Republic of the Philippines
HOUSE OF REPRESENTATIVES
QUEZON CITY Spare 06 AUG 2075

+ TIME _O: 33M,

20% Congress
First Regular Session

House Bill No. 3292

Introduced by: REP. MARK CHOLO L. VIOLAGO

EXPLANATORY NOTE

Article Il, Section 20 of the 1987 Constitution states that - "The State recognizes the
indispensable role of the private sector, encourages private enterprise, and provides incentives
to needed investments." Complimentarily, Article XII, Section 12 of the Constitution states that
"The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods and adopt ensures that help make them competitive.”

In line with these policies, the goverment shall provide measures that shall effectively
attract legitimate and productive foreign investments. The government shall also actively
encourage, promote and accelerate a sound and balanced industrial, economic and social
development of the country.

A special economic zone (SEZ) is an area in which the business and trade laws are
different from the rest of the country. SEZs are located within a country’s national borders, and
their aims include increasing trade balance, employment, increased investment, job creation
and effective administration.

Special economic zones generate plenty of employment opportunities for the local
population. Once special economic zones attract Foreign Direct Investment (FDI), more jobs
will be created. There’s no doubt that foreign businesses and investors will need to hire a high-
volume workforce to operate daily, especially businesses that fall under the industrial sector
e.g manufacturing and logistics.

The area of the Province of Bulacan where the Municipality of San Rafael remains
untapped by industrial developments. The population therein in continuously increasing, thus,
the demand for work and employment increase rapidly. ‘The area is with available land and
relevant resources that an economic zone can be established. The presence of a special
economic zone will make use of the available resources and in tum will provide much needed
development in the area creating economic opportunities not only to the resident of the
municipality but of the nearby municipalities and provinces as well.



Special economic zones offer a “shortcut” to a country’s more complex structural
reforms. These specialized areas reduce red tape, high tariffs, and taxes, providing economies
with relatively more connected territories characterized by simplified customs processes, fewer
hindrances to foreign ownership, and developed infrastructure.

The establishment of a Special Economic Zone in the area will provide facilities that
will cater to businesses and operations that are not readily available to the country. The Special
Economic Zone will serve as a gate way to new technologies and gadgets that cannot be
ordinarily available without the accommodations under this program.

Thus, the creation of a Special Economic Zone and the corresponding Special
Economic Zone Authority will bring forth nothing for advancement and development in the
municipality of San Rafael, the nearby municipalities, the province of Bulacan and other nearby
provin

In view of the foregoing, the immediate approval of this bill is earnestly so



Republic of the Philippines
HOUSE OF REPRESENTATIVES
QUEZON CITY

2¢th Congress
First Regular Session

House Bill No. 3292

Introduced by: |ARK CHOLO I. VIOLAGO

AN ACT ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE MUNICIPALITY
OF SAN RAFAEL, PROVINCE OF BULACAN, CREATING FOR THE PURPOSE
THE SAN RAFAEL 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 “San Rafael Special
Economic Zone Act”

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 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. Creation of the San Rafael Special Economic Zone.

In accordance with the foregoing declared policy and subject to the concurrence of the
concerned local government units (LGUs) of the Province of Bulacan, there is hereby
established a special economic zone, hereinafter referred to as the San Rafael Special Economic
Zone or SRSEZ. The SRSEZ shall cover a particular area in the municipality of San Rafael,
Province of Bulacan, the specific metes and bounds of which shall be more particularly defined
in a presidential proclamation that shall be issued for this purpose: Provided, that the lands
‘embraced therein shall be contiguous to one another.

SECTION 4. Creation of the San Rafael Special Economic Zone Authority.


There is hereby created a body corporate to be known as the San Rafael Special
Economic Zone Authority, hereinafter referred to as the SaRaSEZA, which shall manage and
operate the SRSEZ, in accordance with the provisions of this Act. The corporate life of the
SaRaSEZA shall expire in fifty (50) years counted from the first year after the effectivity of
this Act, unless otherwise extended by Congress. It shall be organized within one hundred
cighty (180) days after the effectivity of this Act.

SECTION 5. GOVERNING PRINCIPLES

The San Rafael Special Economic Zone shall be managed and operated under the
following principles:

a) Under the framework and limitations of the Constitution and the applicable
provisions of the Local Government Code, the SRSEZ shall be developed into
and operated as the decentralized, self-reliant and self-sustaining industrial,
commerciaVtrading, research and development, engineering, medical,
education, information and communications technology including emerging
and future technologies such as artificial technology, block chain, business
process outsourcing, cloud computing, cyber security, distributed ledger
technology, financial technology solutions, internet of things, and virtual
reality, retirement, and healthcare services, agro-industrial, tourism, banking
financial, multinational trading and investment center with provisions for
suitable residential areas.

