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

SEVENTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 8338

Introduced by: Rep Josephine Y. Ramirez-Sato

EXPLANATORY NOTE

This bill seeks to establish the Special Economic and Freeport Zone in the
Municipality of San Jose, Occidental Mindoro. Occidental Mindoro is not only an
agricultural haven but an emerging choice area for investors. Dubbed as the "Gateway to the
South," thousands of goods and people travel through and from the Visayas and Mindanao
thru the province and thus a creation of a Special Economic and Freeport Zone is not only
ideal but more importantly evident. It is also gifted with diverse natural resources,
progressive infrastructures in transportation, power and an abundant supply of highly
technical and skilled manpower and thus continues to be one of the preferred alternatives to
the Metro for investments.

Anchoring on the main objective of promoting the countryside as alternative areas for
investments which was the vision in the early 90s when most of the Special Economic Zones
were created, the bill envisions to create an Ecozone that will alleviate and improve the
economic condition of Occidental Mindoro and the nearby provinces. The residents will be
assured of local employment opportunities which will hasten the economic growth not only
in the area but in the nearby provinces as well. It was to spur the development, through
industrialization of the far flung areas in the provinces. It was to uplift the welfare of the rural
folks and the same time decongests and arrests the cramming of the people to the cities.

The Economic and Freeport Zone is conceptualized as a self-sustaining industrial,
commercial and investment center that will encourage economic growth and accelerate
‘employment generation in the province. It envisions such Economic zone to be operated as a
separate customs territory that will provide incentives to ensure free flow and movement of
goods and commodities within the area and their expression there from. Likewise, it shall
provide tax-based incentives for business operating within its premises. In addition, it shall
also provide for non-tax benefits like exchange policies and grant of permanent resident
status to investors.


The establishment of a special economic and freeport zone is in line with the
government's policy to encourage, promote, induce and accelerate a sound and balanced
industrial, economic and social development of the country, the establishment of Occidental
Mindoro Special Economic Zone in the Municipalities of San Jose and Magsaysay is
earnestly recommended.

In view thereof, early consideration and approval of this bill is earnestly sought.

JOSEPHWE WV’. RAMI SATO
tiv
“one ict{ Occident \doro


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

SEVENTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 8338

Introduced by: Rep Josephine Y. Ramirez-Sato

AN ACT ESTABLISHING A
SPECIAL ECONOMIC ZONE AND FREE PORT IN THE MUNICIPALITIES OF
SAN JOSE AND MAGSAYSAY IN THE PROVINCE OF OCCIDENTAL MINDORO
PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES

Sec 1. Short Title — This Act shall be known as the Occidental Mindoro Special Economic
Zone Act.”

Sec 2. Declaration of Policy — 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
the 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 Occidental Mindoro Special Economic Zone and Free Port ~ In accordance
with the foregoing declared policy is hereby established as a special economic zone and free
port, to be known, as the Occidental Mindoro Special Economic Zone, hereinafter known as
Occidental Mindoro Ecozone, which shall cover certain parts of Barangays Ansiray, Buri,
Catayungan, and Natandol in Ilin Island in the Municipality of San Jose, and certain parts of
Barangays Caguray and Sta. Teresa in the Municipality of Magsaysay.

Sec 4. Governing Principles. - The Occidental Mindoro Ecozone shall be managed and
operated by the Occidental Mindoro Special Economic Zone Authority, hereinafter referred
to as the OMSEZA created under Section 5 of this Act, under the following principles:


(a) Within the framework and limitations of the Constitution and the applicable
provisions of the Local Government Code, as amended, the Occidental Mindoro
Ecozone shall be developed into and operated as a decentralized, self-reliant and
self-sustaining industrial, commercial / trading, agro-industrial, tourism, banking,
financial and investment center with suitable residential areas;

(b) The Occidental Mindoro 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 the Province of Occidental Mindoro and its neighboring towns and
cities;

(c) The Occidental Mindoro 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 or Trade
and Industry (DTI), with foreign entities or enterprises;

(A) Foreign citizens and companies owned by non-Filipinos in whatever proportion
may set up enterprises in the Occidental Mindoro Ecozone, either by themselves
or in joint venture with Filipinos in any sector of industry, international trade and
commerce within the Occidental Mindoro Ecozone;

