Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL no, 3649

Introduced by:

Hon. FERDINAND MARTIN G. ROMUALDEZ, Hon. GLORIA
MACAPAGAL ARROYO, Hon. ALETA C. SUAREZ, Hon.
DIOSDADO M. ARROYO, Hon. JOSE L. ATIENZA JR., Hon.
JONATHAN A. DELA CRUZ, HON. VICTOR FRANCISCO C.
ORTEGA, Hon. PHILIP A. PICHAY, Hon. LANI MERCADO-
REVILLA, Hon. TOBY M. TIANGCO

AN ACT
ESTABLISHING THE SPECIAL ECONOMIC ZONE IN THE CITY
OF TACLOBAN, CREATING FOR THIS PURPOSE THE TACLOBAN
CITY SPECIAL ECONOMIC ZONE AUTHORITY,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES

EXPLANATORY NOTE

‘This Bill seeks to establish the Special Economic Zone in the City of
Tacloban, in the province of Leyte.

Section 5, paragraph (n) of Republic Act 7916, as amended,
initially identifies Tacloban City as a viable location for the
establishment of an ecozone.

If there is anything clear in the world market of investments and to
the community of investors, it is this: a country must look beyond the


traditional way of doing things. It must innovate to create opportunities
where and by which it can give investors the maximum value for their
investments.

The concept and objective is to develop these ecozone areas into a
self-sustaining industrial, commercial and investment centre that will
put in place a wide reaching employment and investment generation
mechanism, all to strengthen the trading and foreign exchange position
of the country. On the whole, it is looking at effectively complementing
an announced aggressive export-oriented thrust of the country, thus
enhancing the country’s global competitiveness.

As envisioned, there shall be established a Tacloban City Freeport
that shall be operated as a separate customs territory and will basically
provide incentives to ensure the free flow and movement of goods and
commodities within the Freeport area and their exportation therefrom.
Likewise, it shall provide tax-based incentives for business activities and
concerns locating and operating within the ecozone premises, not to
mention other non-tax benefits like exchange policies and the grant of
permanent resident status to investors.

This bill does away with an authority-type of office to run the
ecozone but directly tasks a governing body composed of the elected
chief executives of the localities involved and the private sector to do the
job.

The competitive markets around us are moving fast, already
leaving the country behind. The performance of our neighboring
countries in the Asian region such as Japan, Singapore, South Korea,
Taiwan had always been a source of envy despite the limited resources
they have compared to the abundance our country enjoys. And now
Thailand, Malaysia, Indonesia and even Vietnam are surging ahead,
outpacing even other western countries. Particularly, because the
proposed ecozone offers an environment that can match the capabilities
and resources of a comparable area anywhere in the country, this Bill
may help the country, at least, to keep pace with, not necessarily, to get
ahead of the pack.


There are physical, geographic and natural attributes of the
Tacloban City coastline area that can make the creation of a freeport
ideal therein. Tacloban port was a haven for international ships and
even carriers as evident during the relief operations of some foreign
countries in the aftermath of typhoon ‘Yolanda’ last November 8, 2013.
The port can be easily accessible by big commercial ships plying the
route of the Asia-Pacific Region. It is also a few kilometres away from
the Tacloban City airport which has plenty of rooms to be upgraded into
an international airport.

In light of the foregoing, approval of Bill is earnestly sought.

eS ARROYO frase

2nd District, Pampanga 1st District, Leyte
Md ¥, b p/
ALETA C. SYAREZ PHIL! . PICHAY
3rd District, Quezon 2nd District, Surigao del Sur
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JONATHAN A. DELA CRUZ DIO! ., ARROYO

ABAKADA-GURO Party List 3rd District, Quezon


LA [ERCADO -REVILLA

2nd District, Cavite

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VICTOR CISCO ORTEGA

1st District, La Union

TOBY M. TIANGCO

Lone District, Navotas City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL no.__38 40

Introduced by:

Hon. FERDINAND MARTIN G. ROMUALDEZ, Hon. GLORIA
MACAPAGAL ARROYO, Hon. ALETA C. SUAREZ, Hon.
DIOSDADO M. ARROYO, Hon. JOSE L. ATIENZA JR., Hon.
JONATHAN A. DE LA CRUZ, HON. VICTOR FRANCISCO C.
ORTEGA, Hon. PHILIP A. PICHAY, Hon. LANI MERCADO-
REVILLA, Hon. TOBY M. TIANGCO

AN ACT
ESTABLISHING THE SPECIAL ECONOMIC ZONE IN THE CITY
OF TACLOBAN, CREATING FOR THIS PURPOSE THE TACLOBAN
CITY SPECIAL ECONOMIC ZONE AUTHORITY,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES

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

SECTION 1. Short Title. - This Act shall be known as the
“Tacloban City Special Economic Zone Act of 2013”.