b) The SRSEZ shall continue to be provided by the National Government and/or
local government with transportation, telecommunications, high-speed internet
cables and other facilities needed to attract legitimate and productive
investments, generate linkage with industries and employment opportunities for
the people of San Rafael and its neighboring municipalities. The SRSEZ shall
also have priority and preferential access to such National Government and/or
local government transportation and telecommunications infrastructure, high-
speed internet cables and other facilities, and access to the SRSEZ shall be
incorporated in the planning, construction and operation such infrastructure or
expansions: Provided, that the autonomy and self-reliance of the SRSEZ shall
not be a hindrance to assistance and/or partnerships with other units and
instrumentalities of the government: Provided, further, that no assistance or
partnership shall be construed as a waiver of the autonomy of the SRSEZ.

©) The SRSEZ 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 Econor
Zone Authority (PEZA), and the Department of Trade and Industry (DTI), with
foreign entities or enterprises;

4) Foreign citizens and companies owned by non-Filipinos in whatever proportion
may set up enterprises in the SRSEZ, either by themselves or in joint venture


with Filipinos in any sector or industry, international trade and commerce within
the SRSEZ;

e) The SRSEZ shall be managed and operated as a separate customs territory
thereby ensuring the free flow or movement of goods and capital within, into
and out of its territory, and shall likewise provide incentives subject to title XIII
of the National Internal Revenue Code, as amended. However, exportation or
removal of goods from the territory of the SRSEZ to the other parts of the
Philippine territory shall be subject to customs duties and taxes under Republic
Act No. 10863, otherwise known as the “Customs Modemization and Tariff’
Act” and other relevant tax laws of the Philippines;

1) The areas comprising the SRSEZ may be expanded or reduced when necessary
through a presidential proclamation issued for the said purpose. For this
purpose, the SaRaSEZA, 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 SRSEZ. for the following purposes: (1)
consolidation of lands for zone development; (2) acquisition of right of way to
the SRSEZ; and (3) the protection of watershed areas and natural assets
valuable to the prosperity of the SRSEZ;

g) Goods manufactured by the SRSEZ 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 SaRaSEZA together with the PEZA, the Bureau of Customs,
Bureau of Internal Revenue, and the DIT. 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; and

h) The defense of the SRSEZ and the security of its perimeter fence shall be the
responsibility of the national government in coordination with the SaRaSEZA
and the concerned LGUs.

SECTION 6. Development Goals of the SRSEZ

The SaRaSEZA shall determine the development goals of the SRSEZ within the
framework of national development plans, policies and goals. The Chairperson-Administrator
shall, upon approval by the Board of the SaRaSEZA, submit the SRSEZ plans, programs, and
projects to the Regional Development Council for inclusion in the regional development plan.

SECTION 7. Capitalization.
‘The SaRaSEZA shall have an authorized capital stock of Two Billion (2,000,000,000)

no par shares with a minimum issue of Ten Pesos (Php 10.00) each, the majority shares of
which shall be subscribed and paid for by the national government and the LGUs embracing,



the SRSEZ. The Board of Directors of the SaRaSEZA may, with the written concurrence of
the Secretary of Finance, sell shares, representing not more than forty per centum (40%) of the
capital stock of the SaRaSEZA 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
SaRaSEZA.

The amount necessary to subscribe and pay for the shares of the national govemment
to the capital stock of the SaRaSEZA shall be included in the General Appropriations Act, For
the LGUs concemed, the funds shall be taken from their internal revenue allotment and other
local funds

SECTION 8. Principal Office of the SaRaSEZA

The SaRaSEZA shall maintain its principal office in the Municipality of San Rafael,
Province of Bulacan, but it may establish liason offices within the Philippines as may be
necessary for the proper conduct of its business.

SECTION 9. Powers and Functions of the SaRaSEZA
‘The SaRaSEZA shall have the following powers and functions:

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

b) To register, regulate, and supervise the enterprises in the SRSEZ in an efficient
and decentralized manner, subject to existing laws;

©) To coordinate with LGUs and exercise general supervision over the
development plans, activities, and operations of the SRSEZ;

4) To regulate and undertake the establishment, construction, operation and
maintenance of public utilities, other services, and infrastructure in the SRSEZ
such as light and power, shipping, barging, stevedoring, cargo handling,
hauling, warehousing, storage of cargo, port services or concessions, piers,
wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads,
telecommunications, transport, bridges, terminals, conveyors, water supply and
storage, sewerage, drainage, airport operations in coordination with the Civil
Aviation Authority of the Philippines, and such other services or concessions or
infrastructure necessary or incidental to the accomplishment of the objectives
of this Act;

€) 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, otherwise known
as the “Build Operate-Transfer Law”, as amended, or joint venture, adequate


8)

h)

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k)

