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THIRTEENTH CONGRESS OF THE 
1 
Third Regular Session 
) 
REPUBLIC OF THE PHILIPPINES 
) 
S E N A T E  
a 
S.B.NO. 
(In substitution of T-I. No. 5307) 
Prepared by tlie Conmiltees 011 Economic Affairs; Local Government; Ways and 
Means; and Finance with Senators Roxas, Lini, %etq-and Drilon as authors thereof, 
M
I
 
AN ACT 
ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE PROVINCE OF 
DAVAO ORIENTAL, CREATING FOR THE PURPOSE THE DAVAO 
ORIENTAL SPECIAL ECONOMIC ZONE AUTHORITY, APPROPRIATING 
FUNDS THEREFOR AND FOR OTHER PURPOSES 
Be it enacted by the Senole and House of Representatives of 
the Philippines in 
Congress assembled: 
Section 1. SIzori Tiik - This Act shall be known as the “Davao Oriental 
Special Economic Zone Act ol2007.” 
Sec. 2. Declmztion 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 tlie 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 tlie level and quality of their 
living conditions through the establishment, among others, of special economic zones 
in suitable and strategic localions in the country and through measures that shall 
effectively attract legitimate and productive foreign investments. 
Sec. 3. Creation qf the Davao Oriental Special Economic Zone. - 111 
pursuit of the foregoing declared policy and subject to thc concurrence of the 
concerned local government units of Davao Oriental affected by the zone, there is 
hereby established a Special Economic Zone, hereinafter rckrred to as the Davao 
Oriental Ecozone. The Davao Oriental Ecozone shall cover the entire area embraced 
by tlie Municipalities of Mati, San Isidro, and Lupon in the Province of Davao 
Oriental. The specific metes aid bounds of the Davao Oriental Ecozonc shall he 
more particularly defined in a proclamation to be issued by the President of the 
Philippines, upon the recoiilillclldatioii of tlie Philippine Economic Zone Authority 
(PEZA), provided that the lands ernbraced therein shall be public lands. 
Sec. 4. Goveriiing Priiiciples. - The Davao Orienlal Special Economic Zone 
shall be ma1aged and operated by the Davao Oriental Special Economic Zone 


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Authority, herein referred to as the DOSEZA, created undc r Section 10 of this Act, 
under the following principles: 
(a) 
Within the framework and limitations c:f the Constitution and 
applicable provisions of the Local Government Code, the Davao !Oriental Ecozone 
shall be developed into and operated as a decentralized, seK-reliant and self-sustaining 
industrial, commercial/trading, agro-industrial, tourist, bankin&#,,, financial and 
investment center with suitable residential areas. 
(b) 
The Davao Oriental Ecozone shall be provided with transportation, 
telecomniunications and other facilities needed to attract legitimiii ,e and productive 
investments, generate linkage industries and employment opportuni: ies Cor the people 
of the Province of Davao Oriental and its neighboring towns and cities. 
(c) 
The Davao Oriental Ecozone may establish mwtually beneficial 
economic relations with other entities or enterprises within the country or, subject to 
the administrative guidance of the Department of Foreign Ailairs (DFA), the 
Philippilie Economic Zone Authority (PEZA) andlor the Department of Trade and 
Industry (DTI), with foreign entities or enterprises. 
(d) 
Foreign citizens and companies owned by non-Filipinos in whatever 
proportion may set up enterprises in the Davao Oriental Ecozone, either by 
themselves or in joint venture with Filipinos in any sector of industry, international 
trade and commerce within the Davao Oriental Ecozone. 
(e) 
The areas comprising the Davao Oriental Ecozone may be expanded or 
reduced when necessary. For this purpose, the DOSEZA, in consultation with the 
local government units, shall have the power to acquire either by purchase, 
negotiation or condemnation proceedings, any private land within or adjacent to the 
Davao Oriental Ecozone for the following purposes: (1) consolidation of lands for 
Davao Oriental Ecozone development; (2) acquisition of right of way to the Davao 
Oriental Ecozone; and (3) the protection of watershed areas and natural assets 
valuable to the prosperity of the Davao Oriental Ecozone. 
