Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

9147

HOUSE BILL NO.

Introduced by HON. GUS S. TAMBUNTING

EXPLANATORY NOTE

The island of Mindanao holds great promise of progress and economic boost. It is for this
reason that the government is making the island of Mindanao the front and center of the
massive infrastructure program to boost its economy and make it the forefront for
investments.

Situated in this island is the City of Zamboanga, which is one of the richest and thriving
cities in Mindanao. It has been continuously serving its people in helping them improve
their lives through economic activities such as but not limited to livelihood and
employment.

The creation of Zamboanga City Special Economic Zone Authority and Freeport by then
Congresswoman Maria Clara “Caling” Lobregat and then Senator Gloria Macapagal-Arroyo
was one of the boosts that helped and brought about positive change for the city and the
region through job generation and adequate investments. The prevailing challenges have
hampered the region’s potential for decades, hence a more aggressive incentive package
and wider latitude of discretion in appreciating positive investments in the area is much
needed.

Given the challenges that the City has faced and the distance it has from the Central
Business Districts in Luzon, Zamboanga City Special Economic Zone Authority has
widened its incentives to strengthen its mandate to develop ZCSEZA into a decentralized,
self-reliant and self-sustaining agro-industrial, commercial, financial, investment and
tourism center and Freeport.

The modernization of these incentives will not only help ZCSEZA to be an attractive
investment destination, but it will also generate employment, boost local and national
economy as well as improve the lives of the Filipino people in the region.


It is for these reasons that the Zamboanga City Special Economic Zone Authority seeks
the approval of this draft.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

HOUSE BILL NO. 9147

Introduced by HON. GUS S. TAMBUNTING

AN ACT
ENHANCING ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY AND
FREEPORT, AMENDING RA 7903

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

SECTION 1. Title. — This Act shall be known as “Enhancing Zamboanga City Special
Economic Zone and Freeport Authority Act of 2018”

SECTION 2. Section 4 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended or enhanced to read as follows:

“(a) 0x
(b) xx
(Cc) 0x
(d) x0

(e) Business establishments within the ZAMBOECOZONE shall be entitled to the
following incentives and exemptions:

(1) Tax exemption. ZAMBOECOZONE Enterprises shall be exempt from
all national and local taxes, including but not limited to the following:

i. Customs and import duties and national internal revenue taxes,
‘such as VAT, excise and ad valorem taxes on foreign articles;

Internal revenue taxes, such as VAT, ad valorem and excise taxes
on their sales of goods and services for which they are directly



liable;

iii, Income tax on all incomes from sources within the
ZAMBOECOZONE and foreign countries, Export Processing Zones,
Bonded Warehouses and other Special Economic Zones within the
Philippines, as well as all areas that may now or hereafter be
considered to be outside the Customs Territory, whether or not
Payment of such income is actually received, made or collected
within such areas; provided, that ZAMBOECOZONE enterprises
shall, as withholding agents for the National Government,
withhold tax on compensation and income payments to persons or
individuals subject to expanded withholding tax;

iv. Franchise, common carrier or value added taxes and other
percentage taxes on public and services utilities and enterprises
within the ZAMBOECOZONE.

v. Documentary stamp tax for which they are liable; and all taxes,
fees or imposts under RA 7160 (Local Government Code) and other
local taxes or imposts of the City of Zamboanga.

In lieu of paying taxes, all ZAMBOECOZONE enterprises shall pay a final
tax of five percent (5%) of gross income earned as provided in Sec. 4(f)
of the Act and in accordance with these Rules.

(2) Income Tax Holiday.

i. Subject to the exclusive reserved right of the Authority under this
Act, the Authority may grant new registered firms to be fully
exempt from income taxes levied by the National Government for
a period of six (6) years from commercial operation for pioneer
firms and four (4) years for non-pioneer firms. Provided further,
no registered pioneer firm may avail of this incentive for a period
exceeding eight (8) years.

