FOURTEENTH CONGRESS OF THE REPUBLIC ) 
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OF THE PHILIPPINES 
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First Regular Session 
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S. No. 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Constitution, in its Declaration of Principles and State Policies, provides: 
Section 20. The State recognizes the indispensable role of the 
private sector, encourages private enterprises, and provides incentives to 
needed investments. 
In pursuance of this policy, Republic Act No. 7916 or the “Special Economic 
Zone Act of 1995,” was enacted. This law became the legal framework for the creation 
of special economic zones, industrial estates, export processing zones, and free trade 
zones in many parts of the country, and has succeeded in achieving its objectives of 
promoting the flow of investments and generating employment opportunities in areas 
where such a zone is present. The country needs to draw on the enormous contribution of 
this legal conception to the progress of the national economy. Because the creation of an 
economic zone in a particular area depends on the fulfillment of certain requirements set 
by law and approval by the authorities, so far the full potential of their economic 
contribution have not been maximized. 
Economic zones, as enumerated above, differ in their legal conceptions, and the 
creation of a certain zone depends on its geographic location. For instance, a free trade 
zone is created near a port of entry or airport while an export processing zone is located 
outside customs authority, predominantly oriented to export production. An industrial 
estate need not be so located in those areas, and may be created according to a 
comprehensive plan under a unified continuous management. 


This bill aims to take full advantage of the creation of that class of economic 
zone, called industrial estates, by mandating their establishment in all cities and 
municipalities of the country. 


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FOURTEENTH CONGRESS OF THE REPUBLIC ) 
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OF THE PHILIPPINES 
First Regular Session 
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Introduced by Senator Miriam Defensor Santiago 
AN ACT 
CREATING INDUSTRIAL ESTATES IN EVERY CITY AND MUNICIPALITY, 
PROVIDING FUNDS THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Industrial Estates Act 
of 2007.” 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of State to 
attain full economic prosperity by promoting foreign and local investment in all cities and 
municipalities of the country and to help local governments to enable them to attain their 
fullest development as self-reliant communities, as well as to generate employment 
opportunities to the people in all areas of the country 
SECTION 3. Definition of Terms. For the purposes of this Act, the term 
“industrial estate” refers to a tract of land, with an area of at least one (1) hectare, 
subdivided and developed according to a comprehensive plan, under a unified continuous 
management and with provisions for basic infrastructure and utilities, with or without 
pre-built standard factory buildings and community facilities for the use of the 
community o f  industries. 
SECTION 4. Delineation oflndustrial Estates. - The metes and bounds of each 
industrial estate are to be delineated and more particularly described in a proclamation to 
be issued by the President of the Philippines, upon the recommendation of Philippine 
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Economic Zone Authority (PEZA), in coordination with the municipal or city council, 
National Land Use Coordinating Committee and the Regional Land Use Committee. 
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SECTION 5. Industrial Estates to be Decentralized Industrial Community. - 
Industrial estate shall be developed, as much as possible, into a decentralized, self-reliant, 
and self-sustaining industrial center with minimum government intervention. Each 
industrial estate shall be provided with transportation, telecommunications, and other 
facilities needed to generate linkage with industries and employment opportunities for its 
own inhabitants and those of nearby towns and cities. 
The industrial estate shall administer itself on economic, financial, industrial 
development and such other matters within the exclusive competence of the national 
government. The industrial estate may establish mutually beneficial economic relations 
with other entities within the country, or, subject to the administrative guidance of the 
Department of Trade and Industry, with foreign entities or enterprises. 
SECTION 6. Participation of Foreign Enterprises in Industrial Estates. - 
Foreign citizens and companies owned by non-Filipinos in whatever proportion, may set 
up enterprises in the industrial estate, either by themselves or in joint venture with 
Filipinos in any sector or industry, international trade and commerce within the industrial 
estate. Their assets, profits, and other legitimate interests shall be protected: Provided, 
that the industrial estate through PEZA, may require a minimum investments for any 
industrial estate enterprise in freely convertible currencies: Provided, further, that the 
new investments shall fall under the priorities, thrusts and limits provided for in this Act. 
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the Department of Finance. 
