Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No, 3842

Introduced by HON. RENE L, RELAMPAGOS.
First District, Bohol

EXPLANATORY NOTE

This bill seeks to create a special economic-development zone in the
Municipalities of Loon, Calape and ‘Tubigon (LCT), all situated in the northwestern
part of the First District of the Province of Bohol, ‘This bill is in line with the
administration's program to generate employment opportunities and reduce,
minimize, if not to totally eradicate, poverty especially those living in the rural areas
or countryside.

This part of the first district of Bohol forms part of the larger area of Cebu-
Bohol Economic Basin, the emerging center of industrial, commercial and tourism
activities in Central Visayas. Further, the Catagbacan Port, located at the
lity of Loon, has been identified by the Philippine Ports Authority for
conversion as an International Cruise Port in view of the port's strategic location in
relation to the ports in nearby island provinces and the Chocolate Hills of Bohol.

With the increase in the manufacturing industry and trade activities in Central
Visayas in general and in the Cebu-Bohol Economic Basin in particular, the Loon,
Calape and ‘Tubigon areas which are in the northwestern part of Bohol facing Cebu,
and the nearest to Cebu island via Argao have become potential areas for
investments particularly in coast-oriented or port related industries.

Hence, under this bill, proposed in the Municipalities of Loon, Calape and
Tubigon (LCT) is the development of LCT Special Economic Zone where its principal
office covering 400 hectares will be located in Sandingan Island of the Municipality
of Loon. Based on the strategic location and potential of these areas, the following
activities are identified for possible development within the proposed LCT Special
Economic Zone: refueling, restocking, and rewatering of vessels; transshipment port
for bulk and containerized cargoes; ship repair and refurbishing station; power
generation station and other industrial enterprises.

‘The creation of LCT ecozone will address the following economic purposes,
among others:

1, The need for more space for the location of industrial activities to
sustain the development of Central Visayas and in contribution to
the national effort of achieving for the country the status of a newly
industrialized country (NIC);

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2. The need to disperse the development in Metro Cebu to other parts
of Central Visayas in order to promote equity and balance in the
development of the region;

3. The need to provide jobs, increase productivity and improve the
level and quality of living conditions of the people in the said
municipalities; and

4. The need to stimulate the repatriation of Filipino capital by
providing attractive climate and incentives for business activity.

Further, near the LCT Special Economic Zone are found many potential areas
for tourism development. ‘The stretches of white sand beach and nearby deep sea
areas which are reputed for their exotic marine life are just waiting development and
can complement the activities which are proposed in the LCT Special Economic
Zone.

In view of these accruing economic benefits of the establishment of an
economic zone in the said municipalities of Bohol and the significant contribution it
will give to the entire country’s development and objective of inclusive growth, the
urgent consideration and approval of this measure is highly recommended.

RENE nt ‘LAMPAGOS


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3842

Introduced by HON, RENE L. RELAMPAGOS
First District, Bohol

“AN ACT.

ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE
MUNICIPALITIES OF LOON, CALAPE AND TUBIGON, PROVINCE OF
BOHOL, CREATING FOR THE PURPOSE THE LOON, CALAPE AND
‘TUBIGON 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. Title. ~ This Act shall be known as the “Loon, Calape and
‘Tubigon (LCT) Special Economic Zone Act of 2011.”

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the
State to actively encourage, promote, induce and accelerate the sound and balanced
industrial, economic and social development of the country in order to provide jobs
to the people, especially those in rural areas, increase their productivity and their
individual and family income, and thereby improve the level and quality of their
living conditions through the establishment, among others, of sp« economic
zones in suitable and strategic locations in the country and through measures that
shall effectively attract legitimate and productive foreign investments.

SEC. 3. Creation of Special Economic Zone in the Municipalities of
Loon, Calape and Tubigon, Province of Bohol. ~ In pursuit of the above
declared state policy and subject to the concurrence of the concerned local
government units (LGUs) of the said municipalities and the Province of Bohol
affected by the zone, there is established a special economic zone, referred
hereinafter as the Loon, Calape and Tubigon Ecozone or LCT Ecozone. The LCT
Ecozone shall cover all the barangays in the municipalities of Loon, Calape and
‘Tubigon in the Province of Bohol. The specific metes and bounds of the LCT Ecozone
shall be more particularly defined in a presidential proclamation that shall be issued
for this purpose.

