Republic of the Philippines

Congress of the Philippines

Metro Manila
Third Regular Session

Began and held in Metro Manila, on Monday, the twenty-fifth

day of July, nineteen hundred and ninety-four.

[REPUBLIC ACT NO. 7916]

(as amended by Republic Act No. 8748)

AN ACT PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE CREATION, OPERATON,
ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES IN THE PHILIPPINES, CREATING FOR
THIS PURPOSE, THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

CHAPTER I

PURPOSES AND OBJECTIVES: ESTABLISHMENT

AND NATURE OF SPECIAL ECONOMIC ZONES;
COORDINATION WITH OTHER SIMILAR SCHEMES

SEC. 1. Title. – This act shall be known and cited as "The Special Economic Zone Act of 1995."

SEC. 2. Declaration of Policy. – It is the declared policy of the government to translate into practical realities the following State
policies and mandates in the 1987 Constitution, namely:

(a) "The State recognizes the indispensible role of the private sector, encourages private enterprise, and provides incentives to
needed investments." (Sec. 20, Art II)

(b) "The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods and adopt
measures that help make them competitive." (Sec. 12, Art XII)

In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced
industrial, economic and social development of the country in order to provide jobs to the people specially those in the rural
areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living
condition through the establishment, among others, of special economic zones in suitable and strategic locations in the country
and through measures that shall effectively attract legitimate and productive foreign investments.

SEC. 3. Purposes, Intents and Objectives. – It is the purpose, intent and objective of this Act:

(a) To establish the legal framework and mechanisms for the integration, coordination, planning and monitoring of special
economic zones, industrial estates / parks, export processing zones and other economic zones;

(b) To transform selected areas in the country into highly developed agro industrial, industrial, commercial, tourist, banking,
investment, and financial centers, where highly trained workers and efficient services will be available to commercial
enterprises;
(c) To promote the flow of investors, both foreign and local, into special economic zones which would generate employment
opportunities and establish backward and forward linkages among industries in and around the economic zones;

(d) To stimulate the repatriation of Filipino capital by providing attractive climate and incentives for business activity;

(e) To promote financial and industrial cooperation between the Philippines and industrialized countries through technology-
intensive industries that will modernize the country’s industrial sector and improve productivity levels by utilizing new
technological and managerial know-how; and
(f) To vest the special economic zones on certain areas thereof with the status of a separate customs territory within the
framework of the Constitution and the national sovereignty and territorial integrity of the Philippines.

SEC. 4. Definition of Terms. – For purposes of this Act, the following definitions shall apply to the following terms:

(a) "Special Economic Zones (SEZ)" – hereinafter referred to as the ECOZONES, are selected areas with highly developed or
which have the potential to be developed into agro-industrial, Industrial tourist/recreational, commercial, banking, investment
and financial centers. An ECOZONE may contain any or all of the following: Industrial Estates (IEs), Export Processing Zones
(EPZs), Free Trade Zones, and Tourist/Recreational Centers.

(b) "Industrial Estate (IE)" – refers to a tract of land subdivided and developed according to a comprehensive plan under a
unified continuous management and with provisions for basic infrastructure and utilities, with or without pre-built standard
factory buildings and community facilities for the use of the community of industries.

(c) "Export Processing Zone (EPZ)" – a specialized industrial estate located physically and/or administratively outside customs
territory, predominantly oriented to export production. Enterprises located in export processing zones are allowed to import
capital equipment and raw materials free from duties, taxes and other import restrictions.

(d)"Free Trade Zone" - an isolated policed area adjacent to a port of entry (as a seaport) and/or airport where imported goods
may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, or otherwise manipulated without being
subject to import duties. However, movement of these imported goods from the free-trade area to a non-free-trade area in the
country shall be subject to import duties.

Enterprises within the zone are granted preferential tax treatment and immigration laws are more lenient.

SEC. 5. Establishment of ECOZONES. – To ensure the viability and geographical dispersal of ECOZONES through a system of
prioritization, the following areas are initially identified as ECOZONES, subject to the criteria specified in Section 6:

(a) So much as may be necessary of that portion of Morong, Hermosa, Dinalupihan, Orani, Samal, and Abucay in the Province of
Bataan;

(b) So much as may be necessary of that portion of the municipalities of Ibaan, Rosario, Taysan, San Jose, San Juan, and cities of
Lipa and Batangas;

(c) So much as may be necessary of that portion of the City of Cagayan de Oro in the Province of Misamis Oriental;

(d) So much as may be necessary of that portion of the City of Iligan in the Province of Lanao del Norte;

(e) So much as may be necessary of that portion of the Province of Saranggani;

(f) So much as may be necessary of that portion of the City of Laoag in the Province of Ilocos Norte;

(g) So much as may be necessary of that portion of Davao City and Samal Island in the Province of Davao del Norte;

(h) So much as may be necessary of that portion of Oroquieta City in the Province of Misamis Occidental;

(i) So much as may be necessary of that portion of Tubalan Cove, Malita in the Province of Davao del Sur;

(j) So much as may be necessary of that portion of Baler, Dinalungan and Casiguran including its territorial waters and islets and
its immediate environs in the Province of Aurora;

(k) So much as may be necessary of that portion of cities of Naga and Iriga in the Province of Camarines Sur, Legaspi and
Tabaco in the Province of Albay, and Sorsogon in the Province of Sorsogon;

(l) So much as may be necessary of that portion of Bataan Island in the Province of Batanes;

(m) So much as may be necessary of that portion of Lapu-lapu in the Island of Mactan, and the municipalities of Balamban and
Pinamungahan and the cities of Cebu and Toledo and the Province of Cebu, including its territorial waters and islets and its
immediate environs;
(n) So much as may be necessary of that portion of Tacloban City;

(o) So much as may be necessary of that portion of the Municipality of Barugo in the Province of Leyte;

(p) So much as may be necessary of that portion of the Municipality of Buenavista in the Province of Guimaras;

(q) So much as may be necessary of that portion of the municipalities of San Jose de Buenavista, Hamtic, Sibalon, and Culasi in
the Province of Antique;

(r) So much as may be necessary of that portion of the municipalities of Catarman, Bobon and San Jose in the Province of
Northern Samar, the Island of Samar;

(s) So much as may be necessary of that portion of the Municipality of Ternate and its immediate environs in the Province of
Cavite;

(t) So much as may be necessary of that portion of Polloc, Parang in the Province of Maguindanao;

(u) So much as may be necessary of that portion of the Municipality of Boac in the Province of Marinduque;

(v) So much of may be necessary of that portion of the Municipality of Pitogo in the Province of Zamboanga del Sur;

(w) So much as may be necessary of that portion of Dipolog City-Manukan Corridor in the Province of Zamboanga del Norte;

(x) So much as may be necessary of that portion of Mambajao, Camiguin Province;

(y) So much as may be necessary of that portion of Infanta, Real, Polillo, Alabat, Atimonan, Mauban, Tiaong, Pagbilao,
Mulanay, Tagkawayan, and Dingalan Bay in the Province of Quezon;

(z) So much as may be necessary of that portion of Butuan City and the Province of Agusan del Norte, including its territorial
waters and islets and its immediate environs;

(aa) So much as may be necessary of that portion of Roxas City including its territorial waters and islets and its immediate
environs in the Province of Capiz;

(bb) So much as may be necessary of that portion of San Jacinto, San Fabian, Mangaldan, Lingayen, Sual, Dagupan, Alaminos,
Manaoag, Binmaley in the Province of Pangasinan;

(cc) So much as may be necessary of that portion of the autonomous region;

(dd) So much as may be necessary of that portion of Masinloc, Candelaria and Sta. Cruz in the Province of Zambales;

(ee)So much as may be necessary of that portion of the Palawan Island;

(ff) So much as may be necessary of that portion of General Santos City in South Cotabato and its immediate environs;
(gg) So much as may be necessary of that portion of Dumaguete City and Negros Oriental, including its territorial waters and
islets and its immediate environs;

(hh)So much as may be necessary of that portion of the Province of Ilocos Sur;

(ii) So much as may be necessary of that portion of the Province of La Union;

(jj) So much as may be necessary of that portion of the Province of Laguna, including its territorial waters and its immediate
environs;

(kk) So much as may be necessary of that portion of the Province of Rizal;

(ll) All existing export processing zones and government-owned industrial estates; and

(mm) Any private industrial estate which shall voluntarily apply for conversion into an ECOZONE.
These areas shall be developed through any of the following schemes:
i. Private initiative;
ii. Local government initiative with the assistance of the national government; and
iii. National government initiative. The metes and bounds of each ECOZONE are to be delineated and more particularly
described in a proclamation to be issued by the President of the Philippines, upon the recommendation of the Philippine
Economic Zone Authority (PEZA), which shall be established under this Act, in coordination with the municipal and / or city
council, National Land Use Coordinating Committee and / or the Regional Land Use Committee.

SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the ECOZONES identified in Section 5 of this Act,
other areas may be established as ECOZONES in a proclamation to be issued by the President of the Philippines subject to the
evaluation and recommendation of the PEZA, based on a detailed feasibility and engineering study which must conform to the
following criteria:

(a) The proposed area must be identified as a regional growth center in the Medium-Term Philippine Development Plan or by the
Regional Development Council;

(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones, ports, airports, etc.,
and the suitability and capacity of the proposed site to absorb such improvements;

(c) The availability of water source and electric power supply for use of the ECOZONE;

(d) The extent of vacant lands available for industrial and commercial development and future expansion of the ECOZONE as
well as of lands adjacent to the ECOZONE available for development of residential areas for the ECOZONE workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE;

(f) The area must have a significant incremental advantage over the existing economic zones and its potential profitability can be
established;

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to curtail smuggling activities.

Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the said area shall be
developed only through local government and/or private sector initiative under any of the schemes allowed in Republic Act No.
6957 (the build-operate-transfer law), and without any financial exposure on the part of the national government: Provided,
further, That the area can be easily secured to curtail smuggling activities: Provided, finally, That after five (5) years the area
must have attained a substantial degree of development, the indicators of which shall be formulated by the PEZA.

SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist, Investment and Financial
Community. - Within the framework of the Constitution, the interest of national sovereignty and territorial integrity of the
Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining
industrial,commercial/trading, agro-industrial, tourist, banking, financial and investment center with minimum government
intervention. Each ECOZONE shall be provided with transportation, telecommunications, and other facilities needed to generate
linkage with industries and employment opportunities for its own inhabitants and those of nearby towns and cities. The
ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters within the
exclusive competence of the national government. The ECOZONE may establish mutually beneficial economic relations with
other entities within the country, or, subject to the administrative guidance of the Department of Foreign Affairs and/or the
Department of Trade and Industry, with foreign entities or enterprises.

Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE, either
by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within the
ECOZONE. Their assets, profits and other legitimate interests shall be protected: Provided, That the ECOZONE through the
PEZA may require a minimum investment for any ECOZONE enterprises in freely convertible currencies: Provided, further,
That the new investment shall fall under the priorities, thrusts and limits provided for in the Act.

SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. – The ECOZONE shall be managed and
operated by the PEZA as separate customs territory. The PEZA is hereby vested with the authority to issue certificate of origin
for products manufactured or processed in each ECOZONE in accordance with the prevailing rules or origin, and the pertinent
regulations of the Department of Trade and Industry and/or the Department of Finance.

SEC. 9. Defense and Security. – The defense of the ECOZONE and the security of its perimeter fence shall be the responsibility
of the national government in coordination with the PEZA. Military forces sent by the national government for the purpose of
defense shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these military forces shall be borne
by the national government. The PEZA may provide and establish the ECOZONES’ internal security and firefighting forces.

SEC. 10. Immigration. – Any investor within the ECOZONE whose initial investment shall not be less than One Hundred Fifty
Thousand Dollars ($150,000.00), his/her spouse and dependent children under twenty-one (21) years of age shall be granted
permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE
without any need of special authorization from the Bureau of Immigration. The PEZA shall issue working visas renewable every
two (2) years to foreign executives and other aliens, processing highly-technical skills which no Filipino within the ECOZONE
possesses, as certified by the Department of Labor and Employment. The names of aliens granted permanent resident status and
working visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after issuance thereof.

CHAPTER II GOVERNING STRUCTURES

SEC. 11. The Philippine Economic Zone Authority (PEZA) Board. – There is hereby created a body corporate to be known as
the Philippine Economic Zone Authority (PEZA) attached to the Department of Trade and Industry. The Board shall have a
director general with the rank of department undersecretary who shall be appointed by the President. The director general shall
be at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of the following fields: economics,
business, public administration, law, management or their equivalent, and with at least ten (10) years relevant working
experience preferably in the field of management or public administration.

"The director general shall be assisted by three (3) deputy directors general each for policy and planning, administration and
operation, who shall be appointed by the PEZA Board, upon the recommendation of the director general. The deputy directors
general shall be at least thirty-five (35) years old, with proven probity and integrity, and a degree holder in any of the following
fields: economics, business, public administration, law, management or their equivalent."

"The Board shall be composed of thirteen (13) members as follows: the Secretary of the Department of Trade and Industry as
Chairman, the Director General of the Philippine Economic Zone Authority as Vice-Chairman, the undersecretaries of the
Department of Finance, the Department of Labor and Employment, the Department of Interior and Local Government, the
Department of Environment and Natural Resources, the Department of Agriculture, the Department of Public Works and
Highways, the Department of Science and Technology, the Department of Energy, the Deputy Director General of the National
Economic and Development Authority, one (1) representative from the investors / business sector in the ECOZONE. In case of
the unavailability of the Secretary of the Department of Trade and Industry to attend a particular board meeting, the Director
General of PEZA shall act as Chairman."

The existing Export Processing Zone Authority (EPZA) created under Presidential Decree No. 66 shall evolve into the PEZA in
accordance with the guidelines and regulations set forth in an executive order issued for this purpose.

Members of the Board shall receive a per diem of not less than the amount equivalent to the representation and transportation
allowances of the members of the Board and / or as may be determined by the Department of Budget and Management:
Provided, however, That per diems collected per month does not exceed the equivalent of four (4) meetings.

SEC. 12. Functions and Powers of PEZA Board. – The Philippine Economic Zone Authority (PEZA) Board shall have the
following functions and powers:

(a) Set the general policies on the establishment and operations of the ECOZONES, industrial estates, export processing zones,
free trade zones, and the like;

(b) Review proposals for the establishment of ECOZONES based on the set criteria under Section 6 and endorse to the President
the establishment of the ECOZONES, industrial estates, export processing zones, free trade zones and the like. Thereafter, it
shall facilitate and assist in the organization of said entities;

(c) Regulate and undertake the establishment, operation and maintenance of utilities, other services and infrastructure in the
ECOZONE, such as heat, light and power, water supply, telecommunication, transport, toll roads and bridges, port services, etc.,
and to fix just, reasonable and competitive rates, charges and fees therefore;
(d) Approve the annual budget of the PEZA and the ECOZONE development plans;

(e) Issue rules and regulations to implement the provisions of this Act in so far as its power and functions are concerned;

(f) Exercise its powers and functions as provided for in this Act; and

(g) Render annual reports to the President and the Congress.

SEC. 13. General Powers and Functions of the Authority. – The PEZA shall have the following powers and functions:

(a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this Act;

(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner;

(c) To coordinate with local government units and exercise general supervision over the development, plans, activities and
operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like;

(d) In coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease, operate
and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-operate-transfer
scheme or joint venture, adequate facilities and infrastructure, such as light and power systems, water supply and distribution
systems, telecommunication and transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities for the
operation and development of the ECOZONE;

(e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may deem
necessary;

(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property; sue and
be sued; and otherwise carry out its duties and functions as provided for in this Act;

(g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above;

(h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and Industry (DTI),
the Department of Science and Technology (DOST), and the local government units and appropriate government agencies for
policy and program formulation and implementation; and

(i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local
government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure required or to
be made available for said entities.

SEC. 14. Powers and Functions of the Director General. – The director general shall be the overall coordinator of the policies,
plans and programs of the ECOZONES. As such, he shall provide overall supervision over and general direction to the
development and operations of these ECOZONES. He shall determine the structure and the staffing pattern and personnel
complement of the PEZA and establish regional offices, when necessary, subject to the approval of the PEZA Board. In addition,
he shall have the following specific powers and responsibilities:

(a) To safeguard all the lands, buildings, records, monies, credits and other properties and rights of the ECOZONES;
(b) To ensure that all revenues of the ECOZONE are collected and applied in accordance with its budget;
(c) To ensure that the investors/firms and employees of the ECOZONES are properly discharging their respective duties;
(d) To give such information and recommend such measures to the Board, as he shall deem advantageous to the ECOZONE;
(e) To submit to the Board, the ongoing and proposed projects, work and financial program, annual budget of receipts, and
expenditures of the ECOZONE;
(f) To represent the ECOZONE in all its business matters and sign on its behalf after approval of the Board, all its bonds,
borrowings, contracts, agreements and obligations made in accordance with this Act;
(g) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and claims of the residents and enterprises in
the ECOZONE concerning administrative matters;

(h) To recommend to the Board the grant, approval, refusal, amendment or termination of the ECOZONE franchises, licenses,
permits, contracts, and agreements in accordance with the policies set by the Board;
(i) To require owners of houses, buildings or other structures constructed without the necessary permit whether constructed on
public or private lands, to remove or demolish such houses, buildings, structures within sixty (60) days after notice and upon
failure of such owner to remove or demolish such house, building our structure within said period, the director general or his
authorized representative may summarily cause its removal or demolition at the expense of the owner, any existing law, decree,
executive order and other issuances or part thereof to the contrary notwithstanding;

(j) To take such emergency measures as may be necessary to avoid fires, floods and mitigate the effects of storms and other
natural or public calamities;

(k) To prepare and make out plans for the physical and economic development of the ECOZONE, including zoning and land
subdivision, and issue such rules and regulations which shall be submitted to the Board for its approval; and

(l) To perform such other duties and exercises such powers as may be prescribed by the Board, and to implement the policies,
rules and regulations set by the PEZA.

SEC. 15. Administration of Each ECOZONE. – Except for privately-owned, managed or operated ECOZONES, each
ECOZONE shall be organized, administered, managed and operated by the ECOZONE executive committee composed of the
following:

(a) The administrator who shall be appointed by the PEZA Board upon recommendation of the director general; and

(b) One (1) deputy administrator to be appointed by the Board upon recommendation of the director general.

An ECOZONE advisory body shall be created with the following members:

1. The president of the association of investors in the ECOZONE;
2. The governor of the province where the ECOZONE is located;
3. The mayor/s of the municipality/ies or city/ies where the ECOZONE is located;
4. The president of an accredited labor union in the ECOZONE;
5. The representative of the business sector in the periphery of the ECOZONE; and
6. The representative of the PEZA.

The ECOZONE advisory body shall have the following functions:

i. Advise the ECOZONE management on matters pertaining to policy initiatives; and
ii. Assist the ECOZONE management in setting problems arising between labor and any enterprise in the ECOZONE.

Privately-owned ECOZONES shall retain autonomy and independence but shall be monitored by the PEZA for the
implementation of incentives and operations for adherence to the law.