(f) 
Goods manufactured by a Davao Oriental Ecozone enterprise shall 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 
forinulated by the DOSEZA, together with the PEZA, the Bureau of Customs and the 
DTI. However, in order to protect domestic industries, a Negative List of industries 
shall be drawn up and regularly updated by PEZA. Enterprises engaged in industries 
included in such Negative List shall not be allowed to sell their products locally. 
(g) 
The national government shall maintain its ability to coordinate with 
the Davao Oriental Ecozone and the local government units. 
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SEC. 5. Incentives To Registered Enterprises. - The D.avao Oriental Special 
Economic Zone Authority (DOSELA) may administer the follo\ving incentives to the 
registered enterprises located therein to the extent of the activity/ project: 
(A) 
Income Tax Holiday (ITH). -Registered enterprii .es shall be entitled to 
an income tax holiday from the start of their commercial open. Lions 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 (BOI), shall be entitled to a 
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) Producinghendering new productshewices or having strong 
backward or Forward linkages 
Category C - Registered export enterprise shall be entitled to a six- year 
income tax holiday: Provided, however, That if the export enterprise complies 
with the following: (1) large capital investments or :sizeable employment 
generation, or (2) use high level of technology or (3) 'iocated outside Metro- 
Manila, it shall be entitled to an eight-year income tax Idday. 
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 BO1 
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 Davao 
Oriental Special Economic Zone Authority (DOSEZA) to transact business within the 
Davao Oriental Special Economic 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 percent 
(70%) of its nornial 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 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, That the project is listed in the IPP at the same time the 
additional investment in the project is made: Provided, firther, That the entitlement 
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period for additional investments shall not exceed three limes the period provided 
under this subsection: 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 DOSEZA are required to share in the special 
development fund of the BO1 for investment promotion projects of the government 
equivalent to one percent (1%) ofthe ITH granted for every application. 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise 
availing of IT13 or Net Operating Loss Carryover (NOLCO) to secure a certificate of 
eligibility fiom the DOSEZA before submitting its income tax return (ITR) with 
DOSEZA for validation. 
Failure to secure certification and/or to file the ITI-I or NOLCO availment for 
validation by the DOSEZA within forty-five (45) days from the last day of each 
statutory filing date for ITR shall cause the forfeiture of the availmcnt for the taxable 
period. 
(B) 
Net Operating Loss Carryover (NOLCO). - Net operating loss of the 
business or enterprise during the first three years from start of commercial operations 
which have not been previously offset as deduction fiom 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 o€ a tax rate of five percent (5%) on Gross Income Earned 
(GIE). -Except for real properly tax on land, no local and national taxes as prescribed 
under Republic Act No. 8424, also known as “The National Internal Revenue Code of 
1997, as Amended” such as income tax, excise tax, and franchise taxes, shall be 
imposed on registered enterprises operating within the Davao Oriental Ecozone. In 
lieu thereof, five percent (5%) ofthe gross income earned shall be paid as follows: 
(a) Three percent (3%) to the national governmelit; 
(b) Two percent (2%) shall be remitted by the business establishments to the 
treasurer’s office of the municipality or city where the enterprise is 
located; 
All persons and service establishments in the Davao Oriental Ecozone shall be 
subject to national and local taxes under the National Internal Revenue Code of 1997, 
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as amended, and the Local Government Code. 
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D. Accelerated Depreciation. - Accelerated deprc ciation of plant, machinery 
and equipment that are reasonably needed and actually \):sed for the production and 
transport of goods and services may be allowed using a rate not exceeding twice the 
rate which would have been used had the annual allowance been computed in 
accordance with the rules and regulations prescribed by the Secretary of Finance and 
the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended. 
E. 