SEC. 4. Governing Principles. - The LCT Special Economic Zone shall be
managed and operated by the LCT Special Economic Zone Authority or LCTSEZA as
created under Section 10 of this Act, under the following principles:

A. Within the framework and limitations of the 1987 Philippine Constitution
ions of the Local Government Code, the LCT Ecozone



shall be developed into and operated as a decentralized, self-restraint and
self-sustaining industrial, commercial and/or trading, agro-industrial,
tourist, banking, financial and investment center with suitable residential
areas.

B. The LCT Beozone shall be provided with _ transportation,
telecommunications and other facilities needed to attract legitimate and
productive investments, generate linkage industries and employment
opportunities for the people in the municipalities of Loon, Calape and
‘Tubigon as well as the people of the Province of Bohol and its neighboring
provinces, towns and cities.

C. The LCT Ecozone may establish mutually beneficial economic relations
with other entities or enterprises within the country or, subject to the
administrative guidance of the Department of Foreign Affairs (DFA), the
Philippine Economic Zone Authority (PEZA) and/ or the Department of
Trade and Industry (DTD, with foreign entities or enterpri

D. Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the LCT Ecozone, either by
themselves or in joint venture or partnership with Filipinos in any sector of
industry, international trade and commerce within the LCT Ecozone.

E, The areas comprising the LCT Ecozone may be expanded or reduced when
necessary. For this purpose, the LTCSEZA, 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 LCT
Ecozone for the following purposes: (1) consolidation of lands for LCT
Ecozone development; (2) acquisition of right of way to the LCT Ecozone;
and (3) the protection of watershed areas and natural assets valuable to the
prosperity of the LCT Ecozone.

F, Goods manufactured by an LCT Ecozone enterprise shall be made
available for immediate retail sale in the domestic market, subject to the
payment of corresponding taxes on materials and other regulations that
may be formulated by the LCTSEZA, together with the PEZA, the Bureau
of Customs and the DTI, in accordance with the National Internal Revenue
Code (NIRC) 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 shall be drawn up and regularly
updated by the PEZA. Enterprises engaged in industries included in such
negative list shall not be allowed to sell their products locally.

G. The national government shall maintain its ability to coordinate with the
LCT Ecozone and the local government units concerned.

SEC. 5. Incentives to Registered Enterprises. — The LCTSEZA may
administer the following incentives to the registered enterprises located within the
LCT Ecozone to the extent of the activity and/or project:

A. Income Tax Holiday (ITH). — Registered enterprises shall be entitled to an
income tax holiday from the start of their commercial operations to the
extent of their activity under the following categories:


Category A — Registered domestic enterprise located in highly developed
areas, as determined by the Board of Investments (BOD), shall be entitled
toa four-year income tax holiday.

Category B — Registered domestic enterprise on the following shall be
entitled to a six- year income tax holiday:

1. Located in less developed areas as defined by the BOI; or

2. Producing, rendering new products and/or services or having strong
backward or forward linkages.

Category C ~ Registered export enterprise shall be entitled to a six-year
incometax holiday: Provided, however, That if the export enterprise
complies with the following: (1) large capital investments or sizeable
employment generation; (2) use high level of technology; or (3)
located outside Metro Manila, it shall be entitled to an eight-year income
tax holiday.

Registered enterprises embarking on new investments that are listed in
the current Investment Priorities Plan (IPP) shall be entitled to incentives
provided herein pertaining to the new investments and subject to such
terms and conditions as the BOI may determine.

For this purpose, a registered enterprise shall be defined as any person,
ral or juridical, licensed to do business in the Philippines and
registered with the LCTSEZA to transact business within the LCT Special
Economie Zone. A registered export enterprise shall be defined as any
registered enterprise engaged directly or indirectly in the production,
manufacture or trade of products or services which earns at least seventy
pereent (70%) of its normal operating revenues from the sale of its
products or services abroad for foreign currency. A registered domestic
enterprise, meanwhile, shall be defined as any registered enterprise not
falling under the definition of a registered export enterpris

Additional investments in the project shall be entitled to the income tax
holidays corresponding to such investments as may be determined by the
BOI. Additional income tax holiday may be granted for as long as the
investment is made on the same project: Provided, however, That the
total ITH period for an export enterprise availing of an eight-year ITH
shall not exceed twenty (20) years. Any unused incentives shall therefore
be deemed forfeited if not used during the incentive period.

Enterprises registered with the LCTSEZA are required to share in the
development fund of the BOI for investment promotion projects of the
government equivalent to one percent (1%) of the ITH granted to every
application.

