FOURTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
§ENATE BILL NO 
Introduced by Senator Juan Ponce EnriIe 
EXPLANATORY NOTE 
Past and present administrations have endeavored to spur economic 
development in the countryside. Through the creation of industrial centers in the rural 
and underdeveloped areas, the government hopes to encourage investors and stimulate 
activities that will result in job creation and enhanced productivity that will redound to 
the benefit not only of the residents within these areas, but also of nearby provinces and 
regions as well. 
The province of Surigao del Sur in the CARAGA Region in Mindaiiao is ai1 area 
that boasts of vast natural and human resources. It is strategically located as it serves as 
an entsy and exit point for trade and other activities coming from the nearby provinces 
of Surigao Del Norte, Davao Oriental and Agusan del Sur. It has a total population of 
501,808 residents, based on the 2000 Census, approximately 63.97% of which serves as 
the province's labor force. While the agriculture sector remains the major provider of 
employment, 35% of the labor force also devote their efforts on various industries and 
services. 
It is in view of the potentials of this province that this representation proposes to 
create a special economic zone and free port in the province of Surigao del Sur, covering 
the municipalities of Carrascal, Cantilaii, Madrid, Carmen, and Lanuza. The location of 
the proposed special economic zone is ideal as the seaport in Cantilan can be further 
developed to serve the needs of the entire coastline of Surigao del Sur. 
The bill proposes to create the Surigao del Sur Special Economic Zone and 
Preeport Authority which will oversee the operations and activities within the zone, 
with the end in view of facilitating its development into a self-sustaining industrial, 
commercial, linaiicial and investment center and free port. Hopefully, this economic 
zone will serve as an engine of growth in the southern region of the country. 
In view of the foregoing, approval of the bill is earnestly reque 


FOURTEENTH CONGRESS OF THE ) 
REPUSLXC OF THE PHILIPPINES 
) 
First Regular Session 
SENATE BILL NO. 
Introduced by Sen. Juan Ponce Enrile 
AN ACT 
ESTABLISHING THE SURIGAO DEL SUR SPECIAL ECONOMIC ZONE AND 
FREEPORT IN THE MUNICIPALITIES OF CARRASCAL, CANTILAN, MADRID, 
CARMEN, AND LANUZA,‘PROVINCE OF SURIGAO DEL SUR, PROVIDING 
FUNDS THEREFOR, AND FOR OTHER PURPOSES 
Be in enacted by the Senate and the House of Representatives of the Philippines in the Congress 
assembled: 
1 
SECTION 1. Short Title. - This Act shall be known as the “Surigao del Sur Special 
2 
Econorhic Zone nnd Free Port Act of 2007.” 
3 
4 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to 
5 
actively encourage, promote, induce and accelerate the sound and balanced industrial, 
6 
economic and social development of the country in order to provide jobs to the people 
7 
especially those in the rural areas, increase productivity and individual family income, 
8 
and thereby improve the level and quality of living conditions through the 
9 
establishment, among others, of special economic zones and freeports in suitable and 
10 
strategic Iocations in the country and through measures that will attract legitimate and 
11 
productive foreign investments. 
12 
13 
14 
15 
16 
17 
SEC. 3. Creation of the Surigao del Sur Special Economic Zone and Freeport. - 
In accordance with the foregoing declared policy and subject to the concurrence of the 
concerned IocaI government units (LGUs) in the Province of Surigao del Sur affected by 
the zone, there is hereby established a Special Economic Zone and Freeport in the 
Municipalities of Carrascal, Cantilan, Madrid, Camen, and Lanuza in the Province of 