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m) To establish one-stop shops for the issuance of all necessary pe

facilities and infrastructure requires or needed for the operation and
development of the SRSEZ, in coordination with appropriate national and local
government authorities and in conformity with applicable laws thereon;

To approve plans, programs, and projects of the SI 10 be submitted to the
Regional Development Council for inclusion in the regional development plan;

To operate on its own, either directly or through licenses to others, tourism-
related activities, including games, amusements, recreational and sports
facilities, subject to the approval and supervision of the Philippines Amusement
and Gaming Corporation;

To raise or borrow, within the limitation provided by law, and subject to the
approval of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), as
the case may be, adequate and necessary funds from local or foreign sources, to
finance its projects and programs under this Act and for this 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;

To protect, preserve, maintain, and develop the forests, beaches, corals and coral
reefs, and maintain ecological balance within the SRSEZ. Notwithstanding the
power of the SaRaSEZA to create rules for such 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 SaRaSEZA;

To create, operate or contract to operate such functional units or offices of the
SaRaSEZA as it may deem necessary;

‘To adopt, alter, and use a corporate seal; contract, lease, buy, acquire, own or
otherwise dispose of personal or real property of whatever nature; sue and be
sued; and otherwise carry out its functions and duties as provided for in this Act;

To issue certificates of origin for products manufactured or processed in the
SRSEZ in accordance with prevailing rules of origin and the pertinent
regulations of the PEZA, the DTI, and the Department of Finance (DOF);

licenses, and other similar certifications to conduct such act
improve the ease of doing business within the SRSEZ, in coordination with
‘government agencies having jurisdiction over activities therein: Provided, that
all government agencies are directed to provide and extend utmost and full
cooperation to the SaRaSEZA in the establishment of such one-stop shops;


n) To ensure that the area covered by the SRSEZ is secure at all times; Provided,
that the Armed Forces of the Philippines (AFP) or the Philippine National
Police (PNP) shall not interfere in the internal affairs of the SaRaSEZA except
to provide the necessary security and defense, or law enforcement assistance, as
the case maybe: Provided, finally, that expenses of the AFP or the PNP in the
SRSEZ shall be bome by the national government;

0) To exercise such powers as may be essential, necessary or incidental to the
powers granted to it by this Act, as well as those that shall enable it to carry out,
implement and accomplish the purposes, objectives, and policies set forth in this,
Act; and

p) 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 10. Board of Directors of the SaRaSEZA.

‘The powers of the SaRaSEZA 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 Chairperson, who shall at the same time be the administrator of the
SaRaSEZA;

b) A Vice Chairperson, who shall be elected form among the members of the
Board of Directors;

©) Members consisting of:

1. The Govemor of the Province of Bulacan or a duly- authorized
representative from the Provincial Government of Bulacan;

The mayor of the municipality covered by the ecozone;

One (1) representative from the investors’ group; and

One (1) representative from among the workers in the SRSEZ.

Sep

The Governor or the Governor's duly authorized representative and the mayor
of the municipality within the ecozone shall serve as ex officio members of the Board,
whose terms in the Board shall correspond to their term as elected officials.

The Chairperson-Administrator and the members of the Board, except for the
representatives of the investors and workers groups and 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 form service due to death, voluntary resignation or removal for
cause. In case of death, resignation or removal for cause, their replacements shall serve
only the unexpired portion of the respective terms. No person shall be appointed as a
member of the board unless the person is a Filipino citizen of good moral character, of


proven probity and integrity, and a degree holder in any of the following fields:
economic, 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, except the ex officio members, shall each receive
per diem allowance at rates to be determined by the Department of Budget and
Management in accordance with existing rules and regulations: Provided, however, that
the total per diem allowance collected each months shall not exceed the equivalent of
four (4) meetings unless and until the President of the Philippines has fixed a higher
rate for the per diem allowance for the members of the Board, such allowance shall not
be more than Ten Thousand Pesos (Php 10,000.00) for every Board meeting.

SECTION 11. Organization and Personnel

‘The Board of Directors of the SaRaSEZA shall provide for its organization and staff.

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. The
Board shall have exclusive and final authority to promote, transfer, assign, reassign, or remove
officers of the SaRaSEZA, any provision of existing law to the contrary notwithstanding. The
Chairperson-Administrator shall execute the decisions of the Board.

‘The officers and employees of the SaRaSEZA, 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 SaRaSEZA, shall be removed or suspended except for

cause, as provided by civil service rules and regulations.

a)

b)

°)

d)

SECTION 12. Powers and Duties of the Chairperson-Administrator
The Chairperson-Administrator shall have the following powers and duties:

To direct and manage the affairs of the SaRaSEZA in accordance with the policies of
the Board;

To establish the internal organization of the SaRaSEZA under such conditions that the
Board may prescribs

To submit an annual budget and necessary supplemental budget to the Board for its
approval;

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 requires;


€) To submit to the Board for its approval, policies, systems, procedures, rules and
regulations that are essential to the operation of the SRSEZ;

f) To recommend to the Board the remuneration and other emoluments of its officers and
employees in accordance with existing laws on compensation and position
classification;

g) 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 SRSEZ; and

h) To perform such other duties as may be assigned by the Board or which are necessary
or incidental to the office.