The Bureau of Internal Revenue (BIR) shall require a registered
enterprise availing of the ITH or Net Operating Loss Carryover (NOLCO)
to secure a certificate of eligibility from the LCTSEZA before submitting its
income tax return (ITR) with the LCTSEZA for validation.


. Accelerated Depreciation. - Ac

Failure to secure certification and/or to file the ITH or NOLCO
availment for validation by the LCTSEZA within forty-five (45) days from
the last day of each statutory filing date for ITR shall cause the forfeiture of
the availment for the taxable period.

Net Operating Loss Carryover (NOLCO). — Net operating loss of the
business or enterprise during the first three (3) years from the start of
commercial operations which have not been previously offset as deduction
from gross income shall be carried over as a deduction from gross income
for the next five (5) consecutive years immediately following the year of
such loss: Provided, however, That operating loss resulting from
availment of incentives provided in this Act shall not be entitled to
NOLCO.

Registered enterprises availing of the ITH as provided here shall not be
entitled to avail of the NOLCO.

Imposition of a tax rate of five percent (5%) on Gross Income Earned
(GIE). ~ Except for real property tax on land, no local and national taxes as
prescribed under Republic Act No. 8424 or the NIRC of 1997, as amended
such as income tax, excise tax and franchise taxes, shall be imposed on
registered enterprises operating within the LCT Ecozone. In lieu thereof,
five percent (5%) of the gross income earned shalll be paid as f

1. Three percent (3%) to the national government; and

‘Two percent (2%) shall be remitted by the business establishmen
the treasurer’s office of the municipality or city where the enterpr
located.

All persons and service establishments in the LCT Ecozone shall be
subject to national and local taxes under the NIRC of 1997, as amended
and the Local Government Code.

clerated 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 NIRC of 1997, as amended.

. Capital Equipment Incentives. ~ (1) Importations of capital equipment,

spare parts, tools and dye, or those required for pollution abatement and
control, cleaner production and waste reduction including consignment
thereof by registered enterprises upon the effectivity of this law, shall be
exempted to the extent of one hundred percent (100%) of the taxes and
customs duties: Provided, That imported items thereof shall be used
exclusively by the registered enterprise in its registered activity: Provided,
further, That the importation of machinery and equipment and
‘accompanying parts shall comply with the following conditions:



They are not manufactured domestically in sufficient quantity, of
comparable quality and at reasonable prices;

2. They are reasonably needed and will be used exclusively by the
registered enterprise in the manufacture of its products, unless prior
approval of the LCTSEZA is secured for the part-time utilization of

said equipment in a nonregistered activity to maximize usage thereof or

the proportionate taxes and duties are paid on a specific equipment and
machinery being permanently used for nonregistered activities; and

| of the LCTSEZA must be secured by any sale, transfer or
disposition of the imported capital equipment, machinery or spare
parts is made: Provided, That if such sale or transfer or disposition is
made within the first five (5) years from date of importation, any of the
following conditions must be present:

3. Approv

i, the same is made to another enterprise enjoying tax and duty
exemption on imported capital equipment;

ii, the same is made to another enterprise, upon the payment of any
taxes and duties on the net book value of the capital equipment to
be sold;

iii. the exportation of the capital equipment, machinery, spare parts or
source documents or those required for pollution abatement and
control; or

iv. proven technical obsolescence of the said equipment, machinery or
spare parts.

When this sale, transfer or disposition is made under any of th
conditions provided for in the previous paragraphs other than in
paragraph (2) herein, the registered firm shall not pay the taxes and
duties waived on such items: Provided, further, That if the registered
enterprises sell, transfer or dispose the said imported items without
prior approval within five (5) years from the date of the importation,
the registered enterprise and the vendee, transferee or assignee shall be
solidarily liable to pay twice the amount of the tax and duty exemption
given it: Provided, finally, That even if the sale, transfer or disposition
of the capital equipment, machinery or spare parts is approved after
five (5) years from the date of importation, the registered enterprises
are still liable to pay the taxes and duties based on the net book value of
the capital equipment, machinery or spare parts if any of the
registration terms and conditions has been violated. Otherwise, they
shall no longer be subject to the payment of the taxes and duties waived
thereon.

(2) The purchase of machinery, capital equipment, raw materials,
supplies, parts and semi-finished products to be used in the fabrication of
machinery and capital equipment by a registered export-oriented
enterprise from a domestic manufacturer shall be subject to zero percent
(0%) value-added tax.


. Raw Materials Incentive

. Incentives on Breeding Stocks and Genetic Materials.