(e) The Occidental Mindoro Ecozone shall be managed and operated as a separate
customs territory ensuring free flow or movement of goods and capital within into
and out of its territory;

(f) The Occidental Mindoro Ecozone may provide incentives such as tax and duty-
free importations of raw materials, capital equipment to registered enterprises
located therein. However, exportation or removal of goods from the territory of
the Occidental Mindoro Ecozone to the other parts of the Philippine territory shall
be subject to customs duties and taxes under the Tariff and Customs Code of the
Philippines, as amended, and the National Internal Revenue Code (NIRC) of
1997, as amended;

(g) The areas comprising the Occidental Mindoro Ecozone may be expanded or
reduced when necessary. For this purpose, the OMSEZA, in consultation with the
LGUs, shall have the power to acquire either by purchase, negotiation or
condemnation proceedings, any private land within or adjacent to the Occidental
Mindoro Ecozone for the following purposes: (1) consolidation of lands for the
Occidental Mindoro Ecozone development; (2) acquisition of right-of-way to the
Occidental Mindoro Ecozone; and (3) the protection of watershed areas and
natural assets valuable to the prosperity of the Occidental Mindoro Ecozone;

(h) Goods manufactured by Occidental Mindoro 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
formulated by the OMSEZA, together with the PEZA, the Bureau of Customs
(BoC) and the DTI. However, in order to protect domestic industries, a negative
list of industries shall be drawn up and regularly updated by the PEZA and the
Board of Investments (BOD,Enterprises engaged in industries included in such
negative list shall not be allowed to sell their products locally; and
(i) The defense of the Occidental Mindoro Ecozone and the security of its perimeter

fence shall be the responsibility of the national government in coordination with
the Occidental Mindoro Ecozone and the LGUs concerned. For this purpose, a
special defense team shall be organized to define its power, duties and
responsibilities.

See 5. Creation of Occidental Mindoro Economic Zone ~ There is hereby created a body
corporate to be known as the Occidental Mindoro Special Economic Zone and Freeport
Authority, hereinafter referred to as the OMSEZA, which shall manage and operate
Occidental Mindoro Ecozone in accordance with the provisions of this Act. This corporate
franchise shall expire in fifty (50) years counted from the first year after the effectivity of this
Act, unless otherwise extended by Congress. It shall be organized within one hundred eighty
(180) days after the effectivity of this Act,

Sec 6. Capitalization - The OMSEZA shall have an authorized capital stock of two billion
(2,000,000,000) no-par value shares with a minimum issue of Ten Pesos (P10.00) each,
the majority shares of which shall be subscribed and paid for by the national
government and the LGUs embracing the Occidental Mindoro Ecozone. The Board of
Directors of the OMSEZA may, with the written concurrence of the Secretary of Finance,
sell shares, representing not more than forty per centum (40%) of the capital stock of the
OMSEZA 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 cent (60%) of the total issued and outstanding capital of the
OMSEZA.

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

Sec 7. Principal Office of the Occidental Mindoro Special Economic Zone and Freeport
Authority — The OMSEZA shall maintain its principal offices at Magsaysay and San Jose,


Occidental Mindoro, but it may establish branches in the Philippines as may be necessary for
the proper conduct of its business.

Sec 8. Powers and Functions of the OMSEZA - The OMSEZA shall have the following
functions:

(a) Recommend to the President of the Philippines the issuance of a
proclamation to fix and delimit the site of the Occidental Mindoro Ecozone;

(b) Operate, administer, manage and develop the Occidental Mindoro Ecozone
according to the principles and provisions set forth in this Act;

(c) Register, regulate and supervise the enterprises in the Occidental Mindoro
Ecozone in an efficient and decentralized manner, subject to existing laws.

