Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILLNO:__3794

Introduced By: HON. CLAUDE P. BAUTISTA.

EXPLANATORY NOTE

This legislative proposal was first introduced during the 19th Congress in
pursuit of advancing inclusive regional development, and is hereby refiled in the
20th Congress to reaffirm the continuing need for strategic economic interventions
in underserved localities—particularly the Municipality of Sarangani in
southern Mindanao.

The 1987 Philippine Constitution underscores the importance of ensuring a
more equitable distribution of wealth and opportunities, emphasizing that all
regions of the country must be given optimal chances for development. One
effective mechanism to realize this mandate has been the creation of Special
Economic Zones (SEZs)—growth hubs that attract both local and foreign
investments, generate employment, and stimulate industrial and infrastructure
development.

SEZs have consistently contributed to national progress. As highlighted in
past studies, these zones have attracted substantial foreign direct investments
(FDIs), which in turn generate employment, facilitate technology and skills
transfer, and enable backward linkages that benefit local industries and
communities. These investments are particularly crucial for areas that lack
industrial presence yet have a workforce ready for productive engagement.

Sarangani’s geographic advantage—as a coastal municipality bordering
Indonesia, with proximity to Malaysia and Brunei—makes it an ideal site for such a
zone. Its strategic location aligns with the broader goals of the Brunei
Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area
(BIMP-EAGA), a subregional initiative aimed at strengthening economic
cooperation, tourism, and trade among member countries.

The proposed SEZ would support the development of an international port,
facilitating faster movement of goods and people, and potentially transforming
Sarangani into a gateway for cross-border commerce and international tourism.


This would unlock long-term economic benefits for the municipality and its
neighboring provinces.

More importantly, the zone would help address the high rate of out-
migration driven by limited local employment options. Despite having a population
with skills suited for industrial and service work, many residents are forced to leave
Sarangani for better opportunities elsewhere. Establishing an SEZ would not only
create local jobs but also build sustainable livelihood pathways that empower
communities and families.

The expected results include robust job creation, enhanced human capital
development, poverty alleviation, and increased household income. These
improvements would drive higher demand for goods and services—such as housing,
education, transportation, and healthcare—leading to broad-based economic
upliftment not only within the municipality but also the country.

In light of these compelling benefits, the immediate and favorable
consideration of this bill is respectfully sought.

CLAI BAUTISTA


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Constitution Hifls, Quezon City

TWENTIETH CONGRESS
First Regular Session

3794

HOUSE BILL NG.

Introduced by: Hon. Claude P. Bautista

AN ACT
ESTABLISHING A SPECLAL ECONOMIC ZONE IN THE MUNICIPALITY
OF SARANGANI, PROVINCE OF DAVAO OCCIDENTAL, CREATING
FOR THE PURPOSE THE MUNICIPALITY OF SARANGANI SPECLAL
ECONOMIC ZONE AUTHORITY, AND APPROPRIATING FUNDS
THEREFOR,

Be it enacted by the Senate and House of Representatives of the Philippines in the
Congress assembled:

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the
“Municipality of Sarangani Special Economic Zone Act.”

SEC. 2. Declaration of Policy. — It is declared the policy of the State
to encourage, promote, and accclerate the sound and balanced industrial,
economic, and social development of the country. The establishment of special
economic zones shall attract legitimate and productive foreign investments in
strategic locations in the country. It shall generate employment, enhance
productivity, and increase individual and family incomes, thereby enhancing
the quality of life of the Filipino people.


CHAPTER I
i CREATION OF THE ECONOMIC ZONE

2 SEC. 3. Creation of the Municipality of Sarangani Special
2 Economic Zone. - In accordance with the foregoing declared policy and subject
4 t0 the concurrence of the local government unit (LGU) af the Municipality of

Sarangani, Province of Davao Occidental, there is hereby established a special

6 economic zone, hereinafter referred to as the Municipality of Sarangani Special
7 Economic Zone or MSaraSEZ. The MSaraSEZ shall cover a particular area in
the Municipality of Se

a metes and bounds of which shall be more particularly defined in a presidential

wani, Province of Davao Occidental, the specific

109 proclamation that shall he issued for this purpose: Provided, That the lands
11 embraced therein shall be contiguous to one another.

12 SEC. 4. Creation, Development of an Industrial Park. -
13 Pursuant to Section 3 of this Act, an industrial park shall be established and
14 developed in Barangay Lipol, Municipality of Sarangani, Davao Occidental,

the exact metes and bounds of which shall be determined by the Municipality

of Sarangani Special Economic Zone Authority in coordination and approval of

the local government unit of Sarangani.