The registered export-oriented enterprise shall be granted a tax credit
equivalent to the amount of dutics that would have been waived on the
machinery, capital equipment, raw materials, supplies, parts and semi-
finished products used in the fabrication of machinery and capital
equipment, had these items been imported, upon its submission to the
Department of Finance (DOF) of the bill of materials evidencing the
transaction value of such and other pertinent documents, for verification
and proper endorsement.

‘The availment by a registered export-oriented enterprise of the
incentive stated under the immediately preceding two (2) 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 LCTSEZA 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 (1) year from the date of
delivery.

The importation of source documents by information  technology-
registered enterprises shall be eligible for tax and duty free importation.

~ Every registered export-oriented enterprise
shall enjoy a tax credit equivalent to the internal revenue taxes and
customs duties paid on the supplies, raw materials and semi-manufactured
products provided the same are not sufficient in quantity, quality or are
not competitively priced in the Philippines and which are used in the
manufacture, processing or production of its export products forming part
thereof, exported directly and indirectly by the registered export-oriented
enterprise, based on the actual taxes and duties paid for such materials,
supplies and/or semi-manufactured products by the registered enterprise.

= 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 LCTSEZA.

‘The availment of the incentives by the registered enterprise shall be
subject to the following: (a) that said breeding stocks and genctic
materials would have been qualified for tax and duty-free importation
under the preceding paragraph; (b) that the breeding stocks and genetic
materials are reasonably needed in the registered activity; (c) that
approval of the LCTSEZA has been obtained by the registered enterprise;
and (d) that the purchase is made within ten (10) years from the date of
registration of commercial operation of the registered enterp



This incentive shall be deemed waived if application for tax credit
under this subsection is not filed within one (1) year from the delivery date.

Exemption from Wharfage and Port Dues. ~ The provisions of law to the
contrary notwithstanding, exports by a registered enterprise shall be
exempted from wharfage and port dues.

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’s entitlement period to the income
tax-based incentives has expired.

. Tax Treatment of Merchandise in LCT Ecc

ne, =

1. Domestic merchandise sent from the LCT Ecozone to areas outside the
said ecozone shall, whether or not combined with or made part of other
articles also 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.

2. Merchandise sent from the LCT Ecozone to areas outside the said
ecozone shall, whether or not combined with or made part of
other articles while in the zone, be subject to rules and regulations
governing imported merchandise. ‘The duties and taxes shall be

based on the value of said imported materials except when the
final product is exempt.

3. Articles produced or manufactured in the LCT 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.

4. Unless the contrary is shown, merchandise taken out of the LCT
Ecozone shall be considered for tax purposes to have been sent to
customs territory.

. Tax Treatment of Raw Materials and Capital Equipment in the LCT
Ecozone. - Importations of raw materials and capital equipment shall be
treated as in the Omnibus Investments Code.

. Importations of raw materials and capital equipment shall be treated as in
the Omnibus Investments Code. Registered export-oriented enterprise
shall have access to the utilization of the bonded warehousing system in
accordance with the rules and regulations of the Bureau of Customs.

. Employment of Foreign Nationals. ~ Subject to the provisions of Section
29 of Commonwealth Act No. 613, as amended, a registered enterprise
may employ foreign nationals in supervisory or technical positions for a


period not exceeding ten (10) years from its registration: Provided, That
when the majority of the capital stock of a registered enterprise is owned
by foreign investors, the positions of the president, treasurer and general
manager or their equivalents may be retained by foreign nationals beyond
the period set forth herein, and such officer is the owner or a stockholder
owning at least ten percent (10%) of the outstanding capital stock of the
registered enterprise and he remains the owner or maintains his
stockholdings therein.

Foreign nationals under employment contract within the purview of
this incentive, their spouses and unmarried children under twenty-one
(21) years of age, who are not excluded by Section 29 of Commonwealth
Act No. 613, as amended, shall be permitted to enter and reside in the
Philippines during the period of employment of such foreign nationals.
‘They shall be entitled to a multiple entry visa, valid for a period of three (3)
years, and shall be allowed to enter and leave the Philippines without
further documentary requirements other than valid passports or other
travel documents in the nature of passports. The validity of the multiple
entry visa shall be extendible yearly.

‘The said foreign nationals admitted under this provision, as well as
their respective spouses and dependents shall be exempt from: (a)
obtaining alien certificates of registration and immigration clearance
certificates; and (b) securing the Alien Employment Permit (AEP) and all
types of clearances, permits, licenses or their equivalents required by any
government department or agency.