Capital Equipment Incentives. - (1) Importations of capital equipment, 
spare parts, tools and dye, or those required for pollution abatement and control, 
cleaner production and waste reduction including consignnient thereof by registered 
enterprises upon the effectivity of this law, shall be exempted to the extent of one 
hundred percent (1 00%) 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, furfher, That the importation of machinery and equipment and 
accompanying parts shall comply with the following conditions: 
1. 
comparable quality and at reasonable prices; 
11. 
They are reasoilably needed and will be used exclusively by the 
registered enterprise in the inanufacture of its products, unless prior approval 
of the DOSEZA is secured for the part time utilization of said equipment in a 
non-registered activity to maximize usage thereof or the proportionate taxes 
and duties are paid on a specific equipment and machinery being pernianently 
used for non-registered activities; and 
iii. 
the importation of such machinery, equipment and spare parts. 
Approval of the DOSEZA must be secured before any sale, trans€er 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: 
They are not manufactured domestically in sufficient quantity, of 
.. 
Approval of the DOSEZA was obtained by the registered enterprise for 
1) 
The same is made to another enterprise enjoying tax and duty 
exemption on imported capital equipment; 
The slme 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; 
The exportation of the capital equipment, machinery, spare palls or 
source documents or those required for pollution abatement and 
control; or 
Proven technical obsolescence of the said equipment, machinery or 
spare parts. 
2) 
3) 
4) 
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When tlie aforementioned sale, transfer or disposition is made under any of the 
conditions provided for in the foregoing paragraphs other than paragraph (2) hcrein, 
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 aforementioned 
imported items without prior approval within five years from the date of importation, 
the registered enterprise and the vendee, transferee, or assignee shall be solidarily 
liable to pay twice the aniount of the tax and duty exen~ption given it: Provided, 
Bnally, That even if the sale, transfer or disposition o€ the capibl equipment, 
machinery or spare parts is approved after five years from date of importation, the 
registered enterprises are still liable to pay the taxes and duties based on tlie 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 ofmachinery, capital eqoipnient, raw materials, supplies, 
parts and semi-finished products to be used in the fabrication of machinery and capital 
equipnient by a registered export-oriented enterprise from a domestic inanufacturer 
shall be subject to zero percent (0%) value-added tax. 
Tlie 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-finished products used in 
the fabrication of machinery and capital equipment, had these items been imported, 
upon its submission to the DOF of the bill of materials evidencing tlie transaction 
value of such and other pertinent documents, €or verification and proper endorsement. 
The availnient by a registered export enterprise of the incentive stated under 
the immediately preceding two paragraphs shall be subject to the following 
conditions: (a) That said capital equipment, machinery and spare parts will be used 
exclusively by the registered enterprise in its registered activity; (b) That the capital 
equipment or machinery where tlie raw materials, supplies, parts and semi-finished 
products were used would have qualified for tax and duty-free importation; and (e) 
That the approval of the DOSEZA 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 precediiig paragraphs for such 
disposition shall apply. 
This incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year from date of delivery 
F. 
Tlie importation of source documents by inforination technology- 
registered enterprises shall be eligible for tax and duty free importation. 
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G. 
Raw Materials Incentives. - Every registered export-oriented 
enterprise shall enjoy a tax credit cquivalent to thc 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 
niaterials/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 year from date of exportation of the final product. 
H. Incentives on Breeding Stocks and Genetic Materials. - Importation of 
breeding stocks and genetic materials within ten (10) years from the date of 
registration of comrnercial 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 DOSEZA. 
The availment of the incentives by the registered enterprise shall be subject to 
the €allowing: (a) that said breeding stocks and genetic materials would have been 
qualified Cor tax and duty-free importation under the preceding paagraph; (b) that the 
breeding stocks and genetic materials are reasonably needed in the registered activity; 
(c) that approval of the DOSEZA 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 enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection is not filed within one year from date o€delivery. 