18 In the industrial park, there shal) be established a renewable energy
18 powerplant and diescl-engine generators to provide the necessary and
20 sufficient energy supply for the enterprises and community within the
21 MSaraSEZ, subject to the approval of the Municipality of Sarangani Special
22 Economic Zone Authority and consistent with the rules and regulations issued
hy the Department of Energy and all other concerned government agencies on
the establishment. development, and maintenance of renewable energy

engine gene

26 SEC. 5. Creation of the Municipality of Sarangani Special
Economic Zone Authority, - There is hereby created a body corporate to be
Imown as the Municipality of Sarangani Special Economic Zone Authority,
hereinafter veferred to as the MSaraSEZA, which shall manage and operate

by
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the MSaraSEZ, in accordance with the provisions of this Act. The corporate life
of the MSaraSEZA 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 effectivity of this Act.

SEC. 6. Governing Principles. - The MSaraSEZA shall manage and
operate the MSaraSEZ, under the following principles:

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Within the framework and limitations of the Constitution and applicable
provisions of Republic Act (RA) No. 7160, or the Local Government Code,
as amended, the MSaraSEZ shall be developed into and operated as a
decentralized, self-reliant and self-sustaining industrial, commercial,
trading, agro-industrial, tourist, banking, financial, and investment
center with suitable residential areas;

The MSaraSEZ shall be equipped with __ transportation,
telecommunications, and other facilities needed to attract legitimate and
productive investments and generate linkage industries and employment
opportunities for the people of the Municipality of Sarangani, Province of
Davao Occidental, and the neighboring towns and cities;

The MSaraSEZ may establish mutually beneficial economic relations with
other entities or enterprises within the country cr. subject to the
administrative guidance of the Department. of Foreign Affairs, the
Piiippyme Beununic Zune Auvnority (PEZA), and the Department of
Trade and Industry (DTD, with foreign entities or enterprises;

Subject to the provisions of the Constitution and other relevant law,

foreign citizens and companies owned by uon-Filipinos may set up
enterprises in ihe MSaraS&Z, either by themselves or in a joint venture
with Filipinos in any sector of industry or for international trade and

commerce;


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(h)

The MSaraSEZ shall be managed and operated as a separate customs
territory thereby ensuring the free flow or movement of goods and capital
within, into and out of its territory, and shall likewise provide incentives
subject to Title XIII of the National Internal Revenue Code of 1997, as
amended. However, exportation or removal of goods from the territory of
the MSaraSEZ to the other parts of the Philippine territory shall be
subject to customs duties and taxes under RA 10868, otherwise known as
the “Customs Modernization and Tariff Act (CMTA)” and other relevant.
tax laws of the Philippines:

The areas comprising the MSaraSEZ may be expanded or reduced when
necessary through 2 presidential proclamation issued for the said
purpose. Thus. the MSarsSEZA. in consultation with the LGU, shall have
the power to acquire either by purchase. negotiation or condemnation
proceedings, any private land within or adjacent to the MSaraSEZ for the
following purposes: (1) consolidation of lands for zone development; (2)
acquisition of right of way to the MSaraSEZ; and (3) protection of
watershed areas and natural assets valuable to the prosperity of the
MSaraSEZ;

Goods manufactured by an MSaraSEZ enterprise may be made available
for immediate retail sale in the domestic market, subject to the payment
of corresponding taxes on raw materials and other regulations that may
be formulated by the MSaraSEZA, in coordination with the PEZA, the
Bureau of Customs, the Bureau of Internal Revenue, and the DTI.
However, in order to protect domestic industries, a Negative List of
industries shall be drawn up and regularly updated by the PEZA.
Enterprises engaged in industries included in such Negative List shall not
be allowed to sell their products locally; and

The defense and security of the MSaraSEZ and its perimeter fence shall
be the responsibility of the national government, in coordination with the
MSaraSEZA and the concerned LGUs.


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8

SEC.

Devslopment Goals of ihe Municipality of Sarangani
Ecozone. - The MSaraSEZA shall determine the development goals of the
MSaraSEZ within the framework of national development plans, policies, and
goals. The Chairperson-Administrator shall, upon approval by the Board of
Directors of the MSaraSEZA, submit the plans, programs, and projects of the
MSaraSEZ to the Regional Development Council for inclusion in the regional

development plan.