SEC. 6. Incentive to Investors. — Any foreign national covered under
subsection (M) of Section 5 of this Act, who invests an amount of US $150,000.00,
either in cash and/or equipment, in a registered enterprise shall be entitled to an
investor's visa: Provided, That,

A. He/she is at least eighteen (18) years of age;
B. He/she has not been convicted of a crime involving moral turpitude;

C. He/she is not afflicted with any loathsome, dangerous or contagious
disease; and

D. He/she has not been institutionalized for any mental disorder or disability.

Provided, further, That in securing the investor’s visa, the alien-applicant
shall be entitled to the same privileges provided for under subsection (M), Section 5
hereof.

As a holder of investor’s visa, an alien shall be entitled to reside in the
Philippines while his or her investment subsists. For this purpose, he or she should
submit an annual report, in the form duly prescribed for the purpose, to prove that
he or she has maintained his or her investment in the country. Should said alien
withdraw his or her investments from the Philippines, then the investor's visa issued
to him or her shalll automatically expire.



SEC. 7. Administration, Implementation and Monitoring of
Incentives. - The LCTSEZA shall be responsible for the administration and
implementation of the incentives granted to its respective registered enterpris
Provided, That any incentive administration policy adopted by the BOI for registered
enterprises shall be uniformly applied by the LCTSEZA.

The following are the duties and responsibilities of the LCTSEZA in the
administration of incentives:

A. To adopt consistent procedures of administering incentives in accordance
with the guidelines established by the BOL;

B. To adopt and implement systems and procedures affecting trade and
customs policies in accordance with the requirements established by the
DOF and the BOI;

C. To submit information on registered enterprises to the DOF and the BOT
as required by any of these agencies to ascertain consistency of investment
policies and incentives, including their implementation as provided for in,
paragraph (A), and to ensure proper implementation of systems and
procedures affecting trade and customs policies as provided also in
paragraph (B); and

D. To perform all other duties and responsibilitie
President of the Philippines.

s may be required by the

For proper monitoring, the BOT shall create a single database of all incentives
provided by all incentives granting agencies, including the LCTSEZA, and all
information thereto. Double entry bookkeeping and accounting shall be done by the
BOI 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 here may be extended by the LCTSEZA, in the event that the
registered enterprise suffers operational force majeure or any event cquivalent
thereto, impairing its viability: Provided, That the availment period shall not exceed
the duration of the said force majeure or equivalent event.

SEC. 9. Duration of Incentives. - Enterprises registered with the
LCTSEZA may enjoy ITH or NOLCO granted by the latter prior to the availment of
the five percent (5%) GIE.

Fiscal incentives under this Act shall be terminated after a cumulative period
of twenty (20) years from the date of registration or start of commercial operation,
whichever is applicable, except that it could be extended with regard to industries
deemed indispensable to national development.

The industries exempted from this provision shall be recommended by the
BOI, with the concurrence of the Secretaries of the Departments of Finance and
Trade and Industry.

SEC. 10. Creation of the LCT Special Economic Zone Authority. -
There is created a body corporate to be known as the LCT Special Economie Zone


Authority or LCTSEZA, which shall manage and operate, in accordance with the
provisions of this Act, the LCT Special Economie Zone. ‘This corporate franchise
shall expire in fifty (50) years counted from the first day of the fifth (5!) calendar
year after the effectivity of this Act, unless extended by Congress of the Philippines
It shall be organized within one hundred eighty (180) days after the effectivity of this
Act.

SEC. 11. Principal Office of the LCTSEZA. - The LCT Special Economie
Zone Authority shall maintain its principal office in the Municipality of Loon,
Province of Bohol but it may establish branches within the Philippines as may be
necessary for the proper conduct of its business.

SEC. 12. Powers and Functions of the LCTSEZA. ~ The LCT Special
Economic Zone Authority shall have the following powers and functions:

A. To operate, administer, manage and develop the LCT Ecozone according to
the principles and provisions set forth in this Act

B. To register, regulate and supervise the enterprises in the LCT Ecozone in
an efficient and decentralized manner, subject to existing laws;

C. To coordinate with local government units
supervision over the development plans, activiti
LCT Ecozone;

and. exercise general
and operations of the

D. To regulate and undertake the establishment, operation and maintenance
of utilities, other services and infrastructure in the LCT Eeozone such as
but not limited to heat, light and power, water _ supply,
telecommunications, transport, toll roads and bridges, port services and
the like, and to fix just, reasonable and competitive rates, fares, charges
and prices thereof;