SEC. 16. Personnel. – The PEZA Board of Directors shall provide for an organization and staff of officers and employees of the
PEZA, and upon recommendation of the director general with the approval of the Secretary of the Department of Trade and
Industry, appoint and fix the remunerations and other emoluments:

Provided, That the Board shall have exclusive and final authority to promote, transfer, assign and reassign officers of the PEZA,
any provision of existing law to the contrary notwithstanding: Provided, further, That the director general may carry out removal
of such officers and employees.

All positions in the PEZA shall be governed by a compensation, position classification system and qualification standards
approved by the director general with the concurrence of the Board of Directors based on a comprehensive job analysis and audit
of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the
Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (BCDA) and the private sector and shall be subject
to the periodic review by the Board no more than once every two (2) years without prejudice to yearly merit reviews or increases
based on productivity and profitability. The PEZA shall therefore be exempt from existing laws, rules and regulations on
compensation, position classification and qualification standards. It shall however endeavor to make its systems conform as
closely as possible with the principles under Republic Act No. 6758.

The PEZA officers and employees including all Members of the Board shall not engage directly or indirectly in partisan
activities or take part in any election, except to vote.

No officer or employee of the PEZA subject to Civil Service laws and regulations shall be removed or suspended except for
cause, as provided by law.
SEC. 17. Investigation and Inquiries. – Upon a written formal complaint made under oath, which on its face provides reasonable
basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator of the ECOZONE
concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE and to conduct
investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production of books, papers, and
other evidences: Provided, That to arrive at the truth, the investigator(s) may grant immunity from prosecution to any person
whose testimony or whose possessions of documents or other evidence is necessary or convenient to determine the truth in any
investigation conducted by him or under the authority of the PEZA or the administrator of the ECOZONE concerned.

SEC. 18. Prohibition Against Holding Any Other Office. – The director general, deputy director general, administrators, officials
and staff or assistants of the PEZA shall not hold any other office or employment within or outside the PEZA during their tenure.
They shall not, during their tenure, directly or indirectly, practice any profession, participate in any business, or be financially
interested in any contract with, or in any franchise, or special privilege granted by the PEZA or national government, or any
subdivision, agency, or instrumentality thereof, including any government-owned-controlled corporation, or its subsidiary.

SEC. 19. Disbursement of Funds. – No money shall be paid out of the funds of any ECOZONE except in pursuance of the
budget as formulated and approved by the PEZA.

SEC. 20. Full Disclosure of Financial and Business Interests. – Every member of the Board of the PEZA, the director general,
the deputy directors general, and their staff shall, upon assumption of office, make full disclosure of their financial and business
Interests.

CHAPTER III OPERATIONS WITHIN THE ECOZONE

SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each ECOZONE established
pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and Industry and the
National Economic and Development Authority; Provided, That such development strategy is consistent with the priorities of the
national government as outlined in the medium-term Philippine development plan. It shall be the policy of the government and
the PEZA to encourage and provide Incentives and facilitate private sector participation in the construction and operation of
public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the build-
operate-transfer law).

SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas under its
jurisdiction.

SEC. 23. Fiscal Incentives. – Business establishments operating within the ECOZONES shall be entitled to the fiscal incentives
as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided
under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987. Furthermore, tax credits
for exporters using local materials as Inputs shall enjoy the same benefits provided for in the Export Development Act of 1994.

SEC. 24. Exemption from National and Local Taxes.- Except for real property taxes on land owned by developers, no taxes,
local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent
(5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer’s office of the municipality
or city where the enterprise is located.

House Bill No. 1636 Introduced by: Hon. Gwendolyn F. Garcia, July 18, 2016: This bill seeks to amend Sec. 24 of R.A. No.
7916 for the purpose of granting the province where the economic zone is situated a share of one and half percent of the gross
income derived by the business enterprise of whatever nature operating within the economic zone.

SEC. 25. Applicable National and Local Taxes. – All persons and services establishments in the ECOZONE shall be subject to
national and local taxes under the National Internal Revenue Code and the Local Government Code.

SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise shall be made available for Immediate retail sales
in the domestic market, subject to payment of corresponding taxes on the raw materials and other regulations that may be
adopted by the Board of the PEZA. However, in order to protect the domestic industry, there shall be a negative list of Industries
that will be drawn up by the PEZA. Enterprises engaged in the industries included in the negative list shall not be allowed to sell
their products locally. Said negative list shall be regularly updated by the PEZA. The PEZA, in coordination with the Department
of Trade and Industry and the Bureau of Customs, shall jointly issue the necessary implementing rules and guidelines for the
effective Implementation of this section.

SEC. 27. Applicability of Banking Laws and Regulations. – Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules
and regulations shall apply to banks and financial institutions to be established in the ECOZONE and to other ECOZONE-
registered enterprises. Among other pertinent regulations, these include those governing foreign exchange and other current
account transactions (trade and non-trade) local and foreign borrowings, foreign currency deposit units, offshore banking units
and other financial institutions under the supervision of the BSP.

SEC. 28. After Tax Profits. – Without prior Bangkok Sentral approval, after tax profits and other earnings of foreign investments
in enterprises in the ECOZONE may be remitted outward in the equivalent foreign exchange through any of the banks licensed
by the Bangko Sentral ng Pilipinas in the ECOZONE: Provided, however, That such foreign investments in said enterprises have
been previously registered with the Bangko Sentral.

SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may be expanded or reduced when necessary. For this
purpose, the government shall have the power to acquire, either by purchase, negotiation or condemnation proceedings, any
private lands within or adjacent to the ECOZONE for:

a. Consolidation of lands for zone development purposes;

b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been occupying a parcel of land
within the Zone has to be evicted, the PEZA shall provide the person or group of persons concerned with proper disturbance
compensation: Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be entitled to the
benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of Republic Act No. 3844, in
addition to a homelot in the relocation site and preferential employment in the project being undertaken.

SEC. 30. Leases of Lands and Buildings. – Lands and buildings in each ECOZONE may be leased to foreign investors for a
period not exceeding fifty (50) years renewable once for a period of not more than twenty-five (25) years, as provided for under
Republic Act No. 7652, otherwise known as the Investors’ Lease Act. The leasehold right acquired under long-term contracts
may be sold, transferred or assigned, subject to the conditions set forth under Republic Act No. 7652.

SEC. 31. Land Conversion. – Agricultural lands may be converted for residential, commercial, industrial and other non-
agricultural purposes, subjects to the conditions set forth under Republic Act No. 6657 and other existing laws.

SEC. 32. Shipping and Shipping Register. – Private shipping and related business including private container terminals may
operate freely in the ECOZONE, subject only to such minimum reasonable regulations of local application which the PEZA may
prescribe. The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a shipping
register for each ECOZONE as a business register of convenience for ocean-going vessels and issue related certification. Ships
of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject only to such reasonable
requirement as may be prescribed by the PEZA In coordination with the appropriate agencies of the national government.

SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take concrete and
appropriate steps and enact the proper measure for the protection of the local environment.

SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or operations shall comply
with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of debts. The assets
of the close enterprise can be transferred and the funds con be remitted out of the ECOZONE subject to the rules, guidelines and
procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall register with the
PEZA to avail of all incentives and benefits provided for in this Act.

SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of facilitating the registration
of new enterprises in the ECOZONE. Thus, all appropriate government agencies that are Involved In registering, licensing or
issuing permits to investors shall assign their representatives to the ECOZONE to attend to Investor’s requirements.
CHAPTER IV INDUSTRIAL HARMONY IN THE ECOZONES

SEC. 37. Labor and Management Relations. - Except as otherwise provided in this Act, labor and management relations in the
ECOZONE shall be governed by the existing Labor Code of the Philippines. Employees and personnel in the ECOZONE
enterprises shall receive salaries and benefits and shall enjoy working conditions not less than those provided under the
Philippine Labor Code and other relevant laws, issuances, rules and regulations of the Philippine government and the
Department of Labor and Employment.

SEC. 38. Promotion of Industrial Peace. - In the pursuit of Industrial harmony in the ECOZONE, a tripartite body composed of
one (1) representative each from the Department of Labor and Employment, labor sector and business and industry sectors shall
be created In order to formulate a mechanism under a social pact for the enhancement and preservation of industrial peace in the
ECOZONE within thirty (30) days after the effectivity of this Act.

SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and Employment, shall
prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of which provide
salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended, and other relevant
issuances of the national government.

SEC. 40. Percentage of Foreign Nationals. - Employment of foreign nationals hired by ECOZONE enterprises in a supervisory,
technical or advisory capacity shall not exceed five percent (5%) of Its workforce without the express authorization of the
Secretary of Labor and Employment.

SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment, shall promulgate
appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local governments of
nearby areas meet the needs of the migrant workers.

SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value of training expenses incurred In
developing skilled or unskilled labor or for managerial or other management development programs incurred by enterprises In
the ECOZONE can be deducted from the national government's share of three percent (3%) as provided In Section 24. The
PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a review of the incentive
scheme provided In this section every two (2) years or when circumstances so warrant.

CHAPTER V NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the development goals for the
ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon approval
by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council for inclusion in
and as inputs to the overall regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government units comprising the
ECOZONE 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.

SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. – Privately-owned industrial estates shall retain their
autonomy and independence and shall be monitored by the PEZA for the implementation of incentives.

SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates and agri-export
processing estates shall be transferred to the PEZA. The resources of government-owned Industrial estates and similar bodies
except the Bases Conversion Development Authority and those areas identified under Republic Act No. 7227, are hereby
transferred to the PEZA as the holding agency. They are hereby detached from their mother agencies and attached to the PEZA
for policy, program and operational supervision. The Boards of the affected government-owned industrial estates shall be phased
out and only the management level and an appropriate number of personnel shall be retained. Government personnel whose
services are not retained by the PEZA or any government office within the ECOZONE shall be entitled to separation pay and
such retirement and other benefits they are entitled to under the laws then in force at the time of their separation: Provided, That
in no case shall the separation pay be less than one and one-fourth (1 1/4) month of every year of service.
CHAPTER VI MISCELLANEOUS PROVISIONS

SEC. 47. Appropriation. - Upon the effectivity of this Act, all funds of the former Export Processing Zone Authority (EPZA)
shall be transferred to the newly-created Philippine Economic Zone Authority, Thereafter, any sum as may be necessary to
augment its capital outlay shall be Included In the General Appropriations Act to be treated as an equity of the national
government. Additional funding shall come from the following:

(a) The annual subsidies, appropriations and/or other assets of the exports processing zone, and the industrial estates and other
economic areas that have been absorbed/transferred to the PEZA as mandate in this Act;

(b) The proceeds from the rent of lands, buildings, and other properties of the ECOZONES concerned;

(c) The proceeds from fees, charges and other revenue-generatlng Instruments which the PEZA is authorized to impose and
collect under this Act,

(d) The proceeds from bonds which the PEZA authorized to float both domestic and abroad; and

(e) The advance rentals, license fees, and other charges which the PEZA is authorized to impose under this Act and which an
investor is willing to advance payment for.

SEC. 48. Applicability of National Laws. - National laws shall prevail vis-a- vis ECOZONE rules, regulations and standards,
unless there is a clear intent in this Act or other Acts of Congress to vest the ECOZONE specific power and privileges not
otherwise allowed under existing laws.

SEC. 49. Authority of the President to Advance Initial Funding.-- Subject to existing laws, the President of the Philippines is
hereby authorized to advance out of the savings of the Office of the President such funds as may be necessary to effect the
organization of an ECOZONE which shall be reimbursed by the PEZA at reasonable term and condition.

SEC. 50. Non-Applicability on Areas Covered by Republic Act. No. 7227. - This Act shall not be applicable to economic zones
and areas already created or to be created under Republic Act No. 7227 or other special laws, and governed by authorities
constituted pursuant thereto.

SEC. 51. Ipso-Facto Clause. - All privileges, benefits, advantages or exemptions granted to special economic zones under
Republic Act. No. 7227, shall ipso-facto be accorded to special economic zones already created or to be created under this Act.
The free port status shall not be vested upon new special economic zones.

SEC. 52. Separability Clause. - The provisions of this Act are hereby declared separable, and in the event one or more of such
provisions or part thereof are declared unconstitutional, such declaration of unconstitutionality shall not affect the validity of the
other provisions thereof.

SEC. 53. Interpretation / Construction. - The powers, authorities and functions that are vested In the Philippine Economic Zone
Authority (PEZA) and the ECOZONES concerned are intended to establish decentralization of governmental functions and
authority as well as an efficient and effective working relationship between the ECOZONE, the central government and the local
government units.

SEC. 54. Repealing Clause. - All laws, acts, presidential decrees, executive orders, proclamations and / or administrative
regulations which are inconsistent with the provisions of this Act, are hereby amended, modified, superseded or repealed
accordingly.

SEC. 55. Implementing Rules and Regulations. - The Department of Trade and Industry, the National Economic and
Development Authority, the Department of Finance, the Bureau of Customs, the Department of Agrarian Reform, the
Department of Interior and local Government, the Philippine Economic Zone Authority, and the representatives from the
technical staff of the Committee on Economic Affairs of both Houses of Congress shall formulate the implementing rules and
regulations of this Act within ninety (90) days after its approval. Such rules and regulations shall take effect fifteen (15) days
after their publication in a newspaper of general circulation in the Philippines.

SEC. 56. Transitory Provisions. - Prior to the effectivity of the implementing rules and regulations of this Act, the provisions of
Presidential Decree No. 66, as amended, and its implementing rules and regulations shall remain in force.

SEC. 57. Effectivity- This Act shall take effect upon its approval.
 Republic Act No. 8748 June 1, 1999
AN ACT AMENDING REPUBLIC ACT NO. 7916, OTHERWISE KNOWN AS THE "SPECIAL ECONOMIC ZONE
ACT OF 1995"
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Chapter II, Section 11 of Republic Act No. 7916 is hereby amended to read as follows:

"Section 11. The Philippine Economic Zone Authority (PEZA) Board. — There is hereby created a body corporate to be known
as the Philippine Economic Zone Authority (PEZA) attached to the Department of Trade and Industry. The Board shall have a
director general with the rank of department undersecretary who shall be appointed by the President. The director general shall
be at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of the following fields: economics,
business, public administration, law, management or their equivalent, and with at least ten (10) years relevant working
experience preferably in the field of management or public administration.

"The director general, shall be assisted by three (3) deputy directors general each for policy and planning, administration and
operations, who shall be appointed by the PEZA Board, upon the recommendation of the director general. The deputy directors
general shall be at least thirty-five (35) years old, with proven probity and integrity and a degree holder in any of the following
fields: economics, business, public administration, law, management or their equivalent.

"The Board shall be composed of thirteen (13) members as follows: the Secretary of the Department of Trade and Industry as
Chairman, the Director General of the Philippine Economic Zone Authority as Vice-chairman, the undersecretaries of the
Department of Finance, the Department of Labor and Employment, the Department of Interior and Local Government, the
Department of Environment and Natural Resources, the Department of Agriculture, the Department of Public Works and
Highways, the Department of Science and Technology, the Department of Energy, the Deputy Director General of the National
Economic and Development Authority, one (1) representative from the labor sector, and one (1) representative from the
investors/business sector in the ECOZONE. In case of the unavailability of the Secretary of the Department of Trade and
Industry to attend a particular board meeting, the Director General of PEZA shall act as Chairman."
xxx
Section 2. Chapter II, Section 15 of Republic Act No. 7916 is likewise amended to read as follows:

"Section 15. Administration of Each ECOZONE. — Except for privately-owned, managed or operated ECOZONES, each
ECOZONE shall be organized, administered, managed and operated by the ECOZONE executive committee composed of the
following:
xxx xxx xxx

"Privately-owned ECOZONES shall retain autonomy and independence but shall be monitored by the PEZA for the
implementation of incentives and operations for adherence to the law."
Section 3. Chapter II, Section 16 of Republic Act No. 7916 is likewise amended to read as follows:

"Section 16. Personnel. — The PEZA Board of Directors shall provide for an organization and staff of officers and employees of
the PEZA, and upon recommendation of the director general with the approval of the Secretary of the Department of Trade and
Industry, appoint and fix the remunerations and other emoluments: provided, that the Board shall have exclusive and final
authority to promote, transfer, assign or reassign officers of the PEZA, any provision of existing law to the contrary
notwithstanding: provided, further, that the director general may carry out removal of such officers and employees.

"All positions in the PEZA shall be governed by a compensation, position classification system and qualification standards
approved by the director general with the concurrence of the Board of Directors based on a comprehensive job analysis and audit
of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the
Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), Bases Conversion and Development
Authority (BCDA) and the private sector and shall be subject to periodic review by the Board no more than once every two (2)
years without prejudice to yearly merit reviews or increases based on productivity and profitability. The PEZA shall thereforee
be exempt from existing laws, rules and regulations on compensation, position classification and qualification standards. It shall
however endeavor to make its system conform as closely as possible with the principles under Republic Act No. 6758.

"The PEZA officers and employees including all Members of the Board shall not engage directly or indirectly in partisan
activities or take part in any election, except to vote.
"No officer or employee of the PEZA subject to Civil Service laws and regulations shall be removed or suspended except for
cause, as provided by law."

Section 4. Chapter III, Section 24 of Republic Act No. 7916 is hereby amended to read as follows:

"Section 24. Exemption from National and Local Taxes. — Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:

"(a) Three percent (3%) to the National Government;

"(b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality
or city where the enterprise is located."

Section 5. Chapter III, Section 25 of Republic Act No. 7916 is hereby amended to read as follows:

"Section 25. Applicable National and Local Taxes. — All persons and service establishments in the ECOZONE shall be subject
to national and local taxes under the National Internal Revenue Code and the Local Government Code."

Section 6. Chapter III, Section 29 of Republic Act No. 7916, is hereby amended to read as follows:

"Section 29. Eminent Domain. — x x x "If in the establishment of a publicly-owned ECOZONE, any person or group of persons
who has been occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the person or group of
persons concerned with proper disturbance compensation: provided, however, that in the case of displaced agrarian reform
beneficiaries, they shall be entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not limited to
Section 36 of Republic Act No. 3844, in addition to a homelot in the relocation site, and preferential employment in the project
being undertaken."

Section 7. Chapter VI, Section 50 of Republic Act No. 7916 is hereby amended to read as follows:

"Section 50. Non-Applicability on Areas Covered by Republic Act No. 7227. — This Act shall not be applicable to economic
zones and areas already created or to be created under Republic Act No. 7227 or other special laws, and governed by authorities
constituted pursuant thereto."

Section 8. Effectivity Clause. — This Act shall take effect after fifteen (15) days following its publication in the Official
Gazette or in two (2) newspapers of general circulation whichever comes earlier.

Approved, June 1, 1999.

REPUBLIC ACT NO. 7903

AN ACT CREATING A SPECIAL ECONOMIC ZONE AND FREE PORT IN THE CITY OF
ZAMBOANGA CREATING FOR THIS PURPOSE THE ZAMBOANGA CITY SPECIAL ECONOMIC
ZONE AUTHORITY, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

Section 1. Short Title. — This Act shall be known as the "Zamboanga City Special Economic Zone Act of 1995."