I. Exemption from Wharfage Dues. - The provisions of law to the contrary 
notwithstanding, exports by a registered enterprise shall be exempted from wharfage 
dues. 
J. 
Deferred Imposition of the Minimum Corporate Income Tax. - The 
Minimum Corporate Income Tax (MCIT) of two percent (2%) of the gross income as 
of the end of the taxable year shall be imposed when the MCIT is greater than the 
income tax computed under the NIRC of 1997, as amended, for the taxable year: 
Provided, however, That said MCIT shall he imposed only after the enterprise's 
entitlement period to the income tax-based incentives has expired 
K. Tax Treatment of Merchandise in the Davao Oriental Ecozone. - 
a. Domestic merchandise sent from the Davao Oriental 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 


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revenue laws of the Philippines as don iestic goods sold, transferred or 
disposed of for local consumption. 
b. Merchandise sent fiom the Davao Orilental Ecozone to area outside 
the said Ecozone shall, whether or not I :ombined with or made part of 
other articles while in the zone, be su'bject to rules and regulations 
governing imported merchandise. The c luties and taxes shall be based 
on the value of said imported materials (except when the final product 
is exempt). 
c. Articles produced or manufactured in the, Davao Oriental Ecozone and 
exported therefrom shall, on subsequent importation into the customs 
territory, be subject to the import lawis applicable to like articles 
manufactured in a foreign country. 
d. Unless the contrary is shown, merchandise taken out of the Davao 
Oriental Ecozone shall be considered for ,tax purposes to have been 
sent to customs territory. 
Tax Treatment of Raw Materials and Capital Equipment in the Davao 
Oriental Ecozone. - Importations of raw materials and ca,pital 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 un accordance 
with the rules and regulations of the Bureau of Customs. 
L. 
M. 
Employment of Foreign Nationals. - Subjc':i to the provisions of 
.Section 29 of Commonwealth Act No. 613, as amended, a ri.:gistered enterprise may 
employ foreign nationals in supervisory or technical positions for a period not 
exceeding ten (10) years from its registration: Provided, Th:~t 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 mainlains his stockholdings 
therein. 
Foreign nationals under eniployment contract within the purview of this 
incentive, their spouses and unmarried children under twenty-one (2 1) 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 o€ 
employment of such foreign nationals. They shall be entitled to a multiple entry visa, 
valid €or a period of thee years, and shall be allowed to enter and leave the 
Philippines withoui further documentary requirements other than valid passports or 
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other travel documents in the nature of passports. The validity of the multiple entry 
visa shall be extendible yearly. 
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The said foreign nationals admitted under this provision, as well as their 
respective spouses and dependents shall be exempt from: 
(a) obtaining alien 
certificate 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 Eoreign 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, 
(1) He is at least eighteeii (18) years of age; 
(2) He has not been convicted ofa crime involving moral turpitude; 
(3) He is not afflicted with any loathsome, dangerous or contagious disease; 
and 
(4) He has no1 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 paragraph (M), Section 5 hereof. 
As a holder o€ 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. Administrntion, Zniplementntion and Monitoring of Incentives. - 
The DOSEZA shall be responsible for the administration and implementation of the 
incentives granted to its respective registered enterprises: 
Provided. That any 
incentive administration policy adopted by the BO1 for registered enterprises shall be 
uniformly applied by DOSEZA. 
The following are the duties and responsibilities of the DOSEZA in the 
administration of incentives: 
(A) To adopt consistent procedures of administering incentives in 
accordance with the guidelines established by the BOI; 
To adopt and implement systems and procedures agecting trade and 
customs policies in accordance with the requirements established by the 
Department of Finance (DOF) and the BOI; 
To submit information on registered enterprises to the DOF and the BO1 
as required by any of these agencies to ascertain consistency of 
investment policies and incentives, including their implementation as 
(B) 
(C) 
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provided in paragraph (a) herein, and to ensure 1~1 aper implementation of 
systems and procedures affecting trade and CuSti, ms policics as provided 
in paragraph (b) herein; and 
(D) To perform all other duties and responsibilities as may be required by 
the President of the Philippines. 
