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Anti-APECO Petition to Supreme Court

Anti-APECO Petition to Supreme Court

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Republic of the Philippines SUPREME COURT Manila PINAG-ISANG LAKAS NG MGA SAMAHAN SA CASIGURAN, AURORA (PIGLASCA), represented

by its Vice-President, Edwin C. Garcia, DOMINADOR M. MAGNO, ANTONIO T. AVILA, MARCIANA TRESVALLES, PEDRO CALIVARA, ARLYN ASTRERA, MARIBEL T. CASTILLO, JEMARIE C. BANAYAD, LINDA M. DELA PEÑA, ERLINDA A. BITIGAN, ARMANDO A. DELA CRUZ, NELLY G. TIKIMAN, MARIA I. PRADO, RIA L. ESTEVES, DALENA ADUANAN, LOUIE CULIDEG, VINCENT T. BANAYAD, minor, represented by his mother, Vita Banayad. Petitioners, - versus G.R. No. _________________ FOR: CERTIORARI AND PROHIBITION WITH APPLICATION FOR TEMPORARY RESTRAINING ORDER.

x --------------------------------------------x

AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY (APECO), SENATE OF THE PHILIPPINES, represented by Senate President Franklin Drilon, and HOUSE OF REPRESENTATIVES, represented by Speaker Feliciano Belmonte, Respondents.

PETITION
Petitioners, by counsel, most respectfully allege:

THE PARTIES Petitioner Pinag-isang Lakas ng mga Samahan sa Casiguran, Aurora (PIGLASCA) represented herein by its Vice-President, EDWIN C. GARCIA pursuant to a Board Resolution, 1 a non-stock, non-profit corporation duly organized and existing under the laws of the Republic of the Philippines). It is a people’s organization composed of farmers, fisherfolks and indigenous communities residing in Casiguran, suing on behalf of their respective members, all of whom have suffered, still suffer, and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083 coupled with the (injury) caused to petitioners and to others residing within the areas covered by the said statutes. 1. 2. Petitioner DOMINADOR M. MAGNO, is a Filipino citizen, of legal age and a resident of Barangay Cozo, Casiguran, Aurora. Petitioner is a farmer and agrarian reform beneficiary under the Comprehensive Agrarian Reform Program whose land is within the territory being claimed by the APECO. Petitioner has suffered, still suffers and still stands to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 3. Petitioner ANTONIO T. AVILA, is a Filipino citizen, of legal age and a resident of Barangay San Ildefonso, Casiguran, Aurora. Petitioner is a farmer and agrarian reform beneficiary under the Comprehensive Agrarian Reform Program whose land is within the territory being claimed by the APECO. Petitioner has suffered, still suffers and still stands to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 4. Petitioner MARCIANA TRESVALLES, is a Filipino citizen, of legal age and a resident of Barangay Esteves, Casiguran, Aurora. Petitioner is a farmer and victim of illegal conversion who has been farming on a piece of agricultural land at Barangay Esteves that has been illegally converted by APECOand has suffered, still suffers and still stands to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083.

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Attached as Annex “A”.

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5. Petitioner PEDRO CALIVARA, who is also the Chairperson of the Municipal Fisheries and Aquatic Resources Management Council (MFARMC)is of legal age, Filipino and a resident of Barangay Esteves, Casiguran, Aurora. Petitioner is a subsistence fisherfolk who has suffered, still suffers, and still stands to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 6. Petitioner ARLYN ASTRERA, is a Filipino citizen, of legal age and a resident of Barangay Esteves, Casiguran, Aurora. Petitioner is a member of the local community of subsistence fisherfolk who has suffered, still suffers and still stands to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 7. Petitioner MARIBEL T. CASTILLO, is a Filipino citizen, of legal age and a resident of Barangay Esteves, Casiguran, Aurora. Petitioner is a member of the local community of subsistence fisherfolk who was peacefully fishing in Barangay Estevesand as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083 was displaced and has suffered, still suffers and still stands to suffer even more irreversible direct injury. 8. Petitioner JEMARIE C. BANAYAD, is a Filipino citizen, of legal age and a resident of Barangay Culat, Casiguran, Aurora. Petitioner is a member of the Casapsapan settlement of the Agta Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. SHE and others from her community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 9. Petitioners LINDA M. DELA PEÑA AND ERLINDA A. BITIGAN, are Filipino citizens, of legal age and both residents of Barangay San Ildefonso, Casiguran, Aurora. Petitioners are members of the Dalugan settlement of Agta Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. They and others from their community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 10. Petitioner ARMANDO A. DELA CRUZ, is a Filipino citizen, of legal age and resident of Barangay Cozo. Petitioner is a member of

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the Dipontian settlement of Agta Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. He and others from his community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 11. Petitioners NELLY G. TIKIMAN AND MARIA I. PRADO, are Filipino citizens, both of legal age and residents of Barangay San Ildefonso, Casiguran, Aurora. . Petitioners are members of the Disigisaw settlement of Agta Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. They and others from their community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 12. Petitioner RIA L. ESTEVES, is a Filipino citizen, of legal age and resident of Barangay Cozo, Casiguran, Aurora. Petitioner is a member of the Dumagipo settlement of Agta Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. She and others from her community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. 13. Petitioner DALENA ADUANAN is Filipino citizen, 21 years of age, resident of Sitio Dumagipo, Barangay Cozo, Casiguran, Aurora. Petitioner is a member of the Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. She and others from her community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. She is suing in her own behalf and on behalf of other minor Filipinos and of generations of Filipinos yet unborn in general and of her community in particular. 14. Petitioner LOUIE CULIDEG is Filipino citizen, 19 years of age, and a resident of Sitio Dipontian, Barangay Cozo, Caisguran, Aurora. Petitioner is a member of the Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. He and others from his community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. He is suing in his own behalf and

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on behalf of other minor Filipinos and of generations of Filipinos yet unborn in general and of her community in particular. 15. Petitioner VINCENT T. BANAYAD is Filipino citizen, minor, eight years of age, represented by his mother Vita Banayad, 49 Years of age, Filipino citizen and a resident of Sitio Casapsapan, Barangay Culat, Casiguran, Aurora, in this Petition as evident in the accompanying verification and certification. Petitioner is a member of the Indigenous Cultural Community in Casiguran and the San Idelfonso Peninsula. He and others from his community have suffered, still suffer and still stand to suffer even more direct and irreversible injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of Republic Act Nos. 9490 and 10083. He is suing in his own behalf and on behalf of all other minor Filipinos and of generations of Filipinos yet unborn in general and of her community in particular. 16. All other individual petitioners whose names appear and personal circumstances are found in the verification and certification hereof are residents of Casiguran and the San Idelfonso Peninsula. They are all suing on their own behalf and on behalf of minor Filipinos and of generations of Filipinos yet unborn in general and of her community in particular. 17. All petitioners may hereafter be served with all notices and processes issued, and all judgments, decisions, orders, resolutions, and other forms of adjudication promulgated or rendered, by this Honorable Court, at the office of the undersigned counsels at Ateneo Human Rights Center, 20 Rockwell Drive, Rockwell Center, Makati City. 18. Public respondent AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY (APECO) is a government-owned and controlled corporation (GOCC) formed pursuant to Republic Act No. 9490 as amended by Republic Act No. 10083 (hereinafter referred to as the “APECO Laws”). Its principal place of business is at Room 303/304 Languages Internationale Building, 926 A. Arnaiz Avenue (formerly Pasay Road), Barangay San Lorenzo, Makati City, where it may hereafter be served with all notices and processes issued, and all judgments, decisions, orders, resolutions, and other forms of adjudication promulgated or rendered, by this Honorable Court. 19. Public respondent SENATE OF THE PHILIPPINES is represented by the Honorable Senate President Franklin M. Drilon, with office address at Senate of the Philippines, Roxas Boulevard, Pasay City, where it may hereafter be served with all notices and

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processes issued, and all judgments, decisions, orders, resolutions, and other forms of adjudication promulgated or rendered, by this Honorable Court. 20. Public respondent HOUSE OF REPRESENTATIVES OF THE PHILIPPINES, represented by the Honorable Speaker of the House Feliciano Belmonte. Jr., with office address at the House of Representatives Complex, Constitution Hills, Quezon City, where it may hereafter be served with all notices and processes issued, and all judgments, decisions, orders, resolutions, and other forms of adjudication promulgated or rendered, by this Honorable Court. Further, for purposes of this Petition, the Senate of the Philippines and the House of Representatives shall be jointly referred to as “Congress”. COMPLIANCE WITH JURISDICTIONAL PRECONDITIONS 21. Before imploring this Honorable Court to take cognizance of the instant Petition in exercise of its power of judicial review, it is settled that the following have to be clearly established: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case. 2

The Petition involves an issue that is ripe for judicial inquiry.
22. It has been held that no question involving the constitutionality or validity of a law or act may be heard and decided by the Court unless there is: a. A question raised by the proper party; b. An actual case or controversy; c. A question raised at the earliest possible opportunity; and
2

Biraogo vs. The Philippine Truth Commission of 2010, G.R. No. 192935, 7 December 2010 citing Senate of the Philippines vs. Ermita, G.R. No. 169777, 20 April 2006, 488 SCRA 1, 35; and Francisco vs. House of Representatives, 460 Phil. 830, 842 (2003).

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d. The decision on the constitutional or legal question is necessary to the determination of the case itself. 3 23. As will be discussed, Petitioners are the proper parties who have personal and substantial interest in the present case and have sustained, continue to sustain, and will stand to further sustain, direct injury from the implementation of illegal and unconstitutional enactment, in general, and consequent illegal implementation, in particular, of the APECO Laws. 24. The exercise of the power of judicial review is proper and appropriate in this case, as there is an actual case or controversy since billions of pesos have already been spent, is being spent and will continue to be spent on the APECO “project”. Further, of recent, there have been reports and opinions from the various government agencies like the National Economic and Development Agency (NEDA), the Department of Agrarian Reform (DAR) and the Department of Justice (DOJ) that have pointed to the major deficiencies and infirmities of the APECO Laws. 25. The constitutional and legal questions raised in this petition are being raised at the earliest possible opportunity, coupled further with the recent revelations and findings of the aforementioned government agencies. Petitioners have no other available remedy to them and have no reasonable expectation of further relief unless and until the APECO laws are declared unconstitutional.

The Petitioners have standing to challenge the constitutionality and legality of the APECO Laws
26. It is established that for a party to claim standing or locus standi, the petitioners must exhibit that they have been denied, or are about to be denied, a personal right or privilege to which they are entitled.4 27. For cases that involve public interest cases, such as this Petition, this Honorable Court has adopted the direct injury test to determine standing. 5 Under this test, it is not enough that a petitioner in a public interest case, such as the instant Petition, alleges that there has been an illegal action, but the petitioner must have “a
3 4

Joya vs. Presidential Commission on Good Government, 224 SCRA 568. See Chavez vs. Judicial and Bar Council, G.R. No. 202242, 17 July 2012. 5 People of the Philippines and HSBC vs. Vera, 65 Phil 56, 89 (1937).

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personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result.” 6 28. Petitioner PIGLASCA has legal standing to file this Petition as a juridical person, being a peoples’ organization composed of farmer-agrarian reform beneficiaries (ARBs), fisherfolk and indigenous peoples, suing on behalf of themselves and of their respective members, all of whom have suffered, still suffer, and still stand to suffer direct injury as a result of the illegal and unconstitutional enactment and consequent illegal implementation of the APECO Laws – precisely because they themselves occupy and have found their course of living in areas covered by the APECO Laws. 29. It is worth mentioning that all petitioners and others similarly situated were never consulted in the enactment of the APECO Laws, although they are covered by the CARL, IPRA and Fisheries Code, and nonetheless are being made to suffer the consequences of the APECO Laws’ implementation. 30. Several members of PIGLASCA have already lost their means of livelihood while others are in danger of losing theirs. 31. Petitioners DOMINADOR M. MAGNO, ANTONIO T. AVILA, and MARCIANA TRESVALLES likewise have legal standing to file this Petition as natural persons, as they each not only reside in but also have their livelihood in areas covered by the APECO Laws. Thus, as a necessary and implied consequence of the clandestine and unstudied enactment of the APECO Laws, petitioners DOMINADOR M. MAGNO, ANTONIO T. AVILA, and MARCIANA TRESVALLES have been and will continue to be subjected to the utter disregard of their constitutionally guaranteed right “to receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of economic-size farms as basis of Philippine agriculture.” Because the APECO Laws empower APECO to appropriate lands already awarded to farmer-agrarian reform beneficiaries and make them private lands, the welfare of petitioners DOMINADOR M. MAGNO, ANTONIO T. AVILA, and MARCIANA TRESVALLES was completely ignored and will continue to be trampled on. 32. Petitioners ARLENE ASTRERA and MARIBEL T. CASTILLO likewise have legal standing to file this Petition as natural persons, as they each not only reside in but also have their livelihood in areas covered by the APECO Laws. Thus, as a necessary and implied
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15 January 2013.

Advocates for Truth in Lending, Inc. et al. vs. Bangko Sentral Monetary Board, G.R. No. 192986,

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consequence of the clandestine and unstudied enactment of the APECO Laws, petitioners ARLENE ASTRERA and MARIBEL T. CASTILLO have been and will continue to be subjected to the utter disregard of their constitutionally guaranteed right that the State shall “protect the rights of subsistence fisherfolk, especially of local communities to the preferential use of communal marine and fishing resources, both inland offshore.” Because the APECO Laws empower APECO to take over municipal waters, bays and rivers upon which petitioners ARLENE ASTRERA and MARIBEL T. CASTILLO rely for their source of living, the guaranteed preferential treatment they were promised by the Constitution will be completely ignored and will continue to be trampled on. 33. Petitioners JEMARIE C. BANAYAD, LINDA M. DELA PEÑA AND ERLINDA A. BITIGAN, ARMANDO A. DELA CRUZ, NELLY G. TIKIMAN AND MARIA I. PRADO and RIA L. ESTEVES likewise have legal standing to file this Petition as natural persons, as they each not only reside in but also belong to Agta Indigenous Cultural Communities whose ancestral domain lands has been insidiously included in the coverage of the APECO Laws. Thus, as a necessary and implied consequence of the clandestine and unstudied enactment of the APECO Laws, petitioners JEMARIE C. BANAYAD, LINDA M. DELA PEÑA AND ERLINDA A. BITIGAN, ARMANDO A. DELA CRUZ, NELLY G. TIKIMAN AND MARIA I. PRADO and RIA L. ESTEVES have been and will continue to be subjected to the utter disregard of their constitutionally guaranteed right that the State shall “the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social and cultural well-being.” Because the APECO Laws empower APECO to dictate the development in the covered areas, the right to self-governance of petitioners JEMARIE C. BANAYAD, LINDA M. DELA PEÑA AND ERLINDA A. BITIGAN, ARMANDO A. DELA CRUZ, NELLY G. TIKIMAN AND MARIA I. PRADO and RIA L. ESTEVES is reduced to nil. Further, premised on the indigenous concept of ownership, ancestral domains and all resources found therein are not private but communal in nature, i.e., they belong to all and to all generations and therefore cannot be appropriated, disposed or destroyed, especially without the full and informed consent and participation of the members of the Indigenous Local Communities affected. Allowing APECO to function without regard for this principle, will, as a necessary consequence destroy this ancestral domain to the utter prejudice of the entire Agta and Dumagat settlements located in Casiguran and the San Idelfonso Peninsula. 34. Finally, petitioners DALENA ADUANAN, LOUIE CULIDEG and VINCENT T. BANAYAD likewise have legal standing to file this Petition as natural persons, as they each not only reside in Casiguran and the San Idelfonso Peninsula, belong to Indigenous Cultural Communities

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whose ancestral lands have been insidiously included in the coverage of the APECO Laws but also because they represent all other minor Filipinos and generations of Filipinos yet unborn in general and of their community in particular. As a necessary and implied consequence of the clandestine and unstudied enactment of the APECO Laws, petitioners and others like them who relied on the State to deliver on its promise of intergenerational responsibility as discussed in the case of Minors Oposa vs. Factoran 7 and had a right to expect that in the enactment of statues that have irreversible effects such as the APECO Laws, Congress would at the very least ensure their fidelity to the principles enshrined in the Constitution, at a minimum pass them with the accompanying consultation of stakeholders and at all times ensure that a thorough study of their economic viability especially with the various parties whose rights might be unduly affected and transgressed and the enormous chunk of the budget to be dedicated to it in mind. Because the passage into law of the Apeco Laws overlooked any regard for interest of petitioners DALENA ADUANAN, LOUIE CULIDEG and VINCENT BANAYAD, needless to say, there too was a failure to ensure the protection of the rights of generations to come. If this practice is not called out or corrected and reversed, other minors like petitioners DALENA ADUANAN, LOUIE CULIDEG and VINCENT BANAYAD and generations to come cannot ever reasonably rely on and expect the State, through Congress to legislate with their interest in mind. Akin to inter-generational equity8 in environmental law, petitioners DALENA ADUANAN, LOUIE CULIDEG and VINCENT BANAYAD suffered direct injury with the clandestine and unstudied enactment of the APECO Laws since Congress and those who purportedly assented to the enactment, if any, did not meet the onus that each generation has a responsibility to leave an inheritance of wealth no less than what they themselves have inherited. The APECO Laws irreversibly rob petitioners DALENA ADUANAN, LOUIE CULIDEG and VINCENT BANAYAD of the forest, minerals, land, waters, fisheries, wildlife, off-shore areas and other natural resources of Casiguran and the San Idelfonso Peninsula to the end that their exploration, development and utilization will no longer be equitably accessible to them and the generations to come.

The Petition at bar involves constitutional issues of transcendental importance and represents matters of paramount public interest that must be settled early.
7 8

G.R. No. 101083, 30 July 1993. Max Valverde Soto, General Principles of Environmental Law, 3 ILSA J. INT’L & COMP. L. 193, 199200, 2006 (1996) citing E. Brown Weiss, Our Rights and Obligations to Future Generations for the Environment, 84 AM. J. INT’L L. 198 [1990].

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35. Apart from those who suffer direct injury, citizens may be accorded standing if the issue raised involved one of transcendental importance that must be settled early. 9 36. In Coconut Oil Refiners Association, I nc. vs. Torres, 10 it was held that in cases of paramount importance where serious constitutional questions are involved, locus standi requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review. 37. Whether a matter is of transcendental importance or not, we use as guides the following determinants which this Honorable Court has decreed in a long line of cases: a. The character of the funds of other assets involved in the case; b. The presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government; and c. The lack of any other party with a more direct and specific interest in the questions being raised. 11 38. There is no question that matters directly involving billions of Pesos of public funds, covering an area of twelve thousand nine hundred twenty-three (12,923) hectares and a project with a breadth enough to permanently affect several barangays on an entire peninsula and the present inhabitants thereon and its future generations in a manner as insidious, as in this particular instance, qualifies the instant dispute as a matter of paramount public interest.

The manner of the passage of the APECO Laws and the “superbody” they created are illegal, irregular, excessive, or unconscionable, or grossly disadvantageous to the public which amount to grave abuse of discretion of Congress or the
9

G.R. No. 132527, 29 July 2005, 465 SCRA 47. Senate of the Philippines vs. Ermita, G.R. No. 169777, 20 April 2006. Any relaxation on the rule on standing will not apply without these matters being established. Anak-Mindanao Party-List Group vs. The Executive Secretary, 531 SCRA 583 (2007).
11

10

David vs. Gloria Macapagal-Arroyo, 522 Phil. 705 (2006).

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carrying out of legislative power in a manner that is in excess of its jurisdiction.
39. The Constitution clearly imposes upon the judiciary the duty, not simply the power or the authority to look into instances wherein an action of the executive or legislative branches of government has been carried out with grave abuse of discretion.12 This is one of the hallmarks of the 1987 Constitution. 40. As inhabitants of Casiguran and the San Idelfonso Peninsula themselves, the Peninsula over which the APECO Laws are being implemented and as representatives of future generations and heirs that would have been inhabitants of Casiguran, including the San Idelfonso Peninsula, there can be no other parties with more direct and specific interest in a determination of whether there was grave abuse of discretion of Congress in enacting laws targeting them, the main question being raised in the instant Petition than herein petitioners.

The relief sought by petitioners cannot be obtained elsewhere justifying immediate resort to this Honorable Court.
41. It has been held by this Honorable Court that a direct invocation of the Supreme Court’s original jurisdiction to issue extraordinary writs under Rule 65 of the Rules of Court should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. 13 42. Indeed, this Honorable Court has held that, even when other remedies are available, extraordinary writs may be issued by this Honorable Court for special considerations, as public welfare or public policy.14 43. This is not the first time that the APECO Laws have come under fire. While this may be the case, no matter what kind of plea there might be for a suspension of the budget of APECO or call for a re-examination of the development framework behind it, until and unless it is declared unconstitutional by this Honorable Court, the APECO Laws and the “superbodies” they create will be operative, will
12 13 14

Constancia Mendoza, et al. vs. Mayor Enrilo Villas, et al., G.R. No. 187256, 23 February 2011. 1 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM 719 (8th ed. 2002).

§1, ART. VIII.

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continue to be vested with the powers they were statutorily granted, will continue to be appropriated government funds and resources and will appear to be legal and valid notwithstanding the continued violation of the Constitution. 44. Coupled with the “entanglement” among the principal authors of the APECO Laws, the influential political clan from Aurora, and the members of the Board of APECO, among others, petitioners have no other reasonable expectation of speedy, adequate relief outside of this Petition. NATURE OF THE PETITION is a PETITION FOR CERTIORARI AND PROHIBITION UNDER RULE 65 OF THE RULES OF COURT questioning Republic Act Nos. 9490 15 and 10083. 16 and prohibition as proper remedial vehicles to test the constitutionality of statutes and even of acts of other branches of government. 17 This Honorable Court further held in the case of Magallona v. Ermita. STATEMENT OF MATERIAL FACTS

45. This

46. This Honorable Court has held that the writs of certiorari

authored by then Aurora Representative Juan Eduardo Angara and his father then Senator Eduardo Angara—was enacted and approved by then President Gloria Macapagal-Arroyo. The ASEZA covers a total of 500 hectares of public agricultural lands in three (3) barangays in the Municipality of Casiguran, Province of Aurora.
15 16

“An Act Establishing The Aurora Special Economic Zone In The Province Of Aurora, Creating For The Purpose The Aurora Special Economic Zone Authority, Appropriating Funds Therefore And For Other Purposes” (herein referred to as “ASEZA Law”)—principally

47. On 29 June 2007, Republic Act 9490, otherwise known as

Attached as Annex “B”. Attached as Annex “C”. 17 Magallona v. Ermita (G.R. No. 187167, 16 July 2011) citing Aquino III v. COMELEC, G.R. No. 189793, 7 April 2010, 617 SCRA 623 (dismissing a petition for certiorari and prohibition assailing the constitutionality of Republic Act No. 9716, not for the impropriety of remedy but for lack of merit); Aldaba v. COMELEC, G.R. No. 188078, 25 January 2010, 611 SCRA 137 (issuing the writ of prohibition to declare unconstitutional Republic Act No. 9591); Macalintal v. COMELEC, 453 Phil. 586 (2003) (issuing the writs of certiorari and prohibition declaring unconstitutional portions of Republic Act No. 9189), Neri v. Senate Committee on Accountability of Public Officers and Investigations, G.R. No. 180643, 25 March 2008, 549 SCRA 77 (granting a writ of certiorari against the Philippine Senate and nullifying the Senate contempt order issued against petitioner).

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Sec. 3. Creation of the Aurora Special Economic Zone. - In pursuit of the foregoing declared policy and subject to the concurrence of the concerned local government units (LGUs) of Aurora affected by the zone, there is hereby established a special economic zone, hereinafter referred to as the Aurora Ecozone. The Aurora Ecozone shall cover the entire area embraced by barangays Esteves, Dibet and Dibacong, all in the Municipality of Casiguran. 48. The said law was approved and enacted without the knowledge and required consultations of the affected barangays and municipality as shown in the various resolutions of the pertinent bodies questioning and opposing the creation of the ASEZA, to wit, Sangguniang Barangay of Dibet Resolution No. 14, Series of 2008 (dated 29 September 2008); Sangguniang Barangay of Esteves Resolution No. 41, Series of 2008 (dated 3 December 2008); Sanggunian Bayan of Casiguran Resolution No. 001-200918 and Resolution No. 002-2009 (both dated 26 January 2009). The said resolutions questioned the ASEZA law especially that it affects, among others, private agricultural lands awarded to Comprehensive Agrarian Reform Program (CARP) beneficiaries, fisherfolk settlements and municipal waters, as well as Ancestral Domains (AD) occupied by indigenous peoples of Agta and Dumagat. 49. Instead of responding to the opposition of the affected LGUs, the House of Representatives through Congressman Juan Eduardo Angara filed House Bill 6213 and his father Senator Eduardo Angara filed Senate Bill 3408, both of which amended RA 9490 by expanding the said ecozone to 12,923 hectares and included therein three (3) additional barangays of the Municipality of Casiguran, namely Barangays Culat, Cozo and San Ildefonso. The consolidated version was approved on 6 October 2009.

“APECO Law”). The amended ecozone covers the 496 hectares located in the Barangays of Dibet and Esteves in the Municipality of Casiguran as “Parcel 1” (shown in Annex “E”), and the 12,427 hectares located in the Barangays of San Ildefonso, Cozo and Culat, all in the Municipality of Casiguran as “Parcel 2” (shown in Annex “F”). Parcels 1 and 2 combined i.e. the entirety of the APECO superbody can be seen in Annex “G” .
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50. On 22 April 2010, the consolidated bill lapsed into law as Republic Act 10083, which amended Republic Act 9490, entitled “An Act Amending Republic Act No. 9490, Otherwise Known As The "Aurora Special Economic Zone Act Of 2007" (herein referred to as the

Attached as Annex “D”.

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51. Section 3 of RA 10083 states the Governing Principles of the APECO, to wit: (a) Within the framework and limitations of the Constitution and applicable provisions of the Local Government Code, the Aurora Ecozone shall be developed into and operated as a decentralized, selfreliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with suitable residential areas. (b) The Aurora Ecozone shall be provided with transportation, telecommunications and other facilities needed to attract legitimate and productive investments, generate linkage industries and employment opportunities for the people of the Province of Aurora and its neighboring towns and cities. (c) The Aurora Ecozone may establish mutually beneficial economic relations with other entities or enterprises within the country or, subject to the administrative guidance of the Department of Foreign Affairs (DFA), the Philippine Economic Zone Authority (PEZA) and/or the Department of Trade and Industry (DTI), with foreign entities or enterprises. (d) Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the Aurora Ecozone, either by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within the Aurora Ecozone. (e) The Aurora Ecozone shall be managed and operated as a separate customs and taxation territory ensuring free flow or movement of goods and capital within, into and out of its territory. (f) The Aurora Ecozone may provide incentives such as tax and duty-free importations of raw materials, capital and equipment to registered enterprises located therein. However, exportation or removal of goods from the territory of the Aurora

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Ecozone to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Tariff and Customs Code of the Philippines, as amended, and the National Internal Revenue Code (NIRC) of 1997, as amended. (g) The areas comprising the Aurora Ecozone may be expanded or reduced when necessary. For this purpose, the APECO, in consultation with the LGUs, shall have the power to acquire either by purchase, negotiation or condemnation proceedings, any private land within or adjacent to the Aurora Ecozone for the following purposes: (1) consolidation of lands for Aurora Ecozone development; (2) acquisition of right of way to the Aurora Ecozone; and (3) the protection of watershed areas and natural assets valuable to the prosperity of the Aurora Ecozone. (h) Goods manufactured by an Aurora Ecozone enterprise shall be made available for immediate retail sale in the domestic market, subject to the payment of corresponding taxes on raw materials and other regulations that may be formulated by the APECO, in consultation with the PEZA, the Department of Finance (DOF), and the DTI. However, in order to protect domestic industries, a negative list of industries shall be drawn up and regularly updated by the PEZA and the Board of Investments (BOI). Enterprises engaged in industries included in such negative list shall not be allowed to sell their products locally. (i) The defense of the Aurora Ecozone and the security of its perimeter fence shall be the responsibility of the national government in coordination with the APECO and the LGUs concerned. (j) The national government shall actively cooperate and coordinate with the Aurora Ecozone and the LGUs to ensure its speedy development as the vital gateway to the Pacific."

16

52. It is also important to note that RA 10083 added two (2) new provisions regarding the non-profit character of APECO and the enjoyment of benefits of other ecozones, to wit, SEC. 12-A. Non-profit Character of the APECO. The APECO shall be non-profit and shall use its one percent (1%) share as provided in Section 5(C) of this Act for its operations, development, improvement, maintenance and other related expenditures in furtherance and effective implementation of the policy provided in this Act. In consonance with this, the APECO is hereby declared exempt from the payment of all taxes, duties, fees, imposts, charges, costs and service fees in any court or administrative proceedings in which it may be a party. Furthermore, all donations made by any person or entity in favor of the APECO shall be exempt from the payment of the donor's tax and the same shall be considered as deductible from the gross income of the donor, pursuant to the NIRC of 1997, as amended: Provided, That from the shares of the national government from the five percent (5%) tax, one hundred percent (100%) shall be appropriated over a ten (10)-year period to an infrastructure development trust fund to be created by the Bureau of Treasury for the purpose of financing the infrastructure requirements of the Aurora Pacific Economic Zone and Freeport. SEC. 12-B. Enjoyment of Benefits of Other Ecozones and Freeport. The APECO shall enjoy, receive and benefit from the same privileges, licenses or concessions granted or to be granted to other ecozones and free trade zones, such as the Subic Special Economic and Freeport Zone, the Clark Special Economic and Freeport Zone, the Zamboanga City Special Economic and Freeport Zone and the Cagayan Special Economic and Freeport Zone. 53. Again, the enactment of RA 10083 was made without the knowledge and required consultations of the affected barangays and the Municipality of Casiguran as provided for by IPRA and CARL, among others. Hence, the Sanggunian Bayan of Casiguran issued Resolution No. 053-201019 dated 18 October 2010 questioning the enactment of the law.