SECTION 2. Declaration 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 the
country in order to provide jobs to the people especially those in the


rural areas, increase productivity and individual and family income, and
thereby improve the level and quality of living conditions through the
establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures thatwill attract
legitimate and productive foreign investments.

SECTION 3. Creation of the Tacloban City Special Economic Zone. -
In pursuit of the foregoing declared policy and subject to the
concurrence of the concerned local government unit (LGU) affected by
the zone, there is hereby established a special economic zone consisting
of an industrial estate (IE), export processing zone (EPZ) and free trade
zone in the City of Tacloban to be known as the Tacloban City Special
Economic Zone, hereinafter referred to as the Tacloban City ECOZONE.
The Tacloban City ECOZONE shall cover the areas as defined by the
Philippine Economic Zone Authority (PEZA), upon the recommendation
of the City government of Tacloban . The specific metes and bounds of
the Tacloban City Ecozone shall be more particularly defined in a
presidential proclamation that shall be issued for this purpose.

SECTION 4. Governing Principles. - The Tacloban City ECOZONE
shall be managed and operated by the Tacloban City Special Economic
Zone Authority, hereinafter referred to as the TaCSEZA, created under
Section 10 of this Act, under the following principles:

(a) Within the framework and limitations of the Constitution and
applicable provisions of the Local Government Code, the Tacloban City
ECOZONE shall be developed into and operated as a decentralized, self-
reliant and self-sustaining industrial, commercial/trading, agro-
industrial, tourist, banking, financial and investment center with
suitable residential areas.

(b) The Tacloban City 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 city of Tacloban and
Province of Leyte as well as its neighboring towns in the entire Eastern
Visayas Region.


(Q. The Tacloban City 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 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 Tacloban City
ECOZONE, either by themselves or in joint venture with Filipinos in any
sector of industry, international trade and commerce within the
Tacloban City ECOZONE.

(e) The Tacloban City ECOZONE shall be managed and operated
as a separate customs territory, thereby ensuring the free flow or
movement of goods and capital within, into and out of the Tacloban City
ECOZONE and shall likewise provide incentives such as tax and duty-
free importations of raw materials and capital equipment to registered
enterprises located therein. However, exportation or removal of goods
from the territory of the Tacloban City 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;

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

(g) Goods manufactured by the Tacloban City 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
TaCSEZA, together with the PEZA, the Bureau of Customs (BoC) and
the DTI in accordance with the NIRC of 1997, as amended, and the Tariff
and Customs Code of the Philippines, as amended.

However, in order to protect domestic industries, a Negative List
of industries shall be drawn up and regularly updated by the PEZA.
Enterprises engaged in industries included in such Negative List shall
not be allowed to sell their products locally, and

(h) The defense of the Tacloban City ECOZONE and the security
of its perimeter fence shall be the responsibility of the national
government (NG) in coordination with the Tacloban City ECOZONE
and the city government of Tacloban. For this purpose, a special defense
team shall be organized to define its power, duties and responsibilities.

SECTION 5. Incentives to Registered Enterprises. - The TaCSEZA
shall provide the following incentives to the registered enterprises
located therein to the extent of the activity / project:

(a) Income Tax Holiday (ITH) - Registered 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:

(1) Category A - Registered domestic enterprises located in
highly developed areas, as determined by the Board of
Investments (BOI), shall be entitled to a four-year income tax
holiday.

(2) Category B - Registered domestic enterprises on the
following shall be entitled to a six-year income tax holiday:

(i) Located in less developed areas as defined by the
BOI; or

(ii) Producing/rendering new products/services or
having strong backward or forward linkages.