E. To construct, acquire, own, lease, operate and maintain on its own or
through contracts, franchise, licenses, bulk purchase from the private
sector or permits under any of the schemes allowed in Republic Act No.
6957 or the Build-Operate-Transfer Law, as amended by R.A. No. 7718, or
enter into joint venture on adequate facilities and infrastructures required
or needed for the operation and development of the LCT Ecozone, in
coordination with the appropriate national and local government
authorities and in conformity with applicable laws thereon;

F. To operate on its own, either directly or through a license to other tourism-
related activities, including games, amusements, recreational and sports
facilities;

G. Subject to the approval of the President of the Philippines and the
Monetary Board of the Bangko Sentral ng Pilipinas and upon the
recommendation of the Department of Finance, to raise or borrow
adequate and necessary funds from local or foreign sources to finance its
projects and programs under this Act, and for that purpose to issue bonds,
promissory notes and other forms of securities, and to secure the same by
‘a guarantee, pledge, mortgage, deed of trust or an assignment on all or
part of its property or assets;



H. To protect, preserve, maintain and develop the forests, beaches, coral and
coral reefs and maintain ecological balance within the LCT Ecozone;

I. To create, operate and/or contract to operate such functional units of
offices of the LCTSEZA as it may deem necessary;

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

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

L. To issue working visas renewable every two (2) years to foreign executives
and foreign technicians with highly specialized skills which no Filipino
possesses, as certified by the Department of Labor and Employment
(DOLE);

=

To report to the Bureau of Immigration (BI) the names of the foreigners
who have been granted permanent resident status and working visas
within thirty (30) days after issuance of such grant;

N. To exercise such powers as may be essential, necessary or incidental to the
powers granted to it hereunder as well as those that shall enable it to carry
out, implement and accomplish the purposes, objectives and policies of
this Act; and

0. To issue or amend rules, regulations, procedures and practice as may be
required and consistent with the provisions of this Act and as may be
necessary to accomplish and implement the purposes, objectives and
policies provided herein.

SEC. 13. Board of Directors of the LCT Special Economic Zone
Authority. — The powers of the LCT Special Economie Zone Authority shall be
vested in and exercised by a Board of Directors, referred to herein as the Board,
which shall be composed of the following:

‘A. The Chairman who shall, at the same time be the administrator of the
LCTSEZA;

B. A Vice Chairman who shall come from among the members of the Board;
C. Nine (9) Members consisting of:
1. The Governor of the Province of Bohol;

2. The Congressional Representative of the district covering the site of the
LCT Ecozone;

3. One (1) representative from the domestic investors;


4. One (1) representative from the foreign investors;

‘Three (3) representatives or one (1) private resident and taxpayer from
each of the municipalities of Loon, Calape and Tubigon; and

a

6. Two (2) representatives from the workers in the LCT Ecozone.

‘The Governor and the Congressional Representative shall serve as ex-officio
members of the Board, whose term in the Board corresponds to their terms as
elected officials.

‘The Chairman and the members of the Board, except the ex-officio members,
shall be appointed by the President of the Philippines to serve for a term of six (6)
years, unless sooner separated from service due to death, voluntary resignation or
removal for cause. In case of death, resignation or removal for cause, the
replacement shall serve only the unexpired portion of the term.

Except for the representatives of the business and labor sectors, no person
shall be appointed by the President of the Philippines as a member of the Board
unless he is a natural born citizen of the Philippines, of legal age, of good moral
character, of proven ability and integrity and a degree-holder in any of the following
fields: economics, business, accounting, public administration, law, management or
their equivalent ‘and with at least ten (10) years relevant working, experience
preferably in the field of business management or public administration.

‘The members of the Board shall each receive reasonable per diem at a rate to
be determined by the Department of Budget and Management (DBM) in accordance
with existing rules and regulations: Provided, however, That the total per diem
collected each month shall not exceed the equivalent per diem for four (4) meetings.
Unless and until the President of the Philippines has fixed a higher per diem for the
members of the Board, such per diem shall not be more than ten thousand pesos
(P10,000.00) for every Board meeting.

SEC. 14. Appellate Powers of the Board. — The Board, on an appeal
properly taken by an interested party from a decision, judgment or order of the
Chairman-Administrator, shall have the power to:

A. Review, confirm, modify, revise, amend or reverse, as the case may be,
decisions, judgments and/or orders of the Chairman-Administrator;

B. Confirm, remit, mitigate, increase or compromise, as the case may be, fines
imposed by the Chairman-Administrator pursuant to the provisions of this
Act; and

C. Review, confirm, modify, revise, amend or reverse, as the case may be,
impositions by the Chairman-Administrator of liens on personal and real
property of entities or enterprises registered with the LCT Ecozone in
default, or those who have failed to perform their obligations pursuant to
the rules and regulations promulgated under this Act, or those who shall
have failed to pay the fines or other pecuniary penalties for violation
thereof.


