'1l 
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tefh;t llt Ute ~I'('[rbr~ , 
SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 S£P 1 0 1\11:3' 
, 
. SENATE 
Senate Bill No. 1604 
RJ;:CEiVEU BY:_~.~ 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
This bill seeks to establish a Special Economic Zone and Freeport in the 
Province of Iloilo to help encourage and accelerate a sound and balanced 
industrial, economic and social development in the country, particularly in the 
Western Visayas Region. 
The Province of Iloilo, is located in the southeast portion of Panay Island 
and is bordered by Antique to the west and Capiz to the north, has a strategic 
geographical location which makes it an attractive and profitable hub for 
investments in the region. While this measure aims to increase foreign 
investments and encourage economic. growth in the area, this will definitely result 
to more employment and . increased. productivity thereby uplifting the living 
condition of the people. 
The Iloilo Special Economic Zone shall cover Barangay Pedada and 
Barangay Bay-Ang, both in the Municipality of Ajuy while a Freeport shall be 
established at the 20.8 hectare Iloilo Commercial Port Complex. 
In view of the foregoing, approval of this bill is earnestly sought. 
OY EJERCITO ESTRADA 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 1. 6 0 4 
j,cnrltr 
tOUt;' uf HIe ~I'rt"tnr~ 
'13 
SEP 10 All :31 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
: ESTABLISHING A SPECIAL, ECONOMIC ZONE AND FREE PORT IN THE 
: PROVINCE OF ILOILO, AND FOR OTHER PURPOSES 
, 
Be it enacted by the Senate and the House of Representatives of the Philippines 
I in Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the "Iloilo Special 
Economic Zone Act of 2013". 
SEC. 2. Declaration of4;?alicy. - It is hereby declared the policy of the 
government to actively encourage, promote, induce and accelerate a sound and 
balanced industrial, economic and social development of the country in order to 
provide jobs to the people especially those in rural areas, increase their 
productivity and their individual and family income, and thereby improve the level 
and quality of their living condition through the establishment, among others, of 
special economic zones and free ports in suitable and strategic locations in the 
country and through measures that shall effectively attract legitimate and 
productive foreign investments. 
SEC. 3. The Iloilo Special Economic Zone. - In accordance with the 
foregoing declared policy, there is hereby established a special economic zone to 
be known as the Iloilo Special Economic Zone, hereinafter referred to as the Zone, 
which shall cover Barangay Pedada and Barangay Bay-Ang, both in the 
I Municipality of Ajuy, Province of Iloilo. There shall also be a free port to be 
established at the 20.8 hectare Iloilo Commercial Port Complex. 
SEC. 4. Governing Principle. - The Iloilo Special Economic Zone shall he 
! managed and operated under the following principles: 
(A) Under the framework and limitations of the Constitution and the 
applicable provisions of the LocatGovernment Code, the Zone shall be developed 
into and operated as a self-sustaining industrial, commercial, financial, investment, 
and tourism/recreational center and free port with suitable retirement/residential 
areas, in order to create employment opportuniities in and around the Zone, and to 
effectively encourage and attract legitimate and productive foreign investments 
therein; 


" 
.' 
(B) 
The 
Iloilo 
Ecozone 
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 of Iloilo and its neighboring towns and cities; 
(C) The Iloilo 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 fmd Industry (DTI), with 
foreign entities or enterprises; 
(D) Foreign citizens and companies owned by non-Filipinos in whatever 
proportions may set up enterprises in the Iloilo Ecozone, either by themselves or in 
joint venture with Filipinos in any sector of industry, international trade and 
commerce within the Iloilo Ecozone. 
(E) Goods manufactured by an Iloilo Ecozone enterprise shall be made 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 Iloilo Special Economic Zone Authority (ISEZA), together with 
the PEZA, the Bureau of Customs, and the DT!. 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 be allowed to sell their products locally; 
(F) The national govermnent shall maintain its ability to coordinate with the 
Iloilo Ecozone and the local government units. 
1 ... 1 ,.,1. __ . " 
SEC. 5. Incentives to Registered Enterprises. - The Iloilo Special 
Economic Zone Authority (ISEZA) may administer the following incentive to the 
registered entetprises located therein to the extent of the activity project: 
(A) Income Tax Holiday (lTH) - Registered domestic 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 detemined by the Board of Investmenls (BOI) shall be entitled to a four-
year income tax holiday 
Category B - Registered domestic enterprises that fit the following criteria 
shall be entitled to a six- year income tax holiday; 
(1) Located in less developed areas as defined by the 901; or 
(2) Producing rendering new products services or having strong backward 
or forward linkages. 