(3) Category C - Registered export enterprises shall be
entitled to a six-year income tax holiday: provided, finally, that if
the export enterprise complies with the following:

(i) Large capital investments or sizeable employment
generation; or

(ii) Use high level of technology; or

(iii) Located outside Metro Manila, it shall be entitled
to an eight-year ITH.

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.
Additional investments in the project shall be entitled to the ITH
corresponding to such investments as may be determined by the BOI.
Additional ITH 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,
further, that the entitlement period for additional investments shall not
exceed three times 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 the TaCSEZA are required
to share in the special development fund of the BOI for investment
promotion projects of the government equivalent to one percent (1%) of
the ITH granted for every application. The Bureau of Internal Revenue
(BIR) shall require a registered enterprise availing of the ITH or the net
operating loss carryover (NOLCO) to secure a certificate of eligibility
from the TaCSEZA before submitting its income tax return (ITR) with
the TaCSEZA for validation.Failure to secure certification and/or to file
the ITH or the NOLCO availment for validation by the TaCSEZA within
forty-five (45) days from the last day of statutory filing date for ITR shall
cause the forfeiture of the availment for the taxable period.


(b) Net Operating Loss Carryover (NOLCO) - The 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
a deduction from the gross income shall be carried over as a deduction
from the 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 Code 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 for real property 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
the income tax, the excise tax and the franchise taxes shall be imposed
on business establishments operating within the Tacloban City
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned
by all the business enterprises with the TaCSEZA and remitted as
follows:

(1) Two per centum (2%) to the National Government,
provided, that One per centum (1%) of which will be allocated for
the country’s disaster preparedness and emergency management
program nationwide;

(2) Two per centum (2%) to the city government of Tacloban,
provided, that one per centum (1%) of which will be allocated for
the city’s disaster preparedness and emergency management
assistance;

(3) One per centum (1%) to the TaCSEZA

All persons and service establishments in the Tacloban City
ECOZONE that are not covered by section 5 hereof shall be subject to
national and local taxes under the NIRC of 1997, as amended, and the
Local Government 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 NIRC of 1997, as amended.

(ec) 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 consignment thereof by registered enterprises upon the
effectivity of this law shall be exempted to the extent of one hundred
percent (100%) of the taxes and customs duties: Provided, That the
importation thereof shall be used exclusively by the registered enterprise
in its registered activity within the Tacloban City ECOZONE. Provided,
further, That the importation of machinery and equipment and
accompanying parts shall comply with the following conditions:

(1) These are not manufactured domestically in sufficient
quantity, of comparable quality and at reasonable prices;

(2) These are reasonably needed and will be used exclusively
by the registered enterprise in the manufacture of its products,
unless prior approval of the TaCSEZA 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 permanently
used for non-registered activities; and

(3) Approval of the TaCSEZA was obtained by the registered
enterprise for the importation of such machinery, equipment and
spare parts. Approval of the TaCSEZA 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 the


date of importation, any of the following conditions must be
present:

(i) If made to another enterprise enjoying tax and duty
exemption on imported capital equipment;

(ii) If made to another enterprise not covered by part
(i), upon payment of the taxes and duties on the net book
value of the capital equipment to be sold;

(iii) Exportation of the capital equipment, machinery,
spare parts or source documents or those required for
pollution abatement and control; and

(iv) For reasons of proven technical obsolescence.
When the aforementioned sale, transfer or disposition is
made under any of the conditions provided for in the
foregoing paragraphs other than paragraph.

(4), the registered firm shall not pay the taxes and duties
waived on such items: Provided, further, That if the registered
enterprise sells, transfers or disposes 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 amount of the
tax and duty exemption given it: Provided, finally, That even if the
sale, transfer or disposition of the capital equipment, machinery or
spare parts is approved after five years from the date of
importation, the registered enterprise is still liable to pay the taxes
and duties based on the net book value of the capital equipment,
machinery or spare parts if it has violated any of its registration
terms and conditions. Otherwise, it shall no longer be subject to
the payment of the taxes and duties waived thereon.

The purchase of machinery and capital equipment and raw
materials, supplies, parts and semi-finished products 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, and 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 Department of Finance (DOF) of the bill of materials evidencing
the transaction value of such and other pertinent documents, for
verification and proper endorsement.