Section 2. Declaration of Policy. — It is hereby declared the policy of the State to encourage and promote the attainment of a
sound and balanced industrial, economic and social development in the country through the promotion of private enterprises.
Towards this end, the State shall endeavor to establish special economic zones in suitable and selected areas in the country where
enterprises will be given incentives to create an environment conducive to business. This shall be the means to attract local and
foreign investors, general employment opportunities, and encourage the regional dispersal of industries.
Section 3. Creation of the Zamboanga City Special Economic Zone. — In accordance with the foregoing policy and subject
to the concurrence of the city government of Zamboanga affected by the zone, there is hereby established a special economic
zone in the City of Zamboanga to be known as the Zamboanga City Special Economic Zone, hereinafter referred to as the
ZAMBOECOZONE. The specific metes and bounds of the ZAMBOECOZONE shall be more particularly defined in a
presidential proclamation that shall be issued for this purpose.
Section 4. Governing Principles. — The Zamboanga City Special Economic Zone shall be managed and operated under the
following principles:

(a) Within the framework and limitations of the Constitution and the applicable provisions of the Local Government Code, the
ZAMBOECOZONE shall be developed into a decentralized, self-reliant and self-sustaining agro-industrial, commercial,
financial, investment and tourist center and free port with suitable retirement and residential areas. The ZAMBOECOZONE shall
be provided with transportation, telecommunications, and other facilities needed to attract legitimate and productive foreign
investments, generate linkage industries and employment opportunities for the people of Zamboanga City and its neighboring
towns and cities.

(b) The ZAMBOECOZONE may establish mutually beneficial economic relations with other entities within the country, subject
to the administrative guidance of the Department of Foreign Affairs and/or Department of Trade and Industry with foreign
entities or enterprises.
(c)Foreign citizens and companies owned by non -Filipinos in whatever proportion may set up enterprises in the
ZAMBOECOZONE, either by themselves or in joint venture with Filipinos in any sector of industry, international trade and
commerce within the ZAMBOECOZONE.
(d) The ZAMBOECOZONE shall be managed and operated as a separate customs territory to ensure and facilitate the free flow,
entry and movement of machinery and other goods.It shall be vested with the authority to issue certificates of origin for products
manufactured or processed in the ZAMBOECOZONE in accordance with prevailing rules of origin, and the pertinent regulations
of the duly recognized national bodies tasked to oversee all other ECOZONES in the country.
(e) Business establishments within the ZAMBOECOZONE shall be entitled to the existing fiscal incentives as provided for
under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of
Executive Order No. 226, known as the Omnibus Investment Code of 1987, and such incentives, benefits or privileges presently
enjoyed by business establishments operating within the Subic Special Economic Zone pursuant to Republic Act No. 7227.
(f) Any provisions of existing laws, rules or regulations to the contrary notwithstanding, no taxes, local and national, shall be
imposed on business establishments operating within the ZAMBOECOZONE.In lieu of paying taxes, said business
establishments shall pay and remit to the national government two percent (2%) of their gross income.In addition, they shall
remit to the city government of Zamboanga three percent (3%) of their gross income, to be allocated as follows:

(1) Two percent (2%) to the City of Zamboanga; and

(2) (2) One percent (1%) to the barangay special development fund, which is hereby created,
for the development and improvement of the barangays within the City of Zamboanga.

(g) Except as otherwise provided herein, the local government unit/s embraced within the ZAMBOECOZONE shall retain and
maintain their basic autonomy and identity. Zamboanga City shall operate and function in accordance with Republic Act No.
7160, otherwise known as the Local Government Code of 1991.
(h) Any foreign investor who establishes a business enterprise within the ZAMBOECOZONE and who maintains capital
investment of not less than One hundred fifty thousand United States dollars (US$150,000) shall be granted, along with his or
her spouse, dependents, and unmarried children below twenty-one (21) years of age, a permanent resident status within the
ZAMBOECOZONE.
Such foreign investor and his or her spouse, dependents and unmarried children below the age of twenty-one (21) years, shall
have freedom of ingress and egress to and from the ZAMBOECOZONE without any need of any special authorization from the
Bureau of Immigration and Deportation.
Likewise, the Zamboanga City Special Economic Zone Authority shall issue working visas renewable every two (2) years to
foreign executives and foreign technicians with highly specialized skills which no Filipino possesses, as certified by the
Department of Labor and Employment.
The names of the foreigners granted permanent resident status and working visas by the Zamboanga City Special Economic
Zone Authority shall be reported to the Bureau of Immigration and Deportation within thirty (30) days from such grant.
The foregoing is without prejudice to a foreigner acquiring permanent resident status in the Philippines in accordance with
applicable immigration, retirement, and other related laws.
(i) The provisions of any law to the contrary notwithstanding, any foreigner, partnership, corporation, or any other business
association not created and existing under the laws of the Republic of the Philippines, engaged in the business of retailing goods
and merchandise, shall be permitted to engage in the business in such retail trade within the ZAMBOECOZONE after securing
license for that purpose from the Zamboanga City Special Economic Zone Authority: Provided, That only foreign nationals
engaged in medium- and large-scale retail trade may be permitted to engage in such business within the ZAMBOECOZONE.
The determination of the medium- and large-scale retail trade operation shall be the responsibility of the ZAMBOECOZONE
Authority.
(j) Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply on foreign exchange and other
current account transactions (trade and non-trade), local and foreign borrowings, foreign investments, establishment and
operation of local and foreign banks, foreign currency deposit units, offshore banking units and other financial institutions under
the supervision of the BSP.
Section 5. Creation of the Zamboanga City Special Economic Zone Authority. — Subject to the concurrence of the local
government units that will be affected by the creation of the ZAMBOECOZONE, there is hereby created a body corporate to be
known as the Zamboanga City Special Economic Zone
Authority, hereinafter referred to as the ZAMBOECOZONE Authority, which shall manage and operate the
ZAMBOECOZONE, in accordance with this Act. It shall be organized within one hundred eighty (180) days after the effectivity
of this Act.
Section 6. Principal Office. — The ZAMBOECOZONE Authority shall maintain its principal office in the City of Zamboanga,
but it may establish branches and agencies within the Philippines and abroad as may be necessary for the proper conduct of its
business.

Section 7. Powers and Functions of the ZAMBOECOZONE Authority. — The ZAMBOECOZONE Authority shall have the
following functions:
(a) To operate, administer, and manage the ZAMBOECOZONE according to the principles and provisions set forth in this Act;
(b) To recommend to the President the issuance of a proclamation to fix and delimit the site of the ZAMBOECOZONE;
(c) To register, regulate and supervise the enterprises in the ZAMBOECOZONE in an efficient and decentralized manner;
(d) To regulate and undertake the establishment, operation and maintenance of utilities, other mservices and infrastructure in the
ZAMBOECOZONE such as heat, light and power, water supply, telecommunications, transport, toll roads and bridges, port
services, etc., and to fix reasonable and competitive rates, fares, charges and prices therefor;
(e) To construct, acquire, own, lease, operate and maintain on its own or through others by virtue of contracts, franchises,
licenses, or permits under any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law), or in joint
venture with the private sector, any or all of the public utilities and infrastructure required or needed in the ZAMBOECOZONE
in coordination with appropriate national and local government authorities and in conformity with applicable lawsthereon;
(f) To operate on its own, either directly or through a subsidy entity, or license to other tourism related activities, including
games, amusements and recreational and sports facilities;
(g) Within the limitation provided by law, to raise or borrow adequate and necessary funds from local or foreign sources to
finance its projects and programs under this Act, and for that purpose to issue bonds, promissory notes, and other forms of
securities, and to secure the same by a guarantee, pledge, mortgage, deed of trust, or an assignment of all part of its property or
assets;
(h) To provide security for the ZAMBOECOZONE in coordination with national and local governments. For this purpose, the
ZAMBOECOZONE Authority may establish and maintain its own security force and firefighting capability or hire others to
provide the same;
(i) To protect, preserve, maintain and develop the virgin forests, beaches, coral and functional units or offices within the
ZAMBOECOZONE.
(j) To create, operate and/or contract to operate such agencies and functional units or offices of the ZAMBOECOZONE
Authority as it may deem necessary;
(k) To adopt, alter and use a corporate seal; make contracts, leases, own or otherwise dispose of personal or real property; sue
and be sued; and otherwise carry out its functions and duties as provided for in this Act; and
(l) To issue rules and regulations consistent with the provisions of this Act as may be necessary to implement and accomplish the
purposes, objectives, and policies provided therein.
Section 8. Non-profit Character of the ZAMBOECOZONE Authority. — The ZAMBOECOZONE Authority shall be non-
profit and shall devote the use of its returns from capital investments, as well as excess revenues from its operations, for the
development, improvement, and maintenance and other related expenditures of the ZAMBOECOZONE Authority to pay its
indebtedness and obligations and in furtherance and effective implementation of the policy provided in this Act. In consonance
with this, the ZAMBOECOZONE Authority 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.
The foregoing exemptions may however be entirely or partially lifted by the President of the Philippines upon the
recommendation of the Secretary of Finance, not earlier than five (5) years from the effectivity of this Act, if the President shall
find the Authority to be self-sustaining and financially capable by then to pay such taxes, customs duties, fees and other charges
after providing for debt service requirements of the ZAMBOECOZONE Authority and of its projected capital and operating
expenditures.
Section 9. Board of Directors of the ZAMBOECOZONE Authority. — The powers of the ZAMBOECOZONE Authority
shall be vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be composed of the
following:
(a) A chairman who shall, at the same time, be the administrator of the ZAMBOECOZONE Authority;
b)A vice-chairman who shall come from the national agency tasked to coordinate and monitor special economic zones and the
like in the country;
Six (6) members consisting of:
(1) The city's congressional representative;
(2) The mayor of the City of Zamboanga;
(3) One (1) representative of the city council;
(4) One (1) representative from domestic investors in the ZAMBOECOZONE;
(5) One (1) representative from foreign investors in the ZAMBOECOZONE; and
(6) One (1) representative from the labor sector chosen from the workers in the ZAMBOECOZONE.
The city's congressional representative, the mayor of the City of Zamboanga and the representative of the city council shall serve
as ex officio voting members of the Board.
The chairman and the members of the Board, except the ex officio members, shall be appointed by the President of the
Philippines to serve for a term of six (6) years, unless sooner removed for cause or dies or resigns voluntarily. In case of death,
resignation or removal for cause, the replacement shall serve only the unexpired portion of the term.
Except for the representatives of the business and investment sectors no person shall be appointed by the President of the
Philippines as member of the Board unless he is a Filipino citizen, of good moral character and of recognized competence in
some relevant fields of business, banking, shipping, business or labor management, port operations, engineering or law.
Members of the Board shall receive a reasonable per diem which shall be fixed by the President of the Philippines once every six
(6) years for every Board meeting: Provided, however, That the total per diem collected each month shall not exceed the
equivalent per diems for four (4) meetings. Unless and until the
President of the Philippines has fixed a higher per diem for the members of the Board, such per diem shall not be more than Ten
thousand pesos (P10,000.00) for every Board meeting.
Section 10. Powers and Duties of the Chairman-Administrator. — The chairman-administrator shall have the following
powers and duties:
(a) To direct and manage the affairs of the Authority in accordance with the policies of the Board;
(b)To establish the internal organization of the Authority under such conditions that the Board may prescribe;
(c)To submit an annual budget and necessary supplemental budget to the Board for its approval;
(d)To submit within thirty (30) days after the close of each fiscal year an annual report to the Board and such other reports as
may be required; and
(e)To perform such other duties as may be assigned to him by the Board.
Section 11. Promotion of Industrial Peace. — One representative each from the Department of Labor and Employment
(DOLE), labor sector, cultural minorities, business and industry sectors shall formulate a mechanism under a social pact for the
enhancement and preservation of industrial peace in the City of Zamboanga within thirty (30) days after the effectivity of this
Act.
Section 12. Capitalization. — The Zamboanga City Special Economic Zone Authority shall have an authorized capital stock of
two billion (2,000,000,000) no par shares with a minimum issue value of Ten pesos (P10.00) each. The national government
shall initially subscribe and fully pay three hundred million (300,000,000) shares of such capital stock. The initial amount
necessary to subscribe and pay for the shares of stock shall be included in the General Appropriations Act of the year following
its enactment into law and thereafter. The Board of Directors of the ZAMBOECOZONE Authority may, from time to time and
with the written concurrence of the Secretary of Finance, increase the issue value of the shares representing the capital stock of
the ZAMBOECOZONE Authority. The Board of Directors of the ZAMBOECOZONE Authority, with the written concurrence
of the Secretary of Finance, may sell shares representing not more than forty per centum (40%) of the capital stock of the
ZAMBOECOZONE Authority to the general public with such annual dividend policy as the Board and the Secretary of Finance
may determine. The national government shall in no case own less than sixty per centum (60%) of the total issued and
outstanding capital stock of the ZAMBOECOZONE Authority.
Section 13. Supervision and Coordination of Development Plans. — For purposes of policy direction and coordination, the
ZAMBOECOZONE Authority shall be under the direct control and supervision of the Office of the President, in the meantime
that the agency tasked with the coordination of special economic zones is not yet in place.
Section 14. Relationship with the Local Government Units. — In case of any conflict between the ZAMBOECOZONE
Authority and the City of Zamboanga on matters affecting the ZAMBOECOZONE other than defense and security matters, the
decision of the ZAMBOECOZONE Authority shall prevail.
Section 15. Auditing. — The Commission on Audit shall appoint a representative who shall be a full time auditor of the
ZAMBOECOZONE Authority and assign such number of personnel as may be necessary to assist said representative in the
performance of his/her duties. The salaries and emoluments of the assigned auditor and personnel shall be in accordance with
pertinent laws, rules and regulations.
Section 16. Separability Clause. — If any provision of this Act shall be held unconstitutional or invalid, the other provisions
not otherwise affected shall remain in full force and effect.
Section 17. Repealing Clause. — All laws, executive orders or issuance, or any parts thereof which are inconsistent herewith,
are hereby repealed or amended accordingly.
Section 18. Effectivity Clause. — This Act shall take effect upon its publication in at least one (1) newspaper of general
circulation.
Approved: February 23, 1995
 REPUBLIC ACT NO. 7922

AN ACT ESTABLISHING A SPECIAL ECONOMIC ZONE AND FREE PORT IN THE MUNICIPALITY OF SANTA
ANA AND THE NEIGHBORING ISLANDS IN THE MUNICIPALITY OF APARRI, PROVINCE OF CAGAYAN,
PROVIDING FUNDS THEREFORE, AND FOR OTHER PURPOSES
Section 1. Short Title. – This Act shall be known as the “Cagayan Special Economic Zone Act of 1995.”