19

Attached as Annex “H”.

17

Certiorari, Prohibition And Declaration Of Unconstitutionality Of Republic Act 9490 (The ASEZA Act Of 2007) And Its Amendatory Law Republic Act 10083 (The Aurora Pacific Economic Zone And Freeport Act Of 2010) With Prayer For Temporary Restraining Order And/Or Writ Of Preliminary Injunction” (G.R No. 198688) was filed before the
Supreme Court by Rafael V. Mariano et. al., vs. Aurora Pacific Economic Zone and Freeport Authority et. al. The said case is still pending before the Supreme Court.

54. On 10 October 2011, a Petition entitled “Petition For

APECO and the 110Hectare Agricultural Land within ASCOT Property
55. One of the areas covered by the APECO is the 110-hectare agricultural land located in Barangay Esteves, Casiguran, Aurora which was reserved for a school of fisheries by virtue of Proclamation No. 723 dated 21 August 1934. In 1984, a small portion of the total area was utilized for the Aurora National High School of Fisheries. Subsequently, it was renamed Casiguran National High School (CNHS). In 1993, Republic Act No. 7664 was enacted creating Aurora State College of Technology (ASCOT), and CNHS was made an integral part thereof. With the passage of RA 9490 as amended by RA 10083, the subject 110-hectare property was absorbed by APECO. 56. Under Republic Act 6657 (Comprehensive Agrarian Reform Law), as amended by Republic Act 9700 (CARP Extension with Reforms), all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture are covered by CARP. In the case of public lands of the State that are reserved for other public uses such as school reservations, Executive Order No. 407, Series of 199020 as amended by Executive Order No. 448, Series of 199021 applies for purposes of CARP coverage. It states, All lands or portions thereof reserved by virtue of Presidential proclamations for specific public uses by the government, its agencies and instrumentalities, including government-owned or controlled corporations suitable for agriculture and no longer actually, directly and exclusively used or necessary for the purposes for which they have been reserved, as determined by the Department of Agrarian Reform in coordination
20 21

Attached as Annex “I”. Attached as Annex “J”.

18

with the government agency or instrumentality concerned in whose favor the reservation was established, shall be segregated from the reservation and transferred to the Department of Agrarian Reform for distribution to qualified beneficiaries under the Comprehensive Agrarian Reform Program. 57. On 12-14 February 2003, the DAR conducted a Perimeter Survey of Lot 3809 Cad 358-D, the area covered by Proclamation No. 723. The result of the survey was:

Riceland School Compound Residential Road Lots Cocoland Swamps & Riverbeds

-71.856 hectares -5.2476 hectares -1.4310 hectares -2.8975 hectares -9.7665 hectares -19.3008 hectares

58. The area was described by OIC-PARO II Darlene Anicia B. Galicia of DAR Provincial Officer, Baler, Aurora in her Memorandum dated 30 September 2008, as follows:

The whole area is flat land with sufficient natural drainage such as creeks and rivers. As the proclamation so intends, the area is suitable for fisheries research, production and extension/demonstration purposes for both inland, brackish water and marine. The western portion is banked by the Calabgan River while the eastern portion is covered by rich mangrove species. xxx In 1984, 50 years after the proclamation of the area as agricultural school reservation, Aurora National Fisheries School was established in the area, utilizing more or less 5 hectares. The school was later renamed as Casiguran National High School, and because only about 5 hectares was utilized as school campus, encroachment into the reservation continued. Xxx.
59. On 16 September 2010, the Bikolano Ilokano Casiguran Farmers Association (BICFA)—a group of 55 families actually tilling the 110-hectare property in Barangay Esteves, Casiguran since 1960’s—

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refiled their Petition for Coverage22 of the property before the Department of Agrarian Reform (DAR). 60. On 26 August 2011, the DOJ through Secretary Leila de Lima issued DOJ Opinion 44 23 which stated "for your information and guidance only” several points on the matter including the applicability of Executive Order 407 as amended by Executive Order 448, to wit: The said EO has the effect of reclassifying lands that have been reserved by proclamation for public use or purpose into alienable and disposable agricultural lands covered under CARP. Provided, that the following conditions must be present: 1. The lands are suitable for agriculture;

2. The lands are no longer actually, directly and exclusively used or necessary for the purpose for which they have been reserved, as determined by the DAR in coordination with the government agency or instrumentality concerned in whose favor the reservation was established; and 3. The lands must be segregated from the reservation and be transferred to the DAR. 61. However, the said DOJ Opinion 44 also stated that "the determination must be jointly made by the DAR and the concerned government agency or instrumentality in whose favour the reservation was established xxx" in view of the Supreme Court ruling in the case of CMU vs. DARAB. 62. On January 18, 2012, the DOJ Opinion 3 was issued in response to the Letter of DAR Undersecretary Anthony Parungao requesting for a reconsideration of DOJ Opinion 44. The DOJ Opinion 3 stated that the DAR can formally adopt the position it takes on the issue as the agency is primarily responsible for the implementation and administration of the CARL. 63. On 23 April 2012, DAR Undersecretary Anthony Parungao issued a Letter24 to APECO for Joint Determination of Lands Not Used for School Purposes.
22 23

Attached as Annex “K”. Attached as Annex “L”. 24 Attached as Annex “M”.

20

Agta Indigenous Communities within the APECO
64. The Agta and the Dumagats Indigenous Peoples (IPs) have already been identified as the ICC/IP within the covered areas of the Aurora Ecozone based on the list of Indigenous Cultural Communities provided by the National Commission on Indigenous Peoples (NCIP). The Ancestral Domain of the Agta- covers a total of 11,900 hectares. 65. There are IP settlements in Barangays of Cozo, San Ildefonso and Culat of the Municipality of Casiguran. There is already a pending application for a Certificate of Ancestral Domain Title (CADT) by the Agta. The perimeter survey of the ancestral domain of the Agta within the Municipalities of Dinalungan, Casiguran and Dilasag is already on-going and almost done based on the Update of DICADI CADT Delineation and other Related Matters issued by the NCIP Provincial Officer last 15 June 2012.25 It is important to note that all of the 11,900-hectare ancestral domains of the Agta communities are covered by the 12,923-hectare APECO law, particularly the San Ildefonso Peninsula in Parcel 2. 66. APECO has not secured the free, prior and informed consent (FPIC) of the Agtas and other indigenous people of the Municipality of Casiguran, particularly in the five barangays, before it entered and implemented development activities within the ancestral lands or domain. Under RA 8371, Indigenous Cultural Communities or Indigenous Peoples (ICCs/IPs) shall have the right to accept or reject a certain development intervention in their particular communities. 67. With the general principle or policy provided under Republic Act 9490, as amended, that the Aurora Ecozone shall be developed into and operated as a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with suitable residential areas, the ancestral lands or domain of the Agtas are actually being affected.

Fisherfolks Communities within the APECO
68. The public policy on preferential use established by Republic Act 8550 (Philippine Fisheries Code) by small fishers of marine resources is also defied by the establishment of an exclusive Freeport to leave out small fishers.
25

Attached as Annex “N”.

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69. As of now, at least 28 fisherfolk families have been unjustly evicted of their homes along the foreshores to give way to the air strip built by the APECO. More than 200 coastal families are also threatened of being evicted in the planned extension of the air strip of the APECO. 70. At least 1.5 square kilometers of mangroves were also cut by the APECO without any permit.

Farmers, fisherfolks and Agtas’ March to Malacanang
71. On 26 November 2012 to 10 December 2012, at least 120 marchers, most of whom were farmers, fisherfolks and members of the Agta Indigenous Communities, walked on foot from Casiguran to Manila to protest the implementation of the APECO within their communities. 72. On 11 December 2012, President Benigno Aquino III, together with some of his Cabinet members, namely, DOJ Secretary Leila de Lima, DBM Secretary Florencio Abad, DAR Secretary Gil de los Reyes, DENR Secretary Ramon Paje, NCIP Chair Brigida Zenaida Pawid, CHED Chairperson Patricia Licuanan, DA Undersecretary Emerson Palad and Communications Secretary Ricky Carandang, met the farmers, fisherfolks and Agta-Dumagats, in a dialogue at the San Jose Seminary Covered Court at the Ateneo de Manila University in Diliman, Quezon City. 73. During the dialogue, President Aquino tasked the Department of Justice (DOJ) to review the legal implications of the APECO project, as well as the National Economic Development Authority (NEDA) to review the economic viability of the APECO Project. 74. On 18 April 2013, DOJ Secretary Leila de Lima issued DOJ Opinion 35, Series of 2013,26 which stated the following: Consistent with our previous opinions, we hereby reiterate and stress that all government agencies and instrumentalities, including State Colleges and Universities (e.g., ASCOT in this case) are directed by E.O. No. 407 to transfer ownership of all lands
26

Attached as Annex “O”.

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suitable for agriculture to the Department of Agrarian Reform for distribution under the Comprehensive Agrarian Reform Program (Section 1, E.O. No. 407). Included in the coverage of said directive are “all government reservations or portions thereof which are suitable for agriculture and no longer needed for the purposes of which the reservations are established” (2nd WHEREAS Clause of E.O. No. 448). With respect to lands or portions thereof reserved by virtue of Presidential Proclamations for specific public uses (e.g., for a school of fisheries pursuant to Proclamation No. 723 dated 21 August 1934) , the same “shall be segregated from the reservation and transferred to the [DAR] for distribution to qualified beneficiaries under the [CARP]” if the following conditions are present: (a) The lands or portions thereof are suitable for agriculture; and (b) The same are determined by DAR, in coordination with the concerned government agency or instrumentality, as no longer: i. Actually, directly and exclusively used for the purposes for which they have been reserved; or ii. Necessary therefor. Thus, if the subject property in the present case, which is located in Barangay Esteves, Casiguran, Aurora, is found to be suitable for agriculture and is neither actually, directly and exclusively used for a school of fisheries, nor necessary therefor, then its segregation and transfer for distribution to qualified beneficiaries is mandatory or compulsory, given the tenor of the relevant laws and Executive Orders, i.e., the use of the word “shall”. Xxx

23

In light of the foregoing discussion, we hereby answer the questions raised in your request for Clarificatory Opinion, as follows: 1. Can the DAR proceed to cover the 105-hectare area of the subject property, which was already determined by the DAR as irrigated agricultural lands as the said portion was not actually, directly and exclusively used for educational purposes in accordance with Executive Order No. 407, as amended by Executive Order No. 448? The Department is of the view that there is no legal impediment that can prevent ASCOT from turning over to DAR portions of its landholding if, from the determination of DAR in coordination with ASCOT, it finds that the lands, or portions thereof, are no longer actually, directly and exclusively used or necessary for the purpose for which it was reserved. With such determination, it becomes imperative for DAR and ASCOT to implement the directive in E.O. No. 448 to segregate such portions from the reservation, and to transfer them to DAR for distribution to qualified beneficiaries under the CARP. 2. Can the DAR cover the 105-hectare property under CARP if ASCOT refuses to transfer the same to the DAR? Yes, if in its determination, as supported by the evidence and the application of relevant laws, the property satisfies all the conditions set forth in Section 1-A of E.O. No. 407, as amended by E.O. No. 448, none of which requires the consent of ASCOT. xxx 3. Does the previous Supreme Court ruling in the case of Central Mindanao University (CMU) v. DARAB (G.R. No. 100091, October 22, 1992; the “CMU case”) squarely apply in the case at bar? As already answered above, it does not squarely apply in the case at bar given the substantial

24

differences in the prevailing factual and legal milieu between the CMU case and the case at bar, as well as the marked differences in the issues raised therein. While there are pronouncements that continue to have some relevance to the resolution of the case at bar, they must be construed and applied keeping in mind such significant differences, as discussed above. 75. On 24 April 2013, CHED filed a Letter to DOJ asking for a reconsideration on the matter. 76. On 1 April 2013, the DAR members of the Aurora Provincial Task Force on Illegal Conversion conducted a Validation on the activities being made by APECO in Sitio Landing, Barangay Esteves, Casiguran, Aurora. The Task Forced issued the following observations in its Field Investigation Report on the Alleged Illegal Conversion of Agricultural Lands within the APECO Area, 27 to wit: xxx 2. Records of the DAR-Aurora reveal that no clearance was secured from our office for the sale/transfer of the said landholdings to the APECO pursuant to DAR administrative Order No. 01, Series of 1989. 3. Said landholdings are all irrigated riceland serviced by Calbgan Communal Irrigation System. 4. The subject properties were found to be with land development, is being converted from agricultural to residential use (housing project – as evidenced by the sign board conspicuously displayed in the area). Xxx. 5. About 10,000 square-meter portions of the area were already bulldozed, filled with gravel and flattened as of the time of the latest investigation. Xxx 6. Two (2) adjacent landholdings to the area are lands awarded under the government’s CARP to
27

Attached as Annex “P”.

25

farmer-beneficiaries Antonio T. Angara and Melchor A. Estevez, and are now affected by the said land development in the area. The irrigation canal traversing/adjacent to lots of the said farmerbeneficiaries were already filled up with earth, gravel and sand, hence, irrigation water can no longer flow to their farmland. During the recent heavy rains in the area, these farmlands were flooded waist deep because the drainage was as well covered with gravel and sand. 7. Xxx

8. Heavy equipments such as dump truck and road roller are visible in the area and construction of houses is on-going. At least three (3) model houses were already erected/constructed therein. Xxx In view of the foregoing, it is the recommendation of the investigating team that the necessary legal action be instituted against the perpetrators of the aforesaid illegal activities mentioned above in consonance with the provisions embodied under Republic Act No. 6657 as amended in relation to Republic Act No. 8435 considering that the subject landholding is being converted into housing project without an approved land use conversion clearance from the Department of Agrarian Reform. 77. On 10 April 2013, Darlene Anicial Galicia, DAR OICProvincial Agrarian Reform Officer II of Aurora, endorsed the Complaint for Illegal Conversion28 against APECO-NHA before the Office of the Provincial Prosecutor in Aurora. 78. On 15 May 2013, DAR Regional Director Antonio Evangelista issued an Order29 on the matter, docketed as A-0400-0423-13, A.R. Case No. LSD 0300-13, which states the following: WHEREFORE, premises considered, this Office resolves to DIRECT the Aurora Pacific Economic Zone and Freeport Authority (APECO) represented
28 29

Attached as Annex “Q”. Attached as Annex “R”.

26

by its President, Atty. Malcolm l. Sarmiento Jr., with business address at 2nd floor, SSS Building, 6782 Ayala Avenue, Makati City, to SHOW CAUSE within ten [10] days from receipt hereof why a Cease and Desist Order [CDO] shall not be issued. 79. On 3 June 2013, APECO submitted its Comment30 to the Order of the DAR and stated that the rules and regulations of the DAR concerning conversion or reclassification of agricultural land does not apply to all the areas covered by APECO since RA 10083 (APECO Law) itself determined the reclassification/conversion of the land. In its Comment, APECO stated the following: 1. With due respect, APECO respectfully maintains that no Land Use Conversion from the Department of Agrarian Reform (DAR) is necessary for the NHA-APECO Nayon Kalikasan Housing Project as it is inapplicable in such case. 2. APECO is a government entity created pursuant to Republic Act (RA) 9490. Xxx (e) The areas comprising the Aurora Ecozone may be expanded or reduced when necessary. For this purpose, the APECO, in consultation with the LGUs, shall have the power to acquire either by purchase, negotiation or condemnation proceedings, any private land within or adjacent to the Aurora Ecozone for the following purposes: (1) consolidation of lands for Aurora Ecozone development; (2) acquisition of right of way to the Aurora Ecozone; and (3) the protection of watershed areas and natural assets valuable to the prosperity of the Aurora Ecozone. 3. In effect, R.A. 9490 legally caused the conversion or reclassification of the land comprising the APECO premises from agricultural into industrial, commercial, and/or residential, depending on the usage thereof. The reclassification was effected by the law itself since it gave the properties to APECO for specified purposes which are not necessarily agricultural in nature.

30

Attached as Annex “S”.

27

80. On 17 April 2013, the NEDA issued its “Assessment of the Economic Potentials of APEFZ/APECO and its Catchment Area”, 31which states the following: 5.6.1 APECO is operating without a comprehensive master plan, only conceptual plans: At present, APECO does not have a firm and updated comprehensive master plan, corporate long-term financial plans, operations plan, and a land use plan synchronized with the LGU plans. The original master planner hired in 2008, Palafox Associates, is currently in a legal case with APECO. A second master planner, Design Sciences, Inc., produced in 2011 a 6-volume master planning document based on an agro- industrial/manufacturing track for APEFZ. This plan is no longer appropriate given the new direction of APECO to move towards establishing the zone as an agri-aqua- tourism-light industries hub. 5.6.2 No comprehensive land use plan: APECO has formulated a conceptual land use map, which serves as the basis for on-going and planned projects within Parcel 1 (496 hectares) and Parcel 2 (SIP, 12,427 hectares). There is no current effort to prepare a detailed plan. It is uncertain that APECO’s land use plan has been synchronized with the municipal and provincial Comprehensive Land Use Plans (CLUPs). The absence of a master plan and a land use plan compelled local stakeholders to raise the issue with regards to the economic rationale and optimal use of SIP. In 2012, APECO paid PhP120 million to the former commercial logging concession to purchase the usage rights to the area. In APECO’s current conceptual land use map, only 200 hectares of the peninsula is planned for bamboo culture. The rest of the peninsula is reserved for natural protection to Parcel 1 and for ecotourism. 5.6.3 The strategies and activities of LGUs in the catchment areas, actions of ASCOT and other key national and local organizations in the province do not complement the APECO perceived development plans. The local institutions in the Province of Aurora do not provide the enabling conditions for collaboration in such areas as research, technical assistance, community relations, and investments promotion, among others. There is no cooperation or
31

Attached as Annex “T”.

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partnership agreement reached among the ASCOT, PLGU, MLGU and APEFZ/APECO. There is stand-alone implementation of development projects in the catchment areas by the institutions. 5.6.4 At the national level, there is a need for national government agencies (NGAs) together with APECO and the LGUs to harness convergence approaches including the need for a comprehensive local economic situation analysis of the catchment areas to determine potential community roles in business development of potential locators including human capital development. 5.6.5 APECO officials have not been able to clearly and systematically communicate their economic development vision. The strategic directions and policies of the APEFZ/APECO are mostly known only to the President and CEO. Organizational communication for both corporate and external communications is also absent. 5.6.6 APECO established a community relations program but there is no systematic information, education and communication (IEC) program for community relations that will address the issues against APEFZ/APECO and the changes that the community undergo as a “community in transition” in a sustained manner.

ISSUES I. WHETHER OR NOT REPUBLIC ACT NO. 9490 AND REPUBLIC ACT NO. 10083 ARE UNCONSTITUTIONAL FOR BEING VIOLATIVE OF THE SOCIAL JUSTICE PROVISIONS OF THE CONSTITUTION II. WHETHER OR NOT REPUBLIC ACT NO. 9490 AND REPUBLIC ACT NO. 10083 ARE UNCONSTITUTIONAL FOR BEING VIOLATIVE OF THE LOCAL AUTONOMY PROVISIONS OF THE CONSTITUTION

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DISCUSSION I. The Constitution Provides that the State shall Promote Social Justice in all Phases of National Development. 81. The 1987 Philippine Constitution unequivocally dictates that “[t]he State shall promote social justice in all phases of national development.” 32 It is the overarching provision on Social Justice. It lays the foundation for the more specific implementations of Social Justice as found in the provisions of Article XIII. It was originally part of Article XIII, but to avoid repetition, the Constitutional Commission decided to “transpose” the provision from the first sentence of the first section of Article XIII to Article II on the Declaration of Principles. 33 It therefore is an integral part of Article XIII on Social Justice and Human Rights. Relating Section 10 of Article II to the Article on Social Justice and Human Rights allows for an integrated understanding of the intent of the Constitutional Commission in enshrining the State’s mandate of Social Justice in the 1987 Constitution. 82. Initially, the principle of social justice in the earlier Philippine Constitutions is coined in the term “those who have less in life should have more in law.”34 It simply meant: “justice to the common tao, the “little man” socalled. It means justice to him, his wife, and children in relation to their employers in the factories, in the farms, in the mines, and in other employment’s. It means justice to him in the education of his children in the schools, in his dealings with different offices of government, including the courts of justice.”35 83. In terms of judicial appreciation of the term social justice, it means that “when the law is clear and valid, it simply must be applied; but when the law can be interpreted in more ways than one, an interpretation that favors the underprivileged must be followed.36 84. However, the 1987 Constitution goes beyond just focusing on economic inequities. As stated by Fr. Bernas in his Commentary of
Article II, Section 10, 1987 Philippine Constitution. See Constitutional Commission Records, Volume IV, pp. 861-63 (September 20, 1986). 34 Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary, page 71. 35 Bernas citing 1 J. ARUEGO, THE FRAMING OF THE PHILIPPINE CONSTITUTION 147 (1936), page 70. 36 Bernas, page 75.
33 32

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the Constitution, “the new Constitution covers all phases of national development but with emphasis not just on the socio-economic but also on political and cultural inequities.” 37 85. In understanding what the Constitutional Commission meant in crafting Section 10 of Article II, the Record of the transcript on the deliberations on the provision is enlightening: THE PRESIDING OFFICER (Mr. Maambong). May I clarify this for the committee. The suggestion of Commissioner Bernas is that the first sentence of Section 1 of the Article on Social Justice which reads: “The State shall promote social justice in all phases of national development” will be transposed to Section 8 of the Article on the Declaration of Principles. The second sentence thereof and Section 2 will remain with the Social Justice Article with slight modification. Is that correct, Commissioner Bernas? FR. BERNAS. Yes, exactly. THE PRESIDING OFFICER (Mr. Maambong). What does the committee say? MR. TINGSON. Inasmuch as the chairman of the Social Justice Committee obviously and willingly acceded to that suggestion, we would favor it, Mr. Presiding Officer. In fact, we like it that way. So the committee accepts the Bernas suggestion. MR. PADILLA. Mr. Presiding Officer. THE PRESIDING OFFICER (Mr. Maambong). The honorable Vice-President is recognized. MR. PADILLA. My observation is that the different articles or provisions in the Constitution need not necessarily be restated or be a part of the Article on the Declaration of Principles. In fact, I would like to have a distinction between principles and policies. If we want to consider social justice as part of the Article on the Declaration of Principles, why do we not just adopt the provision in Section 5 of the 1935 Constitution which reads:

37

Bernas citing IV RECORD 864-865.

31

The promotion of social justice to ensure the wellbeing and economic security of all the people should be the concern of the State. THE PRESIDING OFFICER (Mr. Maambong). What does the committee say? MR. TINGSON. Mr. Presiding Officer, some Members would like Commissioner Padilla to read it once more. MR. PADILLA. Section 5, Article II on the Declaration of Principles in the 1935 Constitution reads: The promotion of social justice to ensure the wellbeing and economic security of all the people should be the concern of the State. Perhaps with this we would be avoiding the repetition of the phrase “The State shall.” MR. TINGSON. The committee accepts that good suggestion. The wording is good and then, secondly, there would be a bridge somehow also between the 1935 Constitution to the work that we are now framing. MR. NIEVA. Mr. Presiding Officer. THE PRESIDING OFFICER (Mr. Maambong). Commissioner Nieva is recognized. MR. NIEVA. The 1935 Constitution just ensures the wellbeing and economic security. The 1973 Constitution goes a bit further. It ensures the dignity, the welfare and security of all the people. So that phrase “well-being and economic security” is the 1935 Constitution wording and I think the word “dignity” is very important which may not be envisioned or embraced by the phrase “well-being and economic security.” MR. TINGSON. Mr. Presiding Officer, the committee suggests to Commissioner Nieva to amend Commissioner Padilla’s amendment, if she so desires. MR. NIEVA. Yes. if Commissioner Padilla would like to start with the phrase “The promotion of social justice,” to avoid the repetition of the phrase “the State shall,” if will be all

32

right. The proposed amendment then will read: “THE PROMOTION OF SOCIAL JUSTICE TO ENSURE THE DIGNITY, WELFARE AND SECURITY OF ALL THE PEOPLE SHOULD BE THE CONCERN OF THE STATE.” FR. BERNAS. Mr. Presiding Officer. THE PRESIDING OFFICER (Mr. Maambong). Commissioner Bernas, shall we finish this issue first? Commissioner Padilla is recognized. MR. PADILLA. The phrase, “to ensure the well-being and economic security of all the people” in the 1935 Constitution is even better than the phrase used in the 1973 Constitution which says: “The State shall promote social justice to ensure the dignity, welfare and security of all the people.” The phrase “the well-being” is even more specific and clearer than the phrase “dignity and welfare.” After all, in Section 7, I believe that the dignity of man is already mentioned here. THE PRESIDING OFFICER (Mr. Maambong). To abbreviate the proceedings, the Chair recommends that all the suggestions of Vice-President Padilla and Commissioner Nieva be submitted to the committee so that the committee can make a definitive statement on this. In the meantime, the Chair recognizes Commissioner Bernas on his original proposal.

because I think that the Article on Social Justice which we approved earlier goes beyond the 1935 and the 1973 Constitutions. The 1935 Constitution’s concern was mainly economic prosperity and the 1973 Constitution became a little bit more explicit about that. But when we come to the Article on Social Justice in our provision now, we go not just into socioeconomic matters also but into sociopolitical matters and we even touch on cultural inequities. So this is a development beyond the 1935 Constitution. Hence, I do not see why we should allow ourselves to be nailed to the 1935 Constitution when we have liberated ourselves already from that rather limited concept of social justice. So I would like to go back to my original proposal, that we start with a very general statement on social justice “The State shall promote

FR. BERNAS. I would like to go back to my original proposal

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social justice in all phases of national development.” Then when we come to the Article on Social Justice, we try to explain what we mean by this phrase “all phases of national development” which includes socioeconomic, sociopolitical and cultural development. I just want to emphasize the fact that we have transcended the 1935 Constitution and that we do not allow ourselves to be nailed to that. (Emphasis
supplied). THE PRESIDING OFFICER (Mr. Maambong). Will the committee please take serious note of the reasons of the Commissioner Bernas so that the committee can resolve this. Commissioner Padilla is recognized. MR. PADILLA. Mr. Presiding Officer, the various provisions under the Article on Social Justice, will still remain under this proposal. It does not mean the deletion of the entire Article on Social Justice. All those other provisions will remain. It is true that in the 1935 Constitution there is only one section for the Declaration of Principles. In the 1973 Constitution there is also one section for the Declaration of Principles but expressed in two sentences. The second sentence is the 1973 Constitution is what Commissioner Bernas says is the expansion. But those are already provided for in the Article on Social Justice. So, I believe that adopting the one-section provision in the Declaration of Principles in the 1935 Constitution and retaining the many articles and sections on the title of the Article on Social Justice would be very good provisions in our 1986 Constitution. THE PRESIDING OFFICER (Mr. Maambong). Does Commissioner Bernas want to respond? Will Commissioner Davide wait for just a moment so that we can finish his interpellations. Commissioner Bernas is recognized. FR. BERNAS. Yes. The whole point I am trying to say is that the formulation in the 1935 Constitution is a very limited concept. It is limited to economic social justice. It says: “The well-being and economic security of all the people.” If we look at the jurisprudence of the 1935 Constitution, we will see that the whole jurisprudence in this is along socioeconomic lines. It does not contain in seed what we

34

have put into our new draft Constitution. It is an inadequate expression of what we are now trying to achieve.38 86. Later during the deliberations, Commissioner Nolledo affirms the statements of Commissioner Bernas on the Commissioner Padilla’s proposal, stating that “[Section 1 of the Article on Social Justice] is broader in scope compared with merely social well-being and economic security mentioned in the 1935 Constitution.39 Commissioner Davide also supported the statements of Commissioner Bernas stating that “there is a whale of a difference between the concept of social justice which this Commission had adopted and the concept of social justice as embodied in the 1935 Constitution or even in the 1973 Constitution.” Commissioner Braid elucidated further, stating that: MS. ROSARIO BRAID. With due regard to Vice-President Padilla’s representation, we disagree with his stand that the provisions of the 1935 Constitution support the social justice provisions of our present article.

First, the 1935 Constitution is not only economic; but it does not also imply the full participation, the full partnership of the beneficiaries of development, the people with those who plan development. In other words, what we want to connote here is the concept of partnership and participation, and the dignity of every member of all sectors, and this is not contained in the 1935 Constitution very clearly. The term well-being could support the old model of development of people being the passive receivers of development under a system of patronage. This is really what it connotes; it does not involve the concept of participation. We can have the state of well-being of economy without being involved in the process of development. That is why

we do not support the inclusion of the provision of the 1935 Constitution. 40

87. The Padilla amendment lost by three votes, 14 to 17; and the single sentence provision as it now appears under the Section 10 of Article II of the 1987 Constitution was passed with no objection. 41

38 39

See Constitutional Commission Records, Volume IV, pp. 863-64 (September 20, 1986). See Constitutional Commission Records, Volume IV, pp. 866 (September 20, 1986). 40 See Constitutional Commission Records, Volume IV, pp. 859-60 (September 20, 1986). 41 See Constitutional Commission Records, Volume IV, pp. 860 (September 20, 1986).