The registered export enterprise availing of the incentive provided
under the immediately preceding two paragraphs shall be subject to the
following:

(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 the TaCSEZFA 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 preceding 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 the 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 Incentives - 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, That the same are not sufficient in
quantity, quality or are not competitively priced 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 year from the 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 commercial 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 TaCSEZA.

The availment of the incentives by a registered enterprise shall be
subject to the following:

(i) that said breeding stocks and genetic materials would
have been qualified for tax- and duty-free importation under the
preceding paragraph;

(ii) that the breeding stocks and genetic materials are
reasonably needed in the registered activity;

(iii) that approval of the TaCSEZA has been obtained by the
registered enterprise; and

(iv) 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 the date of
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
be imposed only after the enterprise's entitlement period to the income
tax-based incentives.

(k) (1) Tax Treatment of Merchandise in the Tacloban City
ECOZONE -

(i) Except as otherwise provided in this Act, foreign and
domestic merchandise, raw materials, supplies, articles,
equipment, machineries, spare parts and wares of every
description, except those prohibited by law, brought into the zone
to be sold, stored, broken up, repacked, assembled, installed,
sorted, cleaned, graded or otherwise processed, manufactured,
mixed with foreign or domestic merchandise, whether directly or
indirectly related in such activity, shall not be subject to customs
and internal revenue laws and regulations nor to local tax
ordinances, any provision of law to the contrary notwithstanding;

(ii) Merchandise purchased by a registered Tacloban City
ECOZONE enterprise, from the customs territory and
subsequently brought into the export processing zone, shall be
considered as export sales and exportation thereof shall be entitled
to the benefits allowed by law for such transaction;

(iii) Domestic merchandise sent from the Tacloban City
ECOZONE to the customs territory 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, transferred or disposed of for
local consumption;

(iv) Merchandise sent from the Tacloban City ECOZONE to
the customs territory 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);

(v) Domestic merchandise on which all internal revenue
taxes have been paid, if subject thereto, and foreign merchandise
previously imported on which has been paid, or which have been
admitted free of duty and tax, may be taken into the Tacloban City
ECOZONE from the customs territory of the Philippines and be
brought back thereto free of quotas, duty or tax;

(vi) Subject to such regulations respecting identity and
safeguarding of revenue as the TaCSEZA may deem necessary,
when the identity of an article entered into the export processing
zone under the immediately preceding paragraph has been lost,
such article when removed from the zone and taken to the customs
territory shall be treated as foreign merchandise entering the
country for the first time, under the provisions of the Tariff and
Customs Code of the Philippines, as amended;

(vii) Articles produced or manufactured in the Tacloban City
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;

(viii) Unless the contrary is shown, merchandise taken out of
the export processing zone shall be considered for tax purposes to
have been sent to customs territory.

(2) Tax Treatment of Merchandise in the Tacloban City
ECOZONE- The free trade/freeport zone shall be operated and


managed as a separate customs territory ensuring free flow or
movement of goods within, into and exported out of the free
trade/freeport zone. Importations of raw materials and capital
equipment are tax- and dutyfree.

However, exportations or removal of goods from the free trade/freeport
zones to the other parts of the Philippine territory shall be subject to
customs and internal revenue regulations.

(3) Tax Treatment of Services in the Tacloban City ECOZONE-

(i) Sale of service by an entity from the customs territory to a
registered ecozone or free trade enterprise, or by a registered
ecozone or freeport enterprise to another ecozone or freeport
enterprise shall be treated as indirect export and hence, entitled to
the benefits allowed by law for such transaction; and

(ii) Sale or service by a registered ecozone or freeport enterprise to
the customs territory shall be subject to applicable internal revenue laws
and regulations.

()) Registered export-oriented enterprise shall have access to the
utilization of the bonded warehousing system in accordance with the
rules and regulations of the BoC.

(m) Employment of Foreign Nationals - Subject to the provisions
of Section 29 of Commonwealth Act No. 613, as amended, 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
enterprise is owned by foreign investors, the positions of the president,
treasurer and general manager ortheir 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 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 issued a multiple-entry visa, valid for a
period of three 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 foreign nationals admitted herein, as well as their respective
spouses and dependents, shall be exempt from:

(i) obtaining alien certificate of registration and emigration
clearance certificates; and (ii) securing the alien employment permit
(AEP) and all types of clearances, permits, licenses or their equivalents
required by any government department or agency.