(@) To adopt, alter 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 (including 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 ad 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;

(©) 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 the purpose to issue bonds, promissory notes, and other form 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;

(6) 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 OMSEZA may
promulgate from time to time in conformity with the provisions of this Act and the
limitations provided in the Constitution;

(g) 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, mooring areas, storage areas, roads, bridges,
terminals, 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, licenses, or permits for the establishment, operation, and maintenance
of utilities, services and infrastructure in the Zone;

(h) To construct, acquire, own lease, operate and maintain on its own or through others
by virtue of contracts, franchise, licenses, or permits under any of the schemes
allowed in Republic Act No. 6957 (the Build-Operate-Transfer Law, as
amended), or joint venture, adequate facilities and infrastructures
required or needed for the operation and development of the Occidental
Mindoro Ecozone,
government authorities and in conformity with applicable laws thereon;

in coordination with appropriate national and local

(

Operate on its own, either directly or through a subsidiary entity, or

concession or license to other, tourism-related activities and sports facilities,

such as golf courses and others, under priorities and standards set by OMSEZA;

) Protect, preserve, 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 park and will be covered permanent total log ban. For his purpose,
the rules and regulations of the Department of Environment and Natural
Resources and other government agencies in the above functions shall be
implemented by the OMSEZA.

(k) To adopt, implement and enforce reasonable measures and standards to control
pollution within the Zone;

(1) To provide security for the Zone in coordination with the national and local
governments. For this purpose, OMSEZA may establish and maintain its own
security force and firefighting capability or hire others to provide the same;

(m)Coordinate with LGUs and exercise general supervision over the
development plans, activities and operations of the Occidental Mindoro Ecozone;

(n) To form, establish, organize and maintain subsidiary corporations, as its

business and operations may require whether under the laws of the
Philippines or not;

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

(p) To issue rules and regulations consistent with the provisions of this Act as may
be necessary to accomplish and implement the purposes, objectives and policies
provided herein.

Sec 9. Board of Directors of OMSEZA - The powers of the Occidental Mindoro Special
Economie Zone and Freeport Authority shall be vested in and exercised by a Board of
Directors, hereinafter referred to as the Board, which shall be composed of fifteen (15)
members, to wit:


(a) The Secretary of Trade and Industry who shall serve as an ex officio chairman of
the Board of Directors and four (4) other representatives of the national
government;

(b) The Mayor of Municipalities of San Jose and Magsaysay, and the Province of
Occidental Mindoro, as ex officio voting members;

(©) Two (2) representatives of labor from among the workers in the Occidental
Mindoro Special Economic Zone;

(d) Four (4) representatives from the business and investment sectors in the Zone

(©) Two (2) representatives of the private sector coming from the residents of the
municipalities of San Jose

The chairman and the members of the Board, except the ex officio members, shall be
appointed by the President of the Philippines to serve for a term of three (3) years, unless
sooner removed for cause or dies or resigns voluntarily. In case of death, resignation or
removal for cause, the replacement shall serve only the unexpired portion of the term.

Except for the representatives of the business and investment sectors, no person shall
be appointed by the President of the Philippines as a member of the Board unless he is a
zen, of good moral character and of recognized competence in some relevant

Filipino
fields in business, banking, shipping, business or labor management, port operations,
engineering, or law.

Members of the Board shall receive a reasonable per diem which shall not be less than
the amount equivalent to the representation and transportation allowances of the members of
the Board and/or as may be determined by the Department of Budget and Management:
Provided, however, that the total per diem collected each month shall not exceed the
equivalent per diems for four (4) meetings. Unless and until the President of the Philippines
has fixed a higher per diem for the members of the Board, such per diem shall not be more
than Ten thousand pesos (P10,000) for every Board meeting.

Sec 10. 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 Occidental Mindoro Special Economic Zone and Freeport Authority whose
compensation shall be determined 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 OMSEZA shall be responsible to the Board and the president of the
Philippines for the efficient management and operation of the Occidental Mindoro Special
Economic Zone.


Sec 11. Supervision — The Occidental Mindoro Special Economic Zone shall be under the
direct control and supervision of the Office of the President of the Philippines for the purpose
of policy direction and coordination in the meantime that the agency tasked with the
coordination of special economic zones is not yet in place.

Sec. 12. Separability Clause - In case any provision of this Act is found to be
unconstitutional upon final declaration by the appropriate Court, the other provisions not so
declared unconstitutional or unaffected by the declaration shall remain valid and effective and
shall continue to be implemented by relevant government agencies.

Sec 13. Repealing Clause — All laws, executive orders or issuances, or any parts thereof
which are inconsistent wherewith are hereby repealed or amended accordingly.

Sec. 14. Effectivity Clause — this Act shall take effect fifteen (15) days after its publication
in a newspaper of general circulation in the Philippines.

Approved,