Section 2. Declaration of Policy. – It is hereby declared the policy of the government to actively encourage, promote, induce and
accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the
people especially those in the rural areas, increase their productivity and their individual and family income, and thereby improve
the level and quality of their condition through the establishment, among others, of special economic zones and free ports in
suitable and strategic locations in the country and through measures that shall effectively attract legitimate and productive
foreign investments.
Section 3. The Cagayan Special Economic Zone and Free Port. – In accordance with the foregoing declared policy, there is
hereby established a special economic zone and free port, to be known as the Cagayan Special Economic Zone, hereinafter
known as the Zone, which shall cover the entire area embraced by the Municipality of Santa Ana and the islands of Fuga, Barit,
and Mabbag in the Municipality of Aparri, Province of Cagayan.
Section 4. Governing Principles. – The Cagayan Special Economic Zone shall be managed and operated under the following
principles:
(a) Under the framework and limitations of the Constitution and the applicable and the provisions of the Local Government
Code, the Zone shall be developed into and operated as a self-sustaining, commercial, financial, investment, and
tourism/recreational center and free port with suitable retirement/residential areas, in order to create employment opportunities in
and around the Zone, and to effectively encourage and attract legitimate and productive foreign investments therein;
(b) Business establishments operating within the Zone shall be entitled to the existing fiscal incentives as provided for under
Presidential Decree No. 66, the law creating the Export Processing Zone Authority (EPZA), or those provided under Book VI of
Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987;
(c) Any provision of existing law, rules or regulations to the contrary notwithstanding, no taxes, local and national, shall be
imposed on business establishments operating within the Zone. In lieu of paying taxes, said business establishments shall pay
and remit to the national government five per centum (5%) of their gross income, to be divided as follows:
(1) Two per centum (2%) shall accrue to the general fund of the national government;
(2) One per centum (1%) to the Province of Cagayan;
(3) One-half per centum (1/2%) to be shared by the municipalities affected by the declaration of the Zone in proportion to their
income from business activities within the Zone; and
(4) One and one-half per centum (1 ½%) to the Cagayan Economic Zone Authority which shall be created under this Act;
(d) Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply on foreign exchange and other
current account transactions (trade and non-trade), local and foreign borrowings, foreign investments, establishment and
operation of local and foreign banks, foreign currency deposit units, offshore banking units and other financial institutions under
the supervision of the BSP;
(e) Any foreign investor who establishes a business enterprise within the Zone and who maintains capital investment of not less
than One hundred fifty thousand United States dollars (US$150,000) shall be granted, along with his or her spouse, dependents,
and unmarried children below twenty-one (21) years of age, a permanent resident status within the Zone. The responsibility and
authority to grant such permanent resident status is hereby delegated to the Cagayan Economic Zone Authority referred to in
Section 5 of this Act.
Such foreign investor and his or her spouse, dependents, and unmarried children below the age of twenty-one (21) years, shall
have the freedom of ingress and egress to and from the Zone without need of any special authorization from the Bureau of
Immigration. Likewise, the Cagayan Economic Zone Authority shall issue working visas renewable every two (2) years to
foreign executives and foreign technicians with highly specialized skills which no Filipino possesses, as certified by the
Department of Labor and Employees.
The names of foreigners granted permanent resident status and working visas by the Cagayan Economic Zone Authority shall be
reported to the Bureau of Immigration within thirty (30) days from such grant.
The foregoing is without prejudice to a foreigner acquiring permanent resident status in the Philippines in accordance with
applicable immigration, retirement, and other related laws; and
(f) Except as otherwise provided herein, the local government units totally or partially embraced within the Zone shall retain and
maintain their basic autonomy and identity. The Municipality of Santa Ana and the Municipality of Aparri shall operate and
function in accordance with Republic Act No. 7160, otherwise known as the Local Government Act of 1991, insofar as the areas
within their respective jurisdiction covered in this Act are concerned.
Section 5. Creation of the Cagayan Economic Zone Authority. – A body corporate to be known as the Cagayan Economic Zone
Authority, hereinafter referred to as the CEZA, is hereby created to manage and operate, in accordance with the provisions of
this Act, the Cagayan Special Economic Zone and Free Port. This corporate franchise shall expire in fifty (50) years counted
from the first day of the fifth (5th) calendar year after the effectivity of this Act, unless otherwise extended by Congress.
Section 6. Powers and Functions of the Cagayan Economic Zone Authority. – The Cagayan Economic Zone Authority shall have
the following powers and functions:
(a) To adopt, alter, use a corporate seal; to contract, lease, buy, sell, acquire, own and dispose, movable and immovable as well
as personal and real property of whatever nature (including but not limited to shares of stock or participation in private
corporations or in limited partnerships, or in joint ventures with limited liability), bonds, precious metals in bullions, ingots, and
easily convertible foreign exchange; to sue and be sued in order to carry out its duties, responsibilities, privileges, powers and
functions as granted and provided for in this Act; and to exercise the power of eminent domain for public use and public purpose;
(b) Within the limitation provided by law, to raise or borrow adequate and necessary funds from local or foreign sources to
finance its projects and programs under this Act, and for that purpose to issue bonds, promissory notes, and other form of
securities, and to secure the same by a guarantee, pledge, mortgage, deed of trust, or an assignment of all or part of its property
or assets;
(c) To approve, accept, accredit and allow any local or foreign business, enterprise or investment in the Zone subject only to such
rules and regulations as CEZA may promulgate from time to time in conformity with the provisions of this Act and the
limitations provided in the Constitution;
(d) To authorize or undertake, on its own or through others, and regulate the establishment, operation and maintenance of public
utilities, services, and infrastructure in the Zone such as shipping, barging, stevedoring, cargo handling, hauling, 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 the private investors in the Zone shall be given priority in the awarding of
contracts, franchises, licenses, or permits for the establishment, operation and maintenance of utilities, services and infrastructure
in the Zone;
(e) To construct, acquire, own, lease, operate and maintain on its own or through others by virtue of contracts, franchises,
licenses, or permits under the build-operate-transfer scheme or under a joint venture with the private sector any or all of the
public utilities and infrastructure required or needed in the Zone, in coordination with appropriate national and local government
authorities and in conformity with applicable laws thereon;
(f) To operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including
games, amusements, recreational and sports facilities such as horse racing, dog racing, gambling casinos, golf courses, and
others, under priorities and standards set by the CEZA;
(g) To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs within the Zone. The virgin forest
within the Zone will be proclaimed as a national park and will be covered by a permanent total log ban. For this purpose, the
rules and regulations of the Department of Environment and Natural Resources and other government agencies involved in the
above functions shall be implemented by the CEZA;
(h) To adopt, implement and enforce reasonable measures and standards to control pollution within the Zone;
(i) To provide security for the Zone in coordination with the national and local governments. For this purpose, CEZA may
establish and maintain its own security force and firefighting capability or hire others to provide the same;
(j) To form, establish, organize and maintain subsidiary corporations, as its business and operations may require, whether under
the laws of the Philippines or not;
(k) To issue rules and regulations consistent with the provisions of this Act as may be necessary to implement and accomplish
the purposes, objectives and policies herein provided; and
(l) To exercise such powers as may be essential, necessary or incidental to the powers granted to it hereunder as well as those
that shall enable it to carry out, implement, and accomplish the purposes, objectives and policies of this Act.
Section 7. Board of Directors of CEZA. – The powers of the Cagayan Economic Zone Authority shall be vested in and exercised
by a Board of Directors, hereinafter referred to as the Board, which shall be composed of fifteen (15) members, to wit:
(a) The Secretary of Trade and Industry who shall serve as an ex officio chairman of the Board of Directors and four (4) other
representatives of the national government;
(b) The mayors of the Municipality of Aparri and the Municipality of Sta. Ana, Province of Cagayan, as ex officio voting
members;
(c) Two (2) representatives of labor from among the workers in the Cagayan Special Economic Zone;
(d) Four (4) representatives from the business and investment sectors in the Zone, two (2) of whom must come from the investors
in the Municipality of Sta. Ana and the other two (2) must come from the investors in the islands of Fuga, Barit and Mabbag in
the Municipality of Aparri; and
(e) Two (2) representatives of the private sector coming from the residents of the municipalities of Santa Ana and Aparri.
The chairman and the members of the Board, except the ex officio members, shall be appointed by the President of the
Philippines to serve for a term of three (3) years, unless sooner removed for cause or dies or resigns voluntarily. In case of death,
resignation or removal for cause, the replacement shall serve only the unexpired portion of the term.
Except for the representatives of the business and investment sectors, no person shall be appointed by the President of the
Philippines as a member of the Board unless he is a Filipino citizen, of good moral character and of recognized competence in
some relevant fields in business, banking, shipping, business or labor management, port operations, engineering, or law.
Members of the Board shall receive a reasonable per diem which shall not be less than the amount equivalent to the
representation and transportation allowances of the members of the Board and/or as may be determined by the Department of
Budget and Management: provided, however, that the total per diem collected each month shall not exceed the equivalent per
diem for four (4) meetings. Unless and until the President of the Philippines has fixed a higher per diem for the members of the
Board, such per diem shall not be more than Ten thousand pesos (P10,000.00) for every Board meeting.
Section 8. Administrative and Chief Executive Officer. – The President of the Philippines shall appoint a full-time professional
and competent administrator and chief executive officer for the Cagayan Economic Zone Authority whose compensation shall be
determined by its Board of Directors and shall be in accordance with the revised compensation and position classification
system. The administrator as chief executive officer of CEZA shall be responsible to the Board and the President of the
Philippines for the efficient management and operation of the Cagayan Special Economic Zone.
Section 9. Capitalization. – The Cagayan Economic Zone Authority shall have an authorized capital stock of two billion
(2,000,000,000) no par shares with a minimum issue value of Ten pesos (P10.00) each. The national government shall initially
subscribe and fully pay three hundred million (300,000,000) shares of such capital stock. The initial amount necessary to
subscribe and pay for the shares of stock shall be included in the General Appropriations Act of the year following its enactment
into law and thereafter. The Board of Directors of CEZA may, from time to time and with the written concurrence of the
Secretary of Finance, increase the issue value of the shares representing the capital stock of the Cagayan Economic Zone
Authority. The Board of Directors of CEZA, with the written concurrence of the Secretary of Finance, may sell shares
representing not more than forty per centum (40%) of the capital stock of the CEZA to the general public with such annual
dividend policy as the Board and the Secretary of Finance may determine. The national government shall in no case own less
than sixty per centum (60%) of the total issued and outstanding capital stock of the CEZA.
Section 10. Supervision. – The Cagayan Special Economic Zone shall be under the direct control and supervision of the Office of
the President of the Philippines for purposes of policy direction and coordination, in the meantime that the agency tasked with
the coordination of special economic zones is not yet in place.
Section 11. Relationship with the Municipalities of Santa Ana and Aparri. – In case of any conflict between the Cagayan
Economic Zone Authority and the municipalities of Santa Ana and Aparri on matters affecting the Cagayan Special Economic
Zone other than in defense and security matters, the decision of CEZA shall prevail.
Section 12. Legal Counsel. – The Cagayan Economic Zone Authority and the corporations in which CEZA owns a majority of
the issued capital stock shall have its own internal legal counsel under the supervision of the government corporate counsel.
When the exigencies of its businesses and operations demand it, the CEZA may engage the services of an outside counsel either
on a case to case basis or on a fixed retainer.
Section 13. Auditor. – The Commission on Audit shall appoint a representative who shall be a full-time auditor of the Cagayan
Economic Zone Authority and its subsidiaries, and assign such number of personnel as may be necessary to assist said
representative in the performance of his or her duties. The salaries and emoluments of the assigned auditor and personnel of the
Commission on Audit shall be in accordance with the revised compensation and position classification system. The Commission
on Audit shall render an annual report to the President of the Philippines and to Congress on the business activities, transactions
and operations of the Cagayan Economic Zone Authority.
Section 14. Separability Clause. – If any provision of this Act shall be held unconstitutional or invalid, the other provisions not
otherwise affected shall remain in full force and effect.
Section 15. Repealing Clause. – All laws, executive orders or issuances, or any parts thereof which are inconsistent herewith are
hereby repealed or amended accordingly.
Section 16. Effectivity Clause. – This Act shall take effect upon its publication in at least one (1) newspaper of general
circulation.
Approved, February 24, 1995.