1 
2 
Surigao del Sur to be known as the Surigao del Sur Special Economic Zone and 
Freeport, hereinafter referred to as the Surigao del Sur Ecozone. The specific metes and 
3 
4 
bounds of the Surigao del Sur Ecozone shall be more particularly defined in a 
presidential proclamation that shall be issued for this purpose. 
5 
6 
SEC. 4. Governing Principles. - The Surigao del Sur Ecozone shall be managed 
I 
8 
9 
following principles: 
and operated by the Surigao del Sur Special Economic Zone and Free Port Authority, 
herein referred to as the SDSEZA, created under Section 11 of this Act, under the 
10 
11 
12 
13 
14 
15 
(a) Within the framework and limitations of the Constitution and applicable 
provisions of the Local Government Code, the Surigao del Sur Ecozone shall be 
developed into and operated as a decentralized, self-reliant and self-sustaining 
industrial, commercialjtrading, agro-industrial, tourist, banking, financial and 
investment center with suitable residentid areas. 
17 
(b) The Surigao del Sur Ecozone shall be provided with transportation, 
18 
telecommunications and other facilities needed to attract legitimate and 
19 
productive investments, generate linkage industries and employment 
20 
opportunities for the people of the Municipalities of, Carrascal, Cantilan, Madrid, 
21 
Carmen, and Lanuza and its neighboring towns and cities. 
22 
23 
24 
25 
26 
21 
(c) The Surigao del Sur Ecozone may establish a mutually beneficial economic 
relation with other entities or enterprises within the country or, subject to the 
administrative guidance of the Depariment of Foreign Affairs (DFA), the 
Philippine Economic Zone Authority (PEZA) and/or the Department of Trade 
and Industry (DTI), with foreign entities or enterprises. 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
I1 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
(d) Foreign citizens and companies owned by non-Filipinos in whatever proportion 
may set up enterprises in the Surigao del Sur Ecozone, either by themselves or in 
a joint venture with Filipinos in any sector of industry, international trade and 
commerce within the Surigao del Sur Ecozone. 
(e) The Surigao del Sur Ecozone shall be managed and operated as a separate 
customs territory thereby ensuring the free flow or movement of goods and 
capita1 within, into and out of its territory, and shall likewise provide incentives 
such as tax and duty-free importations of raw materials, and capital equipment 
.to registered enterprises located therein. However, exportation or removal of 
goods from the territory of the Surigao del Sur Ecozone to the other parts of the 
Philippine territory shall be subject to customs duties and taxes under the 
Customs and Tariff Code of the Philippines, as amended, and the National 
Internal Revenue Code of 1997, as amended. 
(9 The areas comprising the Surigao del Sur Ecozone may be expanded or reduced 
when necessary. For this purpose, the SDSEZA, 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 Surigao del Sur Ecozone 
for the following purposes: (1) consolidation of lands for Surigao del Sur Ecozone 
development; (2) acquisition of right-of-way to the Surigao del Sur Ecozone; and 
(3) the protection of watershed areas and natural assets valuable to the 
prosperity of the Surigao del Sur Ecozone. 
(g) Goods manufactured by a Surigao del Sur Ecozone enterprise shall be made 
available for immediate retail sale in the domestic market, subject to the payment 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
of corresponding taxes on raw materials and other regulations that may be 
formulated by the SDSEZA, together with the PEZA, the Bureau of Customs and 
the DTI in accordance with the National Internal Revenue Code of 1997, as 
amended, and the Tariff and Customs Code of the Philippines, as amended. 
However, in order to protect domestic industries, a Negative List of industries 
sliall be drawn up and regularly updated by PEZA. Enterprises engaged in 
industries included in such Negative List shall not be allowed to sell their 
products locally. 
(h) The defense of the Surigao del Sur Ecozone and the security of its perimeter 
fence shall be the responsibility of the national government (NG) in coordination 
with the Surigao del Sur Ecozone and the LGUs. 
SEC. 5. Incentives To Regisfered Enterprises - The Surigao del Sur Special 
Economic Zone and Freeport Authority (SDSEZA) may administer the following 
incentives to the registered enterprises located therein to the extent of the 
activity/ project: 
(A)lncorne Tux 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: 
(1) 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. 
(2) Category B - registered domestic enterprise on the following shall be 
entitled to a six -year income taxholiday: 
(a) Located in less developed areas as defined by the BOI; or 


10 
11 
12 
13 
14 
I5 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
(b) Producing/rendering new productslservices or having strong 
backward or forward linkages 
(3) Category C - Registered export enterprise shall be entitled to a six-year 
income tax holiday: 
Provided, horuever, That if the export enterprise 
complies with the following: (a) large capital investments or sizeable 
employment generation, or (b) use high level of technology or (c) 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 (JPP) sliall be entitled to incentives 
provided herein pertaining to the new investments and subject to such terms and 
conditions as the BO1 may determine. 
.^ 
Additional investments in the project shdl be entitled to the income tax 
holiday corresponding to such investqents 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, horumer, That the total ITH 
period for an export enterprise availing of an eight-year I T H  shall not exceed 
twenty (20) years. Any unused incentives shall therefore be deemed forfeited if 
not used during the incentive period. 