Any investments that would propose more than 8 years but not
exceeding ten (10) years other than what is reserved for the
Authority to grant, shall be subject to the further review and
recommendation by the Fiscal Incentives Review Board (FIRB)
and final approval by the Secretary of Finance. The income tax
exemption may be extended for another one (1) to four (4) years
based on the following:

a. The project meets the prescribed ratio of capital
equipment to number of workers set by the Authority;

b. Utilization of indigenous raw materials at rates set by the
Authority;

c. The annual investment amount to at least


US$500,000,000.00 during the first three (3) years of
operation.

Any request for an Income Tax Holiday exceeding ten (10) years
will be subject to the review of the FIRB and recommended by the
Secretary of Finance to the President for approval. No registered
firm may avail of the ITH incentive for a period exceeding thirty
(30) years. Provided further, the ITH could only be availed once
and shall apply to all associates and subsidiaries.

Subject to the exclusive reserved right of the Authority under this
Act, for a period of three (3) years from commercial operation,
registered expanding firms shall be entitled to an exemption from
income taxes levied by the National Government proportionate to
their expansion under such terms and conditions as the Authority
may determine; Provided, however, That during the period within
which this incentive is availed of by the expanding firm it shall not
be entitled to additional deduction for incremental labor expense.

(3) Additional Deduction for Labor Expense. For the first five (5) years
from registration a registered enterprise shall be allowed an additional
deduction from the taxable income of fifty percent (50%) of the wages
corresponding to the increment in the number of direct labor for skilled
and unskilled workers if the project meets the prescribed ratio of capital
equipment to number of workers set by the Authority: Provided, that
this additional deduction shall be doubled if the activity is located in less
developed areas.

(4) Percentage of Income Allowable from Sources Within the Customs
Territory. ZAMBOECOZONE Enterprises may generate income from
sources within the Customs Territory up to thirty percent (30%) of its
total income from all sources, then it shall be subject to the income tax
laws of the Customs Territory provided further, that in any case, customs
duties and taxes must be paid with respect to income from sales of
articles to the Customs Territory.

(5) Importation of Articles. In general, all articles may be imported by
ZAMBOECOZONE Enterprises into the ZAMBOECOZONE free of customs
and import duties and national internal revenue taxes, except those
articles prohibited by the Authority and those absolutely prohibited by
law.

(6) Importation by ZAMBOECOZONE Residents. Articles may be
imported by ZAMBOECOZONE Residents free of customs and import
duties and national internal revenue taxes, except those articles


prohibited by the Authority and those absolutely prohibited by law;
provided, that such articles are limited only for personal or household
use or consumption within the ZAMBOECOZONE.

(7) Tax and Duty Exemption on Imported Capital Equipment. Within five

(5) years from the effectivity of this Act, importations of machinery and
equipment and accompanying spare parts of new and expanding
registered enterprise shall be exempt to the extent of one hundred
percent (100%) of the customs duties and national internal revenue tax
payable thereon: Provided, That the importation of machinery and
equipment and accompanying spare parts shall comply with the
following conditions:

i, They are not manufactured domestically in sufficient quantity, of
comparable quality and at reasonable prices;

ii. They are reasonably needed and will be used exclusively by the
registered enterprise in the manufacture of its products, unless
prior approval of the Authority 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 the specific equipment and machinery being permanently
used for non-registered activities; and

iii. The approval of the Authority was obtained by the registered
enterprise for the importation of such machinery, equipment and
spare parts.

In granting the approval of the importations under this paragraph, the
Authority may require international canvassing but if the total cost of
the capital equipment or industrial plant exceeds US$5,000,000, the
Authority shall apply or adopt the provisions of Presidential Decree
Numbered 1764 on International Competitive Bidding.

If the registered enterprise sells, transfers or disposes of these
machinery, equipment and spare parts without prior approval of the
Authority within five (5) years from date of acquisition, the registered
enterprise and the vendee, transferee, or assignee shall be solidarily
liable to pay twice the amount of the tax exemption given it.