Category C - Registered export enterprises shall be entitle,d to a six-year 
income tax holiday: Provided, however, That if the export enterprise complies with 
the following: (1) large capita'f'investments or sizeable employment generation; or 
(2) use high level of technology; 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, 
natural or juridical, licensed to do business in the Philippines and registered with 
the Special Economic Zone Authority (SEZA) to transact business within the Iloilo 
Special Economic Zone. A registered export enterprise shall be defined as any 
registered enterprise engaged directly or indirectly in the production, manufact11 re 
or trade of products or services which earns at least seventy percent (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 
enterprise. 
Additional investments on tile project shall be entitled to the income tax 
holidays corresponding to such investments as may be determined by the BOL 
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 !PP at the 
same time the additional investment in the project is made; Provided, further, That 
the entitlement period for additional investment shall not exceed three times the 
period provided under this subsection; Provided, however, that the total 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 SEZA are required to share in the special 
development fund of the BOqoJifl:.!e,!!tillent promotion projects of the government 
equivalent to one (1 %) of the RTH granted for every application. 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise 
availing of ITH or Net Operating Loss Carryover (NOLCO) to secure a certificate of 
eligibility from the SEZA before submitting its income tax return (ITR) with the 
SEZA for validation. 
Failure to secure certification andlor file the ITH or NOLCO availment for 
validation by the SEZA within forty-five (45) days from the last day of the statutory 
filing date for ITR shall cause the forfeiture of the availment for the taxable period. 
(B) Net Operating Loss Carryover (NOLCO). - Net operating loss of the 
business or enterprise during the first three 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 
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 herein provided shall not be 
entitled to avail of the NOLCO. 
(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned 
(GIE) - Except [or real prope'ity tax on land, no'iocal and national taxes as 
prescribed under Republic Act No. 8424, also known as "The National Internal 
Revenue Code of 1997, as Amended" such as income tax, excise tax and 
franchise taxes, shall be imposed on registered enterprises operating within the 
Iloilo Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall 
be paid as follows: 


(1) Three percent (3%) to the National Govermnent; and 
(2) Two percent (2%) shall .be remitted by the business establishments to 
the treasurer's office ofthe municipality or city where the enterprise is located. 
All persons and service establishments in the Iloilo Ecozone shall be 
subject to national and local taxes under the National Internal Revenue Code of 
1997, as amended, and the Local Govermnent 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 of 
1997, as amended. 
(E) Capital Equipment Incentives. - (1) Importation 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 effectivity of this law, shall be exempted to the extent 
of one hundred percent (100%) of the taxes and customs duties; Provided, That 
the imported items thereof shall be used exclusively by the registered enterprise in 
its registered activity; Provided, futher, That the importation of machinery and 
equipment and accompanying parts shall comply with the following conditions: 
(1) They are not mi,i(lUfaptur~(j 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 SEZA is seemed 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 
(3) Approval of the SEZA was obtained by the registered enterprise for the 
importation of such machinery, equipment and spare Parts. Approval by the SEZA 
must be secured before any sale, transfer or disposition of the imported capital 
equipment, machinery or spare Parts is made; Provided, 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: 
(a) The same is made to another enterprise enjoying· tax and duty 
exemption on capital equipment; 
(b) 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; 
(c )The exportation .9.Lt~.~ ... C:1:i'pital equipment, machinery, spare parts or 
source documents or those required for pollution abatement and control, or 
(d) Proven technical obsolescence of the said equipment, machinery or 
spare parts. When the aforementioned sale, transfer or disposition is made under 
any of the conditions provided for in the foregoing paragraph other than paragraph 
(2) herein, the registered firm shall riot pay the taxes and duties waived on such 
items; Provided, further, that if the registered enterprise shall sell, transfer or 


dispose the aforementiohed imported items without prior approval within five years 
from the date of importation, the ragistered enterprise and the vendee, transferee 
or assignee shall he solidarily liable to pay twice the amonnt of 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. 
. 
" . 