1 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
Enterprises registered with SDSEZA are required to share in the special 
development fund of the BO1 for investment promotion projects of the 
government equivalent to one percent (1%) of €he ITH granted for every 
application. 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise 
availing of the ITH or the net operating loss carryover (NOLCO) to secure a 
certificate of eligibility from the SDSEZA before submitting its income tax return 
(ITR) with SDSEZA for validation. 
Failure to secure certification and/or to file the ITH or NOLCO availment 
for validation by the SDSEZA within forty-five (45) days from the last day of 
statutory filing date for ITR shall cause the forfeiture of the availment for the 
taxable period. 
(B) Net Operating Loss CuMyover (NOLCO) - Net operating loss of the business or 
enterprise during the first three years from 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 Code shall nof be 
entitled to NOLCO. 
Registered enterprises availing of the ITH as herein provided shall not be 
entitled to avail of the NOLCO. 


8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
., 
23 
24 
25 
26 
(C) Imposition of a tax rate offive percent (5%) OIZ Gvoss 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 the income tax, the excise tax, the francl~ise taxes, 
shall be imposed on business establishments operating within the Surigao del 
Sur Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall 
be paid as follows: 
1. Three percent (3%) to the national government; 
2. 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 Surigao del Sur Ecozone shall 
be subject to national and local taxes under the NIRC 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 (NIRC) of 
1997, as amended. 


1 
2 
3 
4 
5 
6 
(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 custom duties: Provided, That 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
the importation thereof shall be used exclusively by the’ registered 
enterprises in their registered activity: 
Provided, firfher, That the 
importation of machinery and equipment and accompanying parts shall 
comply with the following conditions: 
(a) They are not manufactured domestically in sufficient quantity, of 
comparable quality and at reasonable prices; 
.(b) They are reasonably needed and will be used exclusively by the 
registered enterprise in the manufacture of its products, unless prior 
approval of the SDSEZA 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, 
(c) Approval of the SDSEZA was obtained by the registered enterprise for 
the importation of such machinery, equipment and spare parts. 
Approval of the SDSEZA must be secured before any sale, transfer 
or disposition of the imported capital equipment, machinery or spare 
parts i s  made: Pvovided, 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 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
(i) If made to another enterprise enjoying tax and duty exemption on 
imported capital equipment; 
(ii) If made to another enterprise, upon the payment of any taxes and 
duties on the net book value of the capital equipment to be sold; 
(iii) 
Exportation of the capital equipment, machinery, spare parts or 
source documents or those required for pollution abatement and 
control; and 
(iv) 
For reasons of proven technical obsolescence. 
When the aforementioned sale, transfer or disposition is made 
under any of the conditions provided for in the foregoing paragraphs 
other than paragraph (ii), the registered firm shall not pay the taxes and 
duties waived on such items: Provided, further, That if the registered 
enterprise sells, transfers or disposes the aforementioned imported items 
without prior approval within five years from the date of importation, the 
registered enterprise and the vendee, transferee, or assignee shaI1 be 
solidarily liable to pay twice the amount of the tax and duty exemption 
given it: Provided, finalZy, That even if thp sale, Qansfer or disposition of 
the capital equipment, machinery or spare parts is approved after five 
years from the date of importation, the registered enterprise is still liable 
to pay the taxes and duties based on the net book value of the capital 
equipment, machinery or spare. parts if it has violated any of its 
registration terms and conditions. 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 