SECTION 13. Legal Counsel

The SaRaSEZA shall have its own internal legal counsel who shall be under the
supervision of the Government Corporate Counsel. When the exigencies of business and
operations demand it, the SaRaSEZA may engage the services of an outside counsel either on
a case to case or on a fixed retainer basis.

SECTION 14. Investors’ Visa

Any foreign national who invests an amount of Two Hundred Thousand US dollars
(US$200,000.00) in a registered enterprise, either in cash or equipment, shall be entitled to an
investors’s visa: Provided, that the foreign national has the following qualifications:

a) Must be at least eighteen (18) years of age;

b) Must not have been convicted by final judgment of a crime involving moral
turpitude;

c) Must not be afflicted with any dangerous or contagious disease;

d) Must not have been confined in an institution for any mental disorder or
disability; and

¢) Must be financially capable as borne out by credible and verifiable evidence.

With an investor’s visa, an alien shall be entitled to reside in the Philippines while
the investment subsists. The alien investor should submit an annual report, in the form duly
prescribed for the purpose, to prove that the investment in the country subsists. Should said
alien investor withdraw the investments from the Philippines, then the investor's visa issued
to said alien shall automatically expire and be withdrawn.

The authority to issue visas and work permits shall remain with the Bureau of
Immigration (BI) and the Department of Labor and Employment (DOLE), respectively:
Provided, that the BI and the DOLE shall implement measures to expedite the processing
of such visas and permits for workers in the SRSEZ and coordinate closely with the
SaRaSEZA to facilitate the conduct of business operations.

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SECTION 15, Fiscal Incentives

Registered enterprises of the SRSEZ may be entitled to pertinent fiscal incentives
granted under Title XII (Tax Incentives) of the National Internal Revenue Code, as
amended.

SECTION 16. Banking Rules and Regulations.

Banks and financial institutions to be established in the SRSEZ shall be under the
supervision of the BSP and subject to existing banking laws, rules and regulations.

SECTION 17. Remittances

In the case of foreign investments, a duly registered entity or enterprise within the
SRSEZ shall have the right to remit earnings to its investors 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 Republic Act No. 7653, otherwise known as the
“New Bank Act” as amended.

SECTION 18. Supervision and Control

For purposes of policy direction and coordination, the SaRaSEZA shall be under
the direct control and supervision of the Office of the President of the Philippines.

SECTION 19. Relationship with Local Government Unit

Except as herein provided, the LGUs comprising the SRSEZ, shall retain their basic
autonomy and identity. The Municipality of San Rafael, Province of Bulacan, shall operate
and function in accordance with the framework of the Constitution, the Local Government
Code of 1991, as amended, and this Act.

In case of any conflict among the SaRaSEZA, the LGUs and the national
government on matters affecting the SRSEZ, other than national defense and security
matters, the decision of the SaRaSEZA shall prevail.

SECTION 20. Audit
The Commission on Audit shall appoint a full-time auditor for the SaRaSEZA and
‘may assign such number of personnel as may be necessary to assist the auditor in the

performance of the auditor's functions.

SECTION 21. Interpretation and Construction

1


The powers, authorities and functions that are vested in the SaRaSEZA are intended
to establish national self sufficiency and self-reliance in the advancement of and
protection of the national integrity, enhancement of national security, decentralization of
governmental functions and authority, and promotion of an efficient and effective working
relationship among the SaRaSEZA, the national govemment and the LGUs. Any
interpretation of this Act shall consider such intentions. In the event of conflict of
interpretation and provided the intentions cannot be harmonized, the provisions of this Act
shall be construed in favor of an interpretation that shall protect national security.

SECTION 22. Applicability Clause

Insofar as they are consistent with the provisions of this Act, the provisions of
Sections 30 to 41 of Republic Act No. 7916, otherwise known as “The Special Economic
Zone Act of 1995”, as amended, shall likewise apply to the SRSEZ..

SECTION 23. Implementing Rules and Regulations.

Within sixty (60) days from effectivity of this Act, the DTI shall, in coordination
with the DOF and the National Economic and Development Authority, formulate rules and
regulations for the effective implementation of the provisions of this Act.

SECTION 24. 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 25. Repealing Clause

All laws, executive orders or issuances or any part thereof, which are inconsistent
herewith, are hereby repealed or amended accordingly.

SECTION 26. Effectivity

This Act shall take effect fifteen (15) days after its publication in the Official
Gazette or in a newspaper of general circulation.

Approved

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