, 
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, 
The registered export-oriented -enterprise shall be granted a tax credit 
equivalent to the amount of duties that would have been waived on the machinery, 
capital equipment, raw materials, supplies, parts and semi-fmished products used 
in the fabrication of machinery and capital equipment, had these items been 
imported, upon submission to the Department of finance (DOF) of the bill of 
materials evidencing the transaction value of such an other documents, for 
verification and proper endorsement. 
The avaifment by a registered export enterprise of the incentive stated 
under the immediately preceding two paragraphs shall be subject to the following 
conditions: (i) that said capital equipment, machinery and spare parts will be used 
exclusively by the registered enterprise in its registered activity; (ii) 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 (iii) that the approval of (h~l SEU)s 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 paragraph for such 
disposition shall apply. 
This incentive shall be deemed waived if application for tax credit under 
this subsection was not field within one year from date of delivery. 
(F) The importation of source documents by information technology-
registered enterprises shall be eligible for tax and duty free importation. 
(G) Raw Material Incentive$. - 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 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 semi-manufactured products by the registered enterprise. 
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. 
(H) Exemption from Wharfage Dues. - The provisions of law to the contrary 
notwithstanding, exports by'a -'registered enterprise shall be exempted from 
wharfage dues. 
(I) 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 the. MCIT shall be imposed only after the 
enterprise's entitlement period to the income tax-based incentives has expired. 
(J) Tax Treatment of Merchandise in the Iloilo ECozone. - (1) Domestic 
merchandise sent from the Iloilo Ecozone to areas outside the said ecozone 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, transfered or 
disposed of for local consumption. 
(2) Merchandise sent from the Iloilo 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 Iloilo 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 Iloilo 
Ecozone shall he considered for tax purposes to have been sent to customs 
territory. 
(K) Tax Treatment of Raw Materials and Capital Equipment in the Iloilo 
Ecozone. -Importation of raw materials and capital equipment shall be .treated as 
in the Omnibus Investment Code." .,. ,il:" . 
(L) Employment of Foreign Nationals. - Subject to the provisions of Section 
29 of Commonwealth Act No. 613, 'as mnended, 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 en~erprise 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%) ofthe 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 deparlment or agency. 


SEC. 6. Incentives to' 'Investors. - Any foreign national covered under 
Subsection (L) 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; 
(8) He has not been convicted of a crime involving moral turpitude; 
(C) He is not afflicted with any loathsome, dangerous or contagious 
disease; and 
(D)He has not been diagnosed 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 paragraph (L), Section 5 
hereof. As a 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 
investments from the Philippines, then the investor's visa issued to him shall 
automatically expire. 
SEC. 7. Duration of Incentives. - Enterprises.registered with the SEZA 
may enjoy ITH or NOLCO granted by the latter prior to the availment of the five 
percent (5%) GIE. Fiscal inq~Dtj)/!1l!>.I!Jnder 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 801, with 
the concurrence of the Secretaries of the Departments of Finance and Trade and 
Industry. 
SEC. 8. Creation of the Special Economic Zone,Authority. - A corporate 
body to be known as the Special Economic Zone Authority, hereinafter referred to 
as SEZA, is hereby created to manage and operate, in accordance with the 
provisions of this Act, the Special Economic Zone and Free Port. This corporate 
franchise shall expire fifty (50) years counted from the first day of the fifth (5th) 
calendar year after the effectivity of this Act, unless otherwise extended by 
Congress. 