5 
6 
7 
8 
9 
10 
11 
12 
’ 13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
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 01 duties that would have been waived on 
the machinery, capital equipment and 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 of the incentives by a registered export enterprise 
provided 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 SDSEZA 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 be deemed waived if application for tax credit 
under this subsection was not filed within one year from date of: delivery. 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
I1 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
(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 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 is not filed within one year from date of exportation of the final 
product. 
(H)lncentizies 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 SDSEZA. 
Availment of the incentives by a registered enterprise shall be subject to the 
following: (1) that said breeding stocks and genetic materials would have been 
qualified for tax and duty-free importation under the preceding paragraph; (2) 
that the breeding stocks and genetic materials are reasonably needed in the 
"registered activity; (3) that approval of the SDSEZA has been obtained by the 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
., ' 12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
registered enterprise; and (4) 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 date of delivery. 
(I) Exemption from Whrfage Dues - me 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 Minimum 
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' 
entitlement period to the income tax-based incentives. 
(K) (1) Tax treatment of merchandise in the Surigao del Sur Ecozone - 
(a) Except as otherwise provided in this Act, foreign and domestic merchandise, 
raw materials, supplies, articles, equipment, machineries, spare parts and 
wares of every description, except those prohibited by law, brought. into the 
zone to be sold, stored, broken up, repacked, assembled, installed, sorted, 
cleaned, graded, or otherwise processed, manufactured, mixed with foreign 
or domestic merchandise whether directly or indirectly related in such 
activity, shall not be subject to customs and internal revenue laws and 
regulations nor to local tax ordinances, any provision of law to the contrary 
notwithstanding. 


1 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
(b) Merchandise purchased by a registered Surigao del Sur Ecozone enterprise, 
from the customs territory and subsequently brought into the export 
processing zone, shall be considered as export sales and exportation thereof 
shall be entitled to the benefits allowed by law for such transaction. 
(c) Domestic merchandise sent from the Surigao del Sur Ecozone to the customs 
territory 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 of for local consumption. 
(d) Merchandise sent from the Surigao del Sur Ecozone to the customs territory 
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). 
(e) Domestic merchandise on which all internal revenue taxes have been paid, if 
subject thereto, and foreign merchandise previously imported on which has 
been paid, or which have been admitted free of duty and tax, may be taken 
into the Surigao del Sur Ecozone from the customs territory of the Philippines 
and be brought back thereto free of quotas, duty or tax. 
(f) Subject to such regulations respecting identity and safeguarding of revenue 
as the SDSEZA may deem necessary, when the identity of an article entered 
into the export processing zone under the immediately preceding paragraph 
has been lost, such article when removed from the zone and taken to the 
customs territory shall be treated as foreign merchandise entering the country 
for the first time, under the provisions of the Tariff and Customs Code of the 
Philippines, as amended. 


9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
(g) Articles produced or manufactured in the Surigao del Sur 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. 
(h) Unless the contrary is shown, merchandise taken out of the Surigao del Sur 
Ecozone shall be considered for tax purposes to have been sent to customs 
territory. 
(2) Tax treatment of Merchandise in the Surigao del Sur Ecozone - The Surigao 
del Sur Special Economic Zone and Freeport shall be operated and managed 
as a separate customs territory ensuring free flow or movement of goods 
within, into and exported out of the free trade/freeport zone. Importations of 
raw materials, and capital equipment are tax and duty free. However, 
exportations or removal of goods from the Surigao del Sur Ecozone to the 
other parts of Philippine territory shall be subject to customs and internal 
~ 
revenue regulations. 
(3) Tax Treatment of Services in the Surigao del Sur Ecozone - (a) Sale of service 
by an entity from the customs territory to a registered ecozone or free trade 
enterprise, or by a registered ecozone or freeport enterprise to another 
ecozone or freeport enterprise shall be treated as indirect export, and hence, 
entitled to the benefits allowed by law for such transaction. 
(b) Sale or service by a registered ecozone or freeport enterprise to the 
customs territory shall be subject to applicable internal revenue laws and 
regulations. 


7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
21. 
22 
23 
24 
(L) 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. 
(M) 
Employment of Foreign Nationals - Subject to the provisions of Section 29 
of Commonwealth Act No. 613, as amended, a registered enterprise may employ 
fQreign 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 
officers are the owners or stockholders owning at least ten percent (10%) of the 
outstanding capital stock of the registered enterprise and they remain the owner 
or maintain their 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 issued a multiple 
entry visa, valid for a period of three years, and shaIl 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 $e sxpjq$ibla yearly. 
25 