The Authority shall allow and approve the sale, transfer or disposition of
the said items within the said period of five (5) years if made:

(aa) to another registered enterprise or registered domestic
producer enjoying similar incentives;

(bb) for reasons of proven technical obsolescence; or


(cc) for purposes of replacement to improve and/or expand the
operations of the registered enterprise.

(8) Tax Credit on Domestic Capital Equipment. A tax credit equivalent to
one hundred percent (100%) of the value of the national internal
revenue taxes and customs duties that would have been waived on the
machinery, equipment and spare parts, had these items been imported
shall be given to the new and expanding registered enterprise which
purchases machinery, equipment and spare parts from a domestic
manufacturer: Provided, That (1) That the said equipment, machinery
and spare parts are reasonably needed and will be used exclusively by
the registered enterprise in the manufacture of its products, unless prior
approval of the Authority is secured for the part-time utilization of said
equipment in a non-registered activity to maximize usage thereof; (2)
that the equipment would have qualified for tax and duty-free
importation under paragraph (c) hereof; (3) that the approval of the
Authority was obtained by the registered enterprise; and (4) that the
purchase is made within five (5) years from the date of effectivity of the
Act. If the registered enterprise sells, transfers or disposes of these
machinery, equipment and spare parts, the provisions in the preceding
paragraph for such disposition shall apply.

(9) Exemption from Contractor's Tax. The registered enterprise shall be
exempt from the payment of contractor's tax, whether national or local.

(10) Simplification of Customs Procedure. Customs procedures for the
importation of equipment, spare parts, raw materials and supplies, and
exports of processed products by registered enterprises shall be
simplified by the Bureau of Customs.

(11) Unrestricted Use of Consigned Equipment. Provisions of existing
laws notwithstanding, machinery, equipment and spare part consigned
to any registered enterprises shall not be subject to restrictions as to
period of use of such machinery, equipment and spare parts Provided,
that the appropriate re-export bond is posted unless the importation is
otherwise covered under subsections (c) and (m) of this Article.
Provided, further, that such consigned equipment shall be for the
exclusive use of the registered enterprise.

If such equipment is sold, transferred or otherwise disposed of by the
registered enterprise the related provision of Section 4 (3) shall apply.
Outward remittance of foreign exchange covering the proceeds of such
sale, transfer or disposition shall be allowed only upon prior Central
Bank approval.


(12) Exemption on Breeding Stocks and Genetic Materials. The
importation of breeding stocks and genetic materials within ten (10)
years from the date of registration or commercial operation of the
enterprise shall be exempt from all taxes and duties: Provided, that such
breeding stocks and genetic materials are (1) not locally available
and/or obtainable locally in comparable quality and at reasonable
prices; (2) reasonably needed in the registered activity; and (3)
approved by the Authority.

(13) Tax Credit on Domestic Breeding Stocks and Genetic Materials. A
tax credit equivalent to one hundred percent (100%) of the value of
national internal revenue taxes and customs duties that would have
been waived on the breeding stocks and genetic materials had these
items been imported shall be given to the registered enterprise which
Purchases breeding stocks and generic materials from a domestic
producer: Provided, 1) That said breeding stocks and generic materials
would have qualified for tax and duty free importation under the
preceding paragraph; 2) that the breeding stocks and genetic materials
are reasonably needed in the registered activity; 3) that the approval of
the Authority has been obtained by the registered enterprise; and 4) that
the purchase is made within ten (10) years from date of registration or
commercial operation of the registered enterprise.

(14) Tax Credit for Taxes and Duties on Raw Materials. Every registered
enterprise shall enjoy a tax credit equivalent to the National Internal
Revenue taxes and Customs duties paid on the supplies, raw materials
and semi-manufactured products used in the manufacture, processing
or production of its export products and forming part thereof, exported
directly or indirectly by the registered enterprise: Provided, however,
that the taxes on the supplies, raw materials and semi- manufactured
products domestically purchased are indicated as a separate item in the
sales invoice.