For proper monitoring, the BO1 shall create a single dat.rbase of all incentives 
provided by all incentives granting agencies, including DOSE%.\, and all information 
thereto. Double entry accounting shall be done by the BO1 in IL cording all incentives 
granted by the government for transparency purposes. 
Sec. 8. Extension of Period of Availment. - The awilment period of the 
incentives provided herein may be extended by DOSEZA, in the event that the 
registered enterprise suffers operationalfurce majeure or any event equivalent thereto, 
impairing its viability, provided that the availment period slrlull not exceed the 
duration of the saidforce lnnjeure or equivalent event. 
Sec. 9. Duration uflncentives. - Enterprises registered with DOSEZA 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 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 BOI, 
with the concurrence of the Secretaries of the Department of Finance and Trade and 
Industry. 
Sec. 10. Creation uf the Davao Oriental Spcciid Ecunornic Zone Authority. 
- There is hereby created a body corporate to be known as the Davao Oriental Special 
Economic Zone Authority, hereinaller referred to as the DOSEZA, which shall 
manage aud operate, in accordance with the provisions of this Act, the Davao Oriental 
Special Economic Zone. This corporate franchise shall expire in fifty (50) years 
counted from the first day of the fifth (5Ih) calendar 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. 11. 
Principal Offe 
of DOSEZA. - The Davao Oriental Special 
Economic Zone Authority shall maintain its principal office in the Municipality of 
Mali, Province of Davao Oriental, but it may establish branches within the Philippines 
as may be necessary for the proper conduct of its business. 
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SEC. 12. Powers und Fnnciions of the Davuo Oriental Speciul Economic 
Zone Authority. - The Davao Oriental Special Economic Zone Authority shall have 
the following powers and €unctions: 
(a) To operate, administer, manage and develop the Davao Oriental Ecozone 
according to the principles and provisions set forth in this Act; 
(b) To register, regulate and supervise the enterprises in the Davao Oriental 
Ecozone in an efficient and decentralized mmier, subject to existing laws; 
(c) TO coordinate with local government units and exercise general 
supervision over the developinent plans, activities and operations of the 
Davao Oriental Ecozone; 
(d) To regulate and undertake the establishment, operation and maintenance 
of utilities, other services and infrastructure in the Davao Oriental 
Ecozone such as but not limited to heat, light and power, water supply, 
telecommunications, transport, toll roads and bridges, port services, etc. 
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 (the Build-Operate-Transfer Law, as amended by RA 7718), or joint 
venture, adequate facilities and infrastructure required or needed for the 
operation and development of the Davao Oriental Ecozone, 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 license to other 
tourism-related activities, including games, amusements, recreational and 
sports facilities; 
(g) Subject to the approval of the President and the Monetary Board of the 
Bangko Sentral ng Pilipinas upon the recommendation of the Department 
of Finance, to raise or borrow adequate and necessary funds from local or 
foreign sources to finance its projects and programs under this Act, and 
for that purpose to issue bonds, promissory notes, and other forms of 
securities, and to secure the same by a guarantee, pledge, mortgage, deed 
of trust, or an assignment of all or part of its property or assets; 
(h) To protect, preserve, maintain and develop the virgin forests, beaches, 
coral and coral reefs and maintain ecological balance within the Davao 
Oriental Ecozone; 
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(i) To create, operate and/or contract to operate such functional units of 
orfices of the DOSEZA as it may deem necessary; 
(j) To adopt, alter and use a corporate seal; inalte contracts, leases, own, or 
otherwise dispose of personal or real property, sue and be sued; aid 
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 Davao Oriental Ecozone in accordance with prevailing rules of origin, 
and the pertinent regulations of the PEZA, DTI andor the Department of 
Finance (DOF); 
(1) To issue working visas renewable every two (2) years to foreign 
executives and foreign technicians with highly specialized skills which no 
Filipinos possesses, as certified by the Department of Labor and 
Employnient; 
(m) To report to the Bureau of Immigration the names of the foreigners who 
have been granted periiianent resident status and working visas within 
thirty (30) days after issuance of such grant; 
(11) To exercise such powers as maybe 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 rules and regulations consistent with the provisions of this Act as 
maybe necessary to acconiplish and implement the purposes, objectives 
and policies provided herein. 