1 
2 
3 
4. 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
The foreign nationals admitted herein, as well as their respective spouses 
and dependents shall be exempt from: (1) obtaining Alien Certificate of 
Registration and Emigration Clearance Certificates; and (2) securing the Alien 
Employment Permit (Am) and all types of clearances, permits, licenses or their 
equivalents required by any government department or agency. 
SEC. 6. Incentive to Investors. - Any foreign nation& 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, 
(a) He is at least eighteen (18) years of age; 
@) He has not been convicted of a crime involving moral turpitude; 
(c) He is not afflicted with any loathsome, dangerous or contagious disease; 
(d) 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 
entitleh to the same privileges provided for under Section 5 (M), last paragraph. 
As 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 inveskments from the 
Philippines, then the investor’s visa issued to him shall automatically expire. 
SEC. 7. Adnzinistration, Implementation and Monitoring of Incentives. - The 
SDSEZA shall be responsible for the administration and implementation of the 
incentives granted to its respective registered enterprises: Provided, That any incentive 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
administration policy adopted by the BO1 for registered enterprises shall Le uniformly 
applied by SDSEZA. 
The following are the duties and responsibilities of the SDSEZA 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 data and information to the DOF and the BO1 as required by any of 
these agencies to ascertain consistency of investment policies and incentives, 
including their implementation as provided in paragraph (a) herein, and to 
ensure proper implementation of system 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 BO1 shall create a single database of all incentives 
provided by all incentives granting agencies, including SDSEZA, and all information 
thereto. Double entry accounting shall be done by the BO1 in recording all incentives 
granted by the government for transparency purposes. 
SEC. 8. Extension of Period of Availment. - The availment period of the 
incentives provided herein may be extended by SDSEZA in the event that the registered 
enterprise suffers operational force mujeure or any event equivalent thereto, impairing its 
27 
viability. 


1 
2 
SEC. 9. Duration of Incentives. - Enterprises registered with SDSEZA may 
3 
enjoy ITH or NOLCO granted by the latter prior to the availment of the five percent 
4 
(576)GIE. 
5 
6 
7 
8 
9 
indispensable to national development. 
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 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
The industries exempted from this provision shall be recommended by BOI, with 
the concurrence of the Secretaries of the Department of Finance and Trade and 
Industry. 
SEC. 10. Creation of the Surigao del Sur Special Economic Zone and Freeport 
Authority. - There is hereby created a body corporate to be known as the “Surigao del 
Sur Special Economic Zone and Freeport Authority” hereinafter referred to as the 
SDSEZA, which shall manage and operate the Surigao del Sur Ecozone, in accordance 
with the provisions of this Act. This corporate franchise 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 eighty (180) days after the 
effeciivity of this Act. 
SEC. 11. Principal Oflice of SDSEZA. - The SDSEZA shall maintain its principal 
office in the Municipality of Cantilan but it may establish branches within the 
26 
Plulippines as may be necessary for the proper conduct of its business. 


1 
2 
3 
4 
SEC. 12. Powers and Functions of the SDSEZA. - The Surigao del Sur Special 
Economic Zone and Freeport Authority shall have the following powers and functions: 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
(a) To operate, administer, manage and develop the Surigao del Sur Ecozone 
'- according to the principles and provisions set forth in this Act; 
(b) To recommend to the President of the Philippines the issuance of a 
proclamation to fix and delimit the site of the Surigao del Sur Ecozone; 
(c) To register, regulate and supervise the enterprises in the Surigao del Sur 
Ecozone in an efficient and decentralized manner, subject to existing laws; 
(d) To coordinate with local government units and exercise general supervision 
over the development plans, activities and operation of ecozones; 
(e) Tu regulate and undertake the establishment, operation and maintenance of 
utiiilies, other services and infraskructure in the Surigao del Sur Ecozone such 
as but nut limited to heat, light and power systems using indigenous and/or 
renewable, and other energy sources, water supply, telecommunications, 
transport, toll roads and bridges, port services, etc. The SDSEZA shall have 
the power to fix just, reasonable and competitive rates, fares, charges and 
prices thereof, notwithstanding the provisions of the Electric Power Industry 
Reform Act of 2001, and other pertinent laws. 
' 
(f) To construct, acquire, own, lease, operate and maintain on its own or through 
contracts, franchise, licenses, bulk purchase from the private sector or permits 