In no case shall the Chairman-Administrator participate in the hearing and
adjudication of an appealed case before the Board where the subject of appeal is a
judgment or decision rendered by his office. In such case, it requires five (5)
concurring votes of the members of the Board who actively participated in the
deliberation of the appealed case before the judgment or decision of the Chairman-
Administrator can be modified or reverse.

SEC. 15. Orders. —

‘A. Effectiveness of Orders. - Except in emergency situations, all order, rules
and regulations of the Chairman-Administrator and LCTSEZA shall take
effect within such reasonable time as the LCTSEZA may prescribe, and
shall continue in force and effect until a further order, rule or regulation,
or for a specified period of time as shall be prescribed in the order, rule or
regulation.

B. Emergencies. — Whenever the Chairman-Administrator is of the opinion
that an emergency requiring immediate action exists with respect to safety
and security within the LCT one, the Chairman-Administrator shall
have the power, either upon his initiative without complaint, at once, if the
Chairman-Administrator so orders, without answer or other form of
pleading by the interested person or persons, and with or without notice,
hearing or the making or filing of a report, to make such just and
reasonable orders, rules and regulations as may be essential in the interest
of safety and security within the LCT Ecozone to meet such emergen
Provided, That the Chairman-Administrator immediately thereafter must
initiate proceedings to the matter giving rise to any such order, rule or
regulation.

C. Suspension and Modification of Orders. - The Chairman-Administrator
shall have the power to suspend or modify orders upon such notice and in
such manner as the Chairman-Administrator shall find proper.

SEC. 16. Power to Administer Oaths. — The members of the Board, the
Chairman-Administrator and such other duly designated officers of the LCTSEZA
shall have the authority to administer oaths in the transaction and performance of
their official duties.

SEC. 17. Quorum. — The presence of at least five (5) members of the Board
shall constitute a quorum and the majority vote of three (3) members in a meeting
where a quorum is present shall be necessary for the adoption of any rule, ruling,
order, resolution, decision or other act of the Board in the exercise of its functions.

SEC. 18. Board Meetings. ~ The Board shall meet regularly once a month
and may hold special meetings which shall not be more than once a month to
consider urgent matters upon call of the Chairman or upon the initiative of at least
five (5) members. Internal rules of procedure in the conduct of Board meetings shall
be as prescribed by the Board.

SEC. 19. Organization and Personnel. - The Board of Directors of the
LCTSEZA shall provide for an organization and staff of its officers and employees.
Upon recommendation of the Chairman-Administrator, the Board shall appoint and
fix the remuneration, allowances and other emoluments of its officers and employees


in accordance with existing laws on compensation and position classification:
Provided, That the Board shall have exclusive and final authority to promote,
transfer, assign or reassign officers of the LCTSEZA, any provision of existing law to
the contrary notwithstanding: Provided, further, That the Chairman-Administrator
may carry out removal of such officers and employees.

The officers and employees of the LCTSEZA, 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 LCTSEZA, subject to civil service and
Ombudsman laws and regulations, shall be removed or suspended except for cause,
as provided by law.

SEC. 20. Powers and Duties of the Chairman-Administrator. ~ The
Chairman-Administrator shall have the following powers and duties:

A. To direct and manage the affairs of the LCTSEZA in accordance with the
policies of the Board;

B. To establish the internal organization of the LCTSEZA 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 (go) days after the close of each calendar and/or
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 LCT 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 LCT Ecozone; and

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

SEC. 21. The Office of Enforcement and Legal Service. - To effectively
implement the provisions of this Act and the mandates of the Chairman-

istrator and LCTSEZA, a permanent office within the LCTSEZA which shall
ed of an in-house counsel of the latter and its necessary support staff, shall
ished by the Board.

This office shall provide adequate legal assistance to the Chairman-
Administrator and to the LCTSEZA as a whole in their exercise of their powers as
provided for under this Act. This office shall be under the supervision of the Office of
the Government Corporate Counsel.

‘The exercise of the function by the Chairman-Administrator to issue subpoena
ad testificandum, subpoena duces tecum and the imposition of any administrative



sanction shall be within the exclusive determination and recommendation of the
Office of Enforcement and Legal Service.