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88. From the Constitutional Commission’s deliberations, it is clearly established that the Commission intended Section 10 of Article II to include the concept of participation as a sociopolitical matter within the constitutional mandate on Social Justice. 89. To implement this concept of participation, the Constitutional Commission passed Sections 15 and 16 of Article XIII on the Role and Rights of People’s Organization, which provide: Section 15. The State shall respect the role of independent people's organizations to enable the people to pursue and protect, within the democratic framework, their legitimate and collective interests and aspirations through peaceful and lawful means. People's organizations are bona fide associations of citizens with demonstrated capacity to promote the public interest and with identifiable leadership, membership, and structure. Section 16. The right of the people and their organizations to effective and reasonable participation at all levels of social, political, and economic decision-making shall not be abridged. The State shall, by law, facilitate the establishment of adequate consultation mechanisms. 90. In his reading of the said provisions, Commissioner Florenz Regalado asked during the Constitutional Commission deliberations for clarification on their meaning. The committee’s response, reproduced below, sheds light upon the intent of the framers for the provisions on participation: MR. REGALADO. … I do not know what is meant by political participation because we have had a lot of discussions here about political participation by the common tao, not only for political purposes. Xxx some phrases are actually phrases used by technocrats. How many of us really understand these phrases? I confess, without any attempt at self-delusion, that there are some phrases I really cannot understand, an example of which is “an integrated economic program.” I frankly do not know what it really is. Other phrases like “socio-economic structures and processes,” frankly, I do not know what they

36

mean. I am always the first to confess to something I do not know. THE PRESIDENT. May we have the next speaker of the Committee? Commissioner Garcia is recognized. MR. GARCIA. Actually, one of the parts which were deleted in the version was the definition of social justice. Earlier in our deliberations in the Committee, we were striving to recognize one definition; of course, it was not a very easy task. In fact, I think during the period of amendments, even the Committee members will find out that we differ. I recognize that this is a very complex area and therefore, even among the members of the Committee, there may be differences. Anyway let us discuss the definition and concept of social justice. I would like to discuss with the body one of our earlier formulations of social justice which are not incorporated in the document but which we discussed in the subcommittee. In speaking of social justice, we deal with justice not as practised [sic] among individuals but justice as embodied in the structures and institutions of society; namely, its system of law such as regulating the relationship between the owner and the worker of the land; or the relationship between the man who sells his labor and the manager of the company or the owner of that business enterprise. It is distribution of wealth and political power. I

mention this precisely because one of the insistent points throughout this whole Article is that if we were to have justice, there will have to be a redistribution of not only economic wealth but also political power. What we intended to say when we spoke of power is that political power can help shape the future that affect their lives. Regarding people’s organization, the Gentleman will find this as the enabling vehicle through which justice can be attained through some kind of involvement and participation in decision-making. (Emphasis supplied.)
Finally, also in the norms and common understanding which govern this, a concept of social justice involves a vision of man in society. Fundamental to this vision are two notions which must be held in a sort of dynamic tension. First, man

37

is a person with personal dignity and possessed of certain rights which the State did not conger and cannot take away. He can never illegitimately become simply the instrument of another man or of the State. Also, man has certain inalienable rights which are inherent to his dignity. Secondly – and this is very important – he is by nature a member of various communities. He is a member of the family; he can be a member of indigenous communities; he can be a member of a sector; and finally he is a member of the national and world community. He needs these communities to achieve his full development as a person. The communities themselves are concerned about his welfare. And just as he receives from them, he is obliged to contribute to them. So, the definition that we originally

agreed on in the Committee but which is not part of the Article is that social justice is a condition of the structures and institutions of society which reflect on the one hand the inherent dignity and inalienable rights of the person, and the obligation of the community to use the material wealth and political power at its disposal for the welfare of all its members, especially the poor and the weak; and on the other hand, the individual’s obligation to the community and to the welfare of all its members. (Emphasis supplied.)

As we can see, there is a dynamic tension throughout this Article on Social Justice – the individual and the community, and their mutual obligation to each other. We must admit that there is a definite bias for the poor and weak; but as the Gentleman himself mentioned, those who have less in life must have more in law.

lasting peace that could be the condition or the atmosphere within which all other projects prosper. 42

Finally, why the primacy of social justice? Because we want to tell the State that the emphasis should not be simply on economic growth but basically to create egalitarian conditions, to create social justice. This is what will provide

91. Commissioner Edmundo Garcia explained during the Constitutional Commission deliberations the purpose for the provisions on participation:

42

Constitutional Commission Records, Volume II, pp. 619-20 (August 2, 1986).

38

MR. GARCIA. … I will present a very brief explanation for Sections 19 and 20 [now Sections 15 and 16 of the 1987 Constitution] and why we feel these are very important and integral parts of the entire Article on Social Justice.

Empowering people is a key to the attainment of the ends of social justice. So, in this new constitution, we feel we must recognize that people’s organizations can be one significant vehicle in this progressive and democratic tradition. The majority of no wealth nor political influence can empower themselves through people’s organizations that are popular and authentic expressions of their will. Indeed, it is argued here that people’s power can find most permanent, organized and articulate expression through such organizations within the democratic framework. The new constitution must, therefore, recognize the role of people’s organizations as a principal means of empowering the people to pursue and protect, in a peaceful manner, popular and social reforms and mandate the State to respect their independence as autonomous checks to State power. Finally, the new constitution must also institutionalize people’s participation and ensure consultation among the basic sectors at all levels of social, political and economic decisionmaking, guaranteeing that the people have access to information necessary to make informed and responsible decisions. Concretely, the State must be mandated to make possible proper and adequate consultation mechanisms with the people, and the formulation and implementation of local, regional and national priorities, plans, programs and projects that affect people’s lives. Thus, in sum, empowerment of the people is the enabling mechanism in the cause of social justice and people’s power can find more permanent expression in people’s organizations and through the institutionalization of consultation mechanisms that insure people’s participation in decision-making.43
92. Commissioner Garcia has also, at various times in the Constitutional Commission deliberations, illustrated when these provisions on participation should apply: MR. ROMULO. The other problem is that, by and large, government services are inefficient. So, this is a problem all by itself. On Section 19 [now Section 15 of the 1987 Constitution], where the report says that people’s
43

Constitutional Commission Records, Volume III, pp. 140-41 (August 9, 1986).

39

organizations as a principal means of empowering the people to pursue and protect through peaceful means . . ., I do not suppose that the Committee would like to either preempt or exclude the legislature, because the concept of a representative and democratic system really is that the legislature is normally the principal means. MR. GARCIA. That is correct. In fact, people cannot even dream of influencing the composition of membership of the legislature, if they do not get organized. It is, in fact, a recognition of the principle that unless a citizenry is organized and mobilized to pursue its ends peacefully, then it cannot really participate effectively. MR. ROMULO. And it is meant to say “influence the legislature” or “supplant the legislature.”

are periods, for example, when a legislature can be remiss in its obligations and, therefore, the proper atmosphere is created so that the legislature can take note that there is a clamor for a particular issue or direction. During martial law,

MR. GARCIA. No, not to supplant the legislature. But there

this was evident. When the legislature was no longer responsive to the needs of the people, organizations or ordinary citizens – a very concrete example is the NAMFREL and other citizens’ groups – took on the task of ensuring that the objectives of the people are defended. MS. NIEVA. Yes, even in our Constitution now we have even provided for initiative and referendum, and I think for those to really work, the people have to organize themselves. MR. ROMULO. Yes, I wanted that clarified. How does the Committee envision Section 20 [now Section 16 of the 1987 Constitution] to operate, especially when it says: “participation at all levels of social, political and economic decision-making”?

principle that people must first be consulted, especially regarding decisions which will affect their lives. Very often, it is the people who are very close to the problem that is why they can tell what the problem is, and perhaps, the solution lies along the same lines. The proper function of the legislature in this regard would be to try to formulate the

MR. GARCIA. First of all, it is again a recognition of the

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mechanisms of consultation that would ensure talking with the people and finding out their ideas. This should be done on a regular and direct manner so that the State or the different planning agencies will be able to harness the participation of the people in an institutional manner.
MR. ROMULO. I guess my question is really on the extent to which the Committee would like to decision-makers to undertake such consultation. MR. GARCIA. As much as possible and as much as practicable. In the Ministry of Trade and Industry, I understand they have now created the people’s economic councils. I remember a dialogue with Minister Concepcion where he was discussing how multisectoral representations in different regions are not being put together so that they can help identify the resources in the area, the proper use of those resources and the marketing facilities that they could make available. The Ministry of Health, I understand, is also doing this kind of consultation in many regions. So, I think this is a very interesting phenomenon that should be duplicated al all levels of government. MR. ROMULO. Thank you. 44 93. A cursory study reveals that there is not a single mention of the rights of local citizens within the area set forth in its Section 3 of R.A. No. 9490 as amended by R.A. No. 10083. The Congress’ committee deliberations for the R.A. No. 10083 likewise show no trace of mention of the rights of citizens affected by the enactment of the law.

consultation in the enactment of R.A. No. 9490 and R.A. No. 10083: 5.6.5 APECO officials have not been able to clearly and systematically communicate their economic development vision. The strategic directions and policies of the

Assessment of the Economic Potentials of APEFZ/APECO and Its Catchment Area show indications of the lack of
94. NEDA’s

APEFZ/APECO are mostly known only to the President and CEO. Organizational communication for both corporate and external communications is also absent. (Emphasis supplied) there is no systematic information, education and

5.6.6 APECO established a community relations program but

44

Constitutional Commission Records, Volume II, pp. 644 (August 4, 1986).

41

communication (IEC) program for community relations that will address the issues against APEFZ/APECO and the changes that the community undergo as a “community in transition” in a sustained manner. (Emphasis supplied.) 45
II. The APECO Failed the Economic Viability Assessment of the National Economic and Development Agency 95. In the Executive Summary of the Assessment of the Economic Potentials of APEFZ/APECO and Its Catchment Area, NEDA has indeed mentioned the “potential” of APECO to bring in muchneeded economic progress. However, two major deficiencies must be pointed out. 96. For one, the NEDA assessment came after the APECO has been established by law. There was no independent assessment made by the NEDA prior to the passage of RA Nos. 9490 and 10083. This is in contravention of the mandate of NEDA under the Constitution and its implementing law, to wit: SECTION 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development. Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government. 46 97. On the other hand, Executive Order No. 230 provides that NEDA is primarily responsible for the country’s continued, coordinated and fully integrated social and economic policies, plans and programs, to wit: Section 5. Powers and Functions of the Authority. The powers and functions of the Authority reside in the NEDA Board.

45 46

SOURCE Article XII, 1987 Constitution.

42

The Authority shall primarily be responsible for formulating continuing, coordinated and fully integrated social and economic policies, plans and programs, on the basis of the following: The State aims to achieve objectives of growth coupled with equity; Development leading to the attainment of the above mentioned goals is a multi-faceted process that calls for the coordination and integration of policies, plans, programs and projects of all sectors of society; In the formulation of basic policies, plans, programs and projects, there shall be maximum participation by and consultation with concerned private sector groups, community organizations and beneficiaries and local government units in order to ensure that priority needs are incorporated into such policies, plans, programs and projects; National plans shall be in fact the sum of nationally and regionally identified targets and strategies and locally formulated approaches to perceived local needs and priorities, carried out within the framework of national strategies; Major socio-economic policies, plans, programs and projects of different government agencies must be properly coordinated with the Authority at both the national and regional levels prior to their adoption, in order to ensure their consistency with established national priorities and coordination with other policies, plans, programs and projects of the government; and The linkage between development planning, programming and budgeting shall be of the highest priority in planning and budgeting activities. 98. In its assessment of the economic potentials of APECO, the NEDA belatedly cautioned APECO, thus:

43

5.5.4 However, it is important to cite certain risks that could undermine the economic viability of APECO unless addressed effectively. These risks include: (a) possible diminution of biodiversity; (b) protracted resolution of conflicts and opposition to APECO; (c) delayed or non-release of funds by government to APECO; and (d) the absence of a masterplan and other operational plans for the development of the ecozone. The last two items have possibly hindered APECO to operate as a corporation, particularly in hiring appropriate professional/technical staff to provide clear and firm guidance in the implementation of development activities and at the same time come up with effective promotion and marketing strategies to attract both locators and tourists. (Emphasis supplied.) 47 99. Otherwise stated, the passage of Republic Act Nos. 9490 and 10083 failed to satisfy the constitutional mandate that the planned major development, in the form of APECO, should actually be economically viable taking into consideration all other stakeholders who are going to be affected through proper consultations. This could have been effectively done through proper study and assessment by the NEDA before the passage of the said laws and not after. 100. The NEDA was merely polite in its characterization of the speculative “potential” that can be brought about by APECO. But such potential, again, is nothing more than pure speculation. Every part and parcel of the Philippines is a “potential” if only resources are to be spent. But again, the assessment of NEDA of APECO’s betrays the speculativeness of this potential. In the end, the lack of real plans (in fact, the masterplan) undermines the economic viability of APECO. How can there be a real and truthful assessment of APECO if there are no plans to start with? 101. Verily, the passage of RA No. 9490 and 10083 violates Article XII of the Constitution as further implemented by Executive Order No. 230. III. Republic Act No. 9490 and Republic Act No. 10083 Violate the Constitutional Provisions on Agrarian Reform.

Office of the President, Reorganizing the National Economic and Development Authority, Executive Order 230 (22 July 1987).

47

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102. Section 1, Article XII of the Constitution provides: SECTION 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. 103. On the other hand, Article XIII of the Constitution provides: SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. SECTION 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

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(...). SECTION 4. The Sate shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the rights of small landowners. The State shall further provide incentives for voluntary land-sharing. (Emphasis supplied.) 104. Various legislations, such as R.A. 6657 and 9700, have been enacted in order to promote the mandate of the Constitution regarding the rights of farmers and regular farmworkers to own the lands that they till. Section 1 R.A. 9700, amending Section 2 of R.A. 6657, particularly reiterates that: It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farmworkers will receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of economic-size farms as the basis of Philippine agriculture. 105. The Constitution, as well as R.A. 9700, then gives primacy to the welfare of landless farmers and farmworkers. It is worth noting that it is even explicitly stated in Section 3 of R.A. 10083 that the economic zone shall only cover agricultural lands of the public domain. However, with the establishment of APECO, the legislature disregarded this right because it has appropriated lands which were already given to CARP farmer beneficiaries, making these lands private lands.

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106. Moreover, the conversion of the agricultural lands would also result to the loss of means of production and, consequently, the displacement of farmers. Rolando A. Suarez, in his book Agrarian Reform & Social Legislation, in explaining the Declaration of Principles and Policies under R.A. 6657 states that the purpose of R.A. 6657 is to “enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands”. How then will the establishment of APECO support such purpose? With the conversion of the lands and absence of concrete livelihood and relocation programs, the establishment of APECO has gone against the alleviation of the status and dignity of farmers and farmworkers. 107. Furthermore, the establishment of APECO goes against Section 12 of R.A. 9700 which states that: Lands acquired by beneficiaries under this Act or other agrarian reform laws shall not be sold, transferred or conveyed except through hereditary succession, or to the government, or to the LBP, or to other qualified beneficiaries through the DAR for a period of ten (10) years… xxx If the land has not yet been fully paid by the beneficiary, the rights to the land may be transferred or conveyed, with prior approval of the DAR, to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall cultivate the land himself/herself. Failing compliance herewith, the land shall be transferred to the LBP which shall give due notice of the availability of the land in the manner specified in the immediately preceding paragraph. 108. R.A. 9700 has explicitly prohibited the sale, transfer and conveyance of the lands awarded to farmer beneficiaries except through succession and through the government. This is in order to promote the policy of the government, as stated in various decisions of the Supreme Court, to preserve generations of farmers in order to have an adequate and sustained agricultural production. The sustainability of the agricultural production is then also given importance, as it is one of the main industries in our country. The establishment of APECO, without any consultations from various

47

sectors and local government units, shows then the disregard given as it hastily converted agricultural lands into areas where special economic zones can be set up. How then can we sustain agricultural production when agricultural lands can already be hastily converted through the enactment of laws such as R.A. 10083? 109. APECO also violates Sec. 22 and 24 of RA 9700 (CARPER) that disallows conversion of irrigated/irrigable lands. Section 22. Section 65 of Republic Act No. 6657, as amended, is hereby further amended to read as follows: "SEC. 65. Conversion of Lands. - After the lapse of five (5) years from its award, when the land ceases to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, the DAR, upon application of the beneficiary or the landowner with respect only to his/her retained area which is tenanted, with due notice to the affected parties, and subject to existing laws, may authorize the reclassification or conversion of the land and its disposition: Provided, That if the applicant is a beneficiary under agrarian laws and the land sought to be converted is the land awarded to him/her or any portion thereof, the applicant, after the conversion is granted, shall invest at least ten percent (10%)of the proceeds coming from the conversion in government securities: Provided, further, That the applicant upon conversion shall fully pay the price of the land: P rovided , furtherm ore , That irrigated and irrigable lands, shall not be subject to conversion: Provided, finally, That the National Irrigation Administration shall submit a consolidated data on the location nationwide of all irrigable lands within one (1)year from the effectivity of this Act.” (Emphasis supplied.) 110. Section 22 of RA 9700 clearly provides the amendments to Section 65 of RA 6657. It states that irrigated and irrigable lands shall not be subject to conversion. APECO covers parcels of land that are irrigated and irrigable. The conversion from irrigable or irrigated land to an Economic Zone is a direct violation of Sec. 22 of RA 9700. 111. Furthermore, the intention to ban the conversion is in order to protect food security in the country. Excessive conversion of land into economic zones would result to the insufficiency of land for agriculture and food production. The law is clear that agricultural land must be distributed to farmers thus allowing APECO will only trample
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upon the rights of the farmers in the area by depriving them of what is rightfully theirs as intended by our Constitution. 112. Since the conversion does not meet the standards set by Section 65, it consequently violates Section 24 of RA 9700. Section 24. Section 73 of Republic Act No. 6657, as amended, is hereby further amended to read as follows:

"SEC. 73. Prohibited Acts and Omissions. - The following are prohibited:… (e) The sale, transfer, conveyance or change of the nature of lands outside of urban centers and city limits either in whole or in part after the effectivity of this Act, except after final completion of the appropriate conversion under Section 65 of Republic Act No. 6657, as amended. The date of the registration of the deed of conveyance in the Register of Deeds with respect to titled lands and the date of the issuance of the tax declaration to the transferee of the property with respect to unregistered lands, as the case may be, shall be conclusive for the purpose of this Act…”
113. APECO further violates CARPER because the land awarded to ASCOT is land covered under the Agrarian Reform program as it is not actually, directly and exclusively used for educational purposes and parts of it is still suitable for agriculture. 114. Section 4 of RA 9700 provides the amendments to Section 6 of RA 6657. It directs the local government to ensure that lands acquired by expropriation must be subjected to CARP first if it falls under it. The law protects the rights of the farmer beneficiaries to the proceeds of the just compensation of those lands. 115. In this case, APECO’s reservation of the 12,000 ha land failed to follow the process of awarding the land first to farmer beneficiaries and ensuring that the proceeds of just compensation will be received by them. 116. The rights of indigenous peoples should not be trampled by the pursuit of economic progress and national development. No less than the 1987 Constitution incorporates these rights in Article II, Section 2 which states that “[t]he State recognizes and promotes the rights of indigenous cultural communities within the framework of national unity and development.” Similar to the provision on social justice found in Article II, Section 10, the recognition and promotion of the rights of indigenous peoples are state policies which must serve as the overarching guideline governing the actions of the State.
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117. Furthermore, Section 6, Article XIII of the Constitution provides: SECTION 6. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in accordance with law, in the disposition or utilization of other natural resources, including lands of the public domain under lease or concession suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the rights of indigenous communities to their ancestral lands. (Emphasis supplied.) The State may resettle landless farmers and farmworkers in its own agricultural estates which shall be distributed to them in the manner provided by law. 118. The APECO Laws’ violation of the principle of social justice is further aggravated when it failed to meet the Constitutional protection afforded to indigenous people by totally disregarding their rights in the creation of the APECO. 119. The municipality of Casiguran in the province of Aurora is home to around 250 Agta and Dumagat families. 48 Five (5) Agta or Dumagat settlements can be found in these area, namely (1) Dalugan (25families) and Disigisaw (47 families) in the San Ildefonso Peninsula; Dimagipo (13 families) and Dipontian (15 families) in Barangay; and Casapsapan (14 families) in Culat. 49 Also, around seventy (70) Agta or Dumagat families can be found in “the minute settlements dispersed in within and adjacent to these areas.” 50 120. These families whose lands and lives are directly affected by APECO are covered by the special provisions on indigenous peoples under the 1987 Philippine Constitution. 121. The right of indigenous peoples to their ancestral land is recognized under Article XII, Section 5 of the 1987 Philippine Constitution which states that “[t]he State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-

48 49

PAFID | Impacts of Special Economic Zones on IPs in the Philippines, 2011 | pp.9 Id. 50 Id.

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being.” This mandate is reiterated and further elaborated in Republic Act No. 8371 or “The Indigenous Peoples Rights Act” (IPRA). 122. Under IPRA, the indigenous peoples’ rights of ownership and possession to their ancestral domain are recognized and protected.51 The law only calls the Certificates of Ancestral Domain Title as mere formal recognition of the indigenous peoples’ ownership of their lands. It is clear that Section 11 of the IPRA provides that the rights of indigenous peoples to their land shall be respected even without the certificate. 123. This concept of ownership has a dual nature, being private and, at the same time, a communal ownership to all generations. 52. Further, the right to transfer land or property must be made to/among the members of the indigenous peoples or communities subject to their customary laws and traditions.53 This concept of communal ownership prohibits any individual alienation of the property. Thus, the agreement of a few Dumagats or Aetas to the sale of their property cannot be allowed in light of the intergenerational responsibility aspect of their right of ownership. 124. The Dumagats and Aetas living in the municipality of Casiguran have the right to stay in their territories and not be removed therefrom according to Section 7(c) of IPRA. 54 Under this provision, there can only be two valid instances of relocation of IPs: (1) when there is free, prior and informed consent; and (2) through the exercise of the power of eminent domain. 55 In this case, there was no free, prior and informed consent. 125. Free, prior and informed consent (FPIC) requires that the decision made must have been made willingly as a result of a previous consultation, voluntary and based on full disclosure of facts. The indigenous people in Casiguran were never involved in the planning stage of APECO. As earlier mentioned, there was no previous consultation with the people of Casiguran on the creation of APECO. Needless to say, without following any procedure to open a dialogue with the indigenous peoples, any full disclosure of facts can hardly be achieved. Ultimately, hundreds of families were made to grope in the dark while legislators drafted and approved the assailed law. 126. In the end, the controversy highlights a complete indifference to the Constitutional policy in favor of the rights of
51 52

Section 5 Id. 53 Section 8 54 Section 7c IPRA 55 Id.

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indigenous peoples to their ancestral land. This policy is consistent throughout the provisions of the 1987 Constitution. In fact, it is further emphasized in Article XIII, Section 6 that the prior rights of indigenous peoples must be considered even in the distribution or utilization of natural resources, including lands of the public domain. 127. The lack of consultation with the indigenous peoples in the municipality of Casiguran is also tantamount to a violation of their right to self governance and empowerment under IPRA. Under Section 13 of IPRA on Self-Governance, it is stated that “[t]he State recognizes the inherent right of ICCs/IPs to self-governance and selfdetermination and respects the integrity of their values, practices and institutions. Consequently, the State shall guarantee the right of ICCs/IPs to freely pursue their economic, social and cultural development.” This right is threatened by the power given to the Aurora Pacific Economic Zone and Freeport Authority and the specific use mandated by the law for the land. 128. The right to self-governance is diminished by subjecting the land where the IPs are situated to the power of the Aurora Pacific Economic Zone and Freeport Authority. The right of indigenous peoples to self-governance pertains to their autonomy in choosing how the use of their ancestral lands and natural resources found therein can further the preservation of their culture and tradition. Moreover, the classification of the area of Casiguran as a Special Economic Zone limits the kind of economic, social and cultural development that the IPs can promote. As a Special Economic Zone, APECO will dedicate the use of the land area as an agricultural and industrial development center. This further renders nugatory the right of indigenous peoples to participate in decision-making and their right to determine and decide priorities for development under Sections 16 and 17 of IPRA which states: Sec. 16. Right to Participate in Decision Making.- ICCs/IPs have the right to participate fully, if they so choose, at all levels of decision-making in matters which may affect their rights, lives and destinies through procedures determined by them as well as to maintain and develop their own indigenous political structures. Consequently, the State shall ensure that the ICCs/IPs shall be given mandatory representation in policymaking bodies and other local legislative councils.

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Sec. 17. Right to Determine and Decide Priorities for Development.- The ICCs/IPs shall have the right to determine and decide their own priorities for development affecting their lives, beliefs, institutions, spiritual well-being, and the lands they own, occupy or use. They shall participate in the formulation, implementation and evaluation of policies, plans and programs for national, regional and local development which may directly affect them. (Emphasis supplied.) 129. Failure to conduct consultation with the indigenous peoples in Casiguran is a material deprivation of their right to accept or reject any policy which would directly affect them. The APECO is an example of such interference to their ancestral domain to which their right to determine priorities for development should have been made operative. 130. With the right of indigenous peoples to self-determination diminished, the manner in which they can ensure their culture’s preservation and protection is also compromised. Section 29 of IPRA states: Sec. 29. Protection of Indigenous Culture, traditions and institutions.- The state shall respect, recognize and protect the right of the ICCs/IPs to preserve and protect their culture, traditions and institutions. It shall consider these rights in the formulation of national plans and policies. (Emphasis supplied.) 131. The right to cultural integrity is found also in the 1987 Constitution itself where in Article XIV, Section 17 it states that “[t]he State shall recognize, respect, and protect the rights of indigenous cultural communities to preserve and develop their cultures, traditions, and institutions. It shall consider these rights in the formulation of national plans and policies.” Again, these rights pertain to the right of indigenous peoples to continue their traditional way of life and determine their pace of development. Republic Act No. 10083’s lack of consultation to the indigenous people in Casiguran is tantamount to a mindless imposition, affecting not only the livelihood of the IPs but also their very existence.

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IV. Republic Act No. 9490 and Republic Act No. 10083 Violate the Constitutional Provisions on Subsistence Fishers. 132. Another affected stakeholder in the passage of the APECO law are the fisherfolk. The ecozone covers water forms or lands giving fisherfolk access to their livelihood. In effect, the creation of an ecozone has violated laws that provide protection and recognizes the rights of subsistence fisherfolk. In particular, these are Article XIII, Sec. 7 of the 1987 Philippine Constitution and the various provisions of the Philippine Fisheries Code of 1998 (R.A. No. 8550). 133. Article XIII, Sec. 7 of the Constitution provides that: Section 7. The State shall protect the rights of subsistence fisherfolk, especially of local communities, to the preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide support to such fisherfolk through appropriate technology and research, adequate financial, production, and marketing assistance, and other services. The State shall also protect, develop, and conserve such resources. The protection shall extend to offshore fishing grounds of subsistence fisherfolk against foreign intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing resources. 56 134. The recognition of the rights of fisherfolk and fishworkers is specifically stated in the social justice section of the 1987 Constitution because they comprise one of the marginalized sectors in the Philippines. Furthermore, Commissioner Nieva manifested in her sponsorship speech that “this is a very important provision in view of the fact that the sea area is six times bigger that the land area in the country.” 57 135. The provision qualifies the subject of the protection as “subsistence fisherfolk”. Although the term is not concretely defined in the provision and left in the hands of the Congress, Commissioner Ople has identified certain guidelines in defining it:

Phil. Const., art. XIII, Sec. 7. Joaquin G. Bernas, S.J., The 1987 Constitution of the Republic of the Philippines: A Commentary 1260 (2011 ed.).
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[T]he phrase ‘subsistence fishermen’ should be used liberally in the sense that it should not be restricted to the poorest fishermen who are on the edge of existence day to day and who will perish if they do not fish tomorrow. Some fishermen may be a little bit more affluent than the others, but by the standard of the really big commercial fishing vessels, they are all subsistence fishermen. And so, the intent of the proposal is almost all-encompassing with respect to real and actual fishermen in the area who fish for a living.58 136. Thus, the despite the qualification, the coverage of the provision is broad enough. Based on the intent of the provision, the protection is extended to all real and actual fisherfolk. 137. The provision further affords protection against foreign intrusion in offshore fishing grounds. Foreign intrusion pertains not only to the foreign vessels but also to those operating with foreign capital. 59 The latter was included in order to avoid the circumvention of the Constitution. 138. This constitutional provision is consistent with the Article 4 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). The provision states that: 2. All peoples may, for their own ends, freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co-operation, based upon the principle of mutual benefit, and international law. In no case may a people be deprived of its own means of subsistence. 60 139. Although the social justice provisions of the Constitution are not self-executory, the legislation giving life to these provisions must be taken into consideration to fully implement the spirit of the law. With regard to the rights of fisherfolk, the primary piece of legislation is the Philippine Fisheries Code of 1998 (R.A. No. 8550).

