CHAPTER 1
PURPOSES AND
OBJECTIVES;
ESTABLISHMENT AND NATURE OF SPECIAL ECONOMIC ZONES; COORDINATION WITH
OTHER
SIMILAR SCHEMES
SECTION 1. Title.
- This act shall be known and cited as "The Special Economic Zone
Act
of 1995."
SECTION 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:chanroblesvirtuallawlibrary
a)"The State
recognizes
the indispensible role of the private sector, encourages private
enterprise,
and provides incentives to needed investments."
(Sec.
20, Atr. 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 especially 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.
SECTION 3. Purposes,
Intents and Objectives. - It is the purpose, intent and objective
of
this Act:chanroblesvirtuallawlibrary
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, 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.
SECTION 4. Definition
of
Terms. - For purposes of this Act, the following definitions shall
apply to the following terms:chanroblesvirtuallawlibrary
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 continuos 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.cralaw
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.cralaw
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.cralaw
Enterprises within the
zone
are granted preferential tax treatment and immigration laws are more
lenient.
SECTION 5. Establishment
of ECOZONES. - To ensure the viability and geographic dispersal of
ECOZONES through a system of prioritization, the following areas are
initially
identified as ECOZONES, subject to the criteria specified in Section 6:chanroblesvirtuallawlibrary
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
Ilocos
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,
Sibalom, 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 as 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.
This areas
shall
be developed through any of the following schemes:chanroblesvirtuallawlibrary
(i)Private
initiative;
(ii)Local government
initiative
with the assistance of the national government; and
(iii)National
government
initiative.
These 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 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.
SECTION 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:chanroblesvirtuallawlibrary
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 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.
The 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.
SECTION 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 enterprise in freely convertible currencies: Provided,
further, That the new investments shall fall under the priorities,
thrusts
and limits provided for in this Act.
SECTION 8. ECOZONE to
be Operated and Managed as Separate Customs Territory.- The
ECOZONES
shall be managed and operated by the PEZA as separate customs territory.cralaw
The PEZA is hereby vested
with the authority to issue certificates of origin products
manufactured
or processed in each ECOZONE in accordance with the prevailing rules of
origin, and the pertinent regulations of the Department of Trade and
Industry
and/or the Department of Finance.
SECTION 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.
SECTION 10. Immigration.
- Any investor within the ECOZONE whose initial investment shall not be
less than One hundred fifty thousand dollars ($150,000), 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.cralaw
The PEZA shall issue working
visas renewable every two (2) years to foreign executives and other
aliens,
possessing 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 residents status and working visas by
the PEZA shall be reported to the Bureau of Immigration within thirty
(30)
days after issuance thereof.cralaw
CHAPTER II
GOVERNING
STRUCTURES
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 a 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 with a degree
in
economics, business, public administration, law, management or its
equivalent.cralaw
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 with a degree in economics, business, public
administration,
law, management or its equivalent. They must have career executive
service
eligibility.cralaw
The Board shall be composed
of the director general as ex officio chairman with eight(8) members as
follows: the Secretaries or their representatives of the Department of
Trade and Industry, the Department of Finance, the Department of Labor
and Employment, the Department of the Interior and Local Government,
the
National Economic and Development Authority, and the Bangko Sentral ng
Pilipinas, one (1) representative from the investors/business sector in
the ECOZONE.cralaw
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.cralaw
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 the per diem collected per month does not exceed the equivalent of
four (4) meetings.cralaw
SECTION 12. Functions
and Powers of PEZA Board.- The Philippine Economic Zone Authority
(PEZA)
Board shall have the following functions and powers:chanroblesvirtuallawlibrary
a)Set the
general
policies on the establishments 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 criteria under Section 6 and
endorse
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, telecommunications, transport, toll roads and bridges, port
services,
etc., and to fix just reasonable and competitive rates, fares, charges
and fees therefor;
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 powers 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
SECTION 13. General
Powers
and Functions of the Authority.- The PEZA shall have the following
powers and functions:chanroblesvirtuallawlibrary
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 sytems, water supply and distribution systems,
telecommunications
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 and 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.
SECTION 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:chanroblesvirtuallawlibrary
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 or
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 exercise such powers as may be prescribed by the Board, and
to implement the policies, rules and regulations set by the PEZA.
SECTION 15. Administration
of Each ECOZONE.- Each ECOZONE shall be organized, administered,
managed
and operated by the ECOZONE executive committee composed of the
following:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
(i)Advise the ECOZONE
management
on matters pertaining to policy initiatives; and
(ii)Assist the
ECOZONE management
in settling problems arising between labor and any enterprise in the
ECOZONE.cralaw
SECTION 16. Salary and Other
Emoluments. - The salary of the director general shall be in
accordance
with the revised compensation and position classification system.