1 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
under any of the schemes allowed in Republic Act No. 6957 (otherwise 
known as the Build-Operate-Transfer Law, as amended by RA 7718) or joint 
venture, adequate facilities and infrastructure required or needed for the 
operation and development of the Surigao del Sur Ecozone, in coordination 
with the appropriate national and local government authorities and in 
conformity with applicable laws thereon; 
(g) To operate on its own, either directly or indirectly or through a license to 
othler tourism-related activities, including games, amusements, recreational 
and sport facilities; - 
(11)Subject to the approval of the President and the Monetary Board of the 
Bangko Sentral ng Pilipinas, upon the recommendation of the Department of 
Finance (DOF), 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; 
(i) To provide security for the Surigao del Sur Ecozone in coordination with the 
national and local governments.' Military forces sent by the national 
government for the purpose of defense shall not interfere in the internal 
affairs of the ecozone and expenditures for these military forces shall be borne 
by the national government. For this purpose, the SDSEZA may establish and 
maintain its security forces and firefighting capability or hire others to 
provide the same; 


1 
2 
3 
4 
8 
9 
10 
11 
12 
13 
14 
I5 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
6) To protect, preserve, .maintain and develop the virgin forests, beaches, cord 
and coral reefs and maintain ecological balance within the Surigao del Sur 
Ecozone; 
(k) To create, operate and/or contract to operate such functional units or offices 
of the SDSEZA as it may deem necessary; 
(1) 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; 
(m) 
To issue certificates of origin for products manufactured or processed in 
the Surigao del Sur Ecozone in accordance with the prevailing rules of origin, 
and the pertinent regulations of the PEZA, DTI and/or the DOF; 
(n) To issue working visas renewable every two (2) years for foreign executives 
and foreign technicians with highly specialized skills which no Filipinos 
possesses, as certified by the Department of Labor and Employment (DOLE); 
(0) 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; 
(p) 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, 


I 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
(q) To issue rules and regulations consi’stent with the provisions of this Act as 
maybe necessary to accomplish and implement the purpose, objectives and 
policies provided herein. 
SEC. 13. Banking Rules and Regulations. - 
Existing banking laws and 
rules/regulations of the Bangb Sentral ng Pilipinas (ESP) shall appIy to banks and 
financial institutions to be established in the Surigao del Sur Ecozone, such as 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. 
‘SEC. 14. Remittance of Earnings. - In the case of foreign investments, a 
registered enterprise in the SDSEZA 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 RepubIic Act No. 265, as amended, otherwise known as “the New Central Bank Act”. 
SEC. 15. Board of Directors of the SDSEZA. - The powers of the SDSEZA 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 
SDSEZA; 
(b) A vice-chairman, who shall come from among the members of the Board; 
(c) The Congressional Representative of the district covering the site of the 
Surigao del Sur Ecozone; 
(d) One (1) representative of the Provincial Government of Surigao del Sur; 


(e) One (1) representative from the domestic investors; 
(fl One (1) representative from the foreign investors; and 
(g) One (1) representative from the workers working in the Surigao del Sur 
.' 
Ecozone. 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
The congressional representative and the representative of the Provincial 
Government shall serve as ex-oficio members of the Board, whose term in the Board 
corresponds to their term as elected officials. 
The chairman and members of the Board, except the ex-oficio members, shall be 
11 
12 
13 
14 
15 
appointed by the President of the Philippines to serve for a term of six (6) years, udess 
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. 
16 
17 
'. 18 
19 
20 
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 
21 
22 
23 
24 
25 
26 
experience preferably in the field of management or public administration. 
I,. 
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, Izowever, 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 


1 
the Philippines has fixed a higher per diem for the members of the Board, such pep diem 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
shall not be more than Ten thousand pesos (Pl0,OOO.OO) for every Board meeting. 
SEC. 16. Powers and Duties of the Administrator. - The chairman-administrator 
shall have the following powers and duties: 
(a) To direct and manage the affairs of the SDSEZA in accordance with the policies 
of the Board; 
(b) To establish the interna1.organization of the SDSEZA 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 Surigao del Sur 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 Surigao del Sur Ecozone; and 
(g) To perform such other duties as may i e  assigned to him by the Board or which 
are necessary or incidental to his office. 
SEC. 17. Organization and Personnel. - The Board of Directors of the SDSEZA 
shall provide for an organization and staff of its officers and employees. Upon the 
recommendation of the chairman-administrator, with the approvaI 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 