Id. at p. 1261. Id. at p. 1262. 60 International Covenant of the Economic, Social and Cultural Rights, G.A. res. 2200A (XXI), 21 U.N.GAOR Supp. (No. 16) at 49, U.N. Doc. A/6316 (1966), 993 U.N.T.S. 3 [ hereinafter ICESCR].
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140. There are several provisions of R.A. No. 8550 that are affected by the passage of the APECO law. The law identified the declared policy of the State in connection to fisherfolk: Section 2. Declaration of P olicy. - It is hereby declared the policy of the State: (a) to achieve food security as the overriding consideration in the utilization, management, development, conservation and protection of fishery resources in order to provide the food needs of the population. A flexible policy towards the attainment of food security shall be adopted in response to changes in demographic trends for fish, emerging trends in the trade of fish and other aquatic products in domestic and international markets, and the law of supply and demand; (b) to limit access to the fishery and aquatic resources of the Philippines for the exclusive use and enjoyment of Filipino citizens; (...) (d) to protect the rights of fisherfolk, especially of the local communities with priority to municipal fisherfolk, in the preferential use of the municipal waters. Such preferential use, shall be based on, but not limited to, Maximum Sustainable Yield (MSY) or Total Allowable Catch (TAC) on the basis of resources and ecological conditions, and shall be consistent with our commitments under international treaties and agreements; (e) to provide support to the fishery sector, primarily to the municipal fisherfolk, including women and youth sectors, through appropriate technology and research, adequate financial, production, construction of post-harvest facilities, marketing assistance, and other services. The protection of municipal fisherfolk against foreign intrusion shall extend to offshore fishing grounds. Fishworkers shall receive a just share for their labor in the utilization of marine and fishery resources; The state shall ensure the attainment of the following objectives of the fishery sector:

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1. Conservation, protection and sustained management of the country's fishery and aquatic resources; 2. Poverty alleviation and the provision of supplementary livelihood among municipal fisherfolk; (...) Section 3. Application of its Provisions. - The provisions of this Code shall be enforced in: (a) all Philippine waters including other waters over which the Philippines has sovereignty and jurisdiction, and the country's 200-nautical mile Exclusive Economic Zone (EEZ) and continental shelf; (...) (c) all lands devoted to aquaculture, or businesses and activities relating to fishery, whether private or public lands. (...) (Emphasis supplied.) 141. The provisions highlight and embody the protection afforded by the Constitution. It further determines the scope of the fishing grounds covered by the protection. In the following provision, the use and exploitation is not merely preferential but rather exclusive to Filipinos. Section 5. Use of P hilippine W aters. - The use and exploitation of the fishery and aquatic resources in Philippine waters shall be reserved exclusively to Filipinos: Provided, however, That research and survey activities may be allowed under strict regulations, for purely research, scientific, technological and educational purposes that would also benefit Filipino citizens. (...) 142. Fisherfolk who live in the municipality are given priority in terms of all fishing activities because of their reliance on them for livelihood. R.A. No. 8550 provides that: ARTICLE I MUNICIPAL FISHERIES Section 18. Users of M unicipal W aters. All fishery related activities in municipal waters, as defined in this Code, shall be utilized by municipal fisherfolk and their

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cooperatives/organizations who are listed as such in the registry of municipal fisherfolk. (...) Section 21. P riority of Resident M unicipal Fisherfolk. - Resident municipal fisherfolk of the municipality concerned and their organizations/cooperatives shall have priority to exploit municipal and demarcated fishery areas of the said municipality. (...) 24. Support to M unicipal Fisherfolk. - The Department and the LGUs shall provide support to municipal fisherfolk through appropriate technology and research, credit, production and marketing assistance and other services such as, but not limited to training for additional/supplementary livelihood. X X X Section 143. APECO violates the above-stated provisions of its disruption of the subsistence of the fisherfolk. Some of the areas that will be taken by the APECO includes bays and rivers upon which the fisherfolk are dependent for their livelihood. R.A. No. 10083 provides that: Section 12. Powers and Functions of the Aurora Pacific Economic Zone and Freeport Authority (APECO) (n) To authorize or undertake, on its own or through others, and to regulate the establishment, operation and maintenance of public utilities, services, and infrastructure in the Aurora Ecozone such as shipping, barging, stevedoring, cargo, handling, warehousing, storage of cargo, port services or concessions, piers, wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges, terminals, conveyors, water supply and storage, sewerage, drainage, airport operations, in coordination with the Civil Aeronautics Board, and such other services or concessions or infrastructure necessary or incidental to the accomplishment of the objectives of this Act: Provided, however, That

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the private investors in the Aurora Ecozone shall be given priority in the awarding of contracts, franchises, licenses or permits for the establishment, operation and maintenance of utilities, services and infrastructures in the Aurora Ecozone; (Emphasis supplied.) 144. Section 12 breaches the Constitutional statutory protection of fisherfolk through preferential use of the natural resources and the prohibition on the foreign intrusion. APECO law provides that it can, on its own or through others, establish and operate different services connected to the fishing industry. Thus, the preferential use of the fishery and aquatic resources is transferred in the hands of APECO because they have the power to determine who should benefit from the resources. 145. Furthermore, the proviso in the particular section offers the priority to the private investors who have the financial capacity to build the structures specified in the law. In effect, the priority given to the fisherfolk is disregarded. The proviso is also broad enough to include foreign investors which can be considered as foreign intrusion. The deliberation of the Committee specifically provides that foreign intrusion extends to those who have foreign capital. Thus, at the same time, APECO law also breaches the provision affording exclusivity of the exploitation and use of the natural resources to the Filipinos. 146. The Constitution further provides for “communal marine and fishing resources.” The creation of public utilities and services has the effect of depriving the fisherfolk access to the communal resources that they can use for livelihood. Also, the fisherfolk have no need for all the public utilities and services that the APECO are authorized to create. The services that can be established imply that the intent of the law is to create a large-scale fishing industry which is contrary to the intent of the Constitution and the Philippine Fisheries Code. 147. Clearly, the APECO law failed to take into consideration the negative impact of the establishment of an Ecozone in the area upon the rights of the fisherfolk especially its effect in the social protection afforded by the Constitution. Therefore, it is only proper to strike down the law as unconstitutional because it brings greater negative impacts than its promised prosperity. V.

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Republic Act No. 9490 and Republic Act No. 10083 were Enacted Without Having a Master Plan. 148. The lack of a feasibility study emphasizes the failure to comply with the requirements of the social justice provisions of the Constitution, as further elaborated by the social legislations discussed above. 149. Furthermore, Art. XII Section 16 of the Constitution, it requires that “Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of econom ic viability. (Emphasis supplied.)” 150. In M anila I nternational Airport Authority (M I AA) v. Court of Appeals ,61 the Court explained the importance of the “test of economic viability,” in this wise: The Constitution expressly authorizes the legislature to create “government-owned or controlled corporations” through special charters only if these entities are required to meet the twin conditions of common good and economic viability. In other words, Congress has no power to create governmentowned or controlled corporations with special charters unless they are made to comply with the two conditions of common good and economic viability. The test of economic viability applies only to government-owned or controlled corporations that perform economic or commercial activities and need to compete in the market place. Being essentially economic vehicles of the State for the common good—meaning for economic development purposes—these government-owned or controlled corporations with special charters are usually organized as stock corporations just like ordinary private corporations. (Emphasis supplied.)62 151. Section 16, Article XII deals with “the formation, organization, or regulation of private corporations,” 63 which should be done through a general law enacted by Congress, provides for an exception, that is: if the corporation is government owned or controlled; its creation is in the interest of the common good; and it meets the test of economic viability.

G.R. No. 155650, 20 July 2006, 495 SCRA 591. Manila International Airport Authority v. Court of Appeals, G.R. No. 155650, 20 July 2006. 63 Record of the 1986 Constitutional Commission, Vol. 3, August 13, 1986, p. 260 cited by BSP v. COA GR No. 177131, June 7, 2011.
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152. The record of the 1986 Constitutional Convention shows the intent of the framers in requiring government owned and controlled corporations to pass the economic viability test is not just through quantifying its financial feasibility but also other external benefits, to wit: MS. QUESADA. Madam President, may we be clarified by the committee on what is meant by economic viability? THE PRESIDENT. Please proceed. MR. MONSOD. Economic viability normally is determined by cost-benefit ratio that takes into consideration all benefits, including economic external as well as internal benefits. These are what they call externalities in economics, so that these are not strictly financial criteria. Economic viability involves what we call economic returns or benefits of the country that are not quantifiable in financial terms. (...). (Emphasis supplied.) 64 153. In addition, it was also the intent of the framers of our Constitution that there should be minimum government participation and intervention in the economy. 65 Other aqua and ecotourism attractions in our country like those in Palawan, are existing and are successful without a need of a special economic zone. 154. Congress has plenary authority to create government instrumentalities vested with corporate powers provided these instrumentalities perform essential government functions or public services. However, when the legislature creates through special charters corporations that perform economic or commercial activities, such entities—known as “government64

SOURCE.

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MS. QUESADA. So, would this particular formulation now really limit the entry of government corporations into activities engaged in by corporations? MR. MONSOD. Yes, because it is also consistent with the economic philosophy that this Commission approved – that there should be minimum government participation and intervention in the economy. MS. QUESDA. Sometimes this Commission would just refer to Congress to provide the particular requirements when the government would get into corporations. But this time around, we specifically mentioned economic viability. (...).

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owned or controlled corporations”—must meet the test of economic viability because they compete in the market place. The intent of the Constitution is to prevent the creation of government-owned or controlled corporations that cannot survive on their own in the market place and thus merely drain the public coffers. 155. Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the purpose of this test, as follows: MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in the past. If a government corporation loses, then it makes its claim upon the taxpayers’ money through new equity infusions from the government and what is always invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few government financial institutions. And this is all taxpayers’ money which could have been relocated to agrarian reform, to social services like health and education, to augment the salaries of grossly underpaid public employees. And yet this is all going down the drain. Therefore, when we insert the phrase “ECONOMIC VIABILITY” together with the “common good,” this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. And so, Madam President, I reiterate, for the committee’s consideration and I am glad that I am joined in this proposal by Commissioner Foz, the insertion of the standard of “ECONOMIC VIABILITY OR THE ECONOMIC TEST,” together with the common good.

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156. Fr. Joaquin G. Bernas explains in his textbook The 1987 Constitution of the Republic of the Philippines: A Commentary: The second sentence was added by the 1986 Constitutional Commission. The significant addition, however, is the phrase “in the interest of the common good and subject to the test of economic viability.” The addition includes the ideas that they must show capacity to function efficiently in business and that they should not go into activities which the private sector can do better. Moreover, economic viability is more than financial viability but also includes capability to make profit and generate benefits not quantifiable in financial terms.46 (Emphasis supplied). Clearly, the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. The State is obligated to render essential public services regardless of the economic viability of providing such service. The non-economic viability of rendering such essential public service does not excuse the State from withholding such essential services from the public. However, government-owned or controlled corporations with special charters, organized essentially for economic or commercial objectives, must meet the test of economic viability. These are the government-owned or controlled corporations that are usually organized under their special charters as stock corporations, like the Land Bank of the Philippines and the Development Bank of the Philippines. These are the government-owned or controlled corporations, along with governmentowned or controlled corporations organized under the Corporation Code, that fall under the definition of “government owned or controlled corporations” in Section 2(10) of the Administrative Code. [Manila International Airport Authority vs. Court of Appeals, 495 SCRA 591(2006)] (Emphasis supplied.) 157. The premature operation of APECO without a master plan is a direct violation of the ruling in MIAA v. CA. As stated in the Executive Summary of the NEDA Report:

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5.5.4 However, it is important to cite certain risks that could undermine the economic viability of APECO unless addressed effectively. These risks include: (a) possible diminution of biodiversity; (b) protracted resolution of conflicts and opposition to APECO; (c) delayed or non-release of funds by government to APECO; and

hindered APECO to operate as a corporation, particularly in hiring the appropriate professional/technical staff to provide clear and firm guidance in the implementation of development activities and at the same time come up with effective promotion and marketing strategies to attract both locators and tourists. 5.6.5 APECO officials have not been able to clearly and systematically communicate their economic development vision. The strategic directions and policies of the APEFZ/APECO are mostly known only to the President and CEO. Organizational communication for both corporate and external communications is also absent. 5.7.2 It is advisable that the developmental phase of APEFZ proceeds without delay. The likelihood of the benefits being realized exists but it is imperative that APECO first completes its master plan and other essential corporate business plans and policies, including its land use plan. APECO management can only focus on its core business of developing, marketing, and operating the ecozone, if a well-developed master plan and other business plans are in place. (Emphasis supplied). 158. A similar critic was found in the “2012-2013 Philippine Human Development Report,” to wit: Attempts to disperse industry and generate economic mass across regions have generally not prospered. A national government policy in the 1980s sought to

(d) the absence of a m asterplan and other operational plans for the developm ent of the ecozone. The last two items have possibly

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establish regional agro-industrial centers in every administrative region of the country and specific sites were designated in various physical framework and land use plans. However, only sites that coincided with existing industrial areas, such as in calabarzon and Mactan, thrived; the rest failed to materialize [corpuz 2012]. The saga of the Aurora Pacific economic Zone and Freeport Authority (APECO) is another failed attempt [Box 1.8]. This experience is consistent with what has already been demonstrated internationally: the power of incentives to influence investment location is weak. Spatially targeted incentives may help exploit geographic advantages and market forces that are otherwise constrained but cannot substitute for them. VI. Republic Act No. 9490 and Republic Act No. 10083 Violate the Constitutional Provisions on Local Autonomy. 159. The Constitution clearly provides that “[t]he territorial and political subdivisions shall enjoy local autonomy.” 66 This is further realized the subsequent section which states: The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative and referendum, allocate among the different local government units their powers, responsibilities, and resources, (…)67 160. These provisions, taken together, ensure that while local governments still fall under the national government, such units are still able to ensure their fullest development as self-reliant communities, as effective partners in the pursuit of national development and social progress. 68 161. Autonomy is also discussed in jurisprudence. In the case of Ganzon v. Court of Appeals, it is noted that local autonomy is “not instantly self-executing, but subject to, among other things, the passage of a local government code (…)” The case also stated that deletion of “as may be provided by the law” in Section 3, Article X
66 67 68

PHILIPPINE CONSTITUTION, ART. X, §2. PHIL. CONST., ART. X, §3. JOAQUIN BERNAS, COMMENTARY ON THE PHILIPPINE CONSTITUTION

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means that “the objective of the framers to strengthen local autonomy by severing congressional control of its affairs.” 162. This autonomy is negated by the implementation of R.A. 10083. Section 22 states that: “In case of any conflict between the ASEZA and the Province of Aurora on matters affected the Aurora Ecozone other than defense and security matters, the decision of the ASEZA shall prevail.” 69 Furthermore, RA 9490 states that “the local government units comprising the Aurora Special Economic Zone shall retain their basic autonomy and identity.” 70 163. The provision has a strong implication on the local autonomy of the affected local government units, particularly the barangays of Esteves, Dibet, and Dibacong, and the Municipality of Casiguran. However, due to the powers granted to ASEZA, these local government units shall experience an empty constituency. 164. A concrete manifestation of the diminished autonomy would be in the power of taxation of the local government unit. According to the 1987 Constitution, Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. 71 165. This power of taxation, however, is threatened by the APECO law. R.A. 9490 states that the merchandise in the economic zone “shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, any provision of law to the contrary notwithstanding.”72 The law, therefore, is unclear on whether the affected local governments can exercise their power to create its own sources of revenue. And while it is recognized that the legislative act of the National Government may curtail the power to tax of local governments,73 it cannot completely ignore the constitutional mandate, which enables local governments to create their own sources of revenue.

69 70 71 72 73

R.A. No. 10083, §22. R.A. No. 9490, §22. Article X, §5. R.A. 9490, §5(k)(1). Basco v. Phil. Amusements Gaming Corp.

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166. The APECO law deprives the Municipality of Casiguran and its affected barangays of theirlocal autonomy, and the capacity to decide on affairs other than defense and security matters. This places the ASEZA in the position above the local governments, with the power to overrule exercises of local autonomy done by the province of Aurora. 167. Another manner of ensuring local autonomy is found in the Local Government Code which pertinently states that: “[t]he establishment by law of autonomous special economic zones in selected areas of the country shall be subject to concurrence by the local government units included therein.” 74 168. The lack of concurrence of the involved local government units also illustrates how the APECO law effectively creates new jurisdictions or areas. Upon effectivity and implementation of APECO laws, barangay land areas and populations would be reduced due to relocation. This goes against §9 of the Local Government Code which states that a local government unit may not be abolished through a irreversibly reduced income, population, or land area without certification by national agencies to Congress or to the concerned Sanggunian. 169. Clearly, the limitations and conditions set upon the affected local government units have adverse effects to its local autonomy, which is guaranteed by our Constitution. The APECO law effectively removes the capacity of local government to find sources of revenue, diminishes its land area, income, and population, and ultimately, reduces the basic autonomy and identity of the affected local governments. VII. Republic Act No. 9490 and Republic Act No. 10083 Create a Superbody That Has Powers of the Executive and Legislative Branches of Government 170. The APECO law has “superbody” powers that make it a sovereign entity above the LGUs and the national government. 171. For one, the law creates a separate customs and taxation territory within the Philippines. It means that national and local laws, especially those pertaining to tax and customs, do not apply inside the Special Economic Zone. Thus, Section 3 of RA 10083, amending Section 4 of RA 9490, provides:
Local Government Code, Title VIII, §117.

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(e) The Aurora Ecozone shall be managed and operated as a separate customs and taxation territory ensuring free flow of movement of goods and capital within, into and out of its territory. 172. It can even grant permanent residency and issue exemptions from the requirements of alien employment permits as provided for Section 6 of RA 10083, amending Section 12 of RA 9490, particularly subparagraphs (q) and (r). 173. 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.” 174. Furthermore, APECO abolishes local government units. The LGUs affected, especially the three barangays and even half of the municipality, will be under the jurisdiction of the APECO which has certain autonomy more than that of the LGU. This would either diminish or effectively abolish the covered LGUs upon the establishment of the special economic zone. 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). APPLICATION FOR A TEMPORARY RESTRAINING ORDER 175. More urgently, and before the matter can be heard on notice, a restraining order should be forthwith issued to restrain respondents from further implementing RA Nos. 9490 and 10083. PRAYER WHEREFORE, premises considered, petitioner pray from this Honorable Court that Republic Act No. 9490 as amended by Republic Act No. 10083 be declared UNCONSTITUTIONAL. Other just and equitable reliefs are likewise prayed for.

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Assessment of the Economic Potentials of APEFZ/APECO and its Catchment Area

National Economic and Development Authority April 2013

CONTENTS OF THE REPORT Executive Summary 1. Background of the Study ............................................................................................................... 1 2. Methodology of the Study.............................................................................................................. 1 3. Study Findings................................................................................................................................ 5 3.1 3.2 Profile of APECO ................................................................................................................... 5 Analysis of the Economic Potential of APECO.................................................................... 11 3.2.1 Market Analysis ......................................................................................................... 11 3.2.2 Technical Analysis ..................................................................................................... 14 3.2.3 Economic Analysis ..................................................................................................... 18 3.2.4 Social and Institutional Analysis ................................................................................ 22 4. A Framework for the Sustainable Development of APEFZ and APECO’s Role .................... 28 Annexes .............................................................................................................................................. 34

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LIST OF ANNEXES Annex 1. Annex 2. Annex 3. Annex 4a. List of materials collected and reviewed for the study Survey Instruments and Questionnaires Assumptions for locator projections based on APECO Plan Scenario 1 (Original APECO Plan): Locator projections, 2013-2032

Annex 4b. Scenario 1 (Original APECO Plan): Economic benefits based on incremental income and value of agricultural products, 2013-2032 Annex 4c. Scenario 1 (Original APECO Plan): Economic benefits from ecotourism, 20132032.

Annex 4d. Scenario 1 (Original APECO Plan): Economic costs coming from capital investments, 2013-2032 Annex 4e. Annex 5a. Scenario 1 (Original APECO Plan): Economic costs coming from Operations and Maintenance, 2013-2032 Scenario 2 (Adjusted APECO Plan): Economic benefits based on incremental income and value of agricultural products, 2013-2032

Annex 5b. Scenario 2 (Adjusted APECO Plan): Economic benefits from ecotourism, 20132032 Annex 5c. Scenario 2 (Adjusted APECO Plan): Economic costs coming from capital investments, 2013-2032

Annex 5d. Scenario 2 (Adjusted APECO Plan): Economic costs coming from Operations and Maintenance, 2013-2032 Annex 6a. Scenario 3 (Slow build-up): Locator projections, 2013-2032 Annex 6b. Scenario 3 (Slow build-up): Economic benefits based on incremental income and value of agricultural products, 2013-2032 Annex 6c. Scenario 3 (Slow build-up): Economic benefits from ecotourism, 2013-2032 Annex 6d. Scenario 3 (Slow build-up): Economic costs coming from capital investments, 2013-2032 Annex 6e. Scenario 3 (Slow build-up): Economic costs coming from Operations and Maintenance, 2013-2032

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LIST OF ACRONYMS

A&D APECO APEFZ ASCOT ASEAN ASEZA AURELCO BFAR BOT CAAP CARP CEO CLUP COA CU. M. DBM DENR DiCaDi DILG DOE DPWH DRR DSI EIRR FGD FIES GDP GRDP GOCC ICC IDC IEC IP KEDCF KII KM kW kWh KV LED LEIPO LGC LGU MDC MLGU MT MVA MW NAPOCOR/NPC NCIP NEDA NGA NPV

Alienable and disposable Aurora Pacific Economic Zone and Freeport Authority Aurora Pacific Economic and Freeport Zone Aurora State College of Technology Association of Southeast Asian Nations Aurora Special Economic Zone Act Aurora Electric Cooperative Bureau of Fisheries and Aquatic Resources Build-Operate-Transfer Civil Aviation Authority of the Philippines Comprehensive Agrarian Reform Program Chief Executive Officer Comprehensive Land Use Program Commission on Audit Cubic Meter Department of Budget and Management Department of Environment and Natural Resources Dilasag-Casiguran-Dinalungan Department of Interior and Local Government Department of Energy Department of Public Works and Highways Disaster Risk Reduction Design Sciences, Inc. Economic Internal Rate of Return Focus Group Discussion Family Income and Expenditure Survey Gross Domestic Product Gross Regional Domestic Product Government Owned and Controlled Corporation Investment Coordination Committee Industries Development Corp. Information, education and communication Indigenous People Korean Economic Development Cooperation Fund Key Informant Interview Kilometer Kilowatt Kilowatt hour Kilovolt Local Economic Development Local Economic Investments Promotions Office Local Government Code Local Government Unit Municipal Development Council Municipal Local Government Unit Metric ton Megavolt ampere Megawatt National Power Corporation National Commission on Indigenous People National Economic and Development Authority National Government Agency Net Present Value

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NSO O&M PEZA PhP PLGU R&D RA RDC RE RoRo SEZA SIP SPUG

National Statistics Office Operation and maintenance Philippine Economic Zone Authority Philippine Peso Provincial Local Government Unit Research and Development Republic Act Regional Development Council Renewable Energy Roll-On-Roll-Off Special Economic Zone Act San Ildefonso Peninsula Small Power Utilities Group

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ACKNOWLEDGEMENT

This report is a product of the National Economic and Development Authority (NEDA) coordinated by an Inter-Staff Technical Working Group (TWG), composed of the Agriculture Staff (AS); Infrastructure Staff (IS); Trade, Industry and Utilities Staff (TIUS), Public Investment Staff (PIS); Regional Development and Coordination Staff (RDCS) and the NEDA Region III Office (NRO III). The technical assistance of Ms. Arlene P. Donaire and Dr. Aser B. Javier are acknowledged, particularly in providing technical expertise in objectively assessing the challenges and opportunities in the study area.

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EXECUTIVE SUMMARY

1. Legal Basis of APEFZ/APECO. The Aurora Special Economic Zone was created in 2007 by virtue of Republic Act (RA) No. 9490. Subsequent to this, RA No. 10083 was passed amending RA 9490, mandating the establishment of the Aurora Pacific Economic Zone and Freeport Authority (APECO) to manage and operate the expanded ecozone, now called the Aurora Pacific Economic and Freeport Zone (APEFZ). 2. Rationale for the Study. Last November 24, 2012, a group of farmers, fisherfolks and members of the Dumagat indigenous peoples (IP) from Casiguran appealed to the President to stop the establishment of the APEFZ in Casiguran, Aurora. The main issues raised by the groups were the possibility of residential and livelihood displacement from the area as a result of APEFZ development and the perceived non-transparency of the APEFZ development plans and activities due to insufficient consultation with stakeholders. Given this, the President instructed NEDA to undertake an assessment of the economic potentials of the establishment of APEFZ and its institution, APECO. 3. Objectives of the Study. The general objective of the study is to determine the feasibility of the economic zone, vis-à-vis the context of the national development framework and its objective of promoting inclusive growth. Specifically, it aims to answer the following: (i) (ii) (iii) (iv) What is the economic potential of APEFZ/APECO and its catchment area? What are the economic and social costs and benefits of developing APEFZ/APECO? What transformation is required to realize this potential? What is a feasible framework to ensure sustainable development of the area?

4. Methodology of the Study. A two–track approach was used for data gathering and analysis: (i) Stocktaking and Desk Research/Analysis; and (ii) Field Based Data Collection. The latter involved Key Informant Interviews (KII) and Focus Group Discussion (FGD) which were conducted on 19-22 February 2013. One hundred eighty (180) key informants were interviewed, including officials and staff of the Municipality of Casiguran and its barangays (14), APEFZ/APECO officials (5), the Governor and the department heads of the Province of Aurora (8), the President and officials of the Aurora State College of Technology (ASCOT) (3), and IPs, farmers, fisher folks and civil society organizations both from anti- and pro-APECO camps (150). The NEDA-ICC project evaluation methodology was used as basic framework for the rapid assessment, which included: (a) market; (b) technical; (c) economic; (d) social; and (e) institutional analysis. The study adopted a rapid assessment approach, given time constraints. While the study relied on published and official data/statistics/information, these were deemed not sufficient to support in-depth quantitative analysis. 5. Major Findings 5.1. The common thread that underlies the arguments in favor of the ecozone is its potential to bring in much-needed economic progress in an area that has been neglected despite its naturally rich endowments. The ecozone is seen as an anchor for support infrastructures and a platform for value adding activities that will generate employment and spur markets not just in the catchment area of Dilasag-Casiguran-Dinalungan (DI-CA-DI) in Aurora, but also in the nearby provinces. This is the primary economic argument in favor of the ecozone. 5.2. The general feeling of LGU stakeholders is that the APEFZ can potentially bring development to their area. They noted that before the development of the ecozone was initiated, they never thought that the national government would support the area at this magnitude since it only merited attention when calamities occur. Prior to APEFZ, no major

road improvements were seen in the province, especially for the northern area, where the ecozone is located. 5.3. APECO is setting its sights on creating an ecozone that meets the needs of locators in three categories of production activities: (a) agri-aqua ventures; (b) ecotourism; and (c) light industries. The basic needs include: ease of access to raw input and product markets, availability of human resources, administrative support and other operations support services, and suitability for the establishment of small to medium-scale processing facilities. Provisions of decent accommodation amenities would serve as an additional pull factor for investors and visitors. Many of the needs are present in the area: (a) there is a well-defined market for outputs within and outside of the ecozone; and (b) the area itself is an abundant source of supply for inputs of production such as agri-aqua raw materials and human resources (some IPs are skilled and majority are trainable) that serve as a strong draw for locators. Coupled with the investment incentives and assuming that support infrastructure for market development are completed in a timely manner, the location factor may be still be seen as a strength rather than weakness as currently perceived. The market, which encompasses the ecozone’s catchment area - the DI-CA-DI municipalities; the secondary circle (i.e., rest of Aurora province); and the spillover area (nearby provinces – N. Ecija, N. Vizcaya, Quezon, and Isabela) also double as a potential immediate market for outputs that may be produced in the ecozone for domestic consumption. 5.4. The challenge for APECO is to fully utilize these resources in a sustainable manner towards promoting growth and development in its influence area and adjoining municipalities. The ecozone’s total area coverage is 12,923 hectares, divided into Phase 1 – 496 hectares, located in the inland barangays of Casiguran; and Phase 2 – 12,427 hectares located in the San Ildefonso Peninsula. APECO does not have a land use plan, only a conceptual land use map. Further, completing the support infrastructure for ensuring market development of APEFZ is critical, wherein transportation and power are top in the list. The ecozone’s accessibility is anchored on a trimodal transpiration system (i.e., land-sea-air). 5.4.1 Roads. About 75 percent of Aurora Province’s road network of 1,278.7 km is gravel surfaced. The part from Baler to Casiguran, which is 121 kms long, is currently being paved and rehabilitated at a cost of around PhP2.3 billion by DPWH. The 121-km road network from Baler to Casiguran is planned to be completed by 2014. With the works still being done, travel time has been reduced from 6-7 hours (according to the locals) to the present 3-4 hours. APECO and the Provincial Government are optimistic that the ecozone location is strategic, alongside the eastern seaboard (the Pacific Ocean) and its proximity to larger provinces that are potential markets. 5.4.2 Airports. There is an existing 1.2 km airstrip, located just outside the APECO corporate campus in Casiguran that is managed by Civil Aviation Authority of the Philippines (CAAP). The facility can accommodate 6-15 seater aircrafts. APECO management is planning to seek an agreement with CAAP to take over management of the airstrip, extend this to 2.4 kms to comply with international standards and accommodate 737 aircrafts, and build a suitable terminal through a Build-OperateTransfer (BOT) scheme. The timing for all of these, however, should be linked to the phase of development in the ecozone, particularly locator occupancy and tourist arrivals. 5.4.3 Seaports. Casiguran has an existing roll-on-roll-off (RORO) wharf in Dibacong, completed in 2008, as part of the nautical highway. Requested then by the LGU, the facility was envisioned to attract investments to the area. Currently, navy patrol boats are stationed in this port. The Feasibility Study for a proposed PhP1.96 billion Casiguran International Seaport in Banagas Point, about three (3) kms away from APECO’s corporate campus, has been completed and submitted to NEDA-ICC.