REPUBLIC ACT No. 9490 June 29, 2007

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 THEREFOR
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the - Aurora Special Economic Zone Act of 2007―.
Section 2. Declaration of Policy. - It is hereby declared the policy of the State to actively encourage, promote, induce and
accelerate the sound and balanced industrial, economic and social development of the country in order to provide jobs to the
people, especially those in rural areas, increase their productivity and their individual and family income, and thereby improve
the level and quality of their living conditions though the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign
investments.
Section 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. The specific metes and bounds of the Aurora
Ecozone shall be more particularly described and described as follows:
A portion of an agricultural land of the public domain, embraced by CAD-358-D of Casiguran cadastre and beginning at a point
marked - I - on the map which is located at the center of the intersection of a road going to Barangay Bianoan, Casiguran, Aurora
and to the barangay road going to Casiguran National High School (CNHS), Barangay Esteves, Casiguran, Aurora with
geographic coordinates of 16-12-05 North, 122-02.34.7 East.
Thence N 05° 00' E 1,000.00 m. to corner 2, intersection of barangay road to Barangay Dibet and So. Bikal, Barangay Esteves,
Casiguran, Aurora.
Thence N 70° 00' E 1,700.00 m. to Corner 3, stake on the ground
Thence S 08° 00' E 1,300.00 m. to corner 4, along the shoreline of Casiguran Bay
Thence S 85° 00' W 380.00 m. to cornel' 5, center of Barangay Road and Motiong Creek
Thence N 16° 00' E 700.00 m. to corner 6, intersection of barangay road to Barangay Esteves and Dibet, Casiguran, Aurora
Thence N 58° 00' E 1,500.00 m. to corner 7, center of 1'0 ad at Banawang Creek
Thence Due South 250.00 m. to corner 8, along the shoreline of Casiguran Bay
Thence S 35° 00' W 600.00 m. to corner 9, along the shoreline of Casiguran Bay
Thence N 73° 00' W 600.00 m. to corner 10, Gmelina tree 40 cm. diam. along barangay road
Thence Due North 830.00 m. to corner 11, following the road from CNHS
Thence N 40° 00' E 1,000.00 m. to corner 1, following the road from CNHS to point of begin rung containing an area Five
hundred (500) hectares, more or less, subject to actual ground survey: Provided, That the lands embraced therein shall be public
lands.
Section 4. Governing Principles. - The Aurora Special Economic Zone shall be managed and operated by the Aurora Special
Economic Zone Authority, hereinafter referred to as the ASEZA, created under Section 10 of this Act, under the following
principles:
(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, self reliant 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 areas comprising the Aurora Ecozone may be expanded or reduced when necessary. For this purpose, the ASEZA, 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.
(f)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
ASEZA, together with the PEZA, the Bureau of Customs 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 Enterprises engaged in industries included in
such negative list shall not be allowed to sell their products locally.
(g)The national government shall maintain its ability to coordinate with the Aurora Ecozone and the local government units.
Section 5. Incentives to Registered Enterprises. - The Aurora Special Economic Zone Authority (ASEZA) may administer the
following incentives to the registered enterprises located therein to the extent of the activity/project:
(A)Income Tax Holiday (ITH). - Registered enterprises shall be entitled to an income tax holiday from the start of their
commercial operations to the extent of their activity under the following categories:
Category A - Registered domestic enterprise located in highly developed areas, as determined by the Board of Investments
(BOI), shall be entitled to a four-year income tax holiday.
Category B - Registered domestic enterprise on the following shall be entitled to a six-year income tax holiday:
(1)Located in less developed areas as defined by the BOI; or
(2)Producing/rendering new products/services or having strong backward or forward linkages.
Category C - Registered export enterprise shall be entitled to a six-year income tax holiday: Provided, however, That lithe export
enterprise complies with the following: (1) large capital investments or sizeable employment generation; or (2) use high level of
technology; or (3) located outside Metro Manila, it shall be entitled to an eight-year income tax holiday.
Registered enterprises embarking on new investments that are listed in the current Investment Priorities Plan (IPP) shall be
entitled to incentives provided herein pertaining to the new investments and subject to such terms and conditions as the BOI may
determine.
For this purpose, a registered enterprise shall be defined as any person, natural or juridical, licensed to do business in the
Philippines and registered with the Aurora Special Economic Zone Authority (ASEZA) to transact business within the Aurora
Special Economic Zone. A registered export enterprise shall be defined as any registered enterprise engaged directly or indirectly
in the production, manufacture or trade of products or services which earns at least seventy percent (70%) of its normal operating
revenues from the sale of its products or services abroad for foreign currency. A registered domestic enterprise, meanwhile, shall
be defined as any registered enterprise not falling under the definition of a registered export enterprise.
Additional investments in the project shall be entitled to the income tax holidays corresponding to such investments as may be
determined by the BOI. Additional income tax holiday may be granted for as long as the investment is made on the same
project: Provided, That the project is listed in the IPP at the same time the additional investment in the project is made: Provided,
further, That the entitlement period for additional investments shall not exceed three times the period provided under this
subsection: Provided, however, That the total ITH period for an export enterprise availing of an eight-year ITH shall not exceed
twenty (20) years. Any unused incentives shall therefore be deemed forfeited if not used during the incentive period.
Enterprises registered with the ASEZA are required to share in the special development fund of the BOI for investment
promotion projects of the government equivalent to one percent (1%) of the ITH granted for every application.
The Bureau of Internal Revenue (EIR) shall require a registered enterprise availing of ITH or Net Operating Loss Carryover
(NOLCO) to secure a certificate of eligibility from the ASEZA before submitting its income tax return (ITR) with the ASEZA
for validation.
Failure to secure certification and/or to file the ITH or NOLCO availment for validation by the ASEZA within forty-five (45)
days from the last day of each statutory filing date for ITR shall cause the forfeiture of the availment for the taxable period.
(B)Net Operating Loss Carryover (NOLCO). - Net operating loss of the business or enterprise during the first three years from
the start of commercial operations which have not been previously offset as deduction from gross income shall be carried over as
a deduction from gross income for the next five consecutive years immediately following the year of such loss: Provided,
however, That operating loss resulting from availment of incentives provided in this Act shall not be entitled to NOLCO.
Registered enterprises availing of the ITH as herein provided shall not be entitled to avail of the NOLCO.
(C)Imposition of a tax rate of five percent (5%) on Gross Income Earned (GIE) - Except for real property tax on land, no local
and national taxes as prescribed under Republic Act No. 8424, also known as - The National Internal Revenue Code of 1997, as
Amended - such as income tax, excise tax and franchise taxes, shall be imposed on registered enterprises operating within the
Aurora Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall be paid as follows:
(a)Three percent (3%) to the national government; and
(b)Two percent (2%) shall be remitted by the business establishments to the treasurer's office of the municipality or city where
the enterprise is located.
All persons and service establishments in the Aurora Ecozone shall be subject to national and local taxes under the National
Internal Revenue Code of 1997, as amended, and the Local Government Code.
(D)Accelerated Depreciation. - Accelerated depreciation of plant, machinery and equipment that are reasonably needed and
actually used for the production and transport of goods and services may be allowed using a rate not exceeding twice the rate
which would have been used had the annual allowance been computed in accordance with the rules and regulations prescribed by
the Secretary of Finance and the provisions of the National Internal Revenue Code of 1997, as amended.
(E)Capital Equipment Incentives. -
(1)Importations of capital equipment, spare parts, tools and dye, or those required for pollution abatement and control, cleaner
production and waste reduction including consignment thereof by registered enterprises upon the effectivity of this law, shall be
exempted to the extent of one hundred percent (100%) of the taxes and customs duties: Provided, That the imported items
thereof shall be used exclusively by the registered enterprise in its registered activity: Provided, further, That the importation of
machinery and equipment and accompanying parts shall comply with the following conditions:
(i)They are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices;
(ii)They are reasonably needed and will be used exclusively by the registered enterprise in the manufacture of its products, unless
prior approval of the ASEZA is secured for the part time utilization of said equipment in a non-registered activity to maximize
usage thereof Or the proportionate taxes and duties are paid on a specific equipment and machinery being permanently used for
non-registered activities; and
(iii)Approval of the ASEZA was obtained by the registered enterprise for the importation of such machinery, equipment and
spare parts.
Approval of the ABEZA must be secured before any sale, transfer or disposition of the imported capital equipment, machinery or
spare parts is made: Provided, That if such sale, transfer or disposition is made within the first five years from date of
importation, any of the following conditions must be present:
(1)the same is made to another enterprise enjoying tax and duty exemption on imported capital equipment;
(2)the same is made to another enterprise, upon the payment of any taxes and duties on the net book value of the capital
equipment to be sold;
(3)the exportation of the capital equipment, machinery, spare parts or source documents or those required for pollution
abatement and control; or
(4)proven technical obsolescence of the said equipment, machinery or spare parts.
When the aforementioned sale, transfer or disposition is made under any of the conditions provided for in the foregoing
paragraphs other than paragraph (2) herein, the registered firm shall not pay the taxes and duties waived all such items: Provided,
further, That if the registered enterprises sell, transfer or dispose the aforementioned imported items without prior approval
within five years from the date of importation, the registered enterprise and the vendee, transferee or assignee shall be solidarily
liable to pay twice the amount of the tax and duty exemption given it: Provided, finally, That even if the sale, transfer or
disposition of the capital equipment, machinery or spare parts is approved after five years from the date of importation, the
registered enterprises are still liable to pay the taxes and duties based on the net book value of the capital equipment, machinery
or spare parts if any of the registration terms and conditions has been violated. Otherwise, they shall no longer be subject to the
payment of the taxes and duties waived thereon.
(2)The purchase of machinery, capital equipment, raw materials, supplies, parts and semi-finished products to be used in the
fabrication of machinery and capital equipment by a registered export-oriented enterprise from a domestic manufacturer shall be
subject to zero percent (0%) value-added tax.
The registered export-oriented enterprise shall be granted a tax credit equivalent to the amount of duties that would have been
waived on the machinery, capital equipment, raw materials, supplies, parts and semi-finished products used in the fabrication of
machinery and capital equipment, had these items been imported, upon its submission to the Department of Finance (DOF) of
the bill of materials evidencing the transaction value of such and other pertinent documents, for verification and proper
endorsement.
The availment by a registered export enterprise of the incentive stated under the immediately preceding two paragraphs shall be
subject to the following conditions: (a) that said capital equipment, machinery and spare parts will be used exclusively by the
registered enterprise in its registered activity; (b) that the capital equipment or machinery where the raw materials, supplies, parts
and semi-finished products were used would have qualified for tax and duty-free importation; and (c) that the approval of the
ASEZA is obtained by the registered enterprise. If the registered enterprise sells, transfers or disposes of these machineries,
capital equipment and spare parts, the provision in the preceding paragraphs for such disposition shall apply.
This incentive shall he deemed waived if application for tax credit under this subsection was not filed within one year from the
date of delivery,
(F)The importation of source documents by information technology-registered enterprises shall be eligible for tax and duty free
importation.
(G)Raw Materials Incentives. - Every registered export-oriented enterprise shall enjoy a tax credit equivalent to the internal
revenue taxes and customs duties 'Paid on the supplies, raw materials and semi-manufactured products provided the same are not
sufficient in quantity, quality or are not competitively priced in the Philippines and which are used in the manufacture,
processing or production of its export products forming part thereof, exported directly and indirectly by the registered export-
oriented enterprise, based on the actual taxes and duties paid for such materials/supplies/semi-manufactured products by the
registered enterprise.
This incentive shall be deemed waived if application for tax credit under this subsection was not med within one year from the
date of exportation of the final product.
(H)Incentives on Breeding Stocks and Genetic Materials. - Importation of breeding stocks and genetic materials within ten (10)
years from the date of registration of commercial operation of the enterprise shall be exempt from all taxes and
duties: Provided, That such breeding stocks and genetic materials are reasonably needed in the registered activity, and approved
by the ASEZA.
The availment of the incentives by the registered enterprise shall be subject to the following: (a) that said breeding stocks and
genetic materials would have been qualified for tax and duty-free importation under the preceding paragraph; (b) that the
breeding stocks and genetic materials are reasonably needed in the registered activity; (c) that approval of the ASEZA has been
obtained by the registered enterprise; and (d) that the purchase is made within ten (10) years from the date of registration of
commercial operation of the registered enterprise.
This incentive shall be deemed waived if application for tax credit under this subsection is not filed within one year from the date
of delivery.
(I)Exemption from Wharfage Dues. - The provisions of law to the contrary notwithstanding, exports by a registered enterprise
shall be exempted from wharfage dues.
(J)Deferred Imposition of the Minimum Corporate Income Tax. - The Millinium Corporate Income Tax (MCIT) of two percent
(2%) of the gross income as of the end of the taxable year shall be imposed when the MCIT is greater than the income tax
computed under the NIRC of 1997, as amended, for the taxable year: Provided, however, That said MCIT shall be imposed only
after the enterprise's entitlement period to the income tax. - based incentives has expired.
(K)Tax Treatment of Merchandise in the Aurora Ecozone. -
(a)Domestic merchandise sent from the Aurora Ecozone to areas outside the said ecozone shall, whether or not combined with or
made part of other articles likewise of local origin or manufactured in the Philippines while in the export processing zone, be
subject to internal revenue laws of the Philippines as domestic goods sold, transferred or disposed off or local consumption.
(b)Merchandise sent from the Aurora Ecozone to areas outside the said ecozone shall, whether or not combined with or made
part of other articles while in the zone, be subject to rules and regulations governing imported merchandise. The duties and taxes
shall be based on the value of said imported materials (except when the final product is exempt).
(c)Articles produced or manufactured in the Aurora Ecozone and exported therefrom shall, on subsequent importation into the
customs territory, be subject to the import laws applicable to like articles manufactured in a foreign country.
(d)Unless the contrary is shown, merchandise taken out of the Aurora Ecozone shall be considered for tax purposes to have been
sent to customs territory.
(L)Tax Treatment of Raw Materials and Capital Equipment in the Aurora Ecozone. - Importations aha w materials and capital
equipment shall be treated as in the Omnibus Investments Code.
(M)Importations of raw materials and capital equipment shall be treated as in the Omnibus Investments Code. Registered export-
oriented enterprise shall have access to the utilization of the bonded warehousing system in accordance with the rules and
regulations of the Bureau of Customs.
(N)Employment of Foreign Nationals. - Subject to the provisions of Section 29 of Commonwealth Act No. 613, as amended, a
registered enterprise may employ foreign nationals in supervisory or technical positions for a period not exceeding ten (10) years
from its registration: Provided, That when the majority of the capital stock of a registered enterprise is owned by foreign
investors, the positions of the president, treasurer and general manager or their equivalents may be retained by foreign nationals
beyond the period set forth herein and such officer is the owner or a stockholder owning at least ten percent (10%) of the
outstanding capital stock of the registered enterprise and he remains the owner or maintains his stockholdings therein.
Foreign nationals under employment contract within the purview of this incentive, their spouses and unmarried children under
twenty-one (21) years of age, who are not excluded by Section 29 of Commonwealth Act No. 613, as amended, shall be
permitted to enter and reside in the Philippines during the period of employment of such foreign nationals. They shall be entitled
to a multiple entry visa, valid for a period of three years, and shall be allowed to enter and leave the Philippines without further
documentary requirements other than valid passports or other travel documents in the nature of passports. The validity of the
multiple entry visa shall be extendible yearly.
The said foreign nationals admitted under this provision, as well as their respective spouses and dependents shall be exempt
from: (a) obtaining alien certificates of registration and immigration clearance certificates; and (b) securing the Alien
Employment Permit (AEP) and all types of clearances, permits, licenses or their equivalents required by any government
department or agency.
Section 6. Incentive to Investors. - Any foreign national covered under subsection (M) of Section 5 of this Act, who invests an
amount of US$150,000.00, either in cash and/or equipment, in a registered enterprise shall be entitled to an investor's
visa: Provided, That:
(1)He is at least eighteen (18) years of age;
(2)He has not been convicted of a crime involving moral turpitude;
(3)He is not afflicted with any loathsome, dangerous or contagious disease; and
(4)He has not been institutionalized for any mental disorder or disability:
Provided, further, That in securing the investor's visa, the alien-applicant shall be entitled to the same privileges provided for
under subsection (M), Section 5 hereof.
As a holder of investor's visa, an alien shall be entitled to reside in the Philippines while his investment subsists. For this
purpose, he should submit an annual report, in the form duly prescribed for the purpose, to prove that he has maintained his
investment in the country. Should said alien withdraw his investments from the Philippines, then the investor's visa issued to him
shall automatically expire.
Section 7. Administration, Implementation and Monitoring of Incentives. - The ASEZA shall be responsible for the
administration and implementation of the incentives granted to its respective registered enterprises: Provided, That any incentive
administration policy adopted by the BOI for registered enterprises shall be uniformly applied by the ASEZA.
The following are the duties and responsibilities of the ASEZA in the administration of incentives:
(A)To adopt consistent procedures of administering incentives in accordance with the guidelines established by the BOI;
(B)To adopt and implement systems and procedures affecting trade and customs policies in accordance with the requirements
established by the Department of Finance (DOF) and the BOI;
(C)To submit information on registered enterprises to the DOF and the BOI as required by any of these agencies to ascertain
consistency of investment policies and incentives, inc1uding their implementation as provided in paragraph (A) herein, and to
ensure proper implementation of systems and procedures affecting trade and customs policies as provided in paragraph (B)
herein; and
(D)To perform all other duties and responsibilities as may be required by the President of the Philippines.
For proper monitoring, the BOI shall create a single database of all incentives provided by all incentives granting agencies,
including the ASEZA, and all information thereto. Double entry accounting shall be done by the BOI in recording all incentives
granted by the government for transparency purposes.
Section 8. Extension of Period of Availment. - The availment period of the incentives provided herein may be extended by the
ASEZA, in the event that the registered enterprise suffers operational force majeure or any event equivalent thereto, impairing its
viability: Provided, That the availment period shall not exceed the duration of the said force majeure or equivalent event.
Section 9. Duration of Incentives. - Enterprises registered with the ASEZA may enjoy ITH or NOLCQ granted by the latter prior
to the availment of the five percent (5%) GIE.
Fiscal incentives under this Act shall be terminated after a cumulative period of twenty (20) years from the date of registration or
start of commercial operation, whichever is applicable, except that it could be extended with regard to industries deemed
indispensable to national development.
The industries exempted from this provision shall be recommended by the BOI, with the concurrence of the Secretaries of the
Departments of Finance and Trade and Industry.
Section 10. Creation of the Aurora Special Economic Zone Authority. - There is hereby created a body corporate to be known as
the Aurora Special Economic Zone Authority, hereinafter referred to as the ASEZA, which shall manage and operate, in
accordance with the provisions of this Act, the Aurora Special Economic Zone. This corporate franchise shall expire in fifty (50)
years counted from the first day of the fifth (5 th) calendar year after the effectivity of this Act, unless otherwise extended by
Congress. It shall be organized within one hundred eighty (180) days after the effectivity of this Act.
Section 11. Principal Office of the ASEZA. - The Aurora Special Economic Zone Authority shall maintain its principal office in
the Municipality of Casiguran, but it may establish branches within the Philippines as may be necessary for the proper conduct of
its business.
Section 12. Powers .and Functions of the Aurora Special Economic Zone Authority (ASEZA). - The Aurora Special Economic
Zone Authority shall have the following powers and functions:
(a)To operate, administer, manage and develop the Aurora Ecozone according to the principles and provisions set forth in this
Act;
(b)To register, regulate and supervise the enterprises in the Aurora Ecozone in an efficient and decentralized manner, subject to
existing laws;
(c)To coordinate with local government units and exercise general supervision over the development plans, activities and
operations of the Aurora Ecozone;
(d)To regulate and undertake the establishment, operation and maintenance of utilities, other services and infrastructure in the
Aurora Ecozone such as but not limited to heat, light and power, water supply, telecommunications, transport, toll roads and
bridges, port services, etc. and to fix just, reasonable and competitive rates, fares, charges and prices thereof;
(e)To construct, acquire, own, lease, operate and maintain on its own or through contracts, franchise, licenses, bulk purchase
from the private sector or permits under any of the schemes allowed in Republic Act No. 6957 (the Build-Operate-Transfer Law,
as amended by R.A. No. 7718), or joint venture, adequate facilities and infrastructures required or needed for the operation and
development of the Aurora Ecozone, in coordination with appropriate national and local government authorities and in
conformity with applicable laws thereon;
(f)To operate on its own, either directly or through a license to other tourism-related activities, including games, amusements,
recreational and sports facilities;
(g)Subject to the approval of the President of the Philippines and the Monetary Board of the Bangko Sentral ng Pilipinas and
upon the recommendation of the Department of Finance, to raise or borrow adequate and necessary funds from local or foreign
sources to finance its projects and programs under this Act, and for that purpose to issue bonds, promissory notes, and other
forms of securities, and to secure the same by a guarantee, pledge, mortgage, deed of trust, or an assignment of all or part of its
property or assets;
(h)To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs and maintain ecological balance
within the Aurora Ecozone;
(i)To create, operate and/or contract to operate such functional units of offices of the ASEZA as it may deem necessary;
(j)To adopt, alter and use a corporate seal; make contracts, leases, own, or otherwise dispose of personal or real property; sue and
be sued; and otherwise carry out its functions and duties as provided for in this Act;
(k)To issue certificates of origin for products manufactured or processed in the Aurora Ecozone in accordance with prevailing
rules of origin, and the pertinent regulations of the PEZA, the DTI and/or the Department of Finance (DOF);
(l)To issue working visas renewable every two (2) years to foreign executives and foreign technicians with highly specialized
skills which no Filipinos possesses, as certified by the Department of Labor and Employment;
(m)To report to the Bureau of Immigration the names of the foreigners who have been granted permanent resident status and
working visas within thirty (30) days after issuance of such grant;
(n)To exercise such powers as may be essential, necessary or incidental to the powers granted to it hereunder as well as those
that shall enable it to carry out, implement and accomplish the purposes, objectives and policies of this Act; and
(o)To issue rules and regulations consistent with the provisions of this Act as may be necessary to accomplish and implement the
purposes, objectives and policies provided herein.
Section 13. Banking Rules and Regulations. -Existing laws and rules/regulations of the Bangko Sentral ng Pilipinas (BSP) shall
apply to banks and financial institutions to be established in the Aurora Ecozone, such as those governing foreign exchange and
other concurrent account transactions (trade and non-trade), local and foreign borrowings, foreign investments, establishment
and operation of local and foreign banks, foreign currency deposit units, offshore banking units and other financial institutions
under the supervision of the BSP.
Section 14. Remittance of Earnings. - In the case of foreign investments, a registered enterprise in the ASEZA shall have the
right to remit earnings from the investment in the currency in which the investment was originally made and at the exchange rate
prevailing at the time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as amended.
Section 15. Board of Directors of the Aurora Special Economic Zone Authority. - The powers of the Aurora Special Economic
Zone Authority shall be vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be
composed of the following;
(a)The Chairman who shall, at the same time be the administrator of the ASEZA;
(b)A Vice Chairman who shall come from among the members of the Board;
(c)Members consisting of:
(1)The Governor of the Province of Aurora;
(2)The Congressional Representative of the district covering the site of the Aurora Ecozone;
(3)The mayor of the Municipality of Casiguran, Province of Aurora;
(4)One representative from the domestic investors;
(5)One representative from the foreign investors; and
(6)Two representatives from the workers working in the Aurora Ecozone.
The Governor, the Congressional Representative and the mayor of the Municipality of Casiguran, Province of Aurora shall serve
as ex officio members of the Board, whose term in the Board corresponds to their terms as elected officials.
The Chairman and the members of the Board, except the ex officio members, shall be appointed by the President of the
Philippines to serve for a term of six (6) years, unless sooner separated from service due to death, voluntary resignation or
removal for cause. In case of death, resignation or removal for cause, the replacement shall serve only the unexpired portion of
the term.
Except for the representatives of the business and labor sectors, no person shall be appointed by the President of the Philippines
as a member of the Board unless he is a Filipino citizen, of good moral character, of proven probity and integrity, and a degree-
holder in any of the following fields: economics, business, public administration, law, management or their equivalent, and with
at least ten (10) years relevant working experience preferably in the field of management or public administration.
The members of the Board shall each receive per diem at a rate to be determined by the Department of Budget and Management
in accordance with existing rules and regulations: Provided, however, That the total per diem collected each month shall not
exceed the equivalent per diem for four (4) meetings. Unless and until the President of the Philippines has fixed a higher per
diem for the members of the Board, such per diem shall not be more than Ten thousand pesos (P10,000.00) for every Board
meeting.
Section 16. Powers and Duties of the Chairman-Administrator. - The Chairman-Administrator shall have the following powers
and duties:
(a)To direct and manage the affairs of the ASEZA in accordance with the policies of the Board;
(b)To establish the internal organization of the ASEZA under such conditions that the Board may prescribe;
(c)To submit an annual budget and necessary supplemental budget to the Board for its approval;
(d)To submit within thirty (30) days after the close of each fiscal year an annual report to the Board and such other reports as
may be required;
(e)To submit to the Board for its approval policies, systems, procedures, rules and regulations that are essential to the operation
of the Aurora Ecozone;
(f)To create a mechanism in coordination with relevant agencies for the promotion of industrial peace, the protection of the
environment, and the advancement of the quality of life in the Aurora Ecozone; and
(g)To perform such other duties as may be assigned to him by the Board or which are necessary or incidental to his office.
Section 17. Organization and Personnel. - The board of directors of the ASEZA shall provide for an organization and staff of its
officers and employees. Upon recommendation of the Chairman-Administrator, the Board shall appoint and fix the remuneration
and other emoluments of its officers and employees in accordance with existing laws on compensation and position
classification: Provided, That the Board shall have exclusive and final authority to promote, transfer, assign or reassign officers
of the ASEZA, any provision of existing law to the contrary notwithstanding: Provided, further, That the Chairman-
Administrator may carry out removal of such officers and employees.
The officers and employees of the ASEZA, including all members of the Board, shall not engage directly or indirectly in partisan
activities nor take part in any election, except to vote.
No officer or employee of the ASEZA, subject to civil service laws and regulations, shall be removed or suspended except for
cause, as provided by law.
Section 18. Ipso Facto Clause. - Sections 30-41 of Republic Act No. 7916, shall ipso facto apply to the Aurora Special
Economic Zone.
Section 19. Capitalization. - The Aurora Special Economic Zone Authority shall have an authorized capital stock of one billion
(1,000,000,000) no par shares with a minimum issue of Ten pesos (P10.00) each, the majority shares of which shall be
subscribed and paid for by the National Government and the local government units (LGUs) embracing the Aurora Special
Economic Zone. The board of directors of the ASEZA may, with the written concurrence of the Secretary of Finance, sell shares,
representing not more than forty per centum (40%) of the capital stack of the ASEZA to the general public under such policy as
the Board and the Secretary of Finance may determine. The National Government and the LGUs shall, in no case, own less than
sixty per centum (60%) of the total issued and outstanding capital of the Aurora Special Economic Zone Authority.
The amount necessary to subscribe and pay for the shares of the national government to the capital stock of the ASEZA shall be
included in the annual General Appropriations Act. For LGUs, the funds shall be taken from their internal revenue allotment and
other local funds.
Section 20. Supervision. - The Aurora Special Economic Zone shall be under the direct control and supervision of the Philippine
Economic Zone Authority (PEZA) for purposes of policy direction and coordination.
Section 21. Relationship with the Regional Development Council. - The Aurora Special Economic Zone Authority shall
determine the development goals for the Aurora Ecozone within the framework of national development plans, policies and
goals. The Administrator shall, upon approval by the Board, submit the Aurora Ecozone plans, programs and projects to the
Regional Development Council for inclusion and inputs to the overall regional development plan.
Section 22. Relationship with Local Government Units. - Except as herein provided, the local government units comprising the
Aurora Special Economic Zone shall retain their basic autonomy and identity. The barangays of Esteves, Dibet and Dibacong, all
in the Municipality of Casiguran shall operate and function in accordance with the Local Government Code of 1991. In case of
any conflict between the ASEZA and, the Province of Aurora on matters affecting the Aurora Ecozone other than defense and
security matters, the decision of the ASEZA shall prevail.
Section 23. Interpretation/Construction. - The powers, authorities and functions that are vested in the ASEZA are intended to
decentralize governmental functions and authority and promote an efficient and effective working relationship between the
Aurora Ecozone, the national government, and the local government units.
Section 24. Auditing. - The Commission on Audit shall appoint a representative who shall be a full time auditor of the ASEZA
and assign such number of personnel as may be necessary to assist said representative in the performance of his/her duties. The
salaries and emoluments of the assigned auditor and personnel shall be in accordance with pertinent laws, rules and regulations.
Section 25. Separability Clause. - If any provision of this Act shall be held unconstitutional or invalid, the other provisions not
otherwise affected shall remain in full force and effect.
Section 26. Repealing Clause. - All laws, executive orders and issuances, or any part thereof, which are inconsistent herewith are
hereby repealed or amended accordingly.
Section 27. Effectivity Clause. - This Act shall take effect upon its publication in the Official Gazette or in at least one newspaper
of general circulation.
Approved,

REPUBLIC ACT No. 9728

AN ACT CONVERTING THE BATAAN ECONOMIC ZONE LOCATED IN THE MUNICIPALITY OF
MARIVELES. PROVINCE OF BATAAN, INTO THE FREEPORT AREA OF BATAAN (FAB), CREATING FOR
THIS PURPOSE THE AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB), APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled.