SEC. 9. Powers and Functions of the Special Economic Zone 
Authority. -
The Special Economic Zone Authority shall have the follOwing 
powers and functions: 
(A) To adopt, aiter, use a corporate seal; to contract, lease, buy, sell, 
acquire, own and dispose movable and immovable as well as personal and real 
property of whatever nature"-(jnClLidfiig but not limited to shares of stock or 
participation in private corporations or in limited partnerships, or in joint ventures 
with limited liability), bonds, precious metals in bullions, ingots and easily 
convertible foreign exchange; to sue and be sued in order to carry out its duties, 
responsibilities, privileges, powers, and functions as granted and provided for in 
this Act; and to exercise the power of eminent domain for pUblic use and public 
purpose; 


(B) Within the limitation provided by law, 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 
fonn of securities, and to secure the same by a guarantee, pledge, mortgage, 
deed of trust, or an assignment of all o~ part of its property or assets; 
(C) To approve, accept, accredit and allow any local or foreign business, 
enterprise or investment in the Zone subject only to such rules and regulations as 
SEZA may promulgate from time to time in conformity with the provisions of this 
Act and the limitations provided in the Constitution; 
(D) To authorize or undertake, on its own or through others, and regulate 
the establishment, .operation and maintenance of public utilities, services, and 
infrastructure in the Zone such as shipping, barging, stevedoring, cargo handling, 
hauling, warehousing, storage of cargo, port services or concessions, piers, 
wharves, bulkheads, bulk terminals, mooling areas, storage areas, roads, bridges, 
tenninals, conveyors, water 'supply and storage sewerage, drainage, airport 
operations in coordination with the Civil Aeronautics Board, and such other 
services or concessions or infrastructure necessary or incidental to the 
accomplishment of the objectives of this Act: Provided, however, That the private 
investors in the Zone shall be given priority in the awarding of contracts, 
franchises, license, or permits for the establishment, operation and maintenance of 
utilities, services and infrastructure in the Zone; 
(E) To construct, acquire, own, lease, operate and maintain on its own or 
through others by virtue of cm},t,~a~~~'lifranchises, licenses, or pennits under' the 
build-operate-transfer scheme or under a jOint vent.ure with the private sector any 
or all of the public utilities and infrastructure required or needed in the Zone in 
coordination with appropriate national and local government authorities and in 
conformity with applicable laws thereon; 
(F) To operate on its own either directly or through a subsidiary entity, or 
license to others, tourism-related activities, including games, amusement, 
recreational and sports facilities such as horse racing, dog racing, gambling 
casinos, golf courses, and others, Imder priorities and standards set by the SEZA; 
(G) To protect, preserrve, maintain and develop the virgin forests, beaches, 
coral and coral reefs within the Zone. The virgin forest within the Zone will be 
proclaimed as a national part and will be covered by a permanent total log ban. 
For this purpose, the rules and regulations of the Department of Environment and 
Natural Resources and other government agencies involved in the above functions 
shall he implemented by the SEZA; 
, 
(H) To adopt, implement and enforce reasonable measures and standards 
to control pollution within the Zone; 
(I) To provide security for the Zone in coordination with the national and 
local governments. For this purpose, SEZA may not establish and maintain its own 
security force and firefighting_.~~E.a~ility .. to hire others to provide the same; 
(J)To form, establish, organize and maintain subsidiary corporation, as it 
business and operations may require, whether under the laws of the Philippines or 
not; 
(K) To issue rules and regulatiqns consistent with the provisions of this Act 
as may be necessary to implement and accomplish the purposes, objectives and 


policies herein provided; in coordination with the Philippine Export Zone Authority 
(PEZA) and the Bureau of Customs (BOC) and 
(L) 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. 
SEC. 10. Board of Directors of SEZA. - The powers of the SEZA shall be 
vested in and exercised by a Board of Directors, hereinafter refened to as the 
Board, which shall be composed of the following: 
(A) The Chairperson who shall come from among the members of the 
Board of Directors; 
(B) A Vice Chairperson who shall come from among the members of the 
Board of Directors; 
(C) Members consisting of: 
(1) The Governor o[(he Province of Iloilo; 
(2) The Congressional Representatives of the the districts of Iloilo Province; 
(3) Five Mayors to be chosen by all the municipal mayors in the Province of 
Iloilo; 
:!.! 1.<1 
L, L. _ • to> ~ 
(4) The President of the Chamber of Commerce and Industry of Iloilo. 
(5) Two (2) representatives from tbe business and investment sectors in the 
Zone. 
(6) One (1) representative from the workers working in the Zone. 
The Governor, the: Congressional Representatives and the Mayors and 
President of the Chamber of Commerce and Industry shall serve as ex-officio 
members of the Board, whose term in the Board corresponds to their terms as 
elected officials. 
The Chairperson shall .beappointed by the President of the Philippines 
upon the nomination of the Board of Directors to serve for a term of six (6) years, 
unless 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 tmexpired portion of the tenu. 
All members of the Board, except ex officio shall be appointed by the 
President of the Philippines to serve for a term of six (6) years. In case of death, 
resignation or removal for cause, the replacement shall serve only the unexpired 
portion of the term. 
All members of the Board:" "except ex officio members shall be appointed by 
the President of the Philippines to serve for a term of six (6) years. In case of 
death, resignation or removal for cause, the replacement shall serve only the 
unexpired portion of the term. 