SEC. 22. Banking Rules or Regulations. — Existing laws, rules and
regulations of the Bangko Sentral ng Pilipinas shall apply to banks and financial
institutions to be established in the LCT Ecozone, such as those governing, foreign
exchange and other concurrent account transactions or 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. 23. Remittance of Earnings. - In the case of foreign investments, a
registered enterprise in the LCTASEZA shall have the right to remit earnings from
the investment in the curreney in which the investment was originally made and at
the exchange rate prevailing at the time of remittance, subject to the provisions of
Section 74 of Republic Act No. 265, as amended.

SEC. 24. Prohibited Interests. — All members of the Board or any of their
relatives within the fourth (4') civil degree of consanguinity or affinity, legitimate or
common law, shall be prohibited from holding any interest whatsoever, either as
investor, stockholder, officer or director, in any company or entity engaged in the
business, operations and transactions of the enterprise, company or entity registered
in the LCT Ecozone and must therefore divest, through sale or legal disposition, of
any and all interests in such undertakings upon the members’ assumption of office.
Any violation of this section shall subject the member concerned to removal from the
LCTSEZA for cause as well as administrative, civil or criminal prosecution under
applicable laws.

SEC. 25. Limitation of Subsequent Employment. - No member of the
Board or any employee of the LCTSEZA shall accept employment or enter into a
contract of service with an entity regulated by the LCTSEZA until the expiry of one
(1) year from the termination of the appointment, whether by resignation or
revocation or otherwise.

SEC. 26. Ipso Facto Clause. ~ Sections 30-41 of Republic Act No. 7916,
shalll ipso facto apply to the LCT Special Economie Zone.

SEC. 27. Capitalization. — The LCT Special Economic Zone Authority shall
have an authorized capital stock of one (1) billion (1,000,000,000) no par shares
with a minimum issue of Ten pesos (P10.00) each, the majority shares of which shall
be subscribed and paid for by the national government and the local government
units (LGUs) embracing the LCT Special Economic Zone. The Board of Directors of
the LCTSEZA may, with the written concurrence of the Secretary of Finance, s
shares representing not more than forty percent (40%) of the capital stock of tl
LCTSEZA 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 percent (60%) of the total issued and outstanding capital of the
LCT Special Economic Zone Authority.

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



SEC. 28. Supervision. — The LCT Special Economie Zone shall be under
the direct control and supervision of the Philippine Economic Zone Authority (PEZA)
for purposes of policy direction and coordination.

SEC. 29. Relationship with the Regional Development Council. -
‘The LCT Special Economic Zone Authority shall determine the development goals for
the LCT Ecozone within the framework of national development plans, policies, and
goals. The Administrator shall, upon approval by the Board, submit the LCT
Ecozone plans, programs and projects to the Regional Development Council for
inclusion and inputs to the overall regional development plan.

SEC. 30. Relationship with Local Government Units. — Except as
provided herein, the local government units comprising the LCT Special Ecozone
Zone shall retain their basic autonomy and identity. The barangays in all the
Municipalities of Loon, Calape and Tubigon shall operate and function in accordance
with the Local Government Code of 1991. In case of any conflict between the
LCTSEZA and the Province of Bohol on matters affecting the LCT Ecozone other
than defense and security matters, the decision of the LCTSEZA shall prevail.

SEC. 31. Interpretation and Construction. — The power
and functions that are vested in the LCTSEZA are intended to decentralize
governmental functions and authority and to promote an efficient and effective
working relationship between the LCT Ecozone, the national government and the
local government units.

SEC. 32. Auditing. - The Commission on Audit shall appoint a
representative who shall be a full time auditor of the LCTSEZA and assign such
number of personnel as may be necessary to assist said representative in the
performance of his and/or her duties. The salaries and emoluments of the assigned
auditor and personnel shall be in accordance with pertinent laws, rules and
regulations.

SEC. 33. Repealing Clause. — All laws, decrees, executive orders,
presidential decrees, rules and regulations or any part thereof contrary to or
inconsistent with the provisions of this Act are hereby repealed or modified
ordingly.

SEC. 34. Separability Clause. — If for any reason, any part or provision of
this Act is declared invalid or unconstitutional, the remaining parts or provisions not
affected thereby shall remain in full force and effect.

SEC. 35. Effectivity Clause. - This Act shall take effect after fifteen (15)
days from its publication in the Official Gazette or in a national newspaper of general
circulation.

Approved,