SEC. 8. Capitalization. - The MSaraSEZA shall have an authorized
capital stock of two billion (2,000,000,000) no par shares with a minimum issue
y shares of which shall be subscribed
and paid for by the national government and the LGUs embracing the
{SaraSEZ.

of Ten pesos (Php10.00) each, the majori

The Board of Directors of the MSaraSEZA may, with the written
concurrence of the Secretary of Finance, sell shares vepresenting not more than
forty per centum (40%) of the capital stock of the MSaraSEZA to the general
public under such policy as the Board of Directors and the Secretary of Finance
may determine. The national government and the LGU of the Municipality of
Savangani shall in no case own less than sixty per centum (60%) of the total
issued and outstanding capital of the MSaraSEZA.

be and pay for the 2s of the national

ent to the capital stock of the MSaraSEZA shall be included in the

Gmail dpnypiatens Av. Eur dae LO vi the Wrenicipality of Sarangani, the
funds shall be taken from its national tax allotment and other local funds.

SEC. 9. Principal Office of the MSaraSk: hail
maintain its principal office in the Municipality of Savengani, Province of
Davao Ccridertzi, ‘sat it muy establish Viaison offices within the Philipines as

may be necessary for the proper conduct of its business.

SEC.

MSaraSEZA shall have the [ollowing powers and functions:

16, Powers and Functions of the

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2 (a) Operate. administer, manage, and develop the MSaraSEZ according to

2 the principles and provisions set forth in this Act;
3 ()) Register, regulate, and supervise the enterprises in the MSaraSEZ in an
4 efficient and decentralized manner, subject to existing laws;

5 (©) Coordinate with the LGUs and exercise general supervision over the

a
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lopment plans, acti

ties, and operations of the MSaraSK!

() Regulate and undertake the establishment, construction, operation. and

maintenance of public utilities, other services, and infrastructure in the
9 MSaraSEZ such as light and power, shipping, barging, stevedoring, cargo

hauling, wai

chousing, storage of cargo, port services or
ions. piers, wharves, bulkheads, bulk terminals, mooring areas,
12 storage areas, roads, telecommunications, transport, bridges, terminals,
i3 conveyors, water supply and storage, sewerage, drainage, airport

s in coondinait with the Civil Aviation Authority of the

15 Philippine: id such other services or concessions or infrastructure

‘ctives of this Act;

Lé necessary or incidental to the accomplishment of the ob;

() Construct, acquire, own, lease, operate, and maintain on its own or
th

hb contracts, franchise, licenses, bulk purchase from the private
-S Secior of permits under any of the schemes allowed in RA 6957, otherwise
20 known as the “Build-Opevate-Transfer La

venture, adequate facilities and infrastructure required or needed for the

. as amended, or joint

operation and development of the MSaraSEZ, in coordination with

appropriate national and local government authorities and in conformity
24 with applicable laws;

‘aSEZ to be submitted

28 to the Regional Development Council for inclusion in the regional

2s () Approve plans. programs, and projects of the MSa

development plan;


no §

16

{g) Operate on its own, either directly or through licenses to others, tourism-

, including games, amusements, recreational and sports

ct to the approval and supervision of the Phi

Amusement and Gaming Corporation:

(h) Raise or borrow, within the limitation provided by faw, and subject to the
approval of the Monetary Board of the Bangho Sentral ng Pilipinas (BSP),
as the case may be, adequate and necessary funds from local or foreign
sources, to finance its projects and programs under this Act and for this
purpose, to issue bonds, promissory notes, and other forms of securities,
and to secure the same by a guarantee, pledge, mortgage, deed of trust or

an assignment of all or part of its property or assets;

() Protect, preserve, maintain, and develop the forests, beaches, corals, and
coral reefs, and maintain ecological balance within the MSaraSEZ.
Notwithstanding the power of the MSaraSEZA to create rules for such
purpose, the rules and regulations of the Department of Environment and
Natural Resources and other government agencies involved in the above
functions shall be implemented by the MSaraSEZA;

() Create. operate or contract to operate such functional units or offices of

the MSaraSEZA as it may deem necessary;

(k) Adopt, alter, and use a corporate seal; contract, lease, buy, acquire, own
or otherwise dispose of personal or real property of whatever nature; sue

and be sued; and otherwise carry out its functions and duties as

for jn this Act:

Issue certificates of origin for products manufactured or processed in the
MSaraSEZ in accordance with prevailing rules of origin and the pertinent
the PEZA. the DTI. and the Department of Finance (DOF):

regulations o!