The viability of the seaport and its proposed scale may be revisited to consider prospective cargo volume demand that may build-up in the later years of operation of the ecozone. 5.4.4 Power. APEFZ is envisioned to be a green energy hub, consistent with APECO’s plan for the green ecozone. A renewable energy study was made by the DOE in 2009 and a plan was developed by Design Sciences, Inc (DSI) in 2011. Both studies showed that the ecozone could benefit from tapping renewable energy (RE) sources. APECO’s plan to install its own 1 MW solar power plant, included in its current budget, needs revalidation. Solar energy is not necessarily the cheapest RE source of electricity. Considering investment costs, options for power such as procurement of diesel generator sets, hydropower, biomass-based power production, including connection to the grid, in the long term, may be studied further. 5.5. Based on our assessment, the economic internal rate of return (EIRR) of APECO operations (2013-2032, 20 year period) at a social discount rate of 15 percent and under two (2) scenarios are as follows: Table 1. Estimate Economic Rate of Return of APECO Operations Scenario 2: Scenario 1: Adjusted Scenario 3: APECO/APEFZ APECO/APEFZ Slow Build up Original Plan Plan 1. NPV PhP 3.4 billion PhP 1.6 billion PhP 496 million 2. EIRR 3. Scenario Profile 34% 100% investor target based on APECO’s plan; not adjusted for incremental benefits and employment duration  55% decrease in benefits  55% decrease in benefits and 5% increase in costs 27 % 100% investor target based on APECO’s plan, further adjusted to reflect incremental benefits and employment duration  Greater than 60% decrease in benefits and 35% increase in costs 20% Scenario 2 but 100% locator occupancy is established on a much slower phase   5% decrease in benefits and 10% increase in costs; 20% increase in costs

4. Viability threshold

5.5.1 The direct cost of APECO in the EIRR estimation consists of the minimum additional investments needed to enable the ecozone to continue operating and to promote the area as an agri-aqua and ecotourism attraction. Critical of these investments are the provision of more stable source of power supply, provision of facilities for proper solid waste management and improved water supply and drainage, and minimal improvement of the air transport facility. While the establishment of a new seaport was proposed, this was not considered in the analysis but could very well be considered in the later years of operation. The on-going construction of the Baler-Casiguran national road was likewise not treated as direct cost as this road is part of the national road network and would be built even without APECO. Meanwhile, past public investments in APECO were treated as sunk costs1, whereby only the additional investments to generate expected benefits were deemed relevant.
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Sunk costs are past investments that can no longer be recovered and may be difficult to utilize for purposes other than what these were intended for. Hence, such investments are not considered as cost in estimating the rates of return of the project.

5.5.2 The direct economic and social benefits of continuing APECO’s operations included mainly the quantifiable economic benefits, to wit: (a) (b) (c) direct income effects from employment generated by APECO locators and agri-aqua activities; increased local spending by tourists with the potential of ecotourism; and value-adding of agricultural products from the agri-aqua project ventures.

To be noted here are the multiplier effects of job creation on consumption, trade and income gains that translate to additional economic benefits not only in the catchment area of APECO but also in neighboring municipalities and provinces. 5.5.3 Indirect benefits of the ecozone include: improved living (social, health, educational opportunities) conditions mainly due to greater accessibility of Casiguran and neighboring municipalities to the rest of the province with the development of transport network; potentials of better quality jobs; and the preservation of natural resources (timber stand, flora, and fauna) with the logging ban in San Ildefonso Peninsula (SIP). 5.5.4 However, it is important to cite certain risks that could undermine the economic viability of APECO unless addressed effectively. These risks include: (a) possible diminution of biodiversity; (b) protracted resolution of conflicts and opposition to APECO; (c) delayed or non-release of funds by government to APECO; and (d) the absence of a masterplan and other operational plans for the development of the ecozone. The last two items have possibly hindered APECO to operate as a corporation, particularly in hiring the appropriate professional/technical staff to provide clear and firm guidance in the implementation of development activities and at the same time come up with effective promotion and marketing strategies to attract both locators and tourists. 5.6. Social and institutional analysis. The concerns of stakeholders have been consistent through the years. This relates to the need for APECO to strengthen its institutional linkages to ensure more sustainable achievement of its development initiatives. The FGD conducted in 2011 and the one conducted for this current study revealed many similar findings on social and institutional issues. 5.6.1 APECO is operating without a comprehensive master plan: At present, APECO does not have a firm and updated comprehensive master plan, corporate long-term financial plan and operations plan. The original master planner hired in 2008, Palafox Associates, is currently in a legal case with APECO. A second master planner, Design Sciences, Inc., produced in 2011 a 6-volume master planning document based on an agro-industrial/manufacturing track for APEFZ. These plans are no longer appropriate given the new direction of APECO to move towards establishing the zone as an agriaqua-tourism-light industries hub. 5.6.2The land use plan is only a conceptual plan: APECO has formulated a conceptual land use map, which serves as the basis for on-going and planned projects within Parcel 1 (496 hectares) and Parcel 2 (SIP, 12,427 hectares). Because of its conceptual nature, it is uncertain that APECO’s land use plan is synchronized with the municipal and provincial governments’ Comprehensive Land Use Plans (CLUPs).As of the period of the study, there is no current effort from APECO to prepare a more detailed plan.

The absence of a master plan and a land use plan compelled local stakeholders to raise the issue with regards to the economic rationale and optimal use, particularly, of the SIP. In 2012, APECO paid PhP120 million to the former commercial logging concession to purchase the usage rights to the area. In APECO’s current conceptual land use map, only 200 hectares of the peninsula is planned for bamboo culture. The rest of the peninsula is proposed to be a reservation for natural protection to Parcel 1 and for ecotourism. 5.6.3 The strategies and activities of LGUs in the catchment areas, actions of ASCOT and other key national and local organizations in the province do not complement the APECO perceived development plans. The absence of a clear land use plan is exacerbated by the fact that there is no cooperation or partnership agreement reached among the ASCOT, Provincial LGU, Municipal LGU and APEFZ/APECO. Local institutions in the Province of Aurora do not provide the enabling conditions for collaboration in such areas as research, technical assistance, community relations, and investments promotion, among others. Hence, even development projects of institutions in the catchment areas are implemented as if they are stand-alone projects. 5.6.4APECO officials have not been able to clearly and systematically communicate their economic development vision. The strategic directions and policies of the APEFZ/APECO are mostly known only to the President and CEO. Organizational communication for both corporate and external communications is also absent. 5.6.5APECO established a community relations program but there is no systematic information, education and communication (IEC) program for community relations that will address the issues against APEFZ/APECO and the changes that the community will undergo as a “community in transition” in a sustained manner. 5.7. A Sustainable and Inclusive Development Framework for APEFZ/APECO. Given the gaps, especially on the institutional preparation of the APEFZ, APECO’s development framework should be as follows: 5.7.1APECO’s master plan and other essential corporate business plans and policies, including its land use plan be immediately formulated and should be aimed at achieveing inclusive growth not only in the catchment area but also outside . Plan formulation should be undertaken such that the community will have the opportunity to participate in identifying development projects and activities. Given the tense situation through the years, participatory planning should involve three perspectives: (a) development of communities’ capacities in understanding local economic development (LED); (b) fast-tracking the marketing promotion and establishment of job generating activities in the ecozone; and, (c) strengthning institutional cooperation between APECO, on the one hand, and the national and local governments, on the other. 5.7.2.Convergence with programs of NGAs. The planning process should proceed towards greater convergence with programs of national government agencies (NGAs) to assist APECO and the community in key strategic economic areas such as investment management, community relations, local economic development, and agribusiness management, among others. 5.7.3 The developmental process of APEFZ should proceed in a slower phase (than the current plan) contingent to the response of investors/locators/tourists to APECO’s marketing promotion.APECO’s development phase includes the provision of power and water supply, drainage facilities and the estabihsment of waste

management services.These support facilities are needed to support APECO’s effort to sell its development scheme ofestablishing agri-aqua-ecotourism zone.The additional minimum investment for these facilities should be done taking into consideration the prospective expansion of locator/investors and influx of tourists in the area. Moroever, this additional public investments in APECO should be clearly identified in its master plan and the viability of each investment established prior to implementation.

Recommendations/Conclusion The most important transformational interventions to be done as regards APEFZ and APECO are: a. Complete the APECO plans. APECO must immediately complete (refine and update) its plans and ensure their consistency with related LGU plans and operationalize the development as embodied in the master plan. For a program that has so far breached the PhP905 million mark in terms of budget support from the government for the development of the corporate campus and its adjoining transport facilities like the airstrip and the RoRo, APECO stands to benefit from a careful reassessment of its development vision with a view towards scale optimization. Moreover, APECO has to enhance its corporate image, uphold more efficient investment programming, and improve project management by hiring officers and staff with the necessary qualifications and competence required to manage and promote the ecozone. b. Study the best use of San Ildefonso Peninsula (SIP). APECO’s acquisition of the user rights to SIP has been completed but its planned use deserves a second look as it may eventually become a high-maintenance low productivity financial asset. If the area eventually becomes an anchor for an ecotourism program, alternative institutional arrangements should be explored that will allow other stakeholders like the LGU and national government agencies (DENR) to co-share in the management of this national asset. From a financial viewpoint, APECO should strategically position itself so that the peninsula does not simply get booked year-in/year-out as a non-performing financial asset. c. Systematic Marketing Promotion. Establishing the ecozone’s market is a critical task at hand. The potential economic benefits of APEFZ beyond 2015 when all basic support facilities and transportation are completed will be significant to offset the costs. APECO must undertake a systematic marketing program to attract viable and desirable locators within and outside Central Luzon. d. Government support. The national government should continue to support the completion of the necessary structures and facilities of APECO, both off-site (i.e., road network projects planned in the area) and on-site (i.e., locator support facilities such as power and water supply,drainage facilities, waste management facilities, housing, among others) to enable the Corporation to attract its investors, operate and to realize the expected returns on investments. By way of drawing lessons from this assessment, future investment decisions of government, especially of similar scale, should be supported by an in-depth feasibility study that does not only articulate the economic viability but alsothestakeholders’ ownership of the project.

MAIN REPORT

1. Background of the Study The Aurora Special Economic Zone was created in 2007 by virtue of Republic Act (RA) No. 9490. Subsequent to this, RA No. 10083 (2009) amended RA 9490 and established the Aurora Pacific Economic Zone and Freeport Authority (APECO) which was then mandated to manage and operate the much expanded ecozone with a new name, the Aurora Pacific Economic and Freeport Zone (APEFZ). Last November 24, 2012, a group of farmers, fisherfolk and members of the Dumagat indigenous peoples (IP) from Casiguran appealed to the President to stop the establishment of the APEFZ in Casiguran, Aurora. The main issues raised by the groups were the possibility of residential and livelihood displacement from the area as a result of APEFZ development and the perceived nontransparency of the APEFZ development plans and activities due to insufficient consultation with stakeholders. The clamor was to stop the release of additional funds to APECO, and hence, suspend all development activities in the area. Given this, the President instructed NEDA to undertake an assessment of the economic potentials of the establishment of APEFZ and its institution, APECO. The general objective of the study was to determine the feasibility of the economic zone, vis-à-vis its adherence to the national development framework and its promotion of inclusive growth. Specifically, it aimed to:     Assess the economic potential of APEFZ/APECO and its catchment area; Determine the interventions and activities required in order to maximize the potential; Analyze the costs and benefits of the establishment and development of APEFZ considering the interventions that have to be made; and Establish the ecozone’s sustainable development framework.

These objectives were translated into questions which the study tried to respond to:     What is the economic potential of the APEFZ and its catchment area? What transformation is required to realize this potential? What are the economic and social costs and benefits of developing APEFZ? Will such development result in higher benefits? For whom? Who loses? How will the losers be compensated? What is the feasible framework to ensure the sustainable development of the area?

2. Methodology of the Study A two–tracked methodology was used for data gathering: (a) Stocktaking and Desk Research and (b) Field-Based Data Collection. Desk analysis included a review of existing relevant documents collected from government dossiers and APECO. A list of the materials collected and reviewed is given in Annex 1. The field-based data, on the other hand, was collected using two key approaches -- Key Informant Interviews (KIIs) and Focus Group Discussions (FGDs). Purposive sampling was used for both the KIIs and FGDs. Representatives from each cluster of stakeholders were included in the interviews and discussions. There were five groups that were interviewed; the composition of each group is shown in Table 2. The mixed sample was resorted to in the group discussions to diffuse the political sensitivity of the issues and hence achieve more objective responses.

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Table 2. Schedule of Interviews and Respondents per Group Schedule Respondents 19 February 2013 PM FGD 1: 14 respondents Venue: DILG-Aurora, Baler,  Mayor of Casiguran Aurora  Vice Mayor of Casiguran  Officials of the municipality of Casiguran  Officials of Brgys. Cozo, Culat, Dibet, Esteves and San Ildefonso 20 February 2013 AM FGD 2: 5 respondents Venue: APECO Corporate  APECO President Office, Casiguran, Aurora  Key executives of APECO PM Venue: Covered court, Casiguran, Aurora 21 February 2013 AM Venue: Aurora Provincial Capitol, Baler, Aurora FGD 3: 150 respondents  Representatives of farmers, fisherfolks, indigenous people and Task Force Anti-APECO

FGD 4: 8 respondents  Governor of Aurora Province and staff  Provincial ENR Officer  Ex-Provincial ENR Officer  Provincial Cooperatives Officer  Provincial Agriculturist  Provincial Planning and Development Officer  Regional DILG representative FGD 5: 3 respondents  President of ASCOT  Key officials of ASCOT

22 February 2013 PM Office of the President, ASCOT, Baler, Aurora

A total of five (5) FGDs were conducted among the key stakeholders in the catchment areas of the APEFZ/APECO during the site visit. On the other hand, respondents to the key informant interviews totalled 180: fourteen (14) officials and staff of the Municipality and the barangays of Casiguran, five (5) APEFZ/APECO Officials, the Governor and seven (7) key department heads from the Provincial Government of Aurora, the President and two key officials from ASCOT, 150 indigenous peoples including farmers, fisherfolk and civil society organizations both from the anti- and pro- APECO camps. The survey instruments and questions used during the FGDs are given in Annex 2.Following these, a key informant interview was also conducted with a representative from the Department of Budget and Management (DBM) last 6 March 2013. Assessment Approach The four objectives originally set out for this economic assessment was approached as two simplified concerns: First, is the APEFZ/APECO economically beneficial? In answering this concern, it was also necessary to assess the economic potential of APEFZ/APECO and its catchment area (objective #1) and analyze the costs and benefits of the establishment and development of the APEFZ/APECO (objective #3). Second, is the “what” question that relates to the identification of the best way to ensure that the benefits will be realized and will continue. In answering the second concern, it was important to determine the interventions and activities required in order to maximize the potential (objective #2) and establish the area’s sustainable development framework (objective #4). It has to be pointed out that the “transformational recommendations” and the “feasible framework” recommended

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should necessarily adopt current government principles on sustainable development and inclusive growth as espoused in various policy documents. The NEDA project appraisal methodology was the basic framework for the rapid assessment of the economic potentials. The essential analyses conducted were as follows: (a) market; (b) technical; (c) economic; and (d) social and institutional. Given the time constraints and availability of data to undertake a complete study, it is very clear that the depth of the analysis greatly depended on published or official data/statistics/information provided to the NEDA team as well as on the statements of respondents in the interviews and group discussions conducted. It should be noted that no extensive organizational assessment was done on APECO, which is the GOCC that supervises the implementation and operation of APEFZ or the ecozone. Only specific findings and ideas where there are clear indications that the economic potential of APEFZ is directly affected by weaknesses or strengths of APECO as an organization were incorporated in the analysis. a. Market Analysis The market analysis included the potential demand for APEFZ’s outputs (products/services) and the availability and accessibility of raw materials supply to support the proposed agri-aqua activities to be located in the ecozone. More specifically, the following variables were examined: potential areas for market expansion; the ecozone’s resources; and government regulations affecting sales or prices of outputs. b. Technical Analysis The suitability of APECO’s projects/activities to address its desired goals/mandate under the law was evaluated. Specifically, the technical analysis included an examination of the ecozone projects being proposed and their appropriateness to local conditions; the practicality of the implementation schedule especially in relation to the likelihood of achieving output targets; and, the possible risks in project implementation and operation. c. Economic Analysis Economic analysis is a key determinant in the decision to extend additional government financial assistance to APEFZ. Only a project with positive net present value (NPV) or incremental net economic benefits and costs ideally qualifies for government assistance. In the case of APECO, the main point of consideration for government decision-makers is whether or not its projected net economic benefit justifies its continuing operations. In the case of APECO, its immediate catchment area stands to benefit or be adversely affected from the physical transformation primarily of its resources (land, forest and coastal/marine), its move to a more commercialized environment, and greater outside influence of social/cultural milieu of the ecozone. These would need to be measured and considered accordingly in the overall scheme of the analysis. Specifically, the economic analysis will need to establish the following:     The sources of the economic costs and benefits of the ecozone and its projects/activities; The relative certainty and risks to the occurrence of these economic costs and benefits; The extent to which these costs and benefits will affect the overall viability of APFEZ/APECO. Directional impacts (+/-) were used in cases where no quantification of values was available; and Indication of whether APECO and its projects/activities were economically viable.

d. Social and Institutional Analysis The framework used for the social and institutional analysis is shown in Figure 1; the key areas and variables considered in the analysis are given in Table 3.

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Framework for an Inclusive Sustainable Development of APEFZ/APECO The proposed “Framework for Sustainable Development of APECO” would have the following elements: Figure1. Framework of Social and Institutional Analysis

Table 3. Key Areas and Variables Considered in the Social and Institutional Analysis Area of Analysis Institutional Analysis Key Variables Implications of APECO as autonomous quasi-political jurisdiction on local governance Provincial * Local Taxation Municipal * Social Services Barangay * Security Current Management and Administration Practices of APECO APECO Institutional Arrangements (Policies, Programs and Service) with the Community, APECO-LGU economic and township cooperation, Role of the private sector in APECO, Process of engaging the community in economic development Determine the existing policy environment for APECO (national, and local levels) and recommend policy instruments for APECO under varying scenarios (business as usual, and transformational/aggressive) Displacement effect of APECO (dislocated families) and rehabilitation/relocation plans, if any, for affected groups Labour force profile (migrants and residents) Rights of the indigenous peoples Roles of the Community in local economic development through the APECO Determine if the establishment of APECO contributed to the local economic development functioning of the LGU and the barangays as per Section 15-22 of the LGC of 1991 Perceived issues and challenges in the development of APECO in the community and provide recommendations to address the concerns

i. ii. iii. iv. v. vi.

Social Analysis

vii.

viii. ix. x. xi. xii.

xiii.

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The overarching principle is sustainable development contextualized in the country’s national development plans. To the extent applicable, strategies for “inclusive growth” will be considered, as well as strategies on climate change management and disaster and risk reduction.

Transformational interventions that will be recommended would have to take into consideration how best APECO would get its plans implemented and operational to reap the benefits that would achieve its objectives of effecting development in the ecozone and its surrounding areas. 3. Study Findings and Analysis This section describes the findings of the study based on the desk analysis of available documents provided by APECO, DBM, NEDA, those obtained from online sources (e.g., COA) as well as observations and insights from the field visit and survey/stakeholders’ consultation between 19 th to 22nd of February 2013 in Baler and Casiguran, Aurora. 3.1 Profile of APECO

APECO, APEFZ and their Vision and Goal APECO is considered a national intervention that seeks to primarily address a local socio-economic issue through the introduction of a stimulus that will attract investments into the province. The following was cited as economic rationale for APEFZ/APECO and this is oft-repeated in many documents in support of the ecozone’s on-going development:
Box 1. Economic rationale for the establishment of APEFZ/APECO According to Senator Angara in several occasions, the establishment of APECO is the government’s response to the perennial problem of poverty in the province of Aurora. In the late 90s and early 2000, the province of Aurora was the top 20 poorest provinces in the whole Philippines. The lack of basic infrastructure and transport system were perceived to be the main causes why there are no, if not few, investments that are being brought in the province. For this reason, SEZA of 1995 included Aurora in the list of Provinces where an ecozone must be established. Said law specifically mentioned the towns of Baler, Dinalungan and Casiguran as potential sites to build an economic zone and freeport.

The common thread that underlies the arguments in favor of the ecozone is its potential to bring in the much-needed economic progress in an area that has been neglected despite its supposed rich natural endowments. The ecozone is seen as an anchor for support infrastructures and a platform for value adding activities that will generate employment and spur markets not just in the catchment area of Dilasag-Casiguran-Dinalungan (DI-CA-DI), in Aurora, but also in the nearby provinces. This is the primary economic argument in favor of the ecozone, especially with the new plan of developing an agri-aqua-ecotourism zone, a much more environment friendly effort than the Freeport which was in the original stipulation of the law that created APECO. APEFZ is expected to be a major transhipment hub going to the Pacific region. It aims to boost social, economic and industrial developments in Aurora and nearby provinces by generating jobs for the people, improving the quality of their living conditions, advocating an eco-friendly approach to industrialization, and enhancing the productivity potential of the community. Aurora is considered and marketed as a favorable investment location for the ecozone on the northeastern quadrangle of Luzon bounded by the provinces of Isabela, Quirino and Nueva Ecija for the following reasons:

Inclusion of Aurora in Central Luzon opens up the possibility of a China Sea-Pacific land connection

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       

Possible expansion of the proposed Central Luzon’s “W” Growth Corridor Strategy Aurora has one of the country’s biggest forest cover estimated at 70% of its total land area The province was identified as one of the country’s 170 priority sites for biodiversity conservation Aurora has a large inventory of natural, cultural and historical attractions ideal for tourism development Aurora boasts of a long coastline along the Pacific Ocean, spanning 410 kilometers The province has rich marine resources Aurora is a viable source of agri-based products The province has a rich human resource base

The vision of APEFZ in Aurora is to be the first ecozone to serve as the Philippines’ gateway to the Pacific; a popular tourist destination; a model agro-marine center with a fish port, processing, canning provisions and reefer facilities and mariculture high-value products; and an excellent R&D center on agro-marine technology with the establishment and strengthening of the Aurora State College of Technology (ASCOT). Included as a mission is the transformation of the area into a green community particularly of its architecture, and its sustainable development (Source: APEFZ brochure). Geographic Scope The APEFZ is a 12,923-hectare land that covers Barangays Dibet, Esteves, San Ildefonso, Cozo, and Culatin in the Municipality of Casiguran, Province of Aurora. Casiguran, which is located in the northern part of Aurora, 353 kms from Manila and 121 kms (i.e., about 3-4 hours drive) from the capital town of Baler possesses a combination of geophysical attributes that made it the ideal location for an agri-aqua ecotourism ecozone, including its proximity and access to Casiguran Bay, a rich resource for fishery and a natural harbor, and its connectivity with other municipalities that are expected to also benefit largely from new economic activities (i.e., in the northeast, Dilasag municipality and on the southwest, Dinalungan municipality). All three municipalities (DI-CA-DI) are recognized by the APECO as the main areas of influence of the zone and as such are represented in a rotating basis (annual) in the APECO Board. Figure 2 is a map showing the relative location of Casiguran and the APECO. Figure 2 – APEFZ and Catchment Area

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Table 4. Comparative Profiles of Aurora, Casiguran, APECO Aurora Casiguran APEFZ/APECO Province Municipality Land Resources 323,954 has, of which: 71,543 has (715.43 sqm) 12,923 has  59% forestlands  85% classified Parcel 1 – 496 has Parcel 2 – 12,427 has  41% A&D lands  15% A&D Marine Majority of the 332 km About 110 km Resources Casiguran coastline Population 201,333 (2010) 23, 865 (2010) About 4.4% average Note: The catchment area growth, 1996-99; 18% alone comprises 25% urban; 82% rural (2007) i.e.,50.5 thousand are in Brgy.Cozo – 1,618 Casiguran, Dilasag, and Brgy.Culat - 630 Dinalungan: Brgy.Dibet – 971 Brgy.Esteves- 1,786 Dilasag – 15,683 Brgy. San Ildefonso – Dinalungan – 10,988 1,100 Age structure: 20 y/o and Below – 30% 21 to 64 y/o – 65% 65 y/o & above – 6% Annual HH Income /Expenditures Poverty Incidence Production PhP 175, 235 PhP 149,806 (From NSO 2009 FIES http://www.census.gov.ph) 24.2% (2009) (Note: national is 26.5%) Actual - Ranks 1st in coconut in C. Luzon; Others – coffee, citrus, banana; fishery; tourism potential: exotic fruits

Actual: coconut, palay, fishery Potential: coconut, root crops, peanuts, fruits 3rd class municipality; with 24 barangays

Classification

Potential: Agriculture – raw material and processing; Mariculture; Services; ecotourism Ecozone & GOCC created by law

APECO Plans A significant part of the financial, technical, environmental, legal, and even social issues levelled against APEFZ/APECO by opposing groups, whether these are real or perceived, would have been easily clarified if there were basis for verifying the current and prospective activities and documents on past accomplishments, such as a master plan and other corporate operating plans and reports. Assuming that APECO had effectively performed the preparatory planning activities as far back as 2008 when it first received its government budget to commence operations, it would then be fair to assume that these plans had been completed and had since provided the bases for the authority’s actions and decisions. APECO Master Plan: Accounts from both APECO officers in the Municipality of Casiguran and staff of the Provincial LGU in Baler indicate that Palafox Associates was hired by APECO to undertake the master planning early in 2008. Currently, however, there is a legal case between the

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parties 2 . A second master planner, Design Sciences, Inc., produced in 2011 a 5-volume master planning document based on an agro-industrial/manufacturing track for APEFZ3. Apparently, such plan was never used especially with the new direction of APECO towards establishing the zone as an agri-aqua-tourism-light industries hub. No new plans were mentioned being done; none of the previous plans have been updated. APECO management noted that they are currently basing their actions and decisions on conceptual plans, some of which were reflected in their recent submission to NEDA for the proposal to build a new international seaport. The list of DSI documents and conceptual plans/policy documents shared and reviewed is given in Annex 3. Comprehensive Land Use Plan (CLUP): APECO has formulated a conceptual land use map that is being used as basis for on-going and planned projects4. The land use map classified the APEFZ into two parcels. Parcel 1, consisting of 496 hectares, is proposed for various uses that include agriculture, aquaculture, mariculture, processing, and common facilities. The use of Parcel 2, which comprises the San Ildefonso Peninsula of 12,427 hectares, has yet to be determined in detail, but the general intent is to preserve the forestlands and allocate some manageable area for eco-tourism. The provincial LGU was uncertain as to whether APECO has already synchronized its land use plan with the land use plan of its catchment municipalities – Casiguran, Dilasag, and Dinalungan. Same ambiguity was expressed in terms of the synchronization of APECO land use plan with the provincial CLUP. The expansion of the land resources of APEFZ to include the San Ildefonso Peninsula (Parcel 2) is the heart of anti-APECO sentiments found in documented position papers, and which is an essential provision of RA 10083. As it stands, APEFZ now owns 12,923 hectares of land, a significant growth from its original 496 hectares. Up to the time of the study, there is no current effort by APECO to draw a more detailed land use plan even on the basis of their conceptual plan.
Box 2. Concerns on the acquisition of the San Ildefonso Peninsula Casiguran Mayor Bitong questions the reasons, including the timeliness of APECO’s area expansion to San Ildefonso Peninsula. He says, “It (i.e., APECO) had not even been proven the viability of developing the first parcel of 496 hectares, how could it pro ve the viability of the area expansion.” APECO’s right over the San Ildefonso Peninsula was completed last year when it finally paid off the logging rights of the Peninsula’s concessionaire, the Industries Development Corp (IDC). A related issue raised refers to “why APECO needed to acquire the logging rights at the amount of PhP120 Million, when government could have just exercised its option to pre-terminate the contract with the logging concessionaire.” APECO Administrator explained that it was not id eal for government to renege on its contract with the private developer.

Business Plan: APECO’s corporate planning department was said to be preparing a business plan. Copies of the business plan were provided. The insights and analysis of the plan is discussed in the technical analysis section.

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Informants from the Provincial Capitol recount that the Palafox planners initially designed the international port and airport in a single location in the ecozone area. When the approval of the Philippine Ports Authority and Civil Aviation Authority Board could not be obtained for these projects, APECO asked the Palafox group to revise the design. The latter wanted to charge additional fees beyond what was contracted, but APECO did not concur. Palafox refused to continue the masterplanning activity, which is now the reason for the pending case filed with the Professional Regulatory Commission by APECO against the Palafox group.
3

The 5-volume collection of master plan documents prepared by Design Science Inc. in 2011 was provided at a later date, March 6, 2013.
4

The conceptual plan was presented in the form of a power point document by APECO officers.

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Power Situation Availability of good quality power is imperative in ensuring high productivity in economic zones, where locators are reliant on mechanized/automated facilities for their processing needs. This stable source of power supply is definitely absent in the proposed APEFZ. The municipality of Casiguran is off-grid and is currently being served by National Power Corporation-SPUG. A 700 KW capacity generator installed in Barangay Lual serves as the primary power source for not only Casiguran but also the municipalities of Dilasag and Dinalungan. The Aurora Electric Cooperative (AURELCO) manages and maintains the power supply system and pays the NAPOCOR for power provided. AURELCO is currently serving over 2,000 consumers. Available online sources indicate that in 2002 power consumption was 88,461 KWH, with an average power consumption of 38KWH per consumer paying an average of PhP 6.19 per KWH used. Quality-wise, the supply is limited to 15 hours, from 10:00 in the morning to 12:00 midnight. During typhoons, power outages can last as long as several weeks due to repair and/or fuel supply shortage and delivery problems, and, could only be restored after several weeks of repair works. The lack of diesel fuel, due to its delayed delivery, also affects the operation of the generator power plant.
Box 3. Frequent Power Outages Even in Baler, Quezon At the time the Study Team was in Baler, during the meeting with LGU officials and early morning of the following day, two outages were experienced: 19 Feb (2-5pm) and 21 Feb (5-9am). Such power outages are frequent in Aurora, according to a DILG officer. The power in Aurora is distributed by Aurelco, with the supply mainly coming from NPC and Nueva Ecija. Per the same DILG officer, there have been regular power outages since January because of improvement works being done in the distribution network, and usually no announcements are made by Aurelco on the schedule of power interruptions.