The members of the Board shall receive a reasonable per diem at a rate to 
be determined by the Department of Budget and Management 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 (Php 10,000) for every Board Meeting. 
, 
SEC. 11. Administrative and Chief Executive Officer. - The President of 
the Philippines shall appoint a full-time professional and competent administrator 
and chief executive officer for the SEZA whose compensation shall be detemlined 
by its Board of Directors and shall be in accordance with the revised compensation 
and position classification system. The administrator as chief executive officer of 
SEZA shall be responsible to the Board and the President of the Philippines for the 
efficient management and operation of the Special Economic Zone: Provided, That 
no person shall be appointed as administrative and executive officer 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 experience preferably in the filed of management or public 
administration. 
SEC. 12. Capitalization. - The SEZA shall have an authorized capital stock 
of One Billion (1,000,000,000) no par shares with a minimum issue value of Ten 
(10) pesos each. The national govermllent shall initially subscribe and fully pay 
three hundred million (300,000,000) shares of such capital stock. The initial 
amount necessary to subscriQEI,~Dqp.~¥for the shares of stock shall be included in 
the General Appropriations Act of the year following its enactment into law and 
thereafter. The Board of Directors of SEZA may, from time to time and with the 
written concurrence of the Secretary of Finance, increase the issue value of the 
shares representing the capital stock of the SEZA. The Board of Directors of 
SEZA, with the written concunence of the Secretary of Finance, may sell shares 
representing not more than forty per centum (40%) of the capital stock of the 
SEZA to the general public with such annual dividend policy as the Board and the 
Secretary of Finance may determine. The national government and local 
government units shall in no case own less than sixty per centum (60%) of the 
total issued and outstanding capital stock of the SEZA. 
SEC. 13. Supervision. - The Special Economic Zone shall be under the 
direct control and supervision of the Philippine Economic Zone Authority (PEZA) 
for purposes of policy direction and coordination. 
SEC. 14. Relationship wilh the Regional Development Council. - The 
Special Economic Zone Authority ,shall determine the development goals for the 
Iloilo Ecozone within the framework of national development plans, policies and 
goals. The Administrator shall, upon approval by the Board, submit the Iloilo 
Ecozone plans, programs and projects to the Regional Development Council for 
inclusion and inputs to the overall regional development plan. 
•• .. i\ "" .... -',' 
" 
SEC. 15. Relationship 'with Local Government Units. - Except as herein 
provided, the local government units comprising the Iloilo Ecozone Zone shall 
retain their basic autonomy and identity. The province, municipalities, and their 
component barangays shall continue to operate and [unction ill accordance with 
the Local Government Code of 1 ~91. In case of any conflict between the SEZA 


and the Province of Iloilo or any of the mnnicipalities, on matters affecting the 
Iloilo Ecozone other than defense and security matters, the decision of ISEZA 
shall prevail. 
SEC. 16. Interpretation/Construction. - The powers, authorities and 
functions that are vested in the SEZA are intended to decentralize governmental 
functions and anthority and promote efficiency and effective working relationships 
between the Iloilo Ecozone, the national government, and the local government 
units. 
SEC. 17. Legal Counsel. - The SEZA and the corporations in which SEZA 
owns a majority of the issued capital stock shall have its owm internal legal 
counsel under the supervision of the government corporate counsel. When the 
exigencies of its businesses and operations demand it, the SEZA may engage the 
services of an outside counsel either on a case to case basis or on a fixed 
retainer. 
SEC. 18. Auditor. -
The Commission on Audit shall appoint a 
representative who shall be a full-time auditor of the SEZA and its subsidiaries, 
and assign such number of personnel as may be necessary to assist said 
representative in the performance of his or her duties. The salaries and 
emoluments of the. assigned auditor and personnel of the Commission on Audit 
shall be in accordance with the, revised compensation and position classification 
system. The Commission on ·Autiitcshall· render an annuall report to the President 
of the Philippines and to Congress on the business activities, transactions and 
operation of the SEZA. 
. .. 
. 
. 
SEC. 19 Separability Clause. - If any provision or part hereof, is held 
invalid or unconstitutional, the remainder of the law or the provision not otherwise 
affected shall remain valid and subsisting. 
SEC. 20. Repealing Clause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation 
contrary to or is inconsistent with the provision of this Act is hereby repealed, 
modified, or amended accordingly. 
SEC. 21. Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
Approved,