9 
10 
11 
12 
13 
14 
15 
16 
'. 17 
18 
19 
20 
21 
22 
23 
24 
25 
classification: Provided, That the Board shall have exclusive and find authority to 
promote, transfer, assign or reassign officers of the SDSEZA, any provision of existing 
laws to the contrary notwithstanding: Provided, further, That the chairman-administrator 
may c&y out removal of such officers and employees. 
The officers and employees of the SDSEZA, 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 SDSEZA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by Saw. 
SEC. 18. Resolution of Labor Disputes. - The right of labor to form unions or 
associations shall be observed. However, strikes and lockouts shall be prohibited 
within the Surigao del Sur Ecozone, notwithstanding the provisions of the Labor Code 
and other pertinent laws. 
Labor disputes shall be resolved through mediation, 
conciliation and such other modes of dispute resolution authorized by law. 
SEC. 19, AppZicabiIity Clause. - The provisions of Sections 30 to 42 of Republic 
Act No. 7916, otherwise known as the Special Economic Zone Act of 1995, as amended, 
on leases of lands and buildings, land conversion, shipping and shipping register, 
protection of environment, termination of business, registration of business enterprise, 
one-stop shop center and on industrial harmony in ecozones, shall apply to the Surigao 
del Sur Ecozone. 
I.. 


1 
2 
3 
4 
5 
6 
7 
SEC. 20. Capitalization. - The Surigao del Sur Special Economic Zone and Free 
Port Authority shall have an authorized capital stock of Two Billion (2,000,000,000) no 
par shares with a minimum issue of Ten Pesos (PlO.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 Surigao del Sur Specid Economic Zone and 
Free Port. The Board of Directors of the SDSEZA may, with the written concurrence of 
the Secretary of Finance, sell shares, representing not more than forty per centum (40%) 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
of the capital stock of the SDSEZA 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 totd issued and 
outstanding capital of the Surigao del Sur Special Economic Zone and Freeport 
Authority. 
. 
The amount necessary to subscribe and pay for the shares of the National 
Government to the capital stock of the SDSEZA 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. 
SEC. 21. Supervision and Coordination of Development Plans. - For purposes of 
policy direction and coordination, the Surigao del Sur Ecozone shall be under the direct 
control and supervision of the Office of the President of the Philippines. 
SEC. 22. Relationship with the Regional Development Council. - The Surigao 
del Sur Special Economic Zone and Freeport Authority shall determine the 
development' goals for the Surigao del Sur Ecozone within the framework of national 
development plans, policies and goals. The Administrator shall, upon approval by the 


1 
Board, submit the Surigao del Sur Ecozone plans, programs and projects to the Regional 
2 
3 
4 
5 
6 
7 
8 
'
9
 
10 
I1 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
Development Council for inclusion and inputs for the overall regional development 
plan. 
SEC. 23. Relationship with Local Government Units. - Except as herein 
provided, the local government units comprising the Surigao del Sur Ecozone shall 
retain their basic autonomy and identity. The Municipalities of Carrascal, Cantilan, 
Madrid, Carmen, and Lanuza, shall operate and function in accordance with the Local 
Government Code of 1991. In case of any conflict between the SDSEZA and the 
Province of Surigao del Sur on matters affecting the Surigao del Sur Ecozone other than 
defense and security matters, the decision of the SDSEZA shall prevail. 
SEC. 24. Interpreta€ion/Constction. - The powers, authorities and functions 
that are vested in the SDSEZA are intended to decentralize government functions and 
authority and promote an efficient and effective working relationship between the 
Surigao del Sur Ecozone, the national government and the LGUs. 
.. 
SEC. 25. Auditing. - ?'he Commission on Audit shall appoint a representative 
who shall be a full time auditor of the SDSEZA and assign such number of personnel as 
may be necessary to assist said representative in the performance of lus/her duties. The 
salaries and emoluments of the assigned auditor and personnel shall be in accordance 
22 
23 
24 
25 
26 
full force and.effect. 
27 
with pertinent laws, rules and regulations. 
SEC. 26. Separability Clause. - If any provisions of this Act sliall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 


1 
2 
3 
SEC. 27. Repealing Clause. - AI1 laws, executive orders or issuances, or any piirk 
thereof, which are inconsistent herewith are hereby repealed and amended accordingly. 
4 
5 
SEC. 28. Effectivity Clause. - This Act shall take effect upon its publication in at 
least one (1) newspaper of general circuIation. 
6 
7 
Approved, 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
JGX/cklrnaralit/tere/2489surigaoecozone/JJdisk