Section 1. Short Title. - This Act shall be known as the "Freeport Area of Bataan (FAB) Act of 2009.
Section 2. Declaration of Policy. - It IS hereby declared the policy of the State to actively encourage, promote, induce and
accelerate a sound and balanced Industrial, economic and social development of the country In order to provide jobs to the
people especially those in the rural areas, increase productivity and individual and family income, and thereby improve the level
and quality of living condition through the establishment, among others, of special economic zones in suitable and strategic
locations in the country and through measures that will attract legitimate and productive foreign investments.
Section 3. Conversion of the Bataan Economic Zone (BEZ) into the Freeport Area of Bataan. - The existing Bataan Economic
Zone located in the Municipality of Mariveles, Province of Bataan is hereby converted into a special economic zone and Freeport
to be known as the Freeport Area of Bataan (FAB). The FAB shall cover the Municipality of Mariveles, Province of Bataan.
Section 4. Governing Principles. - The FAB shall be managed and operated under the following principles: (a) Within the
framework and limitations of the Constitution and applicable provisions of the Local Government Code, the FAB 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:
(b) The FAB shall continue to 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 Bataan and its neighboring towns and cities;
(c) The FAB may establish mutually beneficial economic relations with other entities or enterprises within the country or with
foreign entities or enterprises;
(d) Foreign citizens and companies owned by non - Filipinos m whatever proportion may set up enterprises In the FAB either by
themselves or in Joint venture with Filipinos in any sector of industry, international trade and. commerce within the FAB;
(e) The F AB shall be managed and operated as a separate customs territory ensuring free flow or movement of goods and capital
within, into and out of its territory;
(f) The FAB shall 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 F AB 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 FAB may be expanded or reduced when necessary, For this purpose, the F AB Authority which will
be created under this Act, with the concurrence of the local government units (LGUs), in accordance with existing laws and local
ordinances shall have the power to acquire either by purchase, negotiation or condemnation proceedings, any private lands
within or adjacent to the FAB for the following purposes: (1) consolidation of lands for FAB development; (2) acquisition of
right of way to the F AB; and (3) the protection of watershed areas and the maintenance and improvement of its water Yield and
natural assets valuable to the prosperity of the FAB, the management of solid and water waste and its impact to adjacent areas
within the local government concerned.
The LGU and the FAB shall provide for a mechanism to address inappropriate exploitation of the natural environment and
disruptive land use within the jurisdiction of the FAB;
(h) Goods manufactured by the FAB 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 FAB Authority,
together with the Philippine Economic Zone Authority (PEZA), the Bangko Sentral ng Pilipinas (BSP), the Department of
Finance (DOF), the Bureau of Customs (BOC) and the Department of Trade and Industry (DTI) in accordance with the NIRC of
1997, as amended, and the Tariff and Customs Code of the Philippines, as amended, However, in order to protect the domestic
Industries, a negative list of industries shall be drawn up and regularly updated by the PEZA. Enterprises engaged m industries
included in such negative list shall not be allowed to sell their products locally; and
(i) The defense of the FAB and the security of its perimeter fence shall be the responsibility of the National Government m
coordination with the FAB Authority and the LGUs.
Section 5. Fiscal Incentives. - The registered enterprises operating within the FAB may be entitled to the existing pertinent fiscal
incentives as provided for under Republic Act No. 7916, as amended by Republic Act No. 8748, also known as the Special
Economic Zone Act of 1995, or those provided under Executive Order No. 226, as amended, otherwise known as the Omnibus
Investment Code of 1987.
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and national, shall be
imposed on business establishments operating within the FAB. In lieu thereof, said business establishments shall pay a five
percent (5%) final tax on their gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and1avvphi1
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.
Section 7. Incentive to Investors. - Any foreign national who invests an amount of One hundred fifty thousand US dollars
(US$150,000.00), either in cash and/or equipment, in a registered enterprise shall be entitled to an investor's visa: Provided, That
he has the following qualifications:
(a) He is at least eighteen (18) years of age;
(b) He has not been convicted of a crime involving moral turpitude;
(c) He is not afflicted with any loathsome, dangerous or contagious disease; and
(d) He has not been institutionalized for any mental disorder or disability.
As a holder of investor's visa, an alien shall be entitled to reside m the Philippines while his investment subsists. For this
purpose, he should submit an annual report, m the form duly prescribed for the purpose, to prove that he has maintained his
investment in the country, should said alien withdraw his investments from the Philippines, then the investor's visa issued to him
shall automatically expire.
Section 8. Administration, Implementation and Monitoring of Incentives. - For the proper administration, implementation and
monitoring of tax incentives provided under this law, the following are herein mandated: (a) The AF AB shall be responsible for
the administration and implementation of the incentives granted to its respective registered enterprises. Among others, it shall
adopt and implement systems and procedures affecting trade and customs policies . . The BOC shall set up and establish a
custom's controlled area outside the gate of the F AB to facilitate payment of taxes on goods entering the Philippine customs
territory; and (b) The AFAB shall likewise submit to the DOF its annual tax expenditures based on the tax incentives granted to
its registered enterprises. The DOF, for its part, shall create a single database of all incentives provided by the governing
authority. The DOF shall monitor the incentives granted, and submit all annual report to the President.
Section 9. Extension of Period of Availment. - The availment period of the incentives provided herein may be extended by AF
AB, in the event that the registered enterprise has suffered operational force majeure that has impaired its viability, equivalent
thereto.
Section 10. Duration of Incentives. - Enterprises registered with AFAB may enjoy the income tax holiday (ITH) or the net
operating loss carryover (NOLCO) granted by the authority prior to the availment of the five percent (5%) gross income earned
(GIE). Fiscal incentives under this Act shall be terminated after a cumulative period of twenty (20) years from date of
registration or start of commercial operation, whichever is applicable, except that it could be extended with regard to industries
deemed indispensable to national development. The industries exempted from this provision shall be determined by the AFAB.
Section 11. Creation of the Authority of the Freeport Area of Bataan (AFAB). - There is hereby created a body corporate to be
known as the Authority of the Freeport Area of Bataan (AFAB), hereafter referred to as the AFAB which shall manage and
operate the FAB, in accordance with the provisions of this Act.
Section 12. Principal Office of the AFAB. - The AFAE shall maintain its principal office in the Municipality of Mariveles,
Province of Bataan, but it may establish liaison offices within the Philippines as may be necessary for the proper conduct of its
business.
Section 13. Powers and Functions of the AFAB. - The AFAB shall have the following functions:
(a) To adopt, alter, use a corporate seal, to contract, lease, buy, sell, acquire, own and dispose properties of whatever nature;
(b) To sue and be sued in order to carry out its duties, responsibilities, privileges, powers and functions as granted and provided
for in this Act and to exercise the power of eminent domain for public use and public purpose;
(c) To operate, administer, manage, develop, m accordance with Executive Order No. 525, as amended, the FAB according to the
principles and provisions set forth in this Act and to coordinate with the LGUs for the development plans, activities and
operation of the FAB;
(d) To recommend to the President the issuance of a proclamation to fix and delimit the site of the FAB;
(e) To register, regulate and supervise the enterprises in the FAB in an efficient and decentralized manner, subject to existing
laws;
(f) To coordinate with the LGUs and exercise general supervision over the development plans, activities and operations of the
FAB;
(g) To authorize or undertake, on its own or through others, and to regulate the establishment, construction, operation and
maintenance of public utilities, services, and infrastructure in the FAB such as shipping, barging, stevedoring, cargo, handling,
hauling, warehousing, storage of cargo, port services or concessions, piers, wharves, bulkheads, bulk terminals, mooring areas,
storage areas, roads, bridges, reclamation projects, 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 the private investors in the FAB shall
be given priority in the awarding of contracts, franchises, licenses, or permits for the establishment, operation and maintenance
of utilities, services and infrastructure in the FAB;
(h) To license, set fees, regulate and undertake the establishment, operation and maintenance of utilities, other services,
educational and medical Institutions and infrastructure in the F AB such as, but not limited to, heat, light and power, water
supply, telecommunications, mobile, internet and other data facilities, transport, toll roads and bridges, port services, etc., and to
fix just, reasonable and competitive rates, fares, charges and prices thereof;
(i) To construct, acquire, own, lease, operate and maintain on its own or through contracts, franchises, licenses, bulk purchase
from the private sector and build - operate - transfer scheme, or under a Joint venture with the private sectors, any or all of the
public utilities and infrastructure required or needed for the operation and development of the FAB, in coordination with
appropriate national and local government authorities and in conformity with applicable laws thereon;
(j) To operate on its own, either directly or through a license to other tourism - related activities, including games, amusements,
recreational and sports facilities, subject to the approval and supervision of the Philippine Amusement and Gaming Corporation
(PAGCOR);
(k) To raise or borrow, within the limitation provided by law, adequate and necessary funds from local or foreign sources, to
finance its projects and programs under this Act, and for that purpose, to Issue bonds, promissory notes, and other forms of
securities, and to secure the same by a guarantee, pledge, mortgage, deed of trust, or an assignment of all or part of its property
or assets;
(I) To provide security for the F AB in coordination with the national and local governments.ten.lihpwal For this purpose, the
AFAB may establish and maintain its security forces and firefighting capability or hire others to provide the same. In the event
that an assistance of the military force is necessary, it shall not interfere in the internal affairs of the FAB except to provide the
necessary security and defense, and their expenses shall be borne by the National Government;
(m) To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs, and maintain ecological balance
within the FAB. For this purpose, the rules and regulations of the Department of Environment and Natural Resources (DENR)
and other government agencies involved in the above functions shall be implemented by the AFAB;
(n) To create, operate and/or contract to operate such functional units or offices of the AFAB as it may deem necessary;
(o) To issue certificates of origin for products manufactured or processed in the FAB;
(p) To Issue rules and regulations consistent with the provisions of this Act as may be necessary to implement and accomplish
the purposes, objectives and policl8s provided herein;
(q) To exercise such powers as may be essential, necessary or incidental to the powers granted to it hereunder as well as those
that shall enable It to carry out, implement and accomplish the purposes, objectives and policies of this Act; and
(r) To be vested with other powers enjoyed or exercised by other free port zone authorities.
Section 14. Board of Directors of the FAB. - The powers of the AFAB shall be vested in and exercised by a Board of Directors,
hereinafter referred to as the Board, which shall be composed of the following:
(a) The chairman who shall, at the same time, be the administrator of the AFAB;
(b) A vice chairman who shall come from among the members of the Board;
(c) Members consisting of:
(1) Two (2) representatives from the National Government;
(2) One (1) representative from the Province of Bataan;
(3) One (1) representative from the district covering the site of the FAB;
(4) One (1) representative from the Municipality of Mariveles, Province of Bataan;
(5) One (1) representative from the domestic investors;
(6) One (1) representative from the foreign investors; and
(7) One (1) representative from the workers working in the FAB.
The chairman and the members of the Board, shall be appointed by the President of the Philippines to serve for a term of six (6)
years, unless sooner separated from service due to death, voluntary resignation or removal for cause. In case of death, resignation
or removal for cause, the replacement shall serve only the unused portion of the term.
Except for the representatives of the business and labor sectors, no person shall be appointed by the President of the Philippines
as a member of the Board unless he is a Filipino citizen, of good moral character, of proven probity and integrity, and a degree
holder in any of the following fields: economics, business, public administration, law, management or their equivalent, and with
at least ten (10) years relevant working experience preferably m the field of management or public administration.
The members of the Board shall each receive per diem at rates to be determined by the Department of Budget and Management
(DBM) in accordance with existing rules and regulations: Provided, however, That the total per diem collected each month shall
not exceed the equivalent per diem for four (4) meetings.
Section 15. Powers and Duties of the Chairman-Administrator. - The chairman - administrator shall have the following powers
and duties:
(a) To direct and manage the affairs of the AFAB in accordance with the policies of the Board;
(b) To establish the internal organization of the AFAB under such conditions that the Board may prescribe;
(c) To submit an annual budget and necessary supplemental budget to the Board for Its approval;
(d) To submit within thirty (30) days after the close of each fiscal year an annual report to the Board and such other reports as
may be required;
(e) To submit to the Board for its approval policies, systems, procedures, rules and regulations that are essential to the operation
of the AFAB;
(f) To create a mechanism m coordination with relevant agencies for the promotion of industrial peace, the protection of the
environment, and the advancement of the quality of life m the FAB; and
(g) To perform such other duties as may be assigned to him by the Board or which are necessary or incidental to his office.
Section 16. Organization and Personnel. - The AF AB Board of Directors shall provide for an organizational structure and
appoint employees, subject to the civil service law. Upon the recommendation of the chairman - administrator and with the
approval of the Secretary of the DTI, the Board shall appoint and fix the remuneration and other emoluments of its officers and
employees in accordance with existing laws on compensation and position classification: Provided, That the Board shall exercise
administrative supervision on their employees.
The officers and employees of the AFAB, including all members of the Board, shall not engage directly or indirectly in partisan
activities nor take part in any election, except to vote.
No officer or employee of the AFAB, subject to civil service laws and regulations, shall be removed or suspended except for
cause, as provided by law.
Section 17. Labor Center. - A labor center shall be established within' the FAB. This center shall be responsible for studying and
amicably settling professional and labor relations and disputes, interpretation of employment contracts, and monitoring work,
hygiene and safety standards within the FAB. The labor center shall comprise a labor office, an industrial health and safety
office, and an inspection and disputes office.
Section 18. Banking Rules and Regulations. - Existing banking laws and rules/regulations of the BSP shall apply to banks and
financial institutions to be established in the FAB.
Section 19. Remittances. - In the case of foreign investments, a registered enterprise m the Bataan Ecozone shall have the right to
remit earnings from the investment in the currency m which the investment was originally made and at the exchange rate
prevailing at the time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as amended.
Section 20. Applicability Clause. - The provisions of Sections 30-41 of Republic Act No. 7916, otherwise known as "The
Special Economic Zone Act of 1995", as amended, shall likewise apply to the FAB.
Section 21. Capitalization. - The AFAB shall have an authorized capital stock of Two billion pesos (Php2,000,000,000.00), with
option to. increase capitalization upon the discretion of the AF AB, divided into twenty thousand (20,000) no - par shares fully
subscribed and paid up by the Republic of the Philippines with: (a) All lands embraced and covered by the F AB, as well as
permanent improvements and fixtures upon proper inventory not otherwise alienated, conveyed, or transferred to another
government agency; (b) All other assets which the President may transfer to the AFAB as part of the equity contribution of the
government; and (c) Cash contribution by the government in the amount of Five hundred million pesos (Php500,000,000.00) a
year for the next five (5) years, which is hereby appropriated out of any fund in the National Treasury not otherwise
appropriated.
Section 22. Supervision and Control. - For purposes of policy direction and coordination, the AF AB shall be under the direct
control and supervision of the Office of the President of the Philippines.
Section 23. Regional Development Council. - The AFAB shall determine the development goals for the FAB within the
framework of national development plans, policies and goals. The administrator shall, upon approval by the Board, submit the
FAB plans, programs and projects to the Regional Development Council for inclusion and inputs to the overall regional
development plan.
Section 24. Relationship with Local Government Units. - Except as herein provided, the Municipality of Mariveles in the
Province of Bataan shall operate and function in accordance with the Local Government Code of 1991. In case of any conflict
between the AFAB and the local government units (LGUs) and the National Government (NG) on matters affecting the FAB
other than defense and security matters, the decision of the AFAB shall prevail.
Section 25. Legal Counsel. - The AFAB shall have its own internal legal counsel under the supervision of the Government
Corporate Counsel. When the exigencies of its businesses and operations demand, the AFAB may engage the services of an
outside counsel either on a c a s e - t o - c a s e or on a fixed retainer basis.
Section 26. Interpretation/ Construction. - The powers, authorities and functions that are vested m the AFAB are intended to
establish decentralization of governmental functions and authority and promote an efficient and effective working relationship
between the AFAB, the National Government and the LGU.
Section 27. Audit. - The Commission on Audit shall appoint a full - time auditor in the AFAB or may assign such number of
personnel as may be necessary in the performance of their functions.
Section 28. Transitory Provisions. - All properties, assets, funds, rights, obligations, and liabilities are hereby transferred to the
AFAB except for the liabilities that are not properly accounted for as per the reports coming from the Commission on Audit,
which shall be retained by the PEZA.
The AFAB shall be responsible for the operations, administration, management and development of the FAB. The AFAB shall
effect the transfer herein provided m a manner that will ensure the least disruption of ongoing programs of the BEZ. The
qualified and necessary personnel of the BEZ shall be transferred to and absorbed by the AF AB: Provided, That the tenure,
rank, salaries and privileges of such personnel are not reduced or adversely affected. The personnel whose services are not
retained by the AFAB shall be granted separation pay and retirement and other benefits they are entitled to under existing laws
but in no case shall the separation pay be less than one (1) month for every year of service.
In the period prior to the actual assumption of duties by the AF AB, all officers and employees of the BEZ shall continue to
exercise their functions and discharge their duties and responsibilities. The BEZ shall be deemed abolished upon the organization
of the AF AB.
Section 29. Implementing Rules and Regulations. - The DTI, the DOF, the LGU and the Department of the Interior and Local
Government shall formulate the implementing rules and regulations of this Act within ninety (90) days after its approval. Such
rules and regulations shall take effect fifteen (15) days after their publication in a newspaper of general circulation in the
Philippines.
Section 30. Separability Clause. - If any provision of this Act shall be held unconstitutional or invalid, the other provisions not
otherwise affected shall remain m full force and effect.
Section 31. Repealing Clause. - Republic Act No. 5490 and Presidential Decree No. 66 are hereby amended. All laws, executive
orders or issuances or any part thereof which are inconsistent herewith are hereby repealed or amended accordingly.
Section 32. Effectivity Clause. - This Act shall take effect upon its publication in at least one (1) newspaper of general
circulation.
Republic Act No. 8756 November 23, 1999
AN ACT PROVIDING FOR THE TERMS, CONDITIONS AND LICENSING REQUIREMENTS OF REGIONAL OR
AREA HEADQUARTERS, REGIONAL OPERATING HEADQUARTERS, AND REGIONAL WAREHOUSES OF
MULTINATIONAL COMPANIES, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF EXECUTIVE
ORDER NO. 226, OTHERWISE KNOWN AS THE OMNIBUS INVESTMENTS CODE OF 1987
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. The title of Book III of Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, is
hereby amended as follows:
"BOOK III
"INCENTIVES TO MULTINATIONAL COMPANIES ESTABLISHING REGIONAL OR AREA HEADQUARTERS
AND REGIONAL OPERATING HEADQUARTERS IN THE PHILIPPINES"
Section 2. Definition of Terms. - For purposes of this Act, the term:
(1) Multinational Company shall mean a foreign company or a group of foreign companies with business establishments in two
or more countries;
(2) Regional or Area Headquarters (RHQ) shall mean an office whose purpose is to act as an administrative branch of a
multinational company engaged in international trade which principally serves as a supervision, communications and
coordination center for its subsidiaries, branches or affiliates in the Asia-Pacific Region and other foreign markets and which
does not earn or derive income in the Philippines; and
(3) Regional Operating Headquarters (ROHQ) shall mean a foreign business entity which is allowed to derive income in the
Philippines by performing qualifying services to its affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific
Region and in other foreign markets.
Section 3. The Title and Article 58 of Chapter I of the same Code are hereby amended as follows:
"CHAPTER I
LICENSING OF REGIONAL OR AREA HEADQUARTERS
Art. 58. Qualification of Regional or Area Headquarters. - Any foreign business entity formed, organized and existing under any
laws other than those of the Philippines whose purpose, as expressed in its organizational documents or by resolution of its
Board of Directors or its equivalent, is to supervise, superintend, inspect or coordinate its own affiliates, subsidiaries or branches
in the Asia-Pacific Region and other foreign markets may establish a regional or area headquarters in the Philippines, by securing
a license therefor from the Securities and Exchange Commission, upon the favorable recommendation of the Board of
Investments.
The Securities and Exchange Commission shall, within thirty (30) days from the effectivity of this Code, issue the implementing
rules and regulations. The following minimum requirements shall, however, be complied with by the said foreign entity:
(a) A certification from the Philippine Consulate/Embassy, or a duly authenticated certification from the Department of Trade
and Industry or its equivalent in the foreign firm's home country that said foreign firm is an entity engaged in international trade
with affiliates, subsidiaries or branch offices in the Asia-Pacific Region and other foreign markets.
(b) A duly authenticated certification from the principal officer of the foreign entity to the effect that the said foreign entity has
been authorized by its Board of Directors or governing body to establish its regional or area headquarters in the Philippines,
specifying that:
(1) The activities of the regional or area headquarters shall be limited to acting as a supervisory, communications and
coordinating center for its subsidiaries, affiliates and branches in the region;
(2) The regional or area headquarters will not derive any income from sources within the Philippines and will not participate in
any manner in the management of any subsidiary or branch office it might have in the Philippines nor shall it solicit or market
goods and services whether on behalf of its mother company or its branches, affiliates, subsidiaries or any other company; and
(3) The regional or area headquarters shall notify the Board of Investments and the Securities and Exchange Commission of any