APECO plans to supplement this source by developing power facilities inside the eco-zone, mainly renewable energy – solar, hopefully to be developed by a locator. There seems to be plans for alternative energy sources. Insights on these plans are included in the technical analysis section. Location Choice for APECO In theory, investors consider distance in their location choice. Where location factor is considered weak, it is made up for by other considerations that weigh heavily on the production cost, such as availability of raw materials and human resources, the fiscal and regulatory environment, and the quality of support services and infrastructures that affect transactional costs. In the case of APECO, physical and support infrastructure development has only just begun, with major facilities like its “tri modal” transport system either still on-going in construction or still in the pipeline. Whether the location of APECO is in fact a decisive factor, given its current state of development, can be vetted by the number of locators and, on a micro-level, the capacity to attract professional managers to “man” the zone. Two views came up on this aspect during the consultations as presented in the boxed statements (Box 4). Potential Economic Effects of APECO The most important documented reason for the creation of APEFZ is its potential to generate economic growth for the area. RA 9490, which created the Aurora Special Economic Zone in 2007, declared that this act is in pursuance of national goals “to provide jobs to the people, especially in the rural areas, increase their productivity and their individual and family incomes, and thereby improve the level and quality of their living conditions.” Government’s commitment is reaffirmed in RA 10083, stating that “the national government shall actively cooperate and coordinate with AP ECO and the LGUs to ensure its speedy development as the vital gateway to the Pacific.”

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From a macroeconomic perspective, it is imperative and ideal that government creates the stimulus for development especially in areas thought to be previously marginalized, like Casiguran and its surrounding municipalities. This was certainly the perception of some provincial LGU officers interviewed, who noted that before APEFZ came along, the area only merited national government attention in times of calamities. Until APEFZ came along, no major road improvements were seen in the province, especially for the northern area, where the ecozone is located.
Box 4. Two contrasting views on the locational advantage of APEFZ The pro-view was echoed by both APECO and the provincial LGU, who believe that the location of the ecozone is strategic. The APECO officers noted that because it is located in an area that is adjacent to larger provinces – Isabela, Quirino, and Nueva Ecija, which can serve as market for inputs and products and it is facing the Pacific, which is ideal for external trade flows, then APEFZ possesses enough advantage over other locations. At the same time, Provincial Governor Bellaflor A. Castillo, who is a member of the APECO Board and chair of the Central Luzon Growth Corridor Foundation, Inc., which promotes APEFZ as an investment haven in the region, is optimistic that Casiguran possesses everything needed by potential investors, given its available natural resources, employable citizens, and support of the provincial LGU in implementing skills enhancement activities for the province. She (the Governor) is confident that APECO provides an ideal enabling environment for inflow of value-adding technology and capital that will optimize the use of the province’s resources. The contrarian view was voiced out by Casiguran Mayor Reynaldo Bitong. Mayor Bitong noted that investors will not locate in APECO because it is too far from Metro Manila and there are other options that are closer and well-developed than APEFZ like Port Irene (i.e., the main port of Cagayan Special Economic Zone and Freeport). According to the mayor, when he visited Port Irene to compare the performance of APECO, he found out that there are over 50 medium sized enterprises with about 6,000 workers employed in the zone and he wonders whether APECO would be able to attract as much locators.

Provincial Governor Bellaflor Angara-Castillo expressed full support to APECO for the development of APEFZ, citing that the ecozone represents a chance for the municipality and the province to “go up the economic ladder” and that it is a “window of opportunity for further growth in agriculture and ecotourism.” While recognizing that every movement for progress will be met with opposition, she is confident that as long as APECO makes its plans known to the people in a language that is understandable at their level, especially in explaining that they will benefit through employment, then they are headed in the right direction. The provincial government is prepared to support APECO’s master plan and is hopeful that APECO will not only provide employment but will also consider enterprise development and ecotourism promotion in its prospective projects. Local stakeholders noted that for so long government had neglected the municipality. Aurora, according to them, has one of the best forest covers among the provinces but because of lack of livelihood in the lowlands, the risk has become higher that these forests will be destroyed. They believe that the employment generation effect of the ecozone will also serve to preserve the forests. APECO’s plan to promote forest preservation in San Ildefonso is seen as positive action towards preserving and conserving its natural resource base. Huge differences emanate among municipal and barangay LGU officials and community-level stakeholders in their perspective of the economic impacts of APEFZ. There was a distinct disparity in the municipal and barangay viewpoints. Mayor Bitong of Casiguran agrees that the ecozone and APECO represent progress but the process that was taken by government in establishing the zone was not done properly. He believes that the absence of due process by national government in the passage of the law, the weak role of the LGUs in the decision-making process related to APEFZ, and the ensuing opposition by the indigenous peoples/settlers of the area who are now affected by the developments tend to pull back any progress made and being envisioned. He took deference to the fact that even in his capacity as a member of the board, he was never fully involved in many APECO decisions, including the formulation of RA 10083, the shift to a shared and rotational board membership among municipal mayors of Dinalungan and Dilasag, and especially the decision to

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purchase the rights to San Ildefonso Peninsula. To date, Mayor Bitong has not assumed/accepted his second term as APECO board member because of what he believes are his fundamental differences in principles with the law, the process, and the management of APECO. The barangay officials view the APECO activities in their jurisdictions in a more positive light than their mayor. Disengaging themselves from the political issues raised by their mayor, they instead agreed on the common sentiment that at their level what is more important is that people are actually able to see and experience some benefits no matter how small, few or slow. Compared to a preecozone way of life, they had not been able to experience any developments like road construction, skills trainings and job offers. The barangay chairwomen of Esteves and Cozo particularly noted that some locals are now benefitting from employment in APECO’s seaweed and bamboo pilot projects. The consultations with the indigenous peoples (Dumagats) and the Casiguranens resulted in two polar viewpoints: (i) the pro-APECO folks who noted that they are not precluded from continuing what they used to do before as subsistence farmers, fishermen, or foragers, which implies the APECO based employment is either an option or an add-on; and (ii) the anti-APECO folks who explained that the presence of APECO will displace them from their current sources of income. The bottom line given by the Dumagats who spoke against APECO was that the presence of the ecozone is disadvantageous to them. The anti-group supported their position with detailed calculations on “income loss” as a result of the ecozone’s takeover of coastal areas and occupancy of upland and lowland areas devoted to agriculture. Income data presented by a representative fisherfolk and upland farmer were compared against the options given by APECO: for residents to consider fish cage operations and employment in on-going projects. In defense of the ecozone, the pro group dismissed the numerical calculations as overly assuming and not reflective of the real situation especially for fishermen. Emphasis was made on the fact that APECO has not barred any fisherfolk from conducting their livelihood even if they are being given the opportunity to be employed in the on-going APECO projects.

3.2 3.2.1

Analysis of the economic potentials of APEFZ/APECO and its catchment area Market Analysis

The APEFZ Market Potentials. Envisioned as a “center for optimized development in industrial, commercial trading, agro-industrial, tourist, banking, outsourcing, financial and investment industries,” the APEFZ/APECO intends to attract both international and local investors/locators that have interests in the Pacific region and serving the local market, closest of which is Central Luzon. APECO’s marketing kit describes the ecozone as “the first green economic zone located along the Pacific Northeast seaboard.” APECO is capitalizing on its strategic location and its accessibility to countries located in and near the Pacific region, and is marketing the ecozone with a pitch that a trimodal transportation system will be developed to cover all mobility and transport requirements of locators by land (i.e., a road network linked to the national highway system), sea (a proposal for the development of an international calibre seaport; existence of RoRo facilities), and air (expansion of the existing 1.2 km airstrip to meet international standards). In addition, APECO is marketing the ecozone as a low-cost location, offering land and property at lower costs to entice companies that require easy and immediate start-up in their operations. The DI-CA-DI municipalities are expected to serve as immediate and direct market for raw materials and produce. Raw materials for the ecozone’s agri-aqua-mari activities can either be supplied by existing farmers/planters/growers, contracted by the locators to the barangays best suited for the crop, or can be grown directly by the locators in APECO’s designated parcels. As a market for human resources, it has been noted that skilled and trainable human resources are available and, given the availability of learning institutions including ASCOT, there appears to be a

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ready market for, at the very least, native-skilled (farmers and fishermen), unskilled, and semi-skilled labor. Higher level, including managerial, scientific, and technical types of workers will need to be supplemented with recruitments elsewhere. Agri-aqua, eco-tourism, and light industry technopark. In its current and future investment promotion program, APECO is focusing its efforts on developing and administering the ecozone as an agri-aqua technology park, ecotourism center, and light industries park that will generate employment and preserve the province’s flora and fauna. The ecozone possesses the necessary ingredients to attract strategic investors on these particular economic activities especially if these investors recognize their own early mover advantages. The availability of raw materials that can be grown or harnessed

within the zone and the incentive package provided to locators are deemed by APECO and the provincial government officials as significant location factors not found in other existing ecozones. The eventual proof of the existence and viability of APEFZ’s market will be the presence
of locators that will facilitate the realization of the ecozone’s intended goals – employment generation and improvement of economic conditions in the catchment area. It is too early to judge whether APECO is effectively pursuing its market development mandate well enough and there are reasons put forward why after five years since its start-up operation, the targeted locators seem to be coming in relatively slow. To date, the ecozone has so far registered three (3) enterprise locators, with a total initial investment of PhP49 Million (actual and planned) and employing 390 individuals. There are five more approved in principle, with an expected total investment of PhP 295 Million and is expected to employ up to 253 workers (Table 5). The target is to reach at least 16 locators for the agritech park by 2016 and 109 locators for the light industry park by 2021. Overall, assuming that both these registered and approved-in-principle enterprises fulfil their initial investment plans and employment commitments within 2013-2015, the APEFZ would be able to generate about PhP340 Million in investments and facilitate the employment of almost 650 workers by the time the ecozone officially marks its first year of commercial operations in 2016.

Table 5.APECO Locators, as of March 2013

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Table 5 (Continued). APECO Locators, as of March 2013

Source: APECO

Note that this is a strong assumption and requires close monitoring/feedback by APECO in the coming months and years. The study assumed that APECO has correctly evaluated the business prospects of their current and pipelined locators and that their signed locator agreements specifically provide the schedule within which the investments should be occurring. It also assumed that APECO would have put in place a locator selection policy that enjoins applicant assessment and business evaluation complete with a checklist of regulations to be complied with by applicant locators. To date, no information is available on actual production volumes/levels that occur in the ecozone. The three projects on the ground are on the piloting stage. The approved locators are just starting to set-up shop. Hence, detailed information on the production schedules of the locators was not available. Ecotourism. Ecotourism is already an on-going economic activity in Aurora Province, mainly based in Baler with spillover into the other municipalities, including Casiguran. The ecozone can serve as a platform for alternative ecotourism activities by enhancing promotion of the area and providing the necessary support facilities for already frequented places like Casapsapan, Dumagipo and Motyong Beaches and the Casiguran Sound. With its acquisition of the rights to San Ildefonso, APECO’s intent is to use the peninsula as reservation for ecotourism. In the corporate financial outlook of APECO for the next 20 years, however, there are no specific targets for ecotourism investments and revenue projections especially on the SIP. The only identified use is the 200 hectares for bamboo culture and propagation. The rest of the peninsula is to be preserved as forest stand to serve as natural protection and buffer for the developed areas of Parcel 1 and the aquaculture activities in Casiguran Bay The following areas have been identified as potential tourist destinations in the catchment area:  White sand beach (Casapsapan beach); Motyong beach, San Ildefonso, Casiguran Sound, Dumagipo beach;  Diving sites – Pandungan, Mabudo-Dinalungan, and Detangol-Dinalungan; surfing – Dalugan beach, San Ildefonso;  Bird watching – Amro watershed;  Mountain climbing and camping areas – Dilasag and Dinalungan area Also, groundbreaking of a 50-room, APECO hotel has been done. It is expected that the hotel will encourage tourism in the area and, hence, provide more job opportunities for the residents.

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APEFZ’s Goods and Services. APECO’s vision for its agri-technopark is to offer it as a site for businesses and locators intending to produce goods for the growing market in natural ingredients or agricultural products that are used in the food additives, cosmetics, and pharmaceutical industries. As such, APECO plans to offer sites for the propagation, culture and production of crops aqua/marine products that would be raw input to processing. Parcel 1 of 496 hectares is conceptually planned for the establishment of these processing plants and light industries to guide its offerings to locators. Other services to be provided by the ecozone are a hotel and administrative/operations support for locators, including provision of utilities. Government regulations affecting sales or price of outputs. The fiscal incentives received by locators result in market imperfections because these are essentially subsidies that may not necessarily translate to lower prices of goods and services produced in the ecozone by the locators. The objective of the incentives is to enable the locators to achieve reduced short-run average costs of production, which translate into profit margins that will enable them to make a head start on their operations, if not immediate recovery on their initial investments and facilitating their long-run sustainability. It is therefore implied that national government, by having passed the APEFZ/APECO law, is foregoing some part of its expected tax revenues during the prescribed period of the effectivity of the incentives. As to whether the foregone taxes and the future tax revenues are balanced, that remains to be seen. A future analysis would need to be made once there is sufficient detailed information on locator investments and operations. APECO’s strategy to offer “lower” prices on land leases/rentals during the “preparatory” or start up/cultivation stage of agri-tech locators have an effect on producers’ prices but will not necessarily lead to reduced market prices locally; it all depends on elasticity of demand or on how the producers “market” their produce. Forward contracting can also secure better prices for the locators, allowing them to capture as much gross margins. With tax holidays in place, this may not necessarily redound to the local economy. This needs further validation on whether the strategy effectively attracts initial investors or minimizes dropout of locators and can produce direct benefits to local markets. APEFZ locators are autonomous from the Philippine Economic Zone Authority (PEZA) system and are also exempted from energy regulations. This may lead to “improved” attractiveness of the ecozone to locators but may not necessarily lead to improved local economic returns. Again, the magnitude of this effect requires further validation. Conclusion: There is a well-defined market, in particular, a source of supply for inputs of production – agri-aqua raw materials and human resources (native-skilled and trainable) that will serve as a strong draw for locators. Coupled with the investment incentives and assuming that support infrastructures for market development are completed in a timely manner, the location factor may still be marketed as a strength rather than a weakness as currently perceived. The market, which encompasses the ecozone’s catchment area -- the DI-CA-DI municipalities; the secondary circle (i.e.,rest of Aurora province), and the spillover area (nearby provinces – Nueva Ecija, Nueva Vizcaya, Quezon, Quirino and Isabela) -- also double as a potential immediate market for outputs that will be produced in the eco-zone for domestic consumption. Solidifying APEFZ’s market implies attracting larger players that will bring with them the desired value adding technology and greater employment opportunities, and ensuring long-term locators, relies heavily on timely completion of support infrastructure. 3.2.2 Technical Analysis

Land and Marine Resources and their Planned Uses. The ecozone’s total area coverage of12,923 hectares is divided is follows: Phase 1 – 496 hectares, located in the inland barangays; and Phase 2 – 12, 427 hectares located in the San Ildefonso Peninsula. Per its conceptual land use map, the proposed uses of the land resources are as follows:

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Phase 1 (refer to Figure 3 for conceptual location):  Agro and aqua processing facilities (98 has)  Nature park (71 has)  Light industrial (68 has)  Business district (34 has)  Tourism (27 has)  Airport (24 has)  NHA housing (24 has)  Corporate campus (19 has)  Aurora State College of Technology (ASCOT) (108 has, originally designated as school reservation)  Unspecified uses (23 has) Phase 2: 12, 427 hectares for eco-tourism and forestry reservation. Also, 200 hectares for bamboo culture and propagation was allocated within the Phase 2 area. Figure 3 - APECO Conceptual Land Use Map

The challenge for APECO is to fully optimize the use of these land resources in a sustainable manner. The conceptual land use that is currently being used as basis for management decision needs validation. More importantly, and in response to issues being raised by stakeholders, APECO must justify its acquisition of the more than 12,000 hectares of San Ildefonso Peninsula. The amount used to purchase the “rights” to the peninsula, i.e., PhP120 Million, now constitutes part of APECO’s assets. APECO’s plan to use a portion of the area for bamboo culture and for ecotourism makes sense, provided the activities do not run counter to its philosophy of APEFZ as a green ecozone. From an economic standpoint, there is value in its existence as a natural protection to Parcel 1 territory and development, as well as an area kept as natural reserve. But further study and evaluation has to be done in terms of the most appropriate and efficient investment opportunity for the area that benefits the stakeholders and the society, which also then includes a review and evaluation of APECO’s acquisition of the concession rights.

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Infrastructure. Completing the support infrastructure for ensuring market development of APEFZ is critical – transportation and power are top on the list. The ecozone’s accessibility is anchored on a trimodal transportation system (i.e., land-sea-air). A well-functioning transport system will facilitate the development of the ecozone’s market. Of the three modes, the seaport is key in sustaining market growth because it will facilitate larger volumes and more efficient flow of products, services, and people into and out of the zone. Currently, however, there are existing facilities for RoRo operation. Given APEFZ’s aspiration of being the only or first green ecozone in the country, it is required that the “green” concept be carried out consistently in the way energy, whether as power or as fuel, will be developed and sourced by APECO and utilized by the locators and in APECO operations. Being a green ecozone inevitably requires a favorable bias towards renewable energy power sources and application of energy efficiency measures on all relevant aspects of the ecozone’s operations. As for power source, an energy study done by the DOE in 2009 and a further plan developed by DSI in 2011 have shown that the zone can benefit from tapping renewable energy sources and eventually connection to the grid. APECO’s current plan to install its own 1MW solar power plant needs revalidation. Solar is not necessarily the cheapest RE source of electricity. Local hydropower and biomass-based power production need to be evaluated as options. Land-based/Road network. Aurora Province’s road network of 1,278.7 kms is 75% gravel surfaced. The part from Baler to Casiguran, which is 121 kms long, is currently being paved and rehabilitated at a cost of around PhP2.3 Billion by DPWH as part of the government’s national road network development effort. Of the 121 kms road to be paved and rehabilitated, only about 10 kms (noncontinuous) remain unpaved between Dinalunganan and Casiguran plus some bridges that are still being repaired or constructed. Even with the rehabilitation work still continuing, reduced travel time has been experienced from what used to be 6-7 hours (according to the locals) to now 3-4 hours depending on weather conditions. Air-based transport. There is an existing 1.2 km airstrip, located just outside the APECO corporate campus in Casiguran that is managed by CAAP. The strip can accommodate 6-15 seater small aircrafts. APECO management is planning to seek an agreement with CAAP for the latter to take over management of the airstrip and extend the airstrip to 2.4 kms in order to comply with international standards and accommodate 737 aircrafts; and, to build a suitable terminal through a BOT scheme. The CAAP has separately allocated a budget of PhP92M to extend the airstrip to 1.5kms (Note: CAAP’s budget implies a cost of about P31M/0.1km. With APECO’s plan, the potential cost of extending to 2.4 kms involves a cost equivalent of PhP372M). There are four other feeder airports in the province – three are private airstrips and the fourth, an airfield now called Dr. J.C. Angara Airport, which has a concrete airstrip that is 875 x 30 meters in length. This airport is located in San Luis municipality and is being used by SEAir for commercial flights from and to Manila twice a week. This airport does not appear to present a significant competition for APECO’s prospective plan to commercially operate the Casiguran Airstrip, unless national government decides to also develop it. (http://www.aurora.ph/airplane-flights-baler.html) Sea-based transport. Casiguran has an existing roll-on roll-off wharf in Dibacong, which was completed around 2008, as part of the nautical highway development and on request of the LGU. It was hoped that the facility would attract investments in the area. The port is currently being used as an anchorage for navy guardships. APECO plans to build an international sea port with loan funding from the Korea ExIm Bank. The F/S for a proposed Php1,957M Casiguran International New Port to be located in Banagas Point, about 3 kms away from APECO’s corporate campus, has been completed with a grant funding from the KEDCF and submitted to NEDA-ICC for approval. However, The NEDA-ICC, based on NEDARegion III Office’s evaluation, indicates the need to adjust the assumptions on incremental travel time and cargo volume which seem to be optimistic, and requested for the incorporation of cost escalations. Hence, the viability of the seaport and its proposed scale should be revisited to consider prospective cargo volume demand that may build-up in the later years of operation of the ecozone.

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Energy Situation. Electricity for Aurora Province has been supplied by the franchisee, AURELCO since 1982. Currently, AURELCO sources its power from the NPC’s main grid, the NPC-SPUG, and the Nueva Ecija Electric Cooperative II, and distributes it across Baler, San Luis, Maria Aurora, and Dipaculao via a 69-kv transmission line and a 5MVA substation in Brgy San Isidro of San Luis municipality. For the ecozone’s catchment area (i.e., Dilasag-Casiguran-Dinalungan), electricity is supplied by NPC-SPUG’s 2.1MW diesel power plant located in barangay Lual in Casiguran , and distributed through AURELCO’s 13.2 kV network. A DOE study of renewable energy (RE) sources in the province done in May 2009 projected the following in terms of demand for power:

The DOE study concluded that the estimated RE potential of Aurora Province may reach 409.4 MW, providing as much as 2,869 gigawatt-hours annually. This potential capacity, if fully developed, is significantly larger compared to APECO’s estimated power requirement of 15 MW per year. Details on the analysis of each RE resource shows that the following options may be tapped by APECO, subject to more thorough feasibility studies, as it seeks to ensure reliable power sources of the ecozone by the time it operates full scale in 2015:  For hydropower, potential capacity for the province is 6.8MW, with 5.9MW found in the catchment area. The top 5 with a total capacity of 5MW are confirmed by the DOE as follows: Table 6. Hydropower Sources Type Mini Mini Mini Mini Mini Mini Mini  Source/Capacity Casiguran: Calabgan River – 1 MW Casiguran: Dibet River – 0.5 MW Dilasag: Amro River -1.5 MW Dilasag: Pinamacan River – 1.2MW Dilasag: Kataguman River – 0.8MW Dilasag: Singep Falls – 0.4MW Dinalungan: Talaytay River – 0.5MW EstimatedDevelopme nt Cost (PhP) 150 Million 75 Million 225 Million 180 Million 120 Million 5 Million 75 Million

Source: DOE Study, 2009

 

For solar power, the 61-hectare Dilasag Ridge, which is close to the coastline and is only about 1.5 kms from the 3-phase AURELCO distribution line, was identified as having the best potential for grid connected solar farms. For a one-hectare land area, a 1,000 kWh capacity solar farm could be set up for an estimated project cost of US$7.2M per MW. For wind power, an estimated aggregate wind power capacity of 320MW from 46 potential sites was identified in a 1999 USDOE-NREL study. For biomass, capacity was estimated at 81.6MW using agri by-products of rice, corn and coconut, the province’s top produce. Biodiesel/ethanol production is also a possibility as same materials can become feedstocks and some of Aurora’s vast lands can be planted to jathropa and palm trees.

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In order for APECO to fully take advantage of the RE resources in the area, there are necessary prior steps to take. The DOE study is only a starting point for comparing the general options. For all cases, at the very least, a pre-feasibility study with detailed cost analysis, must be completed, and subsequently a comparative assessment of the viable options, conducted. What is required for decision-making of APECO is a level of detail that allows a comparison of the unit price per source, to reveal which resource is more efficient to develop first. Of the four that were studied – hydro, wind, solar, biomass/biofuels – wind power development requires the longer study period, i.e., at least a year of accurate measurements of wind speed, direction, and magnitude. The quickest to develop and commission, and, on average, the cheapest on a per unit basis, is mini-hydro. The area’s geophysical characteristics, the relative scalability of hydro systems, and well-developed technology of hydropower are facilitating factors. However, the demands for ensuring sustainability of hydro are numerous, viz: (i) the need for regular watershed management and dam inspections to prevent excessive siltation of the plants; (ii) managing the natural hazard posed by the Casiguran fault, located on the western side of San Ildefonso Peninsula, which is an earthquake generator. In the case of solar, special consideration needs to be given on price implications. Solar power technology is not cheap, and assuming that electricity demand is inelastic, it is fair to assume that locators will bear the larger burden of the marginally higher price. Biomass sourced power augurs well for the zone given the relative abundance of feedstock (agriwaste/by-products), which does not compete with the primary uses of products. However, the logistics behind transporting and stockpiling of the materials is a key consideration in the setup of physical structures. APECO’s plan is for the zone to become a hub for green energy technology. In the DSI RE study document, it is stated: The Terms of Reference (TOR) highlighted that APECO will be a premier source of “GREEN” power among the current economic zones as it will utilize wind energy and solar photovoltaic (PV) cells. Serious considerations are given to the possibility of a 10 MW wind farm as well as a 1 MW solar power plant within the Ecozone. Considering investment costs, options for power such as procurement of diesel generator sets, solar power, hydropower, biomass-based power production, including connection to the grid, in the long term, may need further study. 3.2.3 Economic Analysis

Direct Benefits The direct economic and social benefits of continuing APECO’s operations included only those that are expected to be derived from the ecozone activities (see Annex 3 on APECO Plan) and that could be quantified(considering the limited period of the study), such as: (a) direct income effects from employment generated by APECO locators and agri-aqua activities; (b) increased local spending by tourists with the potential of ecotourism; and (c) value-adding of agricultural products from the agri-aqua project ventures. Employment generation and increased income. About 312,200 people are expected to be employed in various activities of APECO, particularly in the light industries and agro-techno processing (35,000), agri-aqua production (268,000) and construction and operations of locator support facilities (10,200). It is expected that the labor shall primarily come from Casiguran but would definitely also attract those from other municipalities of Aurora. Incremental income was estimated based on the proposed wage rate of APECO (P300 per day) minus the reported daily wage rate of farmers and fisherfolks (P66 per day). Increased local spending by tourists. It is envisioned that the ecozone will be an eco-tourism destination. Increased local spending in Casiguran is expected from visitors for the eco-tourism

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activities (most likely including the spill over tourists from Baler) as well as for the agri-aqua projects. Assumption of tourist influx is based on the projections of APECO in relation to the rate of occupancy of the hotel. The amount equated to increased spending includes travel costs from Baler to Casiguran, prospective environmental fee5, and incidental expenses of tourists while in the area6. Value-adding of agri-aqua products. Production from the agri-aqua project ventures within the ecozone, such as fisheries, seaweeds and bamboo, are expected to be sold as raw materials to prospective agri-techno park locators. The value of the raw product plus the value-addition from processing was considered as incremental benefit of the ecozone. Other agricultural products that are abundant in the area such as coconut, maize, banana and rootcrops, to name a few, have great potential for agro-processing ventures and could very well attract agri-based investors. Benefits from the enhancement of these production activities could not be quantified because volume and value of production data were not available. The multiplier effects of job creation on consumption, trade and income gains, while not quantified in the analysis, do also translate to additional economic benefits not only in the catchment area of APECO but also in neighboring municipalities and provinces. The following are the other economic benefits of the ecozone that could not be quantified during the period of the study (Table 7): Table 7. Other economic benefits of APEFZ Impact on economic Extent of Impact potential & relative certainty of occurrence (+) Savings is now 4 hours less time to Strong travel from Baler to Casiguran (+) Affected families are provided a resettlement site with housing units and offered employment in APECO projects The existence value of San Ildefonso Peninsula may outweigh the opportunity and financial cost of purchasing the rights Increment in GDP of the municipality and Aurora Province as well as other provinces like Nueva Ecija, Isabela and others

Economic Externality

Time savings from improvement in road network Improved living conditions of resettled families Environmental – Preservation of San Ildefonso Spillover economic development

(+) Strong

(+) Strong beyond 2016

Improved educational opportunities/health status

(+) Strong beyond 2016

Improved road network. The presence of APECO has accelerated the construction/improvement of roads and bridges between Baler and Casiguran, effectively shortening the travel time from an average of 7 hours to about 3 hours. With improvements in the quality of the road system and the amount of time for travel, it can also be assumed that there will be reductions in road/commuting related accidents in the area, improved access of Casiguran residents to places of work, services, and trade in the capital municipality of Baler, and spurring of retail or service enterprises along the stretch of the

5 6

Assumed at Php15 per person, prevailing rates of DENR-PAWB operated eco-parks. Assumed at Php 150/person for meals and Php 400/person transportation expense

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network. On the negative side, health impacts that have been documented in relation to road construction and expansion are accidents and pollution - air and noise. Option/Existence Value. The preservation of the timber stand, flora, and fauna in San Ildefonso Peninsula has enormous value. There are numerous benefits, such as the CO2 sequestration/oxygen production effect, and investments avoided by APECO in installing DRR-related facilities due to the natural protection offered by the peninsula against natural disaster risks. Other benefits that are significant from a sustainable development perspective are the preservation of biodiversity and availability of genetic stocks for research. Improved living conditions for affected settlers. Affected families are provided a resettlement site with housing units and offered employment in APECO projects Improved educational opportunities/health status. As the demand for workers increase in coming years, so will the demand for education/training from local educational institutions. This down-line improvement in productive employment after schooling may induce educational institutions to proactively enhance the level and quality of education being offered to students. Capacity building for communities. APECO is providing trainings/seminars for Dumagats, including women of Brgy. Cozo and Esteves, in coordination with the Provincial Government and Bureau of Fisheries and Aquatic Resources (BFAR), on enterprises that are being promoted in the zone, like bamboo and seaweeds. Spillover economic improvement. Contribution to improvement in GDP and/or GRDP of the municipality and Aurora Province as well as other provinces like Nueva Ecija, Isabela and others. Direct Costs The direct costs of APECO consist of the minimum additional investments needed to enable the ecozone to continue operating and to promote the area as an agri-aqua and ecotourism attraction. Critical of these investments are the provision of more stable source of power supply, provision of facilities for proper solid waste management and improved water supply and drainage, and minimal improvement of the air transport facility. Assumptions for these economic costs are based on the following expected requirements of the ecozone and its proposed locators at full capacity: maximum waste disposal of 5-10 MT/day, annual electric power demand of 15 MW, and total projected water demand of 24,665 cu.m./day. The minimum additional investment is also included to make the existing airport much safer and more easily accessible to small aircrafts. While the establishment of a new seaport was proposed, this was not considered in the analysis but could very well be considered in the later years of operation. Investments of locators in setting up the projects, and operation and maintenance (O&M) for the operation of APEFZ by APECO and support facilities were also identified as direct costs. The on-going construction of the Baler-Casiguran national road was not treated as direct cost as this road is part of the national effort to enhance and improve road network. While it may have been facilitated by the proposed development plan of APECO, it is a facility that would be built eventually to connect such areas and instigate their growth. Meanwhile, past public investments in APECO were treated as sunk costs7, whereby only the additional investments to generate expected benefits were deemed relevant.