SECTION 6. Incentive to Investors. - Any foreign national covered
under subsection (m) of Section 5 of this Act, who invests an amount of
Two Hundred Fifty Thousand US Dollars (US$ 250,000.00), 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;

(b) 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 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
Section 5(M), last paragraph.


Asa holder of an investor's visa, an alien shall be entitled to reside
in the Philippines while his / her investment subsists. For this purpose,
he / she should submit an annual report, in the form duly prescribed
for the purpose, to prove that he / she has maintained his / her
investment in the country. Should said alien withdraw his / her
investments from the Philippines, then the investor's visa issued to him
/ her shall automatically expire.

SECTION 7. Administration, Implementation and Monitoring of
Incentives. The TaCSEZA 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 BOI for incentives common to all registered enterprises shall be
uniformly applied by the TaCSEZA.

The following are the duties and responsibilities of the TaCSEZA
in the administration of incentives:

(a) Adopt consistent procedures of administering incentives
in accordance with the guidelines established by the BOI and to
amend the same when necessary;

(b) Adopt and implement systems and procedures affecting
trade and customs policies in accordance with the requirements
established by the DOF and the BOI! and to amend the same when
necessary;

(c) Submit data and information to the DOF and the BOI as
required by any of these agencies to ascertain consistency of
investment policies and incentives, including their implementation
as provided in (a) and to ensure proper implementation of systems
and procedures affecting trade and customs policies as provided
in (b); and

(a) Perform all other duties and responsibilities as may be
required by the President.


For proper monitoring, the BOI shall create a single database of all
incentives provided by all incentives granting agencies, including the
TaCSEZA and all information thereto. Double-entry accounting shall be
done by the BOI in recording all incentives granted by the government
for transparency purposes.

SECTON 8. Extension of Period of Availment. - The availment
period of the incentives provided herein may be extended by the
TaCSEZA in the event that the registered enterprise suffers operational
force majeure or any event equivalent thereto, impairing its viability.

SECTION 9. Duration of Incentives. - Enterprises registered with
the TaCSEZA 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 the date of registration or
the start of commercial operation, whichever is applicable, except that it
could be extended with regard to industries deemed indispensable to
national development as determined by TaCSEZA.

The industries exempted from this provision shall be
recommended by the BOI, with the concurrence of the secretaries of the
Department of Finance and of Trade and Industry.

SECTION 10. Creation of the Tacloban City Special Economic Zone
Authority. - There is hereby created a body corporate to be known as the
Tacloban City Special Economic Zone Authority, hereinafter referred to
as the “TaCSEZA”, which shall manage and operate the Tacloban City
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.

SECTION 11. Principal Office of the TaCSEZA. - The TaCSEZA
shall maintain its principal office in the City of Tacloban, but it may


establish branches within the Philippines as may be necessary for the
proper conduct of its business.

SECTION 12. Powers and Functions of the TaCSEZA. - The
TaCSEZA shall have the following functions:

(a) Operate, administer, manage and develop the Tacloban
City ECOZONE according to the principles and provisions set
forth in this Act;

(b) Recommend to the President the issuance of a
proclamation to fix and delimit the site of the Tacloban City
ECOZONE;

(0) Register, regulate and supervise the enterprises in the
Tacloban City ECOZONE in an efficient and decentralized
manner, subject to existing laws;

(d) Coordinate with city government and exercise general
supervision over the development plans, activities and operations
of the Tacloban City ECOZONE;

(e) Authorize or undertake, on its own or through others,
and regulate the establishment, operation and maintenance of
public utilities, services, and infrastructure in the Tacloban City
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;


(f) Regulate and undertake the establishment, operation and
maintenance of utilities, other services and infrastructure in the
Tacloban City 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;

(g) 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), or joint venture, adequate facilities and
infrastructure required or needed for the operation and
development of the Tacloban City ECOZONE, in coordination
with appropriate national and local government authorities and in
conformity with applicable laws thereon;

(h) Operate on its own, either directly or through a
subsidiary entity or licenses to others, tourism-related activities,
including games, amusements, recreational and sports facilities,
such as horse racing, dog racing, gambling casinos, game of
chance, golf courses and others, under priorities and standards set
by TaCSEZA;

(i) Subject to the approval of the President and the Monetary
Board of the Bangko Sentral ng Pilipinas (BSP) upon the
recommendation of the DOF, 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;

(j) Provide security for the Tacloban City ECOZONE in
coordination with the national and local governments.