decision to close down or suspend operations of its headquarters at least fifteen (15) days before the same is effected.
(c) An undertaking that the multinational company will remit into the country such amount as may be necessary to cover its
operations in the Philippines but which amount will not be less than Fifty thousand United States dollars ($50,000) or its
equivalent in other foreign currencies annually. Within thirty (30) days from receipt of certificate of registration from the
Securities and Exchange Commission, the multinational company will submit to the Securities and Exchange Commission a
certificate of inward remittance from a local bank showing that it has remitted to the Philippines the amount of at least Fifty
thousand United States dollars ($50,000) or its equivalent in other foreign currencies and converted the same to Philippine
currency. Annually, within thirty (30) days from the anniversary date of the multinational company's registration as a regional or
area headquarters with the Securities and Exchange Commission, it will submit proof to the Securities and Exchange
Commission of inward remittance amounting to at least Fifty thousand United States dollars ($50,000) or its equivalent in other
foreign currencies during the past year.
(d) Any violation by the regional or area headquarters of a multinational company of any of the provisions of this Code, or its
implementing rules and regulations, or other terms and conditions of its registration, or any provision of existing laws, shall
constitute a sufficient cause for the cancellation of its license or registration.
Section 4. Book III of the same Code is hereby further amended by adding a new chapter designated as Chapter II to read as
follows:
"CHAPTER II
"LICENSING OF REGIONAL OPERATING HEADQUARTERS
"Art. 59. Qualification of Regional Operating Headquarters (ROHQs). - Any foreign business entity formed, organized and
existing under any laws other than those of the Philippines may establish a regional operating headquarters in the Philippines to
service its own affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific Region and other foreign markets.
ROHQs will be allowed to derive income by performing the qualifying services enumerated under paragraph (b) 1 hereunder.
ROHQs of non-banking and non-financial institutions are required to secure a license from the Securities and Exchange
Commission, upon the favorable recommendation of the Board of Investments. ROHQs of banking and financial institutions, on
the other hand, are required to secure licenses from the Securities and Exchange Commission and the Bangko Sentral ng
Pilipinas, upon the favorable recommendation of the Board of Investments.
"The Securities and Exchange Commission and the Bangko Sentral ng Pilipinas shall, within thirty (30) days from the effectivity
of this Code, issue the implementing rules and regulations.
"The following minimum requirements shall be complied with by the said foreign entity:
"(a) A certification from the Philippine Consulate/Embassy, or a duly authenticated certification from the Department of Trade
and Industry or its equivalent in the foreign firm's home country that said foreign firm is an entity engaged in international trade
with affiliates, subsidiaries or branch offices in the Asia-Pacific Region and other foreign markets.
"(b) A duly authenticated certification from the principal officer of the foreign entity to the effect that the said foreign entity has
been authorized by its Board of Directors or governing body to establish its regional operating headquarters in the Philippines,
specifying that:
"(1) The regional operating headquarters may engage in any of the following qualifying services:
- General administration and planning;
- Business planning and coordination;
- Sourcing/procurement of raw materials and components;
- Corporate finance advisory services;
- Marketing control and sales promotion;
- Training and personnel management;
- Logistics services;
- Research and development services, and product development;
- Technical support and maintenance;
- Data processing and communication; and
- Business development.
"ROHQs are prohibited from offering qualifying services to entities other than their affiliates, branches or subsidiaries, as
declared in their registration with the Securities and Exchange Commission nor shall they be allowed to directly and indirectly
solicit or market goods and services whether on behalf of their mother company, branches, affiliates, subsidiaries or any other
company.
"(2) The regional operating headquarters shall notify the Board of Investments, the Securities and Exchange Commission and the
Bangko Sentral ng Pilipinas, as the case may be, of any decision to close down or suspend operations of its headquarters at least
fifteen (15) days before the same is effected.
"(c) An undertaking that the multinational company will initially remit into the country such amount as may be necessary to
cover its operations in the Philippines but which amount will not be less than Two hundred thousand United States dollars
($200,000) or its equivalent in other foreign currencies.
"Within thirty (30) days from receipt of certificate of registration, the multinational company will submit to the Securities and
Exchange Commission a certificate of inward remittance from a local bank showing that it has remitted to the Philippines the
amount of at least Two hundred thousand United States dollars ($200,000) or its equivalent in other foreign currencies and
converted the same to Philippine currency.
"(d) Any violation by the regional operating headquarters of a multinational company of the provisions of this Code, or its
implementing rules and regulations, or other terms and conditions of its registration, or any provision of existing laws, shall
constitute a sufficient cause for the cancellation of its license or registration."
Section 5. Chapter II of the same Code is hereby amended and designated as Chapter III. Articles 59, 60, 61 and 62 under the
same Chapter are hereby amended as follows:
"CHAPTER III
"INCENTIVES TO EXPATRIATES
"Art. 60. Multiple Entry Visa. - Foreign personnel of regional or area headquarters and regional operating headquarters of
multinational companies, their respective spouses and unmarried children under twenty-one (21) years of age, if accompanying
them or if following to join them after their admission into the Philippines as non-immigrant shall be issued a multiple entry
special visa within seventy-two hours upon submission of all required documents, and which shall be valid for a period of three
(3) years to enter the Philippines: Provided, That a responsible officer of the applicant company submits a duly authenticated
certificate to the effect that the person who seeks entry into the Philippines is an executive of the applicant company and will
work exclusively for applicant's regional or area headquarters or regional operating headquarters which is duly licensed to
operate in the Philippines, and that he will receive a salary and will be paid by the headquarters in the Philippines an amount
equivalent to at least Twelve thousand United States dollars ($12,000), or the equivalent in other foreign currencies per annum.
"The admission and stay shall be coterminous with the validity of the multiple entry special visa. The stay, however, is
extendible for three years upon submission to the Bureau of Immigration of a sworn certification by a responsible officer of the
regional or area headquarters or regional operating headquarters: that its license to operate remains valid and subsisting and that
the regional or area headquarters or regional operating headquarters has withheld tax due on compensation and the same has
been paid to the Bureau of Internal Revenue.
"Non-immigrants who have been admitted under the multiple entry special visa, as well as their respective spouses and
dependents, shall be exempt from: the payment of all fees due under the immigration and alien registration laws; securing alien
certificates of registration; and obtaining emigration clearance certificates, and all types of clearances required by any
government department or agency, except that upon final departure from the Philippines the employer of the said nonimmigrants
shall so advise in writing the Bureau of Immigration at least five (5) working days prior to the non-immigrant's departure, and the
finally departing non-immigrant employee shall be required to submit to the said office a tax clearance from the Bureau of
Internal Revenue.
"Art. 61. Withholding Tax of 15% on Compensation Income. - Aliens employed by the regional or area headquarters and regional
operating headquarters of multinational companies shall be subject for each taxable year upon their gross income received as
salaries, wages, annuities, compensations, remuneration and emoluments to a tax equal to fifteen per centum (15%) of such gross
income. The same tax treatment is applicable to Filipinos employed and occupying the same positions as those aliens employed
by multinational companies: Provided, That said Filipinos shall have the option to be taxed at either 15% of gross income or at
the regular tax rate on their taxable income in accordance with the National Internal Revenue Code, as amended by Republic Act
No. 8424.
"Art. 62. Tax and Duty Free Importation. - An alien executive of the regional or area headquarters and regional operating
headquarters of a multinational company shall enjoy tax and duty free importation of personal and household effects as provided
for under Section 105(h) of the Tariff and Customs Code, as amended, and Section 109(I) of the National Internal Revenue
Code, as amended: Provided, That the personal and household effects shall arrive in the Philippines within ninety (90) days
before or after conversion of the alien executive's admission category to multiple entry visa issued under this Act.
"Art. 63. Travel Tax Exemption. - Personnel of regional or area headquarters and regional operating headquarters of
multinational companies and the dependents of such foreign personnel if joining them during the period of their assignment in
the Philippines, as certified by the Board of Investments, shall be exempted from the payment of travel tax imposed under
Section 1 of Presidential Decree No. 1183, as amended."
Section 6. Chapter III of the same Code is hereby amended and designated as Chapter IV. Articles 63, 64, 65, 66 and 67 are
hereby amended to read as follows:
"CHAPTER IV
"INCENTIVES TO REGIONAL OR AREA HEADQUARTERS AND REGIONAL OPERATING HEADQUARTERS
"Art. 64. Corporate Income Tax Incentive to Regional or Area Headquarters and Regional Operating Headquarters. - Regional
or area headquarters established in the Philippines by multinational companies and which headquarters do not earn or derive
income from the Philippines and which act as supervisory, communications and coordinating centers for their affiliates,
subsidiaries, or branches in the Asia-Pacific Region and other foreign markets shall not be subject to income tax. Regional
operating headquarters shall be subject to a tax rate of ten percent (10%) of their taxable income as provided for under the
National Internal Revenue Code, as amended by Republic Act No. 8424: Provided, That any income derived from Philippine
sources by the ROHQ when remitted to the parent company shall be subject to the tax on branch profit remittances as provided
for in Section 28(a)(5) of the National Internal Revenue Code.
"Art. 65. Value-Added Tax. - The regional or area headquarters established in the Philippines by multinational companies shall
be exempted from the value-added tax. In addition, the sale or lease of goods and property and the rendition of services to
regional or area headquarters shall be subject to zero percent (0%) VAT rate as provided for in the National Internal Revenue
Code, as amended.
"Regional operating headquarters shall be subject to the ten percent (10%) value-added tax as provided for under the National
Internal Revenue Code, as amended.
"Art. 66. Exemption From All Kinds of Local Taxes, Fees, or Charges. - The regional or area headquarters and regional operating
headquarters of multinational companies shall be exempt from all kinds of local taxes, fees, or charges imposed by a local
government unit except real property tax on land improvements and equipment.
"Art. 67. Tax and Duty Free Importation of Training Materials and Equipment; Importation of Motor Vehicles. - Regional or
area headquarters and regional operating headquarters shall enjoy tax and duty free importation of equipment and materials for
training and conferences which are needed and used solely for their functions as regional or area headquarters or regional
operating headquarters and which are not locally available subject to the prior approval of the Board of Investments.
"The sale or disposition of equipment within two (2) years after importation, entered tax and duty free, shall require prior
approval of the Board of Investments and prior payment of applicable taxes and duties waived in favor of RHQ/ROHQ.
"Regional or area headquarters and regional operating headquarters shall be entitled to the importation of new motor vehicles
subject to the payment of the corresponding taxes and duties.
"BOOK IV
"INCENTIVES TO MULTINATIONAL COMPANIES ESTABLISHING REGIONAL WAREHOUSES TO SUPPLY
SPARE PARTS, COMPONENTS, SEMI-FINISHED PRODUCTS AND RAW MATERIALS TO THE ASIA-PACIFIC
REGION AND OTHER FOREIGN MARKETS"
Section 7. Articles 68, 69, 70, 71 and 72 of the same Code are hereby amended to read as follows:
"Art. 68. Qualifications. - A multinational company organized and existing under any laws other than those of the Philippines
which is engaged in international trade and supplies spare parts, components, semi-finished products and raw materials to its
distributors or markets in the Asia-Pacific area and other foreign areas and which has established or will simultaneously establish
a regional or area headquarters and/or regional operating headquarters in the Philippines in accordance with the provisions of
Book III of this Code and the rules and regulations implementing the same may also establish a regional warehouse or
warehouses in ecozones in the Philippines, after securing a license therefor from the Philippine Economic Zone Authority
(PEZA). With respect to regional warehouses located or will locate in ecozones with special charters, such license shall be
secured from the concerned ecozone authorities. For existing regional warehouses, said license shall be secured from the Board
of Investments unless they choose to relocate inside ecozones: Provided, That:
"(1) The activities of the regional warehouse shall be limited to serving as a supply depot for the storage, deposit, safekeeping of
its spare parts, components, semi-finished products and raw materials including the packing, covering, putting up, marking,
labelling and cutting or altering to customer's specification, mounting and/or packaging into kits or marketable lots thereof, to fill
up transactions and sales made by its head offices or parent companies and to serving as a storage or warehouse of goods
purchased locally by the home office of the multinational for export abroad. The regional warehouse shall not directly engage in
trade nor directly solicit business, promote any sale, nor enter into any contract for the sale or disposition of goods in the
Philippines: Provided, That a regional warehouse may be allowed to withdraw imported goods from said warehouse/s for
delivery to an authorized distributor in the Philippines: Provided, however, That the corresponding taxes, customs duties and
charges under the Tariff and Customs Code have been paid by the headquarters of the said multinational upon arrival of such
goods: Provided, further, That the delivery of said goods to the aforesaid distributor in the Philippines shall be treated as a sale
made by the headquarters rather than that of its head office, and shall be reflected in a separate book of accounts, any
representation as to who is the seller to the contrary notwithstanding: Provided, furthermore, That the aforementioned sale shall
be governed by the provisions on value-added tax in accordance with the National Internal Revenue Code, as amended by
Republic Act No. 8424: Provided, finally, That the income from the aforementioned sale to said distributor shall be treated as
income derived by the said headquarters from sources within the Philippines and shall be subject to the corporate income tax of a
resident foreign corporation under the National Internal Revenue Code, as amended, the provision of any law to the contrary
notwithstanding.
"(2) The personnel of a regional warehouse will not participate in any manner in the management of any subsidiary, affiliate or
branch office it might have in the Philippines other than the activities allowed under this Act.
"(3) The personnel of the regional or area headquarters or regional operating headquarters shall be responsible for the operation
of the regional warehouse subject to the provisions of this Code.
"(4) The multinational company shall pay the Board of Investments, the PEZA or concerned ecozone authorities, as the case may
be, and the appropriate Collector of Customs concerned the corresponding license fees and storage fees to be determined by said
offices.
"(5) An application for the establishment of a regional warehouse located outside an ecozone shall be made in writing to the
Board of Investments, to the PEZA, or to concerned ecozone authorities in the case of regional warehouses located in ecozones.
The application shall describe the premises, the location and capacity of the regional warehouse and the purpose for which the
building is to be used.
"The jurisdiction and responsibility of supervising the regional warehouses located outside ecozones shall be vested on the
Bureau of Customs, and the Board of Investments, or the PEZA or concerned ecozone authorities for warehouses within
ecozones.
"The Board of Investments, the PEZA or concerned ecozone authorities, in consultation with the Regional Director of Customs
of the district where the warehouse will be situated shall cause an examination of the premises to be made and if found
satisfactory, it may authorize its establishment without complying with the requirements of any other government body, subject
to the following conditions:
"(1) That the articles to be stored in the warehouse are spare parts, components, semi-finished products and raw materials of the
multinational company operator for distribution and supply to its Asia-Pacific and other foreign markets including packaging,
coverings, brands, labels and warehouse equipment as provided in Article 69(a) hereof;
"(2) That the entry or importation, storage or re-export of the goods destined for or to be stored in the regional warehouse will
not involve any dollar outlay from Philippine sources;
"(3) That they are of such character as to be readily identifiable for re-export; and in case of local distribution they shall be
subject to Article 68(1), Article 69 paragraph (b) and the guidelines implementing Book IV of this Code;
"(4) That it shall file an ordinary warehousing bond in an amount equal to one hundred percent (100%) of the ascertained
customs duties on the articles imported without prejudice to its filing a general warehousing bond in lieu of the ordinary
warehousing bond;
"(5) The percentage of annual allowable withdrawal from warehouses located outside ecozones for domestic use shall be subject
to the approval of the Board of Investments, or of the PEZA or concerned ecozone authorities with respect to warehouses located
within the ecozones of their jurisdiction: Provided, however, That in the case of existing warehouses, in no case shall their
withdrawals exceed thirty percent (30%) of the value of goods they have brought in for any given year and the payment of the
corresponding taxes and duties shall have been made upon the arrival of such goods imported: Provided, further, That the PEZA
or concerned ecozone authorities may allow withdrawal exceeding thirty percent (30%) of the value of goods under such terms
and conditions the PEZA or concerned ecozone authorities may impose.
"Art. 69. Tax Treatment of Imported Articles in the Regional Warehouse. -
"(a) Tax Incentives for Qualified Goods Destined for Reexportation to the Asia-Pacific and Other Foreign Markets. - Except as
otherwise provided in this Code, imported spare parts, components, semi-finished products, raw materials and other items
including any packages, coverings, brands and labels and warehouse equipment as may be allowed by the Board of Investments,
the PEZA or concerned ecozone authorities, as the case may be, for use exclusively on the goods stored, except those prohibited
by law, brought into the regional warehouse from abroad to be kept, stored and/or deposited or used therein and re-exported
directly therefrom under the supervision of the Collector of Customs concerned for distribution to its Asia-Pacific and other
foreign markets in accordance with the guidelines implementing Book IV of this Code including to a bonded manufacturing
warehouse in the Philippines and eventually re-exported shall not be subject to customs duty, internal revenue tax, export tax nor
to local taxes, the provisions of law to the contrary notwithstanding.
"(b) Payment of Applicable Duties and Taxes on Qualified Goods Subject to Laws and Regulations Covering Imported
Merchandise if Destined for the Local Market. - Any spare parts, components, semi-finished products, raw materials and other
items sent, delivered, released or taken from the regional warehouse to the local market in accordance with the guidelines
implementing Book IV of this Code shall be subject to the payment of income taxes, customs duties, taxes and other charges
provided for under Section 68 hereof and for which purpose, the proper commercial invoice of the head offices or parent
companies shall be submitted to the Collector of Customs concerned; and shall be subject to laws and regulations governing
imported merchandise: Provided, That in case any of the foregoing items are sold, bartered, hired or used for purposes other than
they were intended for without prior compliance with the guidelines implementing Book IV of this Code and without prior
payment of the duty, tax or other charges which would have been due and payable at the time of entry if the articles had been
entered without the benefit of this Order, shall be subject to forfeiture and the importation shall constitute a fraudulent practice
against customs revenue punishable under Section 3602, as amended, of the Tariff and Customs Code of the
Philippines: Provided, further, That a sale pursuant to a judicial order shall not be subject to the preceding proviso without
prejudice to the payment of duties, taxes and other charges.
"Art. 70. Exemption From the Maximum Storage Period Under the Tariff and Customs Code; Period of Storage in the Regional
Warehouse. - The provision of the law in Section 1908 of the Tariff and Customs Code of the Philippines, as amended, to the
contrary notwithstanding, articles duly entered for warehousing may remain in the regional warehouses for a period of two (2)
years from the time of their transfer to the regional warehouse, which period may be extended with the approval of the Board of
Investments for an additional period of one (1) year upon payment of the corresponding storage fee on the unexported articles, as
provided for under Article 68(4) for each extension until they are re-exported in accordance with the guidelines implementing
Book IV of this Code. Any articles withdrawn, released or removed contrary to the provisions of said guidelines shall be
forfeited pursuant to the provisions of Article 69, paragraph (b) hereof.
"Art. 71. Rules and Regulations on the Jurisdiction, Operation and Control Over Qualified Goods in the Regional Warehouse. -
The Board of Investments, the PEZA, concerned ecozone authorities and the Bureau of Customs shall jointly issue special rules
and regulations on the receiving, handling, custody, entry, examination, classifications, delivery, storage, warehousing,
manipulation and packaging, release for reexportation or for importation and delivery to a Philippine distributor and for the
safekeeping, recording, inventory and liquidation of said qualified goods, any existing law notwithstanding. Such rules and
regulations shall be formulated in consultation with the applicants/operators of regional warehouses.
"Art. 72. Cancellation of License or Registration. - Any willful violation by the regional or area headquarters or regional
operating headquarters of a multinational company which has established a regional warehouse or warehouses contrary to or in
violation of the provisions of existing laws and the implementing guidelines of Book IV of this Code shall constitute a sufficient
cause for the cancellation of its license or registration in addition to the penalties hereinabove provided in Article 69, paragraph
(b) hereof.
"The Board, the PEZA or concerned ecozone authorities, as the case may be, shall have the authority to impose such fines in
amounts that are just and reasonable in cases of late submission or non-compliance on the part of registered enterprises, with
reporting and other requirements under this Code and its implementing rules and regulations."
Section 8. Article 73 of the same Code is hereby repealed.
Section 9. A new article is hereby inserted to read as follows:
"Art. 73. Implementing Rules and Regulations. - To implement the provisions of Books III and IV of this Code, the Department
of Trade and Industry, in coordination with the Department of Foreign Affairs, the Board of Investments, the Philippine
Economic Zone Authority, the ecozone authorities with special charters, the Securities and Exchange Commission, the Bureau of
Internal Revenue, the Bureau of Customs, Bangko Sentral ng Pilipinas, Philippine Tourism Authority, and the Bureau of
Immigration shall jointly promulgate such rules and regulations which shall take effect thirty (30) days after their publication in
at least two (2) national newspapers of general circulation in the Philippines."
Section 10. Separability Clause. - If any part or section of this Act is declared unconstitutional for any reason or whatsoever,
such parts not so declared shall remain in full force and effect.
Section 11. Repealing Clause. - All laws, decrees, orders, rules and regulations or issuances or parts thereof inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.
Section 12. Effectivity Clause. - This Act shall take effect after thirty (30) days following its full publication in at least two (2)
newspapers of general circulation in the Philippines.