SECTION 7. Industrial Estate as Separate Customs Territory. - The industrial 
estates shall be managed and operated by the PEZA as separate customs territory. The 
PEZA is hereby vested with the authority to issue certificates of origin of products 
manufactured or processed in each industria1 estate in accordance with the prevailing 
rules of origin, and the pertinent regulations of the Department of Trade and Industry and 
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SECTION 8. Defense and Security. - The defense of the industrial estate and 
the security of its parameter fence shall be the responsibility of the national government 
in coordination with the PEZA. Military forces sent by the national government for the 
purpose of defense shall not interfere in the internal affairs of any of the industrial estate 
and expenditure for these military forces shall be borne by the national government. The 
PEZA may provide and establish the industrial estate’s internal security and firefighting 
forces. 
SECTION 9. Immigration. - Any investor within the industrial estate whose 
initial investment shall not be less than $150,000.00, his or her spouse, and dependent 
children under 21 years of age shall be granted permanent resident status within the city 
or municipality where the industrial estate in which he invested is located. 
The PEZA shall issue working visas renewable every two (2) years to foreign 
executives and other aliens, possessing highly technical skills which no Filipino within 
the city or municipality where the industrial estate is located, possesses, as certified by 
the Department of Labor and Employment. The names of aliens granted permanent 
resident status and working visas by the PEZA shall be reported to the Bureau of 
Immigration within thirty (30) days after issuance thereof. 
SECTION 10. Administration of each industrial estate. - Each industrial estate 
shall be organized, administered, managed, and operated by the industrial estate 
executive committee composed of the following: 
(A) 
The administrator who shall be appointed by the PEZA Board upon 
recommendation of the director general; and 
One (1) deputy administrator to be appointed by the Board upon 
recommendation of the director general. 
(B) 
SECTION 11. Composition of industrial estate advisovy body. - An industrial 
estate advisory body shall be created with the following members: 
(A)The president of the association of investors in the industrial estate; 
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(B) The governor of the province where the industrial estate is located; 
(C) The mayor of the city or municipality where the industrial estate is located; 
(D)The president of an accredited labor union in the industrial estate ; 
(E) The representative of the business sector in the periphery of the industrial 
estate; and 
(F) The representative of the PEZA. 
SECTION 12. Functions of 
industrial estate advismy body. The industrial 
estate advisory body shall have the following functions: 
(A) Advise the industrial estate management on matters pertaining to policy 
initiatives ; and 
(B) Assist the industrial estate management in settling problems arising 
between labor and any enterprise in the industrial estate. 
SECTION 13. Investigation and Inquiries. - Upon a written formal complaint 
made under oath, which on its face provides reasonable basis to believe that some 
anomaly or irregularity might have been committed, the PEZA or the administrator of the 
industrial estate concerned, shall have the power to inquire into the conduct of firms or 
employees of the industrial estate and to conduct investigations, and for that purpose may 
subpoena witnesses, administer oaths, and compel the production of books, papers, and 
other evidences: Provided, that the investigator may grant immunity from prosecution to 
any person whose testimony or whose possessions of documents or other evidence is 
necessary or convenient to determine the truth in any investigation conducted by him or 
under the authority of the PEZA or the administrator of the industrial estate concerned. 
SECTION 14. Disbursement of Funds. - No money shall be paid out of the funds 
of any industrial estate, except in pursuance of the budget as formulated and approved by 
the PEZA. 
SECTION 15. Development Strutegy of the industrial estate. - The strategy of 
each industrial estate shall be formulated by the PEZA, in coordination with the 
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Department of Trade and Industry and the National Economic and Development 
Authority: Provided, that such development strategy is consistent with the priorities of 
the national government. 
It shall be the policy of the government and the PEZA to encourage and provide 
incentives and facilitate private sector participation in the construction and operation of 
public utilities and infrastructure in the industrial estate, using any of the schemes 
allowed in Republic Act. No. 6957. 
SECTION 16. Fiscal Incentives. - Business establishments operating within the 
industrial estate shall be entitled to the fiscal incentives as provided for under Presidential 
Decree No. 66, the law creating the Export Processing Zone Authority, or those provided 
under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment 
Code of 1987. Furthennore, tax credits for exporters using local materials as inputs shall 
enjoy the sanie benefits provided for in the Export Development Act of 1994. 
SECTION 17. Exemption from Taxes Under the National Internal Revenue 
Code, - Any provision of existing laws, rules and regulations to the contrary 
notwithstanding, no taxes, local and national, shall be imposed on business 
establishments operating within the industrial estate. In lieu of paying taxes, five percent 
(5%) of the gross income earned by all businesses and enterprises within the industrial 
estate shall be remitted to the national government. This five percent (5%) shall be shared 
and distributed as follows: 
(A)Three percent (3%) to the national government; 
(B)One percent (1%) to the city or municipality affected by the declaration of the 
industrial estate; and 
(C)One percent (1%) for the establishment of a development f u d  to be utilized 
for the development of municipalities outside and contiguous to each industrial 
estate. 