Military forces sent by the NG for the purpose of defense
shall not interfere in the internal affairs of the Tacloban City
ECOZONE and expenditures for these military forces shall be
borne by the NG. For this purpose, the TaCSEZA may establish
and maintain its security forces and firefighting capability or hire
others to provide the same;

(k) Protect, preserve, maintain and develop the virgin
forests, beaches, coral and coral reefs, and maintain ecological
balance and adopt a climate change resilient program within the
Tacloban City ECOZONE and neighboring municipalities;

(1) Create, operate and/or contract to operate such functional
units or offices of the TaCSEZA as it may deem necessary;

(m) Adopt, alter and use a corporate seal; contract, lease,
buy, acquire, own or otherwise dispose of personal and/or real
property of whatever nature sue and be sued; and otherwise carry
out its functions and duties as provided for in this Act;

(n) Issue certificates of origin for products manufactured or
processed in the Tacloban City ECOZONE in accordance with
prevailing rules of origin, and the pertinent regulations of the
PEZA, the DTI and/or the DOF;

(0) Issue working visas renewable every three (3) years to
foreign executives and foreign technicians with highly specialized
skills which no Filipino possesses, as certified by the Department
of Labor and Employment;

(p) Report to the Bureau of Immigration the names of the
foreigners who have been granted permanent resident status and
working visas within thirty (30) days after issuance of such grant;

(q) 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


(x) 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.

SECTION 13. Tax Exemptions. - The TaCSEZA is hereby declared
exempt from the payment of all taxes, duties, fees, imports, charges,
costs, and service fees in any court or administrative proceedings in
which it may be a party.The foregoing exemptions may, however, be
entirely or partially lifted by the President of the Philippines upon the
recommendation of the Secretary of Finance, not earlier than five (5)
years from the effectivity of this Act, if the President shall find the
TaCSEZA to be self-sustaining and financially capable by then to pay
such taxes, customs duties, fees and other charges after providing for
debt service requirements of the TaCSEZA and of its projected capital
and operating expenditures.

Furthermore, all donations made by any person or entity in favor
of the TaCSEZA shall be exempt from the payment of the donor's tax
and the same shall be considered as deductible from the gross income of
the donor, pursuant to the NIRC of 1997, as amended.

SECTION 14. Banking Rules and Regulations. - Existing banking
laws and rules/regulations of the BSP shall apply to banks and financial
institutions to be established in the Tacloban City ECOZONE, such as
those governing foreign exchange and other current account
transactions (trade and nontrade), local 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 15. Remittance of Earnings. - In the case of foreign
investments, a registered enterprise in the TaCSEZA 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.


SECTION 16. Board of Directors of the TaCSEZA. - The powers of
the TaCSEZA shall be vested in and exercised

by a board of directors, hereinafter referred to as the Board, which shall
be composed of the following:

(a) The chairman who shall, at the same time, be the administrator
of the TaCSEZA;

(b) A vice chairman who shall come from among the members of
the Board;

(c) Members consisting of:
(1) The City Mayor of Tacloban;

(2) The congressional representative of the district covering
the site of the Tacloban City ECOZONE;

(3) One representative from the domestic investors;
(4) One representative from the foreign investors; and

(5) Two representatives from labor from among the workers
in the Tacloban City ECOZONE.

The city mayor, the congressional representative shall serve as ex
officio members of the Board, whose terms in the Board correspond to
their term as elected officials.

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 six (6) 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 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 proven probity and integrity, and a degree holder in any of
the following fields: economics, business, public administration, law,


management or their equivalent, and with at least ten (10) years relevant
working experience preferably in the field of management or public
administration.

The members of the Board shall each receive per diem at rates to
be determined by the Department of Budget and Management (DBM) 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 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 (P10,000.00)
for every Board meeting.

SECTION 17. Powers and Duties of the Chairman-Administrator. -
The chairman-administrator shall have the

following powers and duties:

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

(b) Establish the internal organization of the TaCSEZA under such
conditions that the Board may prescribe;

(c) Submit an annual budget and necessary supplemental budget
to the Board for its approval;

(d) 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;

(e) Submit to the Board for its approval policies, systems,
procedures, rules and regulations that are essential to the operation of
the Tacloban City ECOZONE;

(f) 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 Tacloban City ECOZONE;
and


(g) Perform such other duties as may be assigned to him by the
Board or which are necessary or incidental to his office.