Nothing herein shall be construed as to preclude the Authority from
setting a fixed percentage of export sales as the approximate tax credit
for taxes and duties of raw materials based on an average or standard
usage for such materials in the industry.

(15) Access to Bonded Manufacturing/Trading Warehouse System.
Registered export oriented enterprises shall have access to the
utilization of the bonded warehousing system in all areas required by
the project subject to such guidelines as may be issued by the Authority.

(16) Exemption from Taxes and Duties on Imported Spare Parts.
Importation of required supplies and spare parts for consigned


equipment or those imported tax and duty free by a registered
enterprise with a bonded manufacturing warehouse shall be exempt
from customs duties and national internal revenue taxes payable
thereon, Provided, However, That at least eighty percent (80%) of
production is exported; Provided, further, that such spare parts and
‘supplies are not locally available at reasonable prices, sufficient quantity
and comparable quality; Provided, finally, That all such spare parts and
supplies shall be used only in the bonded manufacturing warehouse of
the registered enterprise under such requirements as the Bureau of
Customs may impose.

(17) Exemption from Wharfage Dues and any Export Tax, Duty, Impost
and Fee. The provisions of law to the contrary notwithstanding, exports
by a registered enterprise of its non- traditional export products shall be
exempted of its non-traditional export products shall be exempted from
any wharfage dues, and any export tax, duty, impost and fee.

(18) Employment of Foreign Nationals. The Authority may authorize an
alien or an association, partnership, corporation or any other form of
business organization formed, organized, chartered or existing under
any law other than those of the Philippines, or which is not a Philippine
national, or the working capital of which id fully owned or controlled by
aliens to do business or engage in an industry inside the export
processing zone.

Subject to the provisions of Section 29 of Commonwealth Act No. 613,
as amended, an enterprise, a zone registered enterprise may employ
foreign nationals in supervisory, technical or advisory positions for a
period not exceeding five (5) years from its registration, extendible for
limited periods at the discretion of the Authority: Provided, however,
That when the majority of the capital stock of a zone registered
enterprise is owned by foreign national, the positions of president,
treasurer, and general manager or their equivalents may be retained by
foreign nationals beyond the period set forth herein.

Foreign nationals employed within the purview of this Act, their spouses,
and unmarried children under twenty-one years of age who are not
excluded by Sec. 29 of C.A. 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, to enter and leave the Philippines without
further documentary requirements other than valid passports or other
travel documents in the nature of passports. The multiple entry visa will
be issued by the Authority in coordination with the Bureau of
Immigration and the Department of Foreign Affairs. The validity of the


multiple entry special visa shall be extendible yearly. Foreign Nationals
who have been issued multiple entry special visas under this provision,
as well as their respective spouses and dependents, shall be exempt
from obtaining alien certificates and all types of clearances required by
any government department or agency.

A registered enterprise shall train Filipinos as understudies of foreign
nationals in administrative, supervisory and technical skills and shall
submit annual reports of such training to the Authority.

(19) Tax Treatment of Merchandise in the Zone.

ve

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, manipulated, 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, the provisions of law to the contrary notwithstanding.
Merchandise purchased by a registered zone enterprise from the
customs territory and subsequently brought into the zone, shall be
considered as export sales and the exported thereof shall be
entitled to the benefits allowed by law for such transaction.
Domestic merchandise sent from the zone 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.

Merchandise sent from the export processing zone 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
assessed on the value of imported materials (except when the
final product is exempt) and the internal revenue taxes on the
values added.

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



vi.

viii.

Subject to such regulations respecting identity and safeguarding
of the revenue as the Authority 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.