Sec. 
13. Banking Rules and Regulafions. - Existing laws and 
ruleshgulations of the Bangko Sentral ng Pilipinas (BSP) shall apply to banks and 
financial institutions to be established in the Davao Oriental Ecozone, such as those 
governing foreign exchange and other concurrent account transactions (trade and lion- 
trade), local and foreign borrowings, foreign investments, establishment and operalion 
of local and foreign banks, foreign currency deposit units, offshore banking units and 
other financial institutions under the supervision of the BSP. 
Sec. 14. Reniittance of Earnings. - In the case of foreign investments, a 
registered enterprise in the DOSEZA shall have the right to remit earnings from the 
investment in the currency in which the investment was originally made and at the 
exchange rate prevailing at the time of remittance, subject to the provisions of Section 
74 of Republic Act No. 265, as amended. 
See. 15. Board of Directors of the Davao Oriental Special Econoniic Zone 
AtltIloriQ. - The powers of the Davao Oriental Special Economic Zone Authority 
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shall be vested in and exercised by a Board of Dii mtors, he) inafter referred io as the 
Board, which shall be composed of the following: 
a) The Chairman who shall, at the sam'e time be the administrator of the 
DOSEZA; 
b) A Vice-Chairman who shall come from among the members of the Board; 
c) Members consisting of: 
(1) The Governor of the Province of Davao Oriental; 
(2) The Congressional Representath re of the district covering the site 
of the Davao Oriental Ecozone; 
(3) The mayors of the Municipalities of Mati, San Isidro, and Lupon, 
Province of Davao Oriental; 
(4) One (1) representative from the domestic investors; 
(5) One (I) representative from the foieign investors; and 
(6) Two (2) representatives from tlie workers working in Davao 
Oriental Ecozone. 
The Governor, the Congressional represendative and the mayors of the 
Municipalities of Mati, San Isidro, and Lupon, Provii :ice of Davao Oriental shall serve 
as ex-officio members of the Board, whose term in ihe Board corresponds to their 
term as elected officials. 
The Chairman and the members of the Boaicl, except the ex-officio members, 
shall be appointed by the President of the Philipp,i,,es to serve for a term of six (6) 
years, uiless sooner separated from service due 
death, voluntary resignation, or 
removal for cause. In case of death, resignation or iC. ,ioval for cause, the replacement 
shall serve only the unexpired portion of the term. 
Except for the representatives of the business atid labor sectors, no person 
shall be appointed by the President of the Philippines as a member of the Board unless 
he is a Filipino citizen, of good moral character, of provcn 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 tlie Board shall each receive per diem at 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 tlie 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 (PlO,OOO.OO) 
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Scc. 16. Powers and Duties of the Chairman-Administrator. - The 
Chairman-Administrator shall have the following powers and duties: 
To direct and manage the affairs of the DOSEZA in accordance with 
the policies of the Board; 
To establish the internal organization of the DOSEZA under such 
conditions that the Board may prescribe; 
To submit an annual budget and necessary supplemental budget to 
the Board for its approval; 
To submit within thirty (30) days after the close of each fiscal year 
an annual report to the Board and such other reports as may be 
required; 
To submit to the Board for its approval policies, systems, 
procedures, rules and regulations that are essential to the operation 
of the Davao Oriental Ecozone; 
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 Davao Orienlal 
Ecozone; and 
To perform such other duties as may be assigned to hiin by the 
Board or which are necessary or incideiital to his office. 