SECTION 18. Organization and Personnel. - The Board of Directors
of the TaCSEZA shall provide for an organization and staff of its officers
and employees. Upon recommendation 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 TaCSEZA, any provision of existing law to the
contrary notwithstanding: Provided, further, That the chairman-
administrator may carry out removal of such officers and employees.

The officers and employees of the TaCSEZA, 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 TaCSEZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as
provided by law.

SECTION 19. General Manager. - The Board of Directors of the
TaCSEZA shall appoint a full-time professional and competent
administrator and chief executive officer for the TaCSEZA 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 TaCSEZA shall be
responsible to the Board and the President of the Philippines for the
efficient management and operation of the TaCSEZA.

SECTION 20. Applicability Clause. - The provisions of Sections 30
to 41 of Republic Act No. 7916, as amended, on leases of lands and
buildings, land conversion, shipping and shipping register, protection of
environment, termination of business, registration of business
enterprises, one-stop shop center and on industrial harmony in the
ecozones shall apply to the TaCSEZA.


SECTION 21. Capitalization. - The TaCSEZA shall have an
authorized capital stock of Two Billion (2,000,000,000) no par shares with
a minimum issue of Ten Pesos (P10,00) each, the majority shares of
which shall be subscribed and paid for by the NG and the LGUs
embracing the Tacloban City ECOZONE. The Board of Directors of the
‘TaCSEZA 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 TaCSEZA to the general public under such policy as
the Board and the Secretary of Finance may determine. The NG and the
LGUs shall, in no case, own less than sixty percentum (60%) of the total
issued and outstanding capital of the TaCSEZA.

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

SECTION 22. Supervision and Coordination of Development Plans. -
For purposes of policy direction and coordination, the Tacloban City
ECOZONE shall be under the direct control and supervision of the
Office of the President.

SECTION 23. Relationship with the Regional Development Council. -
The TaCSEZA shall determine the development goals for the Tacloban
City ECOZONE within the framework of national development plans,
policies and goals. The administrator shall, upon approval by the Board,
submit the Tacloban City ECOZONE plans, programs and projects to the
Regional Development Council for inclusion and inputs to the overall
regional development plan.

SECTION 24. Relationship with LGU - Except as herein provided,
the LGU comprising the Tacloban City ECOZONE shall retain its basic
autonomy and identity. It shall operate and function in accordance with
the Local Government Code of 1991. In case of any conflict among the
TaCSEZA and the city government of Tacloban on matters affecting the
Tacloban City ECOZONE other than defense and security matters, the
decision of the TaCSEZA shall prevail.


SECTION 25. Legal Counsel. - The Tacloban City Special
Economic Zone Authority and the corporations in which TaCSEZA
owns a majority of the issued capital stock shall have its own internal
legal counsel under the supervision of the government corporate
counsel. When the exigencies of its businesses and operations demand it,
the TaCSEZA may engage the services of an outside counsel either on a
case to case or ona fixed retainer basis.

SECTION 26. Interpretation/Construction. - The powers,
authorities and functions that are vested in the TaCSEZA are intended to
decentralize governmental functions and authority and promote an
efficient and effective working relationship among the Tacloban City
ECOZONE, the NG and the LGU.

SECTION 27. Auditing. - The Commission on Audit shall appoint
a representative who shall be a full-time auditor of the TaCSEZA and
assign such number of personnel as may be necessary to assist said
representative in the performance of his/her duties. The salaries and
emoluments of the assigned auditor and personnel shall be in
accordance with pertinent laws, rules and regulations.

SECTION 28. Separability Clause. - If any provision of this Act
shall be held unconstitutional or invalid, the other provisions not
otherwise affected shall remain in full force and effect.

SECTION 29. Repealing Clause. - All laws, executive orders or
issuances, or any part thereof which are inconsistent herewith are
hereby repealed or amended accordingly.

SECTION 30. Effectivity Clause. - This Act shall take effect fifteen
(15) days after publication in at least two (2) national newspapers of
general circulation.

Approved.