2 (m) Establish one-stop shops for the issuance of all necessary permits,
2 clearances, licenses. and other similar certifications to conduct such

acl

vities intended to improve the ease of doing business within the
MSaraSEZ, in coordination with government agencies having jurisdiction

over activities therein: Provided, That all government agencies axe

directed to provide and extend utmost and full cooperation to the
MSaraSEZA in the establishment of such one-stop shops

3 (n) Ensure that the area covered by the MSaraSEZ is secure at all times:

9 Provided, That the Armed Forces of the Philippines (AFP) or the
ia Philippine National Police (PNP) shall not interfere in the internal affairs
nH of the MSaraSEZA except to provide the necessary security and defense,
2 ov law enforcement assistance, as the case may be: Provided, That

expenses of the AFP or the PNP in the MSaraSEZ shall be borne by the
national government;

(o) Exercise such powers as may be essential, nec

y or incidental to the

powers granted to it by this Act, as well as those that shall enable it to
carry out, implement, and accomplish the purposes, objectives, and

policies set forth in this Act; and

19 (») Issue rules and regulations consistent with the provisions of this Act as
2 may be necessary to accomplish and implement the purposes, objectives,

and policies provided herein.

SEC. 11. Board of Directors of the MSaraSEZA. - The powers of
23 the MSaraSEZA shal? be vested in and exercised by a Board of Directors,

24 hereinafter referred to as the Board, which shall be composed of the following:

25 (a) A Chairperson, who shall at the same time be the administrator of the
26 MSaraSEZA:

(b) A Vice-Chairperson who shall be elected from among the members of the

28 Board;

29 (©) Members consisting of:


22

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(2) The Governor of the Province of Davao Occidental or a duly-authorized
representative from the Provincial Government of Davao Occidental;

(2) The mayor of the Municipality of Sarangani;

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

(4) One (1) representative from among the workers in the MSaraSEZ.

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

The Chairperson-Administrator and the members of the Board, except
for the representatives of the investors and workers groups and the ex officio
members, shall be appointed by the President of the Philippines to serve for a
term of six (6) years, unless sooner separated from service due to death,
voluntary resignation, or removal for cause. In case of death, resignation, or
vemoval for cause, their replacements shall serve only the unexpired portion of
the respective terms. No person shall be appointed as a member of the Board
unless the person is a Filipino citizen, of good moral character, of proven
probity and integrity, and a degree holder in any of the following fields:
economics, business, public administration, law, management, or their
equivalent, and with at least ten (10) years relevant working experience,
preferably in the field of management or public administration,

The members of the Board, except the ex officio members, shall each
receive a per diem allowance at yates to be determined by the Department of
Budget. and Management in accordance with existing rules and regulations:
Provided, however, That the total per diem allowance collected each month
shall not exceed the equivalent of four (4) meetings unless and until the
President of the Philippines has fixed a higher rate for the per diem allowance
for the members of the Board, such allowance shall not be more than Ten
thousand pesos (Php 10,000.00) for every Board meeting.


1 SEC. 12. Organization and Personnel. — The Board of the
2 MSaraSEZA shall provide for its organization and staff. The Board shall
3 appoint and fix the remuneration and other emoluments of its officers and
4 employees in accordance with existing laws on compensation and position
S classification. The Board shall have exclusive and final authority to promote,
6 transfer, assign, reassign, or remove officers of the MSaraSEZA, any provision
7 of existing law to the contrary notwithstanding. The Chairperson-

tor stall execute the decisions of the Board.

3 The cfficers and employees of the MSaraSEZA, including all members of
10 the Board, shall not engage directly or indirectly in partisan political activities
11 nor take part in any election, except to vote.

No officer or employee of the

SaraSEZA, shall be removed or
suspended except for cause, as provided by civil service rules and regulations.

14 SEC. 18. Powers and Duties of the Chairperson-Administrator. -
15 The Chairpersnn-Administrator shall have the following powers and duties:

(a) Direct and manage the affairs of the MSaraSEZA in accordance with the
policies of the Board;

138 (b) Establish the internal organization of the MSaraSEZA under such
19 conditions that the Board may prescribe;
20 © Submit an annual budget and necessary supplemental budget to the

ai Boaed for its approval;

22 (@ Submit within thirty (80) days after the close of each fiscal year an
23 annual report to the Board and such other reports as may be required;

24 (e) Submit to the Board for its approval, policies, systems, procedures,
25 rules, and regulations that are essential to the operation of the

26 MSaraSEZ;


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7

() Recommend to the Board the remuneration and other emoluments of its
officers and employees in accordance with existing laws on

compensation and position classification;

(g) 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 MSaraSEZ; and

(h) Perform such other duties as may be assigned by the Board or which are

necessary or incidental to the office.

SEC. 14. Legal Counsel. - The MSaraSEZA shall have its own internal

fegal counsef who shall be under the supervision of the Gov

ment Corporate
Counsel. When the exigencies of busine:

and operations demand it, the

MSaraSEZA may engage the venices of site tuansel either on a case-to-

case or on a fixed retainer basis.

