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