Sec. 17. Orgrrnization and Personrtel. - The Board of Directors of the 
DOSEZA shall provide for an organization and staff of its officers and employees. 
Upon reconiinendation of the Chairman-Administrator, the Board shall appoint and 
fix the remuneration and other emoluments of its officers and employees in 
accordance with existing laws on compensation and position classification: Provided, 
That the Board shall have exclusive and final authority to promote, transfer, assign or 
reassign officers of the DOSEZA, any provision of existing law to the contrary 
notwithstanding: Provided, further, That the Chairman-Adininistrator may carry out 
removal of such o€ficers and employees. 
The officers and employees of the DOSEZA, 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 DOSEZA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by law. 
Sec. 18. Ipso Facto Clause. - Sections 30-41 of Republic Act 7916, shall @SO 
facfo apply to the Davao Oriental Special Economic Zone. 
Sec. 19. 
Capitalization. - The Davao Oriental Special Economic Zone 
Authority shall have an authorized capital stock of One Billion (1,000,000,000) no par 
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shares with a minimum issue of Ten Pesos (P10.00) each, the majority shares of 
which shall be subscribed and paid ror by the National Government and tlie Local 
Government Units (LGUs) eiiibracing the Davao Oriental Special Economic Zone. 
The Board of Directors of the DOSEZA may, with the written concurrence of the 
Secretary of Finance, sell shares, representing no1 more than forty per centuin (40%) 
of the capital stock of the DOSELA to the general public under such policy as the 
Board and the Secretary of Finance may determine. The National Government and the 
LGUs shall in no case own less than sixty per centuni (60%) of the total issued and 
outstanding capital of the Davao Oriental Special Economic Zone Authority. 
The mount necessary to subscribe and pay for the shares of the National 
Government to the capjtal stock of the DOSEZA shall be included in the Annual 
General Appropriations Act. For LGUs, the funds shall be taken fiom their internal 
revenue allotment and other local funds 
Sec. 20. Supervision. - Tlie Davao Oriental 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. 21. Relationsliip with tlie Regionnl Development Council. - The Davao 
Oriental Special Economic Zone Authority shall determine the development goals for 
the Davao Oriental Ecozone within the framework of national development plans, 
policies and goals. The Administrator shall, upon approval by the Board, submit the 
Davao Oriental Ecozone plans, programs and projects to the Regional Development 
Council for inclusion and inputs to tlie overall regional development plan. 
Sec. 22. Relationsliip with Local Government Units. - Except as herein 
provided, tlie local government units comprising the Davao Oriental Special 
Economic Zone shall retain their basic autonomy and identity. The Municipalities of 
Mati, San Isidro, and Lupon shall operate and function in accordance with the Local 
Government Code of 1991. In case of any conflict between the DOSEZA and the 
Province of Davao Oriental on matters affecting the Davao Oriental Ecozone other 
than defense and security matters, the decision of the DOSEZA shall prevail. 
Sec. 23. ZnterpretatiodConstruction. - The powers, authorities and functions 
that are vested in the DOSEZA are intended to decentralize governmelltal functions 
and authority and promote an efficient and effective working relationship between the 
Davao Oriental Ecozone, the NG, and the local government units. 
Sec. 24. Auditing. - The Commission on Audit shall appoint a representative 
who shall be a full time auditor ofthe DOSEZA and assign such number of personnel 
as may be necessary to assist said representative in the performance of hidher duties. 
The salaries and emoluments on the assigned auditor and personnel shall be in 
accordance with pertinent laws, rules and regulations. 
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Sec. 25. Separiibility Clause. - If any provisions of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 
full force aiid efrect. 
Sec. 26. Repealing Clause. - All laws, cxecutive orders and issuances, or any 
parts thereof, which are inconsistent herewith are hereby repealed or amended 
accordingly. 
Sec. 27. Effectivity Clause. -This Act shall take effect upon its publication in 
at least one (I) newspaper of general circulation. 
Approved, 
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