7

Sunk costs are past investments that can no longer be recovered and may be difficult to utilize for purposes other than what these were intended for. Hence, such investmentsare not considered as cost in estimating the rates of return of the project.

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Economic Viability Based on above-mentioned quantified benefits and costs, the economic internal rate of return (EIRR) of APECO operations (2013-2032, 20 year period) at a social discount rate of 15 percent and under two (2) scenarios, are as follows: Table 8. Estimate Economic Rate of Return of APECO Operations Scenario 2: Scenario 1: Adjusted Scenario 3: APECO/APEFZ APECO/APEFZ Slow Build up Original Plan Plan 1. NPV PhP 3.4 billion PhP 1.6 billion PhP 496 million 2. EIRR 3. Scenario Profile 34% 100% investor target based on APECO’s plan; not adjusted for incremental benefits and employment duration  55% decrease in benefits  55% decrease in benefits and 5% increase in costs 27 % 100% investor target based on APECO’s plan, further adjusted to reflect incremental benefits and employment duration  Greater than 60% decrease in benefits and 35% increase in costs 20% Scenario 2 but 100% locator occupancy is established on a much slower phase   5% decrease in benefits and 10% increase in costs; 20% increase in costs

4. Viability threshold

Note: Minimum additional investments include those for power, water supply and sewerage, solid waste management and airport. Phasing of which are dependent on APECO’s plan of establishment of the locators. Scenario 1 reflects APECO’s development plan to make the ecozone fully commercialized by 2022: 100% of its agri-aqua projects established and in operation by 2016 and its light industries by 2021 (see Annex 4a). Further, it assumes 100% incremental benefits from income and 240 days employment in fisheries and seaweeds production activities. Scenario 2 builds on the original APECO plan, but was adjusted to consider the incremental benefits to be derived from increased income from employment in APECO, as well as the seasonal production and processing of fisheries and seaweeds products. Phasing of locators is established as in Scenario 1 (see Annex 5a). Scenario 3 assumes a slow build-up of locators. It projects slow response to promotional/marketing strategy such that 100% of the targeted number of agri-aqua locators gets established and operational in 2020 while those of the light industries by 2025 (see Annex 6a). The provision of the basic amenities and facilities is delayed depending on the establishment schedule of locators. Risks However, it is important to cite certain risks that could undermine the economic viability of APECO unless addressed effectively. These risks include: (a) possible diminution of biodiversity; (b) protracted resolution of conflicts and opposition to APECO; (c) delayed or non-release of funds by government to APECO; and (d) the absence of a masterplan and other operational plans for the development of the ecozone. The last two items have possibly hindered APECO to operate as a corporation, particularly in hiring the appropriate professional/technical staff to provide clear and firm guidance in the implementation of development activities and at the same time come up with effective promotion and marketing strategies to attract both locators and tourists.

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3.2.4

Social and Institutional Analysis

Stakeholders’ Perceptions The stakeholders’ social concerns have been consistent through the years. The results of the FGD conducted in 2011 for the development of the APECO Master plan and the results of the FGD conducted for this study revealed many similar findings in relation to the social and institutional issues of APECO and APFEZ (See Table 9). The social issues, which have been raised by the stakeholders, are summarized as follows: a. The stakeholders feel that there was no consultation in the passing of the APECO law and its succeeding amendments and the exclusion in the current implementation of development plans. b. The understanding on the roles of the stakeholders in an economic zone is a major confusion among stakeholders. Table 9. Summary of Results on FGD and KI (2011 Consultation on Masterplan Development and 2013 APECO Assessment)
Awareness on the APECO Programs /Policies/ Activities 2011 No clear idea what the APECO project plans. 2013 No clear idea what the APECO project plans. There is no prior consultation before the adoption of the law Perceived Issues and Concerns 2011 Perceived loss of livelihood once APECO project is implemented The management of coastal areas might be taken away from the LGU 2013 No clear cut benefits from the APECO operations Perceived Benefits 2011 Employment opportunities for community 2013 Employmen t opportunitie s

Stakeholders

LGU Casiguran (Municipal and Barangay Officials)

APECO is not bad but the issues against it should be answered

No clear delineation of responsibility between APECO and the LGU

Employment opportunities

Employmen t opportunitie s

LGU Aurora (Provincial Governor and Department Heads)

The APECO is an opportunity for growth in the province and the region

The opposition are mainly not from Casiguran town

Provide employment opportunitie s and for Aurora to be known as an investment and tourism destination

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Stakeholders

Awareness on the APECO Programs /Policies/ Activities 2011 APECO is supposed to be set up for the benefit of the people but there is need for improvement as the area is a God forsaken place 2013 The corporate developmen t plans of APECO are not known to all staff but only to the concerned office and individual

Perceived Issues and Concerns 2011 APECO as an ecozone has the right to expropriate land but did not do it 2013 The pace of development has been in the start-up phase

Perceived Benefits 2011 Employment for the people of Casiguran 2013 New developmen t directions for APECO specifically developing it as an agriaqua techno park

APECO Officials

APECO will build housing for the affected families and for livelihood

APECO has been reaching out to the community through the creation of a Community Relations Office

There are political issues surrounding APECO operations

No written documents on new directions

Allocated sites based on the land use plan.

Community (IPs, Residents, Community Leader)

Tribal Leaders were informed of APECO project

Complaints on prior consultation about the project

Do not believe that investors will be coming to Aurora due to its location

Those who opposed APECO project are not residents of the province Feasibility of APECO projects are questioned

Development projects on health, education and livelihood are implemented Better market for local products

The new directions for ecotourism, the Benham Rise exploration and agriaqua directions for APECO as a techno park The community are continuousl y consulted on APECO projects The construction of the BalerCasiguran road immensely benefitted the community

The community is now polarized between anti and pro APECO

Launching of the Bantay Gubat projects to ensure forest protection from illegal logging Better market for local products

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Stakeholders

Awareness on the APECO Programs /Policies/ Activities 2011 2013

Perceived Issues and Concerns 2011 2013

Perceived Benefits 2011 APECO projects included development of seaport and airport 2013

c. The perception that there will be displacement once APECO development plans are implemented. d. There is confusion among stakeholders on the development plans of APECO as an economic zone and the immediate translation to both livelihood and incomes of the individuals in the community. The non-consultation with stakeholders on the passing of the APECO law and its succeeding amendments, including their exclusion in the current implementation of development plans. a. The sentiment on the absence of a consultative process for both the law that created APECO and its development plans has been raised by the stakeholders consistently through the years. Among the anti-APECO group, the non-consultation has been their primary issue against the ecozone and which they have conveyed to the media and the community to widen their advocacy against APECO. The LGU of Casiguran shared the same concern by way of passing a local resolution validating the non-consultation of APECO. The anti-APECO group has further insisted on the non-consultation prior to the creation of the law as one of the basis for the abrogation of the law. b. The polarization has created divisiveness in the community. The divisiveness has generated anti- and pro-APECO groups even within households and relatives. In an effort to address the protracted opposition by some of the local stakeholders, APECO created a Community Relations Office. From a corporate point of view, the anti-APECO group has forced many of the APECO actions toward addressing more of the local situation rather than focus on investments generation, promotion of the ecozone to possible locators and capital development. Understanding the roles of the stakeholders in an economic zone. a. The role of each of the stakeholders in an economic zone is not clear. There are many diverging perceptions and miscommunications regarding this matter, both by the local governmentunits and the communities, which has created more confusion especially among the indigenous peoples. While the concept of establishing an economic zone is to provide jobs, capital development and ultimately local economic development, economic zones are also established for the purpose of bringing business together in a defined geographical area as an engine for economic growth. Currently, the local stakeholders’ understanding of establishing an economic zone is just to create and provide jobs. They cling to this understanding as this is also what has been communicated to them prior to the passage of the law creating APECO. b. The institutional roles of local stakeholders, especially the LGUs, are also another major social and institutional issue. Key among them is the relationship of APECO and the LGU Casiguran in managing coastal areas, the nature of cooperation that has to be developed and

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the sharing of benefits on revenues generated by APECO from the projects that use the natural wealth of the area. The other issue relates to the identification among the catchment municipalities, i.e. Di-Ca-Di, the alternate board member that would sit in the APECO Board. Corollary to the issue of board membership are claims that even in Casiguran, the promise of jobs as a result of the establishment of the economic zone has not materialized and yet the zone has expanded coverage. The perception that there will be displacement once APECO development plans are implemented.

a. There is fear among stakeholders of losing their current domicile. This is primordial among
the IPs in the community where APEFZ/APECO is geographically located. The affected communities believe that the development of the ecozone had encroached into their ancestral lands and led to the seizure of large tracts of prime agricultural lands. However, when validated with APECO officials, there is no project implemented yet in the San Ildefonso Peninsula that bars the IPs from the area.

b. The issue of domicile displacement has also led to the issue of claims of livelihood
displacements. There are two issues raised by the community, first is the IPs claim that it is their fellow IPs who are pro-APECO warning them of pursuing their livelihood in the forest. Second is on the question of APECO’s offer of livelihood opportunities where approaches ran counter to their traditional manner largely bordering on hunting. This is manifested by their opposition to fish cage farming as opposed to their “alay lakad” mode. Another manifestation is that the hunting of wild boars is preferred to new and innovative methods of seaweed farming.

c. The geographical location of APEFZ as an economic zone exists within an IP community.
This means that economic development has to be side by side with cultural development. The communities in the catchment areas can be considered, therefore, as communities in transition by virtue of the changes that need to be made as a result of the ecozone establishment. Confusion among stakeholders on the development plans of APECO as an economic Freeport zone and the translation of such plan into both livelihood and income opportunities of the individuals in the community. This has exacerbated the issue of the relation of APECO with the community as they expect that APECO should be able to generate jobs and livelihood for them. Except for 3 projects that are on pilot stage, APECO’s employment generation has been mostly from the construction of its facilities (i.e., buildings and roads). Employment generation from the proposed developmental projects is yet to be seen once locators invest and get started. Conclusion: The stakeholders view that in the short-term, the social costs identified outweigh the perceived benefits. The benefits identified are the jobs created through direct employment, the development of the airstrip, the feeder port and most important is the opening of the Baler-Casiguran road, which is recognized by both oppositors and pro-APECO stakeholders as beneficial to them and to the province in general. Institutional Analysis The institutional findings of the study can be summarized as follows: a. The institutional arrangements for local development are stand alone in the catchment areas. The LGUs in the catchment areas, ASCOT and other key local organizations in the province do not complement with the APECO development plans.

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b. The presence of APECO to boost local revenue generation through local taxation is not yet met. c. APECO officials have difficulty to clearly communicate their economic development vision d. Employment as key ingredient of an efficiently operating economic zone is not yet done e. Absence of adopted APECO master plan to guide managerial actions APECO’s stand-alone development efforts rather to coordinate with LGUs, Aurora State College of Technology (ASCOT) and other key local organizations in the province. a. The local institutions in the province of Aurora do not provide the enabling conditions for collaboration in such areas as research, technical assistance, community relations, and investments promotion. There has been no cooperation or partnership agreements reached between the ASCOT, PLGU, MLGU and APEFZ/APECO. There is stand-alone implementation of development projects in the catchment areas by the institutions. Each of the local agencies in the province pursues their development programs according to their institutional plans. There is no convergence framework among institutions to support the ecozone. Also, there is no coordinating institution that facilitates support to the ecozone. For example, provincial government of Aurora has designated a Local Economic Investments Promotions Office (LEIPO) but it has no clear promotions strategy or policy in relation to APECO and vice versa. While the provincial government’s initiative is commendable, there is a need to establish clear cooperation mechanisms to promote and support APECO activities. This is also true for the municipal government of Casiguran. Because of the long standing divisiveness resulting from initial institutional disagreements, the LGU Casiguran and APECO has not been able to forge partnerships to support and complement their respective development efforts and activities. b. The economic township cooperation as mandated in the Local Government Code of 1991 (LGC) (Section 15-22) is not being performed by the LGUs in the catchment areas. There is need to determine what role the LGUs will play in the economic zone operations, including the powers vested under LGC 1991 in the implementation of the economic zone within jurisdictions of the LGU. After five years, the LGU of Casiguran is still asking what their role in the economic zone is. Efforts to make this clear have not been made, based on the consultation with the respondents from the LGUs and barangay officials, despite the fact that the Department of Interior and Local Government (DILG) has prioritized LED. Institutional efforts have also not been made to address these issues except for the visit of Mayor Bitong in Port Irene. c. The capacities of local institutions to manage or facilitate investments given the establishment of the ecozone to say the least is very challenging. Local economic development in support to the ecozone should be pursued at three (3) levels: individual, organizational and system At the individual level, majority of the local officials interviewed do not view the LGUs as a corporate entity that has responsibility for managing business entities within their jurisdiction. They point to APECO to lead them the way in managing the ecozone. Second, the individuals in the community, after five years, still do not understand the purpose of an ecozone, thus building the required skills and competencies for them to be competitive is also not done. At the organizational level, the LGUs as mandated in the LGC of 1991 are both political and corporate entities. The responsibility of growing business including supporting the ecozone is within their jurisdictional corporate responsibilities. Thus creating enabling policies and programs to attract, promote and retain business are necessary. For APECO, the capacity to generate businesses to locate in the ecozone is the biggest challenge to fulfil its organizational mission. This is one of the roots of the social costs driving divisiveness in the community.

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At the system level, the institutional development stage where economic cooperation is desired is not yet met. There is no capacity yet for both individuals and organizations in the community to partner with the private sector. Both the individual and organizational capacity development needs should be met before an apt institutional development can be achieved. Thus in most cases, the LGUs and the community look at APECO for social welfare services to provide them jobs rather than them partnering with a private sector. Thus, as a corporate body, APECO needs to work with political organizations like the LGU to complement its efforts, but at the same time insulate itself from any political leanings. In a similar manner, the anti-APECO group need to strike a balance between the merit of the law, and providing the individual and organizational development to happen prior to advancing questions on accountabilities of APECO. In this manner, exacting the accountabilities of institutions can be made if capacities of both the individuals and communities are also built. Boosting of local revenue generation through local taxation. Local ordinances pertaining to revenue generation as a result of the establishment of the ecozone has not been formulated. The local institutions have yet to prepare pertinent local revenue codes after the expiry of the mandated tax holidays of three to eight years for locators in the ecozone. This is because the LGU has been mired into the political issues rather than that of the corporate context in the establishment of the zone. Further, up to the time of consultation for this assessment study, the LGUs main pre-occupation is the determination of their roles when an ecozone is established. The LGU has not initiated the institutional capacity development for making APECO work for local community development and for community development to be patterned after their biggest investment in the locale (i.e., APECO). Thus, the expectations of enterprises generating revenues as a result of locating in the ecozone that will benefit the LGU and the community in general have yet to materialize. This is also compounded by the fact that there are only few business locators after years of operations. Lack/failure of APECO officials to communicate economic development vision and failure to attract technical experts to look after the development of the ecozone.

a. The strategic directions and policies of the APEFZ/APECO are mostly known only to the
President and CEO. The management of APECO is leadership-centric where majority of the directions are known only to the President and CEO. Organizational policies which should be coming from the Board to provide directions to the APECO are lacking. This is evident when APECO staffs were asked about the strategic directions and priorities for ecozone development. Each of the interviewed staff knew only about the agri-aqua and eco-tourism strategy. But how to operationalize the vision is known only by the APECO division responsible for the task. Organizational communication both within APECO and external is also absent.

b. In the last five years, leadership in APECO has changed annually, which has placed APECO
always in start-up mode. Further, its program and directions are based solely on decisions of the CEO and its President. Likewise, the ecozone has no master plan, business plan and investments management plan to serve as guide in formulating its policies and in setting directions.

c. There is also inability by APECO to attract technical expertise to base in the corporate
campus in Casiguran. The APECO is having difficulty to attract the best and the brightest to backstop their leadership. Thus, only about 50 percent of its plantilla positions have been filled-up. This creates the vacuum for technical backstopping to the President and CEO.

d. The process of disseminating APECO vision to the community and other local stakeholders is
also problematic. There is no strategic social communication and information plan to guide

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the Community Relations Office of APECO. For example, during the consultation for this study, APECO gave only snacks to the participants who are pro-APECO. This led to the misunderstanding of the actions of APECO by the community as political and perpetrated by the sponsors of the law that created it. This has to be clarified through a clear and direct strategic social communications and mobilization plan. Employment that is locator-based as key ingredient of an efficiently operating economic zone is not yet done.

a. The basic purpose of establishing an economic zone is the increase of investments, usually
foreign, and the creation of jobs by the business locators in the zone. In both cases, APECO has not fulfilled this purpose after years of operations. Direct employment by APECO has been largely the strategy. This is because there is no systematic strategy to promote and attract investments in the APECO as an investment destination. Aside from APECO, the province through the Provincial Investments Promotions Office and the Central Luzon Economic Growth Corridor Foundation provides investments promotion without collaboration with APEFZ/APECO or with other concerned agencies. This makes efforts for job creation confusing to community stakeholders and investors in general. Currently, APECO’s strategy is to provide direct employment through construction works.

b. In the long-run, strategies to immediately create business locators-based employment are
imperative. As in any economic zone, the promise of jobs being created as a result of the economic zone establishment need to be prioritized by APECO beyond their own direct employment strategies.

c. The development of the local human resource base is also imperative in the short run but can
be demand-driven in the long-term. This means that the community needs to prepare for niche expertise, skills and competencies in agri-aqua and tourism to be competitive once business locators come in. This is where the direct employment strategies of APECO can serve the community well by bringing together local resources and knowledge in economic development allowing for LGUs and barangays to appreciate and cooperate in implementing economic development. This is contrary to the developed perception that APECO is a source of job and therefore a provider of welfare services. 4. Framework for the Sustainable Development of APEFZ and APECO’s Role Considering the analyses done on the market, technical, and economic aspects of the ecozone, it is clear that APEFZ has economic potential as a value adding production center that capitalizes on the natural endowments of the area. The current plan of management to develop APEFZ as an agri-aquaecotourism-light industries center is appropriate, but a key concern that needs further study and should be managed is APECO’s envisioned scale of operations. Analysis of the strategic environment supports the expectation that APEFZ will be able to yield economic benefits. On paper and as it is being promoted by APECO and the provincial LGU of Aurora, the ecozone is really envisioned and designed as a green ecozone. While originally thought to be developed as an agro-industrial and manufacturing ecozone, over the last five years and with each transition in APECO’s management, the thrusts have shifted and as it stands now, the intent for developing the ecozone’s Parcels 1 and 2 have become more aligned with the realistic context – that Aurora Province and the DI-CA-DI catchments areas are primarily agricultural in resource endowments and that, therefore, the window of opportunity lies in optimizing this natural advantage.

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Given that development of the ecozone is still in its construction stage, it is advisable that APECO proceeds with its developmental phase in a manner that will not adversely affect locator perceptions on the ecozone. For the potential benefits to be realized, there is an imperative to act immediately and simultaneously on many external and internal fronts, both at the operational and strategic levels. APECO now is besieged with planning, policy-related and operational issues that are distracting them from their mission and possibly weakening their economic position as the ecozone has to compete with other investment destinations within the country and in neighbouring ASEAN countries. Over the last five years since it started operating with government funding, the ecozone has had to go through a steep learning curve within an unstable management environment. With constant changes in leadership, it was inevitable that the strategic directions for developing the ecozone had also shifted. These issues, along with the challenges inherent in any “learning” organization and the dependency on the government’s limited budgetary infusion for its start-up operations and requirements for developmental infrastructure, have so far adversely affected the organization’s capacity to deliver. The foundational elements that are essential for APECO to effectively proceed with its mission are: (i) a comprehensive masterplan that spells out not only the strategic broad strokes but also the technical and operational details of developing the ecozone; (ii) a strategic business plan that sets the long-term corporate financial outlook and investment/financing program; and (iii) a comprehensive land use plan that is synchronized with the LGU (provincial and municipal) plans. The opportunity costs for the delay in preparing these plans in the developmental and early operational phases of the ecozone cannot be overlooked. The key transformational interventions to be done as regards the development of APEFZ/APECO are: a. Complete the APECO plans: APECO must immediately complete (refine and update) its plans and ensure their consistency with related LGU plans. For a program that has so far breached the PhP800 Million mark in terms of subsidies and capitalization received from government, APEFZ and APECO stands to benefit from a careful reassessment of its corporate outlook and investment program, with a view towards scale optimization. This should include the development of a business plan on key strategic directions of APECO, and a social marketing and communications plan. The development of business plans for the agri-aqua techno-park should be prioritized. Another strategic direction that APECO can likewise capitalize is the potentials of Benham Rise exploration. The declaration of Benham Rise as a part of Philippine waters potentially offers incentive for developing common service facilities in APECO that will support exploration activities. However, this should only form part of the future plans of APECO once development works in the Benham Rise have already commenced. The APEFZ/APECO officials have created a community relations program but there is no systematic information, education and communication (IEC) plan that will address the issues against APEFZ/APECO in a sustained manner. There is need to develop an external social marketing and communication plan. Further, internal to APECO there is also need for each of the staff and officials to be familiar with the directions and plans of APECO, especially the Community Relations Office. Likewise, the plans should be implemented and supported by a cadre of competent and qualified management and support staff. APECO should complete the hiring of officers and staff with the necessary qualifications and competence required to manage and promote the ecozone. Additionally, it should improve project implementation and management.

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b. Study the best use of San Ildefonso Peninsula: APECO’s acquisition of the user rights to San Ildefonso Peninsula has been completed but its planned use deserves a second look as it may eventually become a high-maintenance/low-productivity financial asset. If the area eventually becomes an anchor for an ecotourism program, alternative institutional arrangements should be explored that will allow other stakeholders like the LGU and national government agencies (DENR) to co-share in the management of this national asset. From a financial viewpoint, APECO should strategically position itself so that the peninsula does not simply get booked year-in/yearout as a non-performing financial asset. c. Systematic Marketing Promotion: Establishing the ecozone’s market is the immediate task at hand. The potential economic benefits of APEFZ beyond 2015 when all basic support facilities and transportation is completed will be significant enough to offset the costs. APECO must undertake a systematic marketing program that attracts desirable and viable locators and bears in mind that within Central Luzon the APEFZ is not the only special economic zone or investment destination. d. Development of an Inclusive Growth Strategy on Local Economic Development (LED). The development of an inclusive growth strategy where the community is provided opportunities to participate in economic development is desired. Given the tense situation that has protracted through the years, the patterns of growth should be fast-paced and collective with the community. This involves three perspectives–1) development of communities’ capacities in understanding LED; 2) fast-tracking by APECO on the long-term creation of community wealth through job generation by business locators; and,3) collective approach in establishing cooperation mechanisms of working together. First, the development of community capacities, including the LGU, to understand their roles in LED is needed. This will create the needed accountabilities for institutions and individuals. The current understanding of the community in locating all the responsibilities to APECO for their livelihood and business needs to be addressed. What are the needed capabilities of the communities to increase its chances of either being hired or doing business with business locators? This is where the strategy of the poor benefitting from the economic development and growth as a result of APECO’s operational performance of its mandates is expected to intervene. Corollary to community capacity building on LED, the determination of rights of IPs in ancestral domain needs to be settled. The impact of the CARP law on the relocation of the IPs and their profiling also needs to be made soon. This will also determine the legitimate IPs the APEFZ/APECO should be dealing with. Second is the fast-tracking of long-term creation of community wealth by APECO. The current employment through construction is not seen favourably by the residents as long- term benefits of having an economic zone in their geographical area. A strategy needs to be developed similar to the bamboo production and seaweed production projects that harness both indigenous skills and natural resource-based economic potentials. Third is the development of cooperation mechanisms that will harness a local collective approach in solving community problems in the APECO catchment areas. For example, research and technical assistance can be provided by both national agencies and the educational institution in the area, i.e., ASCOT. Initially, the local institutions themselves may need institutional capacity building for the macro and supra-national requirements of being an ecozone. This is because many of the requirements of APECO may not be within the current capacities of faculties of ASCOT. In addition, the agri-aqua technopark directions of an ecozone are new and, therefore, the national agencies’ mandate in technical assistance may need adjustments for it to be feasible.

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e. Developmentof a National Agency Cooperation and Convergence Plan for APECO. The call for action is towards collective action of NGAs to assist APECO and the community in key strategic economic areas such as investments management, community relations, local economic development (beyond livelihood as is currently being done), and agribusiness management, among others. This is imperative considering that majority of NGAs in the Philippines already have LED programs, projects and services (State of LED in the Philippines, 2010). The development of a collective approach towards a collaborative expertise and mandates of NGAs implementation will greatly catalyze operations of APECO and the LGUs for LED. For example, the Bureau of Socio Economic Services and Special Concerns of the National Commission on Indigenous Peoples (NCIP) have among its mandates the following: i. Formulates and implements a program of action which will bring agro-technological development among the ICCs/IPs, building upon existing customary practices and traditions; Facilitates the delivery of socio-economic services to the ICCs/IPs communities including but not limited to infrastructure, extension, credit, financing, marketing, and other social services; Coordinates and collaborates with other government agencies for the formulation of policies, plans and programs that will ensure the alleviation, if not eradication, of poverty among ICCs/IPs;

ii.

iii.

These functions of the Bureau of the NCIP are parallel to the Community Relations Office of APECO which can be tapped by both APECO and the LGUs in the catchment area. Further, the profiling of the IPs in the APECO catchment areas can be made part of the convergence approaches. In harnessing the convergence approach, two coordinative mechanisms can be tapped -- vertical and horizontal coordination. Under a vertical coordinative mechanism, the APECO management can tap national government organizations and program for linking support for the communities in the catchment areas. For the horizontal coordination mechanism, the community relations office partners with local organizations and structures in implementing the convergence approach, instead of only APECO programs. In this manner, the scope of livelihood and support assistance becomes a “whole of government approach.” Second, there is need to undertake an assessment process at two levels. First at the national level is to review the process of the different LED related program and structures in collaboration with different existing heads of the current structures on its mandates and identify potential areas of cooperation. This way, NGAs’ menu of programs can be packaged for APECO. By undergoing such review, one will be able to see what else can be done without coming up with a new structure, when possible, to support APECO. Second is to provide a comprehensive local economic situation analysis of the catchment areas to determine potential community roles in business development of potential locators including human capital development. The results will be matched with the LED programs of NGAs initially identified. This means the Regional Development Council (RDC), the Municipal Development Councils (MDCs), the ASCOT, and the communities work together with national agencies. Another is exploring possibilities of key economic national agencies to deploy their staff to APECO through project development management-based approaches of the convergence programs. This means part of the terms of reference is to come up with viable community development projects that are economic in nature and will benefit the communities in the catchment areas and ultimately assist APECO in its community relations projects. The very lean management staff (only 50% of plantilla positions are filled) supporting APECO leadership is not helping create a viable social and ultimately business perception on the economic zone.

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Third, there is need for APECO to rethink its approach of community relations given the antagonism that APECO and members of the community have for each other. A program that will provide the insulation of APECO from the critics and the oppositors should be made soon. The strong opposition actually emanates on the issue and perception of non-consultation, which is further polarized by the inadequacy of job provision, and the inadequacy to communicate the APECO plans that involves the lives of communities, especially the IPs. The issue has become complicated further as APECO has to balance the equation, i.e., implement its mandates and meet the expectations of government of economic development and the opposition of communities, the religious and selected IPs. f. Government support. The national government should continue to support the completion of the necessary structures and facilities of APECO, both off-site (i.e., road network projects planned in the area) and on-site (i.e., locator support facilities such as power and water supply, drainage facilities, waste management facilities, housing, among others) to enable the Corporation to operate and to realize the expected returns on investments. The additional minimum investment should be done taking into consideration the prospective expansion of locator/investors and influx of tourists in the area. Moreover, these additional public investments in APECO should logically be identified from its master plan and the viability of each investment established prior to implementation.