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SECTION 18. Applicable National Taxes. - All income derived by persons and 
all service establishments in the industrial estate shall be subject to taxes under the 
National Internal Revenue Code. 
SECTION 19. Domestic Sales. - Goods manufactured by an industrial estate 
enterprise shall be made available for immediate retail sales in the domestic market, 
subject to payment of corresponding taxes on the raw materials and other regulations that 
may be adopted by the Board of the PEZA. However, in order to protect the domestic 
industry, there shall be a negative list of industries that will be drawn up by the PEZA. 
Enterprises engaged in the industries included in the negative list shall not be allowed to 
sell their products locally. Said negative list shall be regularly updated by the PEZA. The 
PEZA, in coordination with the Department of Trade and Industry and the Bureau of 
Customs, shall jointly issue the necessary implementing rules and guidelines for the 
effective implementation of this section. 
SECTION 20. Applicability of Bunking Laws and Regulations. - Existing banking 
laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply to banks 
and financial institutions to be established in the industrial estate and to other industrial 
estate-registered enterprises. Among other pertinent regulations, these include those 
governing foreign exchange and other current account, transactions (trade and non-trade) 
focal 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. 
SECTION 21. After Tax Profits. - Without prior Bangko Sentral approval, after 
tax profits and other earnings of foreign investments in enterprises in the industrial estate 
may be remitted outward in the equivalent foreign exchange through any of the banks 
licensed by the Bangko Sentral ng Pilipinas in the industrial estate: Provided, however, 
That such foreign investments in said enterprises have been previously registered with the 
Banglto Sentral. 
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SECTION 22. Eminent Domain. - The areas comprising an industrial estate may 
be expanded or reduced when necessary. For this purpose, the government shall have the 
power to acquire, either by purchase, negotiation or condemnation proceedings, any 
private lands within or adjacent to industrial estate for: 
(A) Consolidation of lands for zero development purposes; 
(B) Acquisition oi-right way to the ECOZONE; and 
(C) The protection of watershed areas and natural assets valuable to the 
prosperity of the industrial estate. 
SECTION 23. Leases of Lands una' Buildings. - Lands and buildings in each 
industrial estate may be leased to foreign investors for a period not exceeding fifty (50) 
years renewable once for a period of not more than twenty-five (25) years, as provided 
for under Republic Act No. 7652, otherwise known as the Investors' Lease Act. The 
leasehold right acquired under long-term contracts may be sold, transferred or assigned, 
subject to the conditions set forth under Republic Act No. 7652. 
SECTION 24. Land Conversion. - Agricultural lands may be converted for 
commercial, industrial, residential and other non-agricultural purposes, subject to the 
conditions set forth under Republic Act. No. 6657 and other existing laws. 
SECTION 25. Protection of Environment. - The PEZA, in coordination with the 
appropriate agencies, shall take concrete and appropriate steps and enact the proper 
measures for the protection of the local environment. 
SECTION 26. Termination of Business. - Investors in the industrial estate who 
desire to terminate business or operations shall comply with such requirements and 
procedures which the PEZA shall set, particularly those relating to the clearing of debts. 
The assets of the closed enterprises can be transferred and the funds can be remitted out 
of the industrial estate subject to the rules, guidelines and procedures prescribed jointly 
by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA. 
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SECTION 27. Registration of Business Enterprises. - Business enterprises within 
a designated industrial estate shall register with the PEZA to avail of all incentives and 
benefits provided for in this Act. 
SECTION 28. One Stop Shop Center. - The PEZA shall establish a one stop shop 
center for the purpose of facilitating the registration of new enterprises in the industrial 
estate. Thus, all appropriate government agencies that are involved in registering, 
licensing or issuing permits to investors shall assign their representatives to the industrial 
estate to attend to investor's requirements. 
SECTION 29. Promotion of Industrial Peace. - In the pursuit of industrial 
harmony in the industrial estate, a tripartite body composed of one (1) representative each 
from the Department of Labor and Employment, labor sector and business and industry 
sectors shall be created in order to formulate a mechanism under a social pact for the 
enhancement and preservation of industrial peace in the industrial estate within thirty (30) 
days after the effectivity of this Act. 