RA 7844 – “EXPORT DEVELOPMENT ACT OF 1994.”

EXPORT DEVELOPMENT ACT OF 1994
[Republic Act No. 7844]
AN ACT TO DEVELOP EXPORTS AS A KEY TOWARDS THE ACHIEVEMENT
OF THE NATIONAL GOALS TOWARDS THE YEARS 2000

ARTICLE I
BASIC PRINCIPLES AND POLICIES

SECTION 1. Short title. – This Act shall otherwise be known as the “Export Development Act of 1994.”
SEC. 2. Declaration of policy. – It shall be the policy of the State to evolve export development into a national effort. The
government shall champion exports as a focal strategy for a sustainable agri-industrial development to achieve Philippine
NIChood towards the year 2000. The private sector shall take the lead in the collective effort to promote exports through
discipline and hard work, as it confronts the challenge of winning international markets.
The government and the private sector shall jointly transform the Philippines into an exporting nation. Towards this end, the
State shall instill in the Filipino people that exporting is not just a sectoral concern, but the key to national survival and the means
through which the economic goals of increased employment and enhanced incomes can most expeditiously be achieved.
SEC. 3. Key operating principles. – A macro-economic policy framework that supports export development shall be provided,
especially in key areas of concern to exporters:
[a] Monetary and foreign exchange policies shall establish and maintain a competitive exchange rate, supported by measures to
provide safety nets for various sectors that may be adversely affected by the implementation of such policies. Such policies shall
be consistent with the responsibility and primary objectives of the Bangko Sentral ng Pilipinas pursuant to Section 3 of Republic
Act No. 7653.
[b] Fiscal and credit policies shall provide adequate funds for public and private investments and business expansion, while
keeping the cost of credit comparable to international levels ensuring access to loanable funds for SMEs as well as highly
technical export enterprises, especially those in the countryside.
[c] Agricultural policies shall build up viability and competitiveness of the country’s agriculture sectors and facilitate their
linkage with industry to strengthen the agri-industrial base of the country’s export thrust.
[d] Trade, tariff and customs policies shall engender competitiveness of domestic industries and facilitate their participation in
international trade.
[e] Technical support policies to improve the quality of export products shall be adopted, particularly those relating to
technology transfer, R & D, technical
training and related activities. As such, the Department of Science and Technology [DOST] and the Department of Agriculture
[DA] shall be supported by colleges and universities in the diffusion of technology, information and training to the countryside
for agri-industrial and export development.
[f] Urgent attention must be given to policies affecting infrastructure in order to ensure the adequate supply and quality of power,
water [e.g., for irrigation], transportation [e.g., shipping and cargo handling], and communication to support the flow of goods
and services in the context of the national export drive.
[g] The link between export growth and countryside development must be strengthened through policies favorable to SMEs,
regional industrial centers, and export processing zones to boost rural and farm-based entrepreneurship in identified geographic
economic growth areas of the country.
[h] Labor and industrial relations policies must recognize the inevitable industrial shifts that will occur in the effort to achieve
international competitiveness. Focus shall be given to the formulation of accords between labor and management which shall
provide for sustained increase in productivity and competitiveness. In line with this, dual training schemes shall be integrated as
a basic component to the country’s primary and secondary education program to ensure that the manpower needs of agriculture
and industry will be matched by the skills generated by the educational system. Reasonable price and income policies shall
likewise be adopted in order to safeguard the interest of the labor sector.
[i] All government agencies whose actions affect exporters, such as the Board of Investments [BOI], Bureau of Customs [BOC]
and Bureau of Internal Revenue [BIR] shall simplify procedures to minimize bureaucratic red tape.
[j] Provisions of existing laws deemed detrimental to the export sector shall be repealed in subsequent acts.
SEC. 4. Definition of terms. – For purposes of this Act, the following definitions shall apply to the following terms:
[a] “Exporter” means any person, natural or juridical, licensed to do business in the Philippines, engaged directly or indirectly in
the production, manufacture or trade of products or services which earns at least fifty percent [50%] of its normal operating
revenues from the sale of its products or services abroad for foreign currency : Provided, That in the case of services, the same
shall be limited to information technology services, construction services and other services as defined jointly by the Department
of Finance [DOF] and the Department of Trade and Industry [DTI]. Services rendered by overseas contract workers are not
covered by the definition.
[b] “Export promotion” shall refer to a range of export activities which the public and private sectors undertake, such as
networking, especially in export support services and the provision of trade/market information; organization of trade fairs and
missions; provision of advisory services ; conduct of seminars, lectures, workshops, conferences and training on export-related
subjects; publication of export-related documents; handling of quality standard, product design and such other activities aimed at
promoting existing exports, especially those meant to reinforce and improve the position of Philippine export products in specific
foreign markets, principally being those activities necessary for the implementation of the Philippine Export Development Plan.
[c] “Export incentives” shall refer to support measures provided by the government to exporters to encourage investment in the
export sector, create a freer trade environment and motivate exporters to increase export sales and perform competitively in the
export market. The overall objective is to increase the country’s export sales.
[d] “Accredited organization” shall refer to the organization of exporters granted accreditation by the Export Development
Council, as provided in Section 7[1] of this Act.
ARTICLE II
INSTITUTIONAL STRUCTURES AND STRATEGIES
SEC. 5. Philippine Export Development Plan [PEDP]. – The President of the Republic of the Philippines shall approve a rolling
three-year Philippine Export Development Plan prepared by the Department of Trade and Industry [DTI] which shall form part
of the medium-term Philippine Development Plan [MTPDP]. It shall be formulated in consultation with the private sector,
validated and updated semestrally.
The PEDP shall define the country’s annual and medium-term export thrusts, strategies, programs and projects and shall be
jointly implemented by the government, export and other concerned sectors.
SEC. 6. Export Development Council. – The existing Export Development Council, hereinafter referred to as the Council, which
was created by Executive Order No. 98 [1993] as modified by Executive Order No. 110 [1993], and Executive Order No. 180
[1994], shall be strengthened and institutionalized for the purpose of overseeing the implementation of the PEDP and
coordinating the formulation and implementation of policy reforms to support the said Plan.
SEC. 7. Powers and functions. – The Council shall:
[a] approve the PEDP; coordinate, monitor and assess the implementation thereof, and when necessary, institute appropriate
adjustments thereon in the light of changing conditions in both the domestic and international environment;
[b] periodically review and assess the country’s export performance, problems and prospects;
[c] identify the main bottlenecks, problem areas and constraints in all areas/sectors/activities which influence the development of
exports, including but not limited to, such matters as policy framework, physical infrastructure, finance, technology, production,
promotions and marketing;
[d] mandate specific departments and agencies to attend to the bottlenecks and problems constraining the development of exports
in any of the areas mentioned in paragraph [c] above, and require the concerned Secretaries to deliver progress report[s] on the
actions/initiatives taken to resolve these areas of concern at the next meeting[s];
[e] ensure export quality control by overseeing the formulation and implementation of quality control guidelines by appropriate
agencies to make Philippine exports at par with world-class products;
[f] impose sanctions on any government agency or officer or employee thereof, or private sector entity that impedes efficient
exportation of Philippine goods;
[g] recommend to Congress any proposed legislation that would contribute to the development of exports;
[h] submit quarterly reports to Congress;
[i] formulate policies or recommend measures and draw up a study within ninety [90] days from the approval of this Act, relative
to the rationalization of the government’s export promotion and development functions/activities and programs for the eventual
transfer of government export promotions and development activities to the sector within a period of two [2] years after the
approval of this Act;
[j] formulate the policies for the granting of incentives to exporters;
[k] adopt such policies, rules, procedures and administrative systems for the efficient and effective exercise of its powers and
functions, including the creation or adoption of an executive committee or secretariat; and
[l] grant and review the accreditation of the organization of exporters, according to the guidelines which it shall later promulgate
for the said purpose: Provided, That the organization accredited shall be the dominant one among the other existing export
organizations as determined under the guidelines promulgated by the Council hereof.
[m] issue standards and policies to be observed by Local Government Units [LGUs] in order to :
[1] ensure that LGUs’ plans and budgets are supportive of agri-industrial growth and export competitiveness thrusts of the
national government; and
[2] ensure optimal allocation of expenditures.
The DILG and the regional development councils shall be the channels through which these standards and policies shall be
coursed.
Sec. 8. Composition of the Council. – The Council shall be composed of the following:
[a] Secretary of the Department of Trade and Industry as chairman; [b] Director-General of the National Economic and
Development Authority; [c] Secretary of the Department of Finance; [d] Governor of the Bangko Sentral ng Pilipinas; [e]
Secretary of the Department of Science and Technology; [f] Secretary of the Department of Agriculture; [g] Secretary of the
Department of Foreign Affairs; [h] Secretary of the Department of Labor and Employment; [i] Nine [9] representatives from the
private sector, the majority of whom shall be recommendees of the accredited organization, and one of whom shall be appointed
as vice-chairman.
Other heads of executive agencies, private organizations or individuals can be called upon by the Council to attend any Council
meeting and assist the Council to resolve issues and problems that concern their respective offices.
Likewise, such heads of executive agencies, private organizations or individuals shall respond to the queries of the Council
within two [2] weeks from the time such queries are received.
SEC. 9. Mode of selection and tenure of private sector representatives. – The President shall appoint the private sector
representatives, who are not ex officio members, upon nomination of the accredited organization, ensuring balanced
representations from the Visayas and Mindanao and various sectors, such as the labor sector, agricultural and traditional export
sectors as against the non-agricultural and non-traditional export sectors and the like.
The private sector representatives of the Council shall serve for a period of two [2] years. When a vacancy occurs due to the
resignation, death or incapacity of a member, a replacement who shall serve for the remainder of the member’s term of office
shall be appointed by the President.
SEC. 10. Meeting of the Council. – The Council shall meet once a month: Provided, That the President or the chairman may
convene the Council anytime whenever he deems it necessary.
The President shall preside over meetings of the Council on a quarterly basis.
SEC. 11. Funding. – The activities and operational expenses of the Council shall be funded jointly by budgetary appropriations
from the government and by private sector contributions as provided for in Executive Order No. 98.
SEC. 12. Accredited export organization. – The Council shall accredit a single umbrella organization of exporters pursuant to
section 7[1] of this Act to represent the export sector concerns and interests for three [3] years, after which the Council shall
undertake a review of the accreditation prior to the granting or re-granting of the said accreditation.
The accredited organization shall:
[a] recommend private sector representatives to the Council with consideration of balanced sectoral representation, as provided
in Section 9 hereof;
[b] represent the interests of the export sector;
[c] be responsible for coordinating, supporting and assisting the DTI relative to the formulation and implementation of the
government’s export promotion programs and policies: Provided, That in the event that some of the export promotion functions
of the government are privatized in accordance with the Act, it shall be responsible for the performance of such privatized export
promotion function; and
[d] manage the Philippine Trade Center, which shall include, among others, the authority to enter into contracts with promotion
facilities or functions.
SEC. 13. Export financing guarantee and insurance. – Pursuant to Section 7[1] of this Act, the Council shall make the necessary
legal and feasibility study/recommendation on the alignment and rationalization of government programs relative to export
financing and existing organizations dealing primarily and exclusively with export financing guarantee and insurance and
likewise considering the creation of a private sector led export financing institution whose services shall be primarily devoted
towards supporting the operations of exporters and indirect exporters, particularly the SMEs.
The study shall include the powers , functions, and operations of the proposed institution, and government contributions to the
said institution, and if and when necessary the preparation of a bill creating the same which the Council may recommend to
Congress within six (6) months after the effectivity of this Act.
The government counterpart funds shall come from direct budgetary appropriations and from consolidated capital funds of
government institutions involved in export financing and guarantees, or from equity contributions from government financial
institutions.
SEC. 14. Export promotion and information. – As provided in Section 7[1] of this Act, the Council through the DTI shall
prepare an export promotion privatization program within ninety [90] days from the approval of this Act and shall subsequently
identify the appropriate funding mechanism for such a program . The privatization process shall be completed within a period
two [2] years.
While the appropriate funding mechanism is not yet in place, financial and technical assistance to the accredited organization on
a project-to-project basis shall be granted. In this regard, the national government shall appropriate such sums as may be
necessary to the Council to be exclusively earmarked for export promotion and information until such time that the Council
establishes the funding mechanism. The Council shall formulate the criteria to avail of this financial and technical assistance and
the extent to which the assistance shall be granted with the primary consideration of encouraging the formation of a nationwide
marketing cooperative for export promotion.
SEC. 15. Philippine Trade Center. – The government shall hereby assist the private sector in the establishment of Philippine
Trade Centers which shall house the trade promotion offices and shall serve as permanent exhibit sites of the country’s export
products. In this regard, the government shall provide the land for the center, through a land grant or long term lease to the
accredited organization, and shall arrange financing for the construction of the trade complexes. Upon its establishment, the
centers shall be managed by the accredited organization.
ARTICLE III
OTHER INCENTIVES
SEC. 16. Incentives. – In addition to existing incentives provided by the Board of Investments, the following incentives shall
likewise be granted to exporters:
[a] Exemption from Presidential Decree No. 1853, provided that the importation shall be used for the production of goods and
services for export.
[b] Importation of machinery and equipment and accompanying spare parts which are used in the manufacture of exported
products at zero percent [0%] duty for a period of three [3] years, until 1997.
[c] Tax credit for imported inputs and raw materials primarily used for the production and packaging of export goods, which are
not readily available locally , shall be valid for five [5] years. Provided, That the tax credit shall be issued within thirty [30] days
from exportation.
[d] Tax credit for increase in current year’s export revenue computed as follows:
The first 5% increase in annual export revenue over the previous year would mean a credit of 2.5% to be applied on the
incremental export revenue converted to pesos at the current rate;

§ The next 5% increase would be entitled to a credit of 5.0%;

§ The next 5% increase would be entitled to a credit of 7.5%;

§ In excess of 15% would be entitled to a credit to 10%.

Such tax credit is only granted for the years when the performance is achieved . Export revenues used in the calculation of such
tax credits shall be subject to verification as prescribed under the implementing rulers and regulations.
[e] For exporters of non-traditional products who use or substitute locally produced raw materials, capital equipment and/or spare
parts, tax credits equivalent to twenty-five percent [25%] of the duties that would have been paid had these inputs been imported
; Provided, That this incentives would be available for a period of three [3] years upon effectively of this Act and can be
extended for another three [3] years
by the President upon the recommendation of the Secretary of Finance; Provided, further, That the Secretary of Finance, in
consultation with the Export Development Council, shall prepare a list of non-traditional exports which are entitled to avail of
this incentives: Provided, That these incentives shall be granted only upon; [1] the presentation of a Bureau of Export Trade
Promotion [BETP] certification of the exporter’s eligibility, in compliance with the minimum wage and SSS laws; and that [2] in
the case of importation, the items imported shall be used exclusively for production of export goods.
[f] In the interim, while the Eximbank is not yet established, government financial institutions [GFIs] including the Development
Bank of the Philippines [DBP] , the Philippine National Bank [PNB] and the Land Bank of the Philippines shall extend credit
facilities to be used for plant and equipment expansion purposes, among others. These credit facilities shall offer preferential and
simplified credit schemes to exporters.
SEC. 17. Negotiability. – All tax credit herein provided shall be negotiable.
ARTICLE IV
TRANSITORY PROVISIONS
SEC. 18. Appointment of private sector representatives. – Upon the effectivity of this Act, the President of the Republic of the
Philippines shall appoint the nine [9] private sector representatives to the Council who shall serve for a term of two [2] years .
Thereafter, the determination of the private sector representatives shall be governed by Section 9 of this Act.
SEC. 19. Funding of the Council. – Upon the effectively of this Act, the budget granted to the old Export Development Council
shall be transferred to the new Council created under this Act. Thereafter, such sums as may be necessary for its operation and
maintenance shall be included in the annual General Appropriations Act.
SEC. 20. Operation of the Council. – the Council shall immediately function one [1] month after the approval of this Act.
ARTICLE V
CRIMINAL OFFENSES AND PENALTIES
SEC. 21. Non-compliance of the mandatory provisions of this Act. – Any person, entity, government instrumentality or
institution, found to be willfully violating or grossly negligent in executing the mandates of this Act shall result in the expulsion
from office of its chief executive and operating officers, as well as the responsible officers thereof. Notwithstanding any
provision of law to the contrary, they shall likewise be prohibited from holding any government position for least two [2] years.
ARTICLE VI
ADMINISTRATIVE PROCEDURES AND SPECIAL CLAUSE
SEC. 22. Implementing rules and regulations. – The Secretaries of Trade and Industry and Finance, in consultation with the
Council, shall formulate the rules and regulations to implement the provisions of this Act.
SEC. 23. Separability clause. – The provisions of this Act are hereby declare separable and in the event any of such provisions
is declared unconstitutional, the other provisions which are not affected thereby shall remain in force and effect.
SEC. 24. Repealing clause. – All other laws, decrees, executive orders, administrative orders, rules and regulations or parts
thereof which are inconsistent with the provisions of this Act are hereby repealed , amended or modified accordingly.
SEC. 25. Effectivity. – This Act shall take effect two [2] weeks after its publication in the Official Gazette or in at least two [2]
national newspapers of general circulation in the Philippines, whichever comes earlier.
This Act which is a consolidation of House Bill No. 12073 and Senate Bill No. 1863 was finally passed by the House of
Representatives and the Senate on December 20, 1994.