The following are the proposed implementation schedule of interventions to support the ecozone and facilitate the realization of its potentials (Table 10): Table 10. Recommended Interventions in the Short, Medium, and Long Terms Term Interventions Immediate  APECO must demonstrate its capability of successfully managing the (within the year) ecozone. a. It must immediately complete the ecozone plans including operational plans that ensures proper and efficient project staffing. b. Establish an effective set of criteria to properly evaluate agri-aqua and light industry projects and the prospective locators. c. Formulate a corporate financial outlook that not only considers the risk but also the sensitivities of the ecozone to varying costs and revenue scenarios. d. Synchronize the APECO land use plan with provincial and municipal CLUPs. e. Revisit plan on solar energy development against other options like hydro development. f. Settle the legal issue with Palafox on master plan development.  APEFZ needs to be distinguished from competing ecozones in Central Luzon and properly promote its potential and comparative advantage in agri-aqua. APECO must embark on a more systematic and proactive ecozone promotions program to enlist as many qualified early locators as possible.   Aggressively develop the targeted market to ensure the demand for the ecozone. APECO needs to be more inclusive and non-adverse in its approach to community and stakeholder relations. Perceptions of inequity and social injustice are the easiest reasons to cite for terminating a project. As it is now, APECO’s community relations program appears reactionary and divisive and lacks the finesse of a well thought out social marketing strategy that emphasizes “enlarging the pie” approaches rather than winloss solutions. APECO must prepare and implement a more systematic

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Term

Interventions community relations program that aims to resolve the issues with the antiAPECO groups.  Establish a reliable directory of affected families and estimate their true economic losses to have a credible basis for future amelioration projects. APECO to:  Complete personnel hiring and fully consider options for creating an operations group rather than just detailing existing staff.  Formalize all collaborative activities with other government agencies through MOAs – for example, with ASCOT and other educational institutions that will support the ecozones HR and R&D requirements. Establish a formal agreement with the LGU of Casiguran to jointly manage eco-tourism activities in the ecozone, as a way of more directly and significantly sharing the benefits to the community. Establish a community-based committee that enables APECO and the municipality/barangays to directly communicate in an open and objective venue on all matters affecting each party in relation to ecozone activities APECO to consider providing a mechanism for directly sharing the ecozone benefits to Casiguran, through some form of “royalty” or goodwill donation to the community, possibly a development fund to support LGU projects. Perhaps, to involve as joint venture with the LGUs the implementation particularly of the ecotourism activities.

Medium-term (2014-2015)

 

Long-term (beyond 2015)

A Rejoinder Need for a well-formulated feasibility study prior to requests for government investments. By way of drawing lessons from this assessment, future investment decisions of government, especially of similar scale, should be supported by an in-depth feasibility study that does not only articulate the economic viability but also the stakeholders’ ownership of the project.

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Annex 1. List of Materials Collected and Reviewed for the Study 1. 2011 - Development of Master plan for the Aurora Special Economic Zone, by Design Science Inc., March 2011  Volume 2 Land Use Plan and Zoning  Volume 3 Infrastructure Master Plan  Volume 4 Transportation Master Plan  Volume 5 Strategic Framework Plan on Information and Communications Technology  Volume 6 Strategic Framework Plan for Renewable Energy, Energy Efficiency and APECO Alternative Energy Park 2. 2012 and 2013 - Various APECO Policy Documents submitted to NEDA-RO3 as supporting documents for the APECO International Seaport Proposal under review by NEDA ICC  Corporate Outlook – Vision/Mission statements (2013)  Environmental Scanning (2013)  Conceptual Land Use and Land Acquisition General Action Plan (2012/2013)  Land Boundaries  Land Acquisition Map (2013)  Agri-Aqua Development Framework (2013)  Policy for Investment Promotion (2013)  Policy on Environmental Management (2013)  Community Relations Framework (2013)  Relocation Program Framework with alpha lists of Brgy Dibet and Estevez, NHA house elevation, plan, site development, and NHA-ASEZA MOA 3. APECO Presentation for NEDA Secretary, 23 Feb 2013 4. APECO Presentation for DA, 29 January 2013 5. DA Memo to Office of President, re status of actions taken in response to Casiguran marchers, 21 January 2013 6. GAA Docs – GAA FY 2010 ASEZA; GAA FY 2011-2013 APEFZ 7. DOE Renewable Energy Study Report, May 2009 8. NEDA Project Development Manual 9. Aurora Provincial Statistics Office. 2009. Aurora Provincial Profile 2009 10. Disaster Risk and Vulnerability Report of the province of Aurora 11. Aggarwal, Aradhna. (n.d.). Performance of Export Processing Zones: A Comparative Analysis of India, Sri Lanka, and Bangladesh. 12. Aurora Provincial Statistics Office. 2009. Aurora Provincial Profile 2009 13. Castell, Marvin, Assessing the Role of Government Institutions Supporting Industrial Adjustment in the Philippines: The Case of PEZA, CITEM and DBP 14. Disaster Risk and Vulnerability Report of the province of Aurora 15. International Tropical Timber Council, undated. Achieving the ITTO Objective 2000 and Sustainable Forest Management in the Philippines 16. Madani, Dorsati. 1999. A Review of the Role and Impact of Export Processing Zones, August 1999, the World Bank, Washington, D.C. 17. World Bank, 1998.Export processing zones, PREM notes, December 1998, number, 11 18. Various PowerPoint presentation Materials of APECO

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Annex 2. Guide Questions for the Social and Institutional Analysis
Assessment Areas 1. Stakeholders profile Assessment Variables Identification of stakeholders profile thru primary and secondary data - Socio-economic conditions - Resource (e.g., natural, physical) profile - Policies and processes re the establishment of APECO - Objectives of APECO and strategies/ interventions to achieve them - Projects that were already established in the zone -Roles of government, public sector, and areas for partnership - Capacity to implement economic development adapting them to placespecific strategies through facilitative leadership and guidance in LGU Casiguran and affected barangays Finding answers to the following questions What is the social and demographic profile of the stakeholders? 2. What are the conditions of existing resources – land area/use, water/coastal resources, biodiversity; infrastructure? 3. What are the projected changes in the socio-ecological with/without the APECO? 4. What are the objectives of APECO and what are the strategies/interventions to achieve them? 5. What are the facilitating/constraining factors in policy implementation? e.g., RA 9490 - Aurora Special Economic Zone Act of 2007; and RA 10083- The Aurora Pacific Economic Zone and Freeport Act of 2010 6. Is there an available policy from APECO that is able to provide effective economic development in the LGU; is there enough coordination to adapt these policies to local needs? 7. Is there leadership performed by APECO personnel in driving the economic development policies, strategies and processes in the LGU and barangay? 8. Were there economic and township cooperation made between APECO and the LGU? 9. What is the role of the private sector in APECO? What about public-private partnership? 10. What are the business attraction and investments promotions strategy adopted by APECO for businesses to locate in the economic zone? 1. 11. Is the community part of the identification of economic development goals for APECO? 12. Is APECO bringing together local resources and knowledge in economic development allowing for LGUs and barangays appreciating and cooperating in implementing economic development? 13. Were the rights of the indigenous peoples considered in the development of APECO? 14.What are the consequences and results of engagement and disengagement of the community in economic development? 15. What is the process of identification of the roles of the community? 16. Are the roles identified agreed on by the parties concerned? 17. Can the parties concerned be able to perform the roles effectively? If not, what are the interventions made for the community to perform the roles effectively? 18. What are the goods, services, labour acquired from the development project of the stakeholders? 19. What is the created direct and indirect employment or entrepreneurial opportunities in the community as a result of the establishment of APECO? 20. What are the improvements in the environment as a result of the establishment of APECO? 21. What are the employment opportunities created for the weaker segments of the community (marginalized farmers and fisherfolk)?

2. APECO Institutional Arrangements (Policies, Programs and Service) with the Community

3. Process of engaging the community in economic development

Adapted system for community engagement in economic development

4. Roles of the Community in local economic development through the APECO 5. Perceived benefits of stakeholders on the development projects of APECO (at the household and community/ LGU level)

Identification of key stakeholders roles in local economic development through the APECO

- Job creation and income opportunities (farm, forestry, fishing and nonfarm) for stakeholders -Expanded market linkages - Improved household income

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Assessment Areas

Assessment Variables -Reduced poverty incidence, improved food security level -Who/what sectors benefit? -Potential change/growth in LGU income (or in gross domestic product) as a result of structural change (i.e., from agriculture/fishing to commerce/industry/ service) -Improved services/facilities and access - Who/what sectors will lose and what interventions are needed to reduce impacts? -Effects/impacts on agricultural sector (farm, fishing livelihood) -Settlement for dislocated households -Climate and non-climate hazards/risks with the zone development and adaptation strategies needed - Capacity building to meet new demands of the economic zone

Finding answers to the following questions 22. Did the establishment of APECO contribute to the local economic development functioning of the LGU and the barangays as per Section 15-22 of the LGC of 1991?

6. Perceived issues and challenges in the development of APECO in the community

23. What are the perceived issues of the stakeholders with the establishment of APECO? E.g., Who are the dislocated families as a result of the establishment of APECO? 24. What are the challenges experienced by APECO with the stakeholders in the development of the economic zone? 25. Will the APECO reduce/increase vulnerability of the area to climate and non-climate hazards?

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Annex 3. Assumptions for locator projections based on APECO plan. Locators/Area Parcel 1 1. Agri technopark 2. Hotel Operation 3. Light Industry Parcel 2 4. Bamboo culture Aquaculture 5. Fish cages 16 locators /78.6 hectares 4,400 sqm 109 locators /54.7 hectares Occupancy 100% annually starting 2016 70% annually starting 2020 100 % annually starting 2021

1 locator/200 hectares 4,000 cages /200 hectares

100% annually starting 2016

1-45% from yr 2013-2026 50% by year 2027 92% by year 2032 6.Seaweed culture 100 has / 400 HH-locator 10% in 2013 Additional 10% every year 100% by 2020 7. Admin Operation Varied fees – admin, export processing, royalty income, utilities charges (water, power, solid waste management, sewerage) & Services

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Annex 4a.

Scenario 1 (Original APECO Plan): Locator projections, 2013-2032. Locators

YEAR
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

No. Of Fish Cages
38 50 50 50 100 100 100 150 150 150 200 200 200 250 250 250 350 350 350 350 3,688

Seaweeds (hectares)
10 20 30 40 50 60 70 80 90 100

Light Industry (no.)
5 5 10 10 10 15 15 20 19

Bamboo (hectares)
50 50 50 50

Agri techno (no.) 3 4 5 4

Cumulative Total

100

109

200

16

38

Annex 4b. Scenario 1 (Original APECO Plan): Economic benefits based on incremental income and value of agricultural products, 2013-2032, in ‘000 PhP.
INCREMENTAL INCOME FROM EMPLOYMENT (in '000 PhP) YEAR FISH CAGE PRODUCTION 24,624 57,024 89,424 121,824 186,624 251,424 316,224 413,424 510,624 607,824 737,424 867,024 996,624 1,158,624 1,320,624 1,482,624 1,709,424 1,936,224 2,163,024 2,389,824 LIGHT INDUSTRY 6,840 13,680 27,360 41,040 54,720 75,240 95,760 123,120 149,112 149,112 149,112 149,112 149,112 149,112 149,112 149,112 149,112 149,112 149,112 149,112 SEAWEEDS PRODUCTION 10,368 31,104 62,208 103,680 155,520 217,728 290,304 373,248 466,560 570,240 570,240 570,240 570,240 570,240 570,240 570,240 570,240 570,240 570,240 AGRITECHNO PARK 4,104 9,576 16,416 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 21,507 BAMBOO PRODUCTION 6,480 12,960 19,440 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 25,920 SITE CONSTRUCTION AND DEVELOPMENT 122,458 68,080 75,240 75,240 273,592 251,020 251,020 75,240 75,240 75,240 79,515 75,240 0 0 0 0 0 0 428 0 TOTAL FISH CATCH 8,515 9,859 15,461 21,062 32,266 43,469 54,672 71,477 88,282 105,087 127,494 149,900 172,307 200,315 228,323 256,332 295,543 334,755 373,966 413,178 a. Without P82.99/kg (source: BAS -- Farmgate price of milkfish) b. With P124.48/kg (50% markup in price due to valueadding activity) c. Volume of production based on APECO plan INCREMENTAL VALUE-ADDED (in '000 PhP) SEAWEEDS COCONUT BAMBOO TOTAL

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Assumptions

174,874 192,424 290,088 389,211 717,883 842,839 1,000,735 1,032,459 1,248,963 1,449,843 1,583,718 1,709,043 1,763,403 1,925,403 2,087,403 2,249,403 2,476,203 2,703,003 2,930,231 3,156,603

4,091 8,183 12,274 16,366 20,457 24,549 28,640 32,732 36,823 40,915 40,915 40,915 40,915 40,915 40,915 40,915 40,915 40,915 40,915 40,915 a. Without - no production of seaweeds in Aurora (source: BAS) b. With P4.51/kg (based on APECO plans) c. Volume of production based on APECO plan; achieve full target by 2022

216,943 223,451 230,155 237,059 244,171 251,496 259,041 266,812 274,817 283,061 291,553 300,299 309,308 318,588 328,145 337,990 348,129 358,573 369,330 380,410 a. Without P15.33/kg of copra (source: PCA) b. With - P23/kg (50% mark-up in price due to valueadding activity) c. Beginning volume of production is 60% of total production in Aurora as of 2012 and is expected to increase by 3% annually

1,890 3,780 5,670 7,560 7,560 8,316 8,316 8,316 8,316 8,316 9,072 9,072 9,072 9,072 9,072 9,828 9,828 9,828 9,828 9,828 a. Without - no production of bamboo in Aurora b. With P63/kg c. Volume of production based on APECO plan

231,439 245,273 263,559 282,047 304,454 327,830 350,669 379,337 408,238 437,379 469,033 500,186 531,602 568,889 606,455 645,064 694,415 744,071 794,039 844,331

570,240 21,507 25,920 Wage rate: Without - P0/day; With - P300/day (source: APECO documents)

39

Annex 4c. Scenario 1 (Original APECO Plan): Economic benefits from ecotourism, 2013-2032.
NO. OF TOURIST ARRIVALS (in '000) 0 0 10 17 27 28 30 32 32 32 32 32 32 32 32 32 32 32 32 32 TOTAL BENEFIT (in '000 PhP) 0 0 2,528 4,397 7,025 7,383 7,956 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528 8,528

YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

a. No. of tourists pegged at APECO's projected hotel occupancy rate; 100% of annual tourist arrival targets achieved b. P15/pax entrance fee into forest conservation area c. P100/pax transportation expense d. P150/pax expense for meals and other incidentals (based on government rate)

40

Annex 4d. Scenario 1 (Original APECO Plan): Economic costs coming from capital investments, 2013-2032, in ‘000 PhP.
YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

Power 154,000 0 220,000 220,000 396,000 330,000 330,000 220,000 220,000 220,000 220,000 220,000 0 0 0 0 0 0 0 0
Diesel Generator Sets - 15 sets @ Php22M/set with 10% contingency, 15MW total power requirement. Prices are at 2012 levels.

Water Supply and Sewerage 0 199,064 199,064 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Water supply system dimensions based on total projected water demand of 24,665 cu.m./day. Prices are at 2012 levels.

Solid Waste 0 5,000 0 0 0 0 0 0 0 0 0 12,500 0 0 0 0 0 0 0 1,250
Estimated investment cost for Category 1 Sanitary Landfill (1.5 has), expanded to 2.5 hectares by 2024 and maintenance by 2032. Prices are at 2012 levels.

Airport 0 0 0 0 0 403,977 403,977 403,977 0 0 0 0 0 0 0 0 0 0 0 0
Expansion of current airstrip is dependent on time of peak of locator occupancy. Prices are at 2012 levels.

Locator Investments 336,847 370,544 638,041 606,538 482,484 717,981 718,478 958,975 912,472 19,969 20,000 20,000 20,000 25,000 25,000 25,000 35,000 35,000 35,000 35,000
Cost of establishment:. a. P1000,00/fishcage b. P49,888/ha of seaweed farm c. P47M/light industry locator (based on average investment cost) d. P32M/agri-techno park locator (based on average investment cost)

Total Capital Investments 490,847 574,608 1,057,105 826,538 878,484 1,451,958 1,452,455 1,582,952 1,132,472 239,969 240,000 252,500 20,000 25,000 25,000 25,000 35,000 35,000 35,000 36,250

41

Annex 4e. Scenario 1 (Original APECO Plan): Economic costs coming from Operations and Maintenance, 2013-2032, in ‘000 PhP. YEAR
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

APECO MOOE
45,000 72,496 76,121 79,927 83,923 88,119 92,525 97,152 102,009 107,110 112,465 118,088 123,993 130,192 136,702 143,537 150,714 158,250 166,162 174,470
Based on APECO Plan

Infrastructure O&M
27,803 27,553 19,800 33,000 50,999 42,199 53,199 33,000 44,000 24,200 625 0 0 0 0 0 0 0 63 0
5% of total capial investments on infrastructure

Total O&M Costs
72,803 100,049 95,921 112,927 134,922 130,318 145,724 130,152 146,009 131,310 113,090 118,088 123,993 130,192 136,702 143,537 150,714 158,250 166,225 174,470

42

Annex 5a.

Scenario 2 (Adjusted APECO Plan): Economic benefits based on incremental income and value of agricultural products, 2013-2032, in ‘000 PhP.
INCREMENTAL INCOME FROM EMPLOYMENT (in '000 PhP) SITE CONSTRUCTION AND DEVELOPMENT INCREMENTAL VALUE-ADDED (in '000 PhP)

YEAR

FISH CAGE PRODUCTION

LIGHT INDUSTRY

SEAWEED PRODUCTION

AGRITECHNO PARK

BAMBOO PRODUCTION

TOTAL

FISH CATCH

SEAWEEDS

COCONUT

BAMBOO

TOTAL

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Assumptions

10,670 24,710 38,750 52,790 80,870 108,950 137,030 179,150 221,270 263,390 319,550 375,710 431,870 502,070 572,270 642,470 740,750 839,030 937,310

5,616 11,232 22,464 33,696 44,928 61,776 78,624 101,088 122,429 122,429 122,429 122,429 122,429 122,429 122,429 122,429 122,429 122,429 122,429

4,493 8,986 13,478 17,971 22,464 26,957 31,450 35,942 40,435 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928

3,311 7,726 13,244 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659

5,616 11,232 16,848 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464

0 64,097 62,693 13,591 13,591 13,591 120,232 127,027 133,823 20,386 0 0 3,510 0 0 0 0 0 0

29,706 127,982 167,477 158,171 201,976 251,396 407,459 483,331 558,080 491,256 527,030 583,190 642,860 709,550 779,750 849,950 948,230 1,046,510 1,144,790

8,515 9,859 15,461 21,062 32,266 43,469 54,672 71,477 88,282 105,087 127,494 149,900 172,307 200,315 228,323 256,332 295,543 334,755 373,966 413,178 a. Without P82.99/kg (source: BAS -- Farm gate price of milkfish) b. With P124.48/kg (50% mark-up in price due to value-adding activity) c. Volume of production based on APECO plan

23,587 47,174 70,762 94,349 117,936 141,523 165,110 188,698 212,285 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 a. Without - no production of seaweeds in Aurora (source: BAS) b. With - P26/kg (based on APECO plans) c. Volume of production based on APECO plan; achieve full target by 2022

216,943 223,451 230,155 237,059 244,171 251,496 259,041 266,812 274,817 283,061 291,553 300,299 309,308 318,588 328,145 337,990 348,129 358,573 369,330 380,410 a. Without P15.33/kg of copra (source: PCA) b. With - P23/kg (50% mark-up in price due to valueadding activity) c. Beginning volume of production is 60% of total production in Aurora as of 2012 and is expected to increase by 3% annually

0 0 1,170 2,340 3,510 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 a. Without - no production of bamboo in Aurora b. With - P39/kg per DTI 2006 study on bamboo production and inflated to 2012 prices c. Volume of production based on APECO plan

249,044 280,484 317,547 354,810 397,882 441,168 483,503 531,667 580,063 628,700 659,598 690,752 722,167 759,455 797,021 834,873 884,225 933,880 983,849 1,034,140

1,035,590 122,429 44,928 17,659 22,464 351 1,243,421 Wage rate: Without - P66/day (source: Task Force Anti-APECO documents); With - P300/day (source: APECO documents)

43

Annex 5b. Scenario 2 (Adjusted APECO Plan): Economic benefits from ecotourism, 2013-2032.
NO. OF TOURIST ARRIVALS (in '000) 0 0 10 17 27 28 30 32 32 32 32 32 32 32 32 32 32 32 32 32 TOTAL BENEFIT (in '000 PhP) 0 0 6,821 11,864 18,955 19,921 21,465 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009 23,009

YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

a. No. of tourists pegged at APECO's projected hotel occupancy rate; 100% of annual tourist arrival targets achieved b. P15/person entrance fee into forest conservation area c. P400/person transportation expense d. P150/person expense for meals and other incidentals (based on government rate)

44

Annex 5c. Scenario 2 (Adjusted APECO Plan): Economic costs coming from capital investments, 2013-2032, in ‘000 PhP.
YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

Power 0 24,200 24,200 48,400 48,400 48,400 24,200 48,400 72,600 72,600 0 0 0 0 0 0 0 0 0 0
Diesel Generator Sets - 15 sets @ Php22M/set with 10% contingency, 15MW total power requirement. Prices are at 2012 levels.

Water Supply and Sewerage 0 199,064 199,064 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Water supply system dimensions based on total projected water demand of 24,665 cu.m./day. Prices are at 2012 levels.

Solid Waste 0 5,000 0 0 0 0 0 0 0 0 0 0 12,500 0 0 0 0 0 0 1,250
Estimated investment cost for Category 1 Sanitary Landfill (1.5 has), expanded to 2.5 hectares by 2024 and maintenance by 2032. Prices are at 2012 levels.

Airport 0 0 0 0 0 0 403,977 403,977 403,977 0 0 0 0 0 0 0 0 0 0 0
Expansion of current airstrip is dependent on time of peak of locator occupancy. Prices are at 2012 levels.

Locator Investments 337,550 370,750 637,750 605,750 481,200 716,200 716,200 956,200 909,200 16,200 20,000 20,000 20,000 25,000 25,000 25,000 35,000 35,000 35,000 35,000
Cost of establishment:. a. P1000,00/fishcage b. P49,888/ha of seaweed farm c. P47M/light industry locator (based on average investment cost) d. P32M/agri-techno park locator (based on average investment cost)

Total Capital Investments 337,550 599,014 861,014 654,150 529,600 764,600 1,144,377 1,408,577 1,385,777 88,800 20,000 20,000 32,500 25,000 25,000 25,000 35,000 35,000 35,000 36,250

45

Annex 5d. Scenario 2 (Adjusted APECO Plan): Economic costs coming from Operations and Maintenance, 2013-2032, in ‘000 PhP. YEAR
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

APECO MOOE
45,000 72,496 76,121 79,927 83,923 88,119 92,525 97,152 102,009 107,110 112,465 118,088 123,993 130,192 136,702 143,537 150,714 158,250 166,162 174,470
a. First 2 years based on APECO plan b. 5% annual increase thereafter due to massive promotions, additional manpower requirement and acquisition of additional equipment

Infrastructure O&M
0 12,623 12,373 4,840 4,840 4,840 22,619 25,039 27,459 7,260 0 0 625 0 0 0 0 0 0 63
5% of total capital investments on infrastructure

Total O&M Costs
45,000 85,119 88,494 84,767 88,763 92,959 115,144 122,190 129,468 114,370 112,465 118,088 124,618 130,192 136,702 143,537 150,714 158,250 166,162 174,533

46

Annex 6a. Scenario 3 (Slow build-up): Locator projections, 2013-2032. Locators Light Industry (no.)
2 3 4 4 6 6 8 10 10 12 14 15 15

YEAR

No. Of Fish Cages
15 20 30 35 40 40 80 90 95 100 103 120 190 200 200 400 430 500 500 500 3,688

Seaweeds (hectares)
5 8 10 10 11 10 10 10 12 14

Bamboo (hectares)
25 25 25 25 50 50

Agri techno (no.) 3 1 2 2 2 3 3

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Cumulative Total

100

109

200

16

47

Annex 6b. Scenario 3 (Slow build-up): Economic benefits based on incremental income and value of agricultural products, 2013-2032, in ‘000 PhP.
INCREMENTAL INCOME (in '000 PhP) AGRITECHNO PARK SITE CONSTRUCTION AND DEVELOPMENT INCREMENTAL VALUE-ADDED (in '000 PhP)

YEAR

FISH CAGE PRODUCTION

LIGHT INDUSTRY

SEAWEED PRODUCTION

BAMBOO PRODUCTION

TOTAL

FISH CATCH

SEAWEEDS

COCONUT

BAMBOO

TOTAL

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Assumptions

4,212 9,828 18,252 28,080 39,312 50,544 73,008 98,280 124,956 153,036 181,958 215,654 269,006 325,166 381,326 493,646 614,390 754,790 895,190

2,246 5,616 10,109 14,602 21,341 28,080 37,066 48,298 59,530 73,008 88,733 105,581 122,429 122,429 122,429 122,429 122,429 122,429 122,429

2,246 5,841 10,333 14,826 19,768 24,261 28,754 33,247 38,638 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928 44,928

3,311 3,311 4,415 6,622 8,829 11,037 14,348 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659 17,659

0 2,808 2,808 5,616 8,424 11,232 16,848 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464 22,464

0 64,097 55,897 6,795 6,795 6,795 6,795 6,795 13,591 13,591 120,232 127,027 127,027 17,101 0 0 0 0 0

12,016 91,500 101,814 76,541 104,470 131,949 176,818 226,742 276,837 324,685 475,974 533,313 603,513 549,746 588,806 701,126 821,870 962,270 1,102,670

1,680 3,921 7,282 11,203 15,685 20,166 29,129 39,212 49,855 61,058 72,597 86,041 107,328 129,734 152,141 196,954 245,128 301,145 357,161 413,178 a. Without P82.99/kg (source: BAS -Farmgate price of milkfish) b. With P124.48/kg (50% mark-up in price due to valueadding activity) c. Volume of production based on APECO plan

11,794 30,663 54,251 77,838 103,784 127,371 150,958 174,545 202,850 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 235,872 a. Without - no production of seaweeds in Aurora (source: BAS) b. With - P26/kg (based on APECO plans) c. Volume of production based on APECO plan; achieve full target by 2022

105,312 136,906 177,977 231,370 244,171 251,496 259,041 266,812 274,817 283,061 291,553 300,299 309,308 318,588 328,145 337,990 348,129 358,573 369,330 380,410 a. Without P15.33/kg of copra (source: PCA) b. With - P23/kg (50% mark-up in price due to valueadding activity) c. Beginning volume of production is 60% of total production in Aurora as of 2012 and is expected to increase by 3% annually

0 0 585 1,170 1,755 2,340 3,510 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680 a. Without - no production of bamboo in Aurora b. With - P39/kg per DTI 2006 study on bamboo production and inflated to 2012 prices c. Volume of production based on APECO plan

118,786 171,490 240,095 321,582 365,394 401,373 442,638 485,249 532,201 584,671 604,702 626,893 657,188 688,874 720,838 775,496 833,810 900,270 967,044 1,034,140

1,035,590 122,429 44,928 17,659 22,464 351 1,243,421 Wage rate: Without - P66/day (source: Task Force Anti-APECO documents); With - P300/day (source: APECO documents)

48

Annex 6c. Scenario 3 (Slow build-up): Economic benefits from ecotourism, 2013-2032.
YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

NO. OF TOURIST ARRIVALS (in '000) 0 0 5 8 13 14 30 35 35 35 35 35 35 35 35 35 35 35 35 35

TOTAL BENEFIT (in '000 PhP) 0 0 3,410 5,932 9,478 9,960 21,469 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223 25,223

a. No. of tourists pegged at APECO's projected hotel occupancy rate; 100% of annual tourist arrival targets achieved b. P15/person entrance fee into forest conservation area c. P400/person transportation expense d. P150/person expense for meals and other incidentals (based on government rate)

49

Annex 6d. Scenario 3 (Slow build-up): Economic costs coming from capital investments, 2013-2032, in ‘000 PhP.
YEAR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

Power 0 24,200 0 24,200 24,200 24,200 24,200 24,200 48,400 48,400 24,200 48,400 48,400 48,400 0 0 0 0 0 0
Diesel Generator Sets 15 sets @ Php22M/set with 10% contingency, 15MW total power requirement. Prices are at 2012 levels.

Water Supply and Sewerage 0 199,064 199,064 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Water supply system dimensions based on total projected water demand of 24,665 cu.m./day. Prices are at 2012 levels.

Solid Waste 0 5,000 0 0 0 0 0 0 0 0 0 0 0 12,500 0 0 0 0 0 1,250
Estimated investment cost for Category 1 Sanitary Landfill (1.5 has), expanded to 2.5 hectares by 2024 and maintenance by 2032. Prices are at 2012 levels.

Airport 0 0 0 0 0 0 0 0 0 0 403,977 403,977 403,977 0 0 0 0 0 0 0
Expansion of current airstrip is dependent on time of peak of locator occupancy. Prices are at 2012 levels.

Locator Investments 192,875 144,735 224,975 257,475 352,870 352,750 481,200 576,200 480,940 575,680 668,300 717,000 724,000 20,000 20,000 40,000 43,000 50,000 50,000 50,000
Cost of establishment:. a. P1000,00/fishcage b. P49,888/ha of seaweed farm c. P47M/light industry locator (based on average investment cost) d. P32M/agri-techno park locator (based on average investment cost)

Total Capital Investments 192,875 372,999 424,039 281,675 377,070 376,950 505,400 600,400 529,340 624,080 1,096,477 1,169,377 1,176,377 80,900 20,000 40,000 43,000 50,000 50,000 51,250

50

Annex 6e. Scenario 3 (Slow build-up): Economic costs coming from Operations and Maintenance, 2013-2032, in ‘000 PhP. YEAR
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Assumptions

APECO MOOE
45,000 47,250 51,619 54,200 83,923 88,119 92,525 97,152 102,009 107,110 112,465 118,088 123,993 130,192 136,702 143,537 150,714 158,250 166,162 174,470
a. Initial year is based on APECO plan, but subsequent 3 years are based on slower phasing of investments b. 5% annual increase thereafter due to massive promotions, additional manpower requirement and acquisition of additional equipment

Infrastructure O&M
0 12,623 9,953 2,420 2,420 2,420 2,420 2,420 4,840 4,840 22,619 25,039 25,039 5,465 0 0 0 0 0 63
5% of total capital investments on infrastructure

Total O&M Costs
45,000 59,873 61,572 56,620 86,343 90,539 94,945 99,572 106,849 111,950 135,084 143,127 149,032 135,657 136,702 143,537 150,714 158,250 166,162 174,533

51

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