SECTION 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.cralaw
SECTION 18. Prohibition
Against Holding Any Other Office. - The director general, deputy
directors
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, 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 or controlled corporation, or its subsidiary.cralaw
SECTION 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.cralaw
SECTION 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
SECTION 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.cralaw
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).cralaw
SECTION 22. Survey or
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 it jurisdiction.cralaw
SECTION 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.cralaw
Furthermore, tax credits
for exporters using local materials as inputs shall enjoy the same
benefits
provided for in the Export Development Act of 1994.cralaw
SECTION 24. Exemption
from Taxes Under the National Internal Revenue Code. - Any
provision
of existing laws, rules and regulations to the contrary
notwithstanding,
no taxes, local and national, shall be imposed on business
establishments
operating within the ECOZONE. In lieu of paying taxes, five percent
(5%)
of the gross income earned by all businesses and enterprises within the
ECOZONE shall be remitted to the national government. This five percent
(5%) shall be shared and distributed as follows:chanroblesvirtuallawlibrary
a)Three
percent
(3%) to the national government;
b)One percent (1%) to
the
local government units affected by the declaration of the ECOZONE in
proportion
to their population, land area, and equal sharing factors; and
c)One percent (1%) for
the
establishment of a development fund to be utilized for the development
of municipalities outside and contiguous to each ECOZONE: Provided,
however,
That the respective share of the affected local government units shall
be determined on the basis of the following formula:chanroblesvirtuallawlibrary
1)Population
- fifty
percent (50%)
2)Land area -
twenty-five
percent (25%); and
3)Equal sharing -
twenty-five
percent (25%).
SECTION 25. Applicable
National
Taxes. - All income derived by persons and all service
establishments
in the ECOZONE shall be subject to taxes under the National Internal
Revenue
Code.
SECTION 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.cralaw
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.
SECTION 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 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.cralaw
SECTION 28. After Tax
Profits. - Without prior Bangko 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.cralaw
SECTION 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:chanroblesvirtuallawlibrary
a)Consolidation
of lands for zero development purposes;
b)Acquisition of right
way
to the ECOZONE; and
c)The protection of
watershed
areas and natural assets valuable to the prosperity of the ECOZONE.
SECTION 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.
SECTION 31. Land Conversion.
- Agricultural lands may be converted for residential, commercial,
industrial
and other non-agricultural purposes, subject to the conditions set
forth
under Republic Act. No.. 6657 and other existing laws.cralaw
SECTION 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.cralaw
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.
SECTION 33. Protection
of Environment. - The PEZA, in coordination with the appropriate
agencies,
shall take concrete and appropriate steps and enact the proper measures
for the protection of the local environment.cralaw
SECTION 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 closed enterprises can be transferred and the funds
can
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.cralaw
SECTION 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.cralaw
SECTION 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
SECTION 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.cralaw
SECTION 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.cralaw
SECTION 39. Master Employment
Contracts. - The PEZA, in coordination with the Department of Labor
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.cralaw
SECTION 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.cralaw
SECTION 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.cralaw
SECTION 42. Incentive
Scheme. - Ad 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.cralaw
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.cralaw
CHAPTER V
NATIONAL
GOVERNMENT
AND OTHER ENTITIES
SECTION 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. SECTION 44. Relationship with 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.cralaw
SECTION 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 implementation of incentives.cralaw
SECTION 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.cralaw
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 less than one and one-fourth (1 1/4) month of every
year of service.cralaw
CHAPTER VI
MISCELLANEOUS
PROVISIONS
SECTION 47. Appropriation.
- Upon the effectivity of this Act, all funds of the former Export
Processing
Zone Authority (PEZA) 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.cralaw
Additional funding shall
come from the following:chanroblesvirtuallawlibrary
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 mandated 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-generating 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.
SECTION 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 powers and
privileges
not otherwise allowed under existing laws.
SECTION 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.cralaw
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.cralaw
Any provision of this Act
which provides benefits or privileges less than those granted or
imposes
obligations or burdens more onerous to special economic zones created
or
to be created under special laws shall not apply to them.
SECTION 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 the new
special
economic zones.cralaw
SECTION 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.cralaw
SECTION 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.cralaw
SECTION 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.cralaw
SECTION 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 the 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.cralaw
SECTION 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.cralaw
SECTION 57. Effectivity.
- This Act shall take effect upon its approval.cralaw
This Act which is a consolidation
of House Bill No. 14295 and Senate bill No. 1061 was finally passed by
the House of Representatives and the Senate on February 21, 1995.
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