The Subic Bay Metropolitan Authority (SBMA) was given broad administrative powers over the Subic Special Economic Zone (SSEZ). These powers include the power to approve or disapprove projects within its territorial jurisdiction. The Local Government Code grants concerned sanggunians the power to approve and disapprove the same projects. To resolve this conflict the Supreme Court examined Section 12 of Republic Act No. 7227 or the Bases Conversion and Development Act of 1992:
SECTION 12. Subic Special Economic Zone. — Subject to the concurrence by resolution of the sangguniang panlungsod of the City of Olongapo and thesangguniang bayan of the Municipalities of Subic, Morong and Hermosa, there is hereby created a Special Economic and Free-port Zone consisting of the City of Olongapo and the Municipality of Subic, Province of Zambales, the lands occupied by the Subic Naval Base and its contiguous extensions as embraced, covered, and defined by the 1947 Military Bases Agreement between the Philippines and the United States of America as amended, and within the territorial jurisdiction of the Municipalities of Morong and Hermosa, Province of Bataan, hereinafter referred to as the Subic Special Economic Zone whose metes and bounds shall be delineated in a proclamation to be issued by the President of the Philippines. Within thirty (30) days after the approval of this Act, each local government unit shall submit its resolution of concurrence to join the Subic Special Economic Zone to the office of the President. Thereafter, the President of the Philippines shall issue a proclamation defining the metes and bounds of the Zone as provided herein.
The abovementioned zone shall be subject to the following policies:
(a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent provisions of the Local Government Code, the Subic Special Economic Zone shall be developed into a self-sustaining, industrial, commercial, financial and investment center to generate employment opportunities in and around the zone and to attract and promote productive foreign investments...
(i) Except as herein provided, the local government units comprising the Subic Special Economic Zone shall retain their basic autonomy and identity. The cities shall be governed by their respective charters and the municipalities shall operate and function in accordance with Republic Act No. 7160, otherwise known as The Local Government Code of 1991.
According to the Court, the phrase “[e]xcept as herein provided” means that local governments do not retain their basic autonomy and identity when it comes to matters specified by the law as falling under the powers, functions and prerogatives of the SBMA. The Court concluded that the power to approve or disapprove projects within the SSEZ is one such power over which the SBMA’s authority prevails over the local governments’ autonomy. Hence, there is no need for the SBMA to secure the approval of the concerned sanggunians prior to the implementation of the subject project.