SECTION 30. Master Employment Contracts. - The PEZA, in coordination with 
the Department of Labor and Employment, shall prescribe a master employment contract 
for all industrial estate enterprise staff members and workers, the terms of which provide 
salaries and benefits not less than those provided under this Act, the Philippine Labor 
Code, as amended, and other relevant issuances of the national government. 
SECTION 31. Percentage of Foreign Nationals. - Employment of foreign 
nationals hired by industrial estate enterprises in a supervisory, technical or advisory 
capacity shall not exceed five percent (5%) of its workforce without the express 
authorization of the Secretary of Labor and Employment. 
SECTION 32. Migrant Worker. - The PEZA, in Coordination with the Department 
of Labor and Employment, shall promulgate appropriate measures and programs leading 
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to the expansion of the services of the industrial estate to help the local governments of 
nearby areas meet the needs of the migrant workers. 
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SECTION 33. Incentive Scheme. - Ad additional deduction equivalent to one-half 
(1/2) of the value of training expenses incurred in developing skilled or unskilled labor or 
for managerial or other management development programs incurred by enterprises in the 
industrial estate can be deducted from the national government's share of three percent 
(3%) as provided in Section 17. 
The PEZA, the Department of Labor and Employment, and the Department of 
Finance shall jointly make a review of the incentive scheme provided in this section 
every two (2) years or when circumstances so warant. 
SECTION 34. Relationship with the Regional Development Council. - The PEZA 
shall determine the development goals for the industrial estate within the framework of 
national development plans, policies and goals, and the administrator shall, upon 
approval by the PEZA Board, submit the industrial estate plans, programs and projects to 
the regional development council for inclusion in and as inputs to the overall regional 
development plan. 
SECTION 35. Relationship with Local Government Units. - Except as herein 
provided, the city or municipality where the industrial estate is located shall retain their 
basic autonomy and identity. 
SECTION 36. Relationship of PEZA to Privately -Owned Industrial Estates. - 
Privately-owned industrial estates shall retain their autonomy and independence and shall 
be monitored by the PEZA for implementation of incentives. 
SECTION 37. Authority ojthe President to Advance Initial Funding. - Subject to 
existing laws, the President of the Philippines is hereby authorized to advance out of the 
savings of the Office of the President such funds as may be necessary to effect the 
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organization of an industrial estate which shall be reimbursed by the PEZA at reasonable 
term and condition. 
SECTION 38. Nondiminution Clause. -Nothing in this Act shall be construed to 
reduce any existing benefits of any form granted under existing laws, decrees, executive 
orders, or any contract, agreement or policy between employer and employee. 
SECTION 39. 
Appropriations. - The amount necessary to carry out the 
provisions of this Act shall be included in the budget of concerned government agencies 
in the General Appropriations Act of the year following its enactment into law and 
thereafter. 
SECTION 40. Separability Clause. - The provisions of this Act are hereby 
declared separable, and in the event one or more of such provisions or part thereof are 
declared unconstitutional, such declaration of unconstitutionality shall not affect the 
validity of the other provisions thereof. 
SECTION 41. Interpretation/Construction. - The powers, authorities and 
functions that are vested in the Philippine Economic Zone Authority (PEZA) and the 
industrial estate concerned are intended to establish decentralization of governmental 
functions and authority as well as an efficient and effective working relationship between 
the industrial estate, the central government and the local government units. 
SECTION 42. Repealing Clause. - All laws, acts, presidential decrees, executive 
orders, proclamations and/or administrative regulations which are inconsistent with the 
provisions of this Act, are hereby amended, modified, superseded or repealed 
accordingly. 
SECTION 43. Implementing Rules and Regulations. - The Department of Trade 
and Industry, the National Economic and Development Authority, the Department of 
Finance, the Bureau of Customs, the Department of Agrarian Reform, the Department of 
the Interior and Local Government, and the Philippine Economic Zone Authority, shall 
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formulate the implementing rules and regulations of this Act within ninety (YO) days after 
its approval. Such rules and regulations shall take effect fifteen (15) days after their 
publication in a newspaper of general circulation in the Philippines. 
SECTION 44. Transitoly Provisions. - Prior to the effectivity of the 
implementing rules and regulations of this Act, the provisions o f  Presidential Decree No. 
66, as amended, and its implementing rules and regulations shall remain in force. 
SECTION 45. Effectivity. - This Act shall take effect fifteen (15) days following 
its complete publication in the Official Gazette or in at least two (2) newspapers of 
general circulation. 
Approved, 
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