Articles produced or manufactured in the zone 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;

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

(20) Additional Incentives. Zone registered enterprises shall also be
entitled to the following:

Exemption from Local Taxes and Licenses. Notwithstanding the
provisions of law to the contrary, zone registered enterprise shall,
to the extent of their construction, operation or production inside
the zone be exempt from the payment of any and all local
government imposts, fees, licenses or taxes except real estate
taxes which shall be collected by the Province/City/Municipality
responsible for the collection thereof under the provisions of the
Real Property Tax Code: Provided, That machineries owned by
zone registered enterprises which are actually installed and
operated in the Zone for manufacturing, processing or for
industrial purposes shall not be subject to the payment of real
estate taxes for the first three (3) years of operation of such
machineries: Provided, further, That fifty percent (50%) of the
proceeds of the real estate taxes collected from all real properties
located in the Zone and such other areas owned or administered
by the Authority shall be remitted to the Authority by the
province/city/municipality responsible for the collection of such
taxes under the provisions of the Real Property Tax Code. All real
estate taxes accruing to the Authority as herein provided shall be
expanded for such community facilities, utilities and/or services
as the Authority may determine.

Production equipment or machineries, not attached to real estate,
used directly or indirectly, in the production, assembly or
manufacture of the registered product of the zone registered
enterprise shall be exempt from real property taxes.


(f) Any provisions of existing laws, rules or regulations to the contrary
notwithstanding, no taxes, local and national, shall be imposed on business
establishments operates, said business establishments shall pay and remit to the
national government one percent (1%) of their gross income. In
addition, they shall remit to the City of Zamboanga three (3%) percent
and to the Authority one (1%) percent of their gross income.

(g) x00
(h) 0x
(i) 20x
G) 0x

SECTION 3. Section 7 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“(a) 200
(b) x00
(©) 0x
(d) xxx
(e) xx

(f) To identify additional lands and areas within Zamboanga Peninsula
and other areas within the country deemed important for agro-fisheries
development for possible expansion provided that the main office
remains in Zamboanga City. The additional secured area shall be deemed to
be classified as available for utilization and development into an industrial,
commercial, property development, recreational, tourism, gaming, utilities,
investment or financial center or a mix of any of these developments.

(g) To acquire real and personal properties within the zone held by them
in their proprietary capacity and to apply their resources and assets for
productive, developmental, or welfare purposes for the benefit of the
ZAMBOECOZONE.

(h) To reclaim or undertake reclamation projects or grant reclamation
permits as it may deem necessary in areas adjacent or contiguous to the
Authority's lands.

(i) To secure the exclusive use and exercise exclusive territorial
jurisdiction of the areas, waters, rivers, creeks, submerged lands and
properties proclaimed, owned and/or transferred to the Zamboanga City
Special Economic Zone and Freeport Authority, such as, but not limited


to Presidential Proclamations 977, 1099, 111 and 113. By virtue of this
act, Presidential Proclamations 977, 1099, 111 and 113 shall all be
classified as Industrial Zone. The Land Registration Authority (LRA) shall
register at no charge to the Authority and immediately within 30 days,
issue Certificate of Land Titles for these land areas as stated in the
Presidential Proclamations to Zamboanga City Special Economic Zone
and Freeport Authority upon the approval of this Act. The above
modifications are meant to address the issue of the conversion of the
classification of the land once the same is declared by the ZCSEZA as an
Additional Secured Area or Additional Area entitled to tax and duty-free
incentives provided that such lands are Agricultural Disposable Lands.

() To have the exclusive jurisdiction to issue permits for the use and to
enter into Foreshore Lease Agreements and Miscellaneous Lease
Agreements for areas adjacent to the Authority land within the 15
nautical miles from the baseline of the land properties of the Zone.