CHAPTER Tit
INCENTIVES TO ECOZONE ENTERPRISES AND INVESTORS

SEC. 15. Investors Visa. ~ Any foreign national who invests an amount
of Two hundred thousand US dollars (US$200,000.00) in a registered business
enterprise, either in cash or equipment, shall be entitled to an investor's
visa: Provided, That the foreign national has the following qualifications:

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

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

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

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

(e) Must be financially capable as borne out by credible and verifiable

evidence.


24

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mee

S

With an investor's visa. a foreign national shall be entitled to reside in
the Philippines while the investment subsists. The foreign national shall
submit an annual report, in the form duly prescribed for the purpose, to prove
that the investment in the country subsists. Should said foreign national

withdraw the im

estments from the Philippines, then the investor's visa issued

to said foreign national shall automatically expire and be withdrawn.

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

SEC. 16. Fiscal Incentives, — Registered business enterprises of the
“MSaraSEZ may be entitled to pertinent fiscal incentives granted under Title
XII (Tax Incentives) of the National Internal Revenue Code of 1997, as

amended.

SEC. 17. Revenue Sharing. — alocation of the special corporate
income tax, which is five per centum (5%) of gross income, imposed on
registered business enterprises of the MSaraSEZ shall be as follows:

(a) Three per centum (3%) to the National Government; and

(b) Two per centum (2%) shall be directly remitted by the business
establishments to the treasurer's office of the municipality where the
enterprise is located.

SEC. 18.Banking Rules and Regulations Governing Banks and
Other Financial Institutions. ~ Banks and other BSP-supervised financial
institutions to be established in the MSaraSEZ shall be under the supervision
of the BSP and subject. fo existing hanking Jaws, rules and regulations.

12


SEC. 19. Remittances. - In the case of foreign investments, a duly
registered business enterprise within the MSaraSEZ shall have the right to
remit earnings to its investors in the currency in which the investment was
originally made and at the exchange rate prevailing at the time of remittance,
subject to the provisions of RA 7653, otherwise known as the “New Central
Bank Act”, as amended.

CHAPTER IV
NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 20. Supervision. and Control. — For purposes of policy direction
and coordination, the MSaraSEZA shali be under the direct control and
supervision of the Office of the President of the Philippines: Provided, That the
gvant of fiscal incentives shall be subject to the provisions of Title XIII of the
National Internal Revenue Code of 1997, as amended.

SEC, 21. Relationship with Local Government Units. — Except as
herein provided, the LGUs comprising the MSaraSEZ shall retain their basic
autonomy and identity. The Municipality of Sarangani, Province of Davao
Occidental shall operate and function in accordance with the framework of the
Constitution, the Local Government Code of 1991, as amended. and this Act.

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

SEC. 22. Audii. — The Commission on Audit shall appoint a full-time
auditor for the MSaraSEZA and may assign such number of personnel as may

be necessary to assist the auditor in the performance of the auditor's functions.

CHAPTER V
MISCELLANEOUS

SEC. 23. Interpretation and Construction. - The powers,
authorities, and functions that are vested in the MSaraSEZA are intended to

13


6

enhance national security, encourage self-sufficiency, foster meaningful
decentralization of governmental functions and authority, and promote an
efficient and effective collaboration among the MSaraSEZA, the national
government, and the LGUs. Any interpretation of this Act shall consider such
intentions. In the event of conflict of interpretation and provided the intentions
cannot be harmonized, the provisions of this Act shall be construed in favor of
an interpretation that shall protect national security.

SEC. 24. Applicability Clause. - Insofar as they are consistent with
the provisions of this Act, the provisions of Sections 30 to 41 of RA 7916,
otherwise known as “The Special Economic Zone Act of 1995", as amended,
shall likewise apply to the MSaraS£Z.

SEC. 25. Implementing Rules and Regulations. — Within sixty (60)
days from effectivity of this Act, the DTT shall, in coordination with the DOF
and the National Economic and Development Authority, formulate rules and
regulations for the effective implementation of the provisions of this Act.

SEC. 26. Separability Clause. — If any provision of this Act shall be
held unconstitutional or invalid, the other provisions not otherwise affected
shall remain in full force and effect.

SEC. 27. Repealing Clause. — All laws, execative orders or issuances
or any part thereof, which are inconsistent herewith, are hereby repealed or
amended accordingly.

SEC. 28. Ejfectivity. — This Act shall take effect fifteen (18) days after
its publication in the Official Gazette or in a newspaper of general circulation.

Approved,