(k) To operate on its own, either directly or through a subsidy entity, or
license to other tourism related activities, including games, amusements
and recreational and sports facilities;

(1) Within the limitation provided by law, to raise or borrow adequate
and necessary funds from local or foreign sources to finance its projects
and programs under this Act, and for that purpose to issue bonds,
promissory notes, and other forms of securities, and to secure the same
by a guarantee, pledge, mortgage, deed of trust, or an assignment of all
part of its property or assets;

(m) To provide security for the ZAMBOECOZONE in coordination with
national and local governments. For this purpose, the ZAMBOECOZONE
Authority may establish and maintain itsown security force and
firefighting capability or hire others to provide the same;

(n) To protect, preserve, maintain and develop the virgin forests,
beaches, coral and functional units or offices within the
ZAMBOECOZONE;

(0) To create, operate and/or contract to operate such agencies and
functional units or offices of the ZAMBOECOZONE Authority as it may
deem necessary;

(Pp) To adopt, alter and use a corporate seal; make contracts, leases, own
or otherwise dispose of personal or real property; sue and be sued; and
otherwise carry out its functions and duties as provided for in this Act;
and


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

SECTION 4. Section 8 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“Section 8. Non-profit Character of the ZAMBOECOZONE Authority. — The
ZAMBOECOZONE Authority shall be non-profit and shall devote the use of its returns from
capital investments, as well as excess revenues from its operations, for the development,
improvement, and maintenance and other related expenditures of the ZAMBOECOZONE
Authority to pay its indebtedness and obligations and in furtherance and effective
implementation of the policy provided in this Act. In consonance with this,
the ZAMBOECOZONE Authority is hereby declared exempt from the payment of all taxes,
duties, fees, imposts, charges, costs and service fees in any court or administrative
proceedings in which it may be a party.”

SECTION 5. Section 9 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“Section 9. Board of Directors of the ZAMBOECOZONE Authority. — The powers of
the ZAMBOECOZONE Authority 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) A chairperson and administrator with the rank of undersecretary who shall,
at the same time, be the administrator of the ZAMBOECOZONE Authority;

b) Two (2) vice chairpersons with the rank of secretary who shall come from (1)
the Department of Finance (DOF) and (2) the Department of Trade and

Industry (DTI); in the absence of the secretary, only the senior undersecretary
shall serve as vice chairperson;

Six (6) members consisting of:

(1) The city's congressional representative;

(2) The mayor of the City of Zamboanga;

(3) The vice mayor of the City of Zamboanga;

(4) One (1) representative from domestic investors in the ZAMBOECOZONE;
(5) One (1) representative from foreign investors in the ZAMBOECOZONE; and

(6) One (1) representative from the labor sector chosen from the workers
the ZAMBOECOZONE.

in


The Secretaries of DOF and DTI or their representatives, the city's congressional
representative, the mayor of the City of Zamboanga and the vice mayor of the City of
Zamboanga shall serve as ex officio voting members of the Board.

The Chairman and Administrator 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 investment sectors no person shall be
appointed by the President of the Philippines as member of the Board unless he is a
Filipino citizen, of good moral character and of recognized competence in some relevant
fields of business, banking, shipping, business or labor management, port operations,
engineering or law.

Members of the Board including ex officio members shall receive a reasonable per
diem which shall be fixed by the President of the Philippines once every six (6) years for
every Board meeting: 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 (P10,000.00) for every Board
meeting.”

SECTION 6. Section 12 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“Section 12. Capitalization. — The Zamboanga City Special Economic Zone Authority shall
have an authorized capital stock of five billion (5,000,000,000) no par shares with a
minimum issue value of Ten pesos (P10.00) each. The national government shall initially
subscribe and fully pay six hundred million (600,000,000) shares of such capital stock.
The initial amount necessary to subscribe and pay for the shares of stock shall be included
in the General Appropriations Act of the year following its enactment into law and
thereafter. The Board of Directors of the ZAMBOECOZONE Authority may, from time to
time and with the written concurrence of the Secretary of Finance, increase the issue
value of the shares representing the capital stock of the ZAMBOECOZONE Authority. The
Board of Directors of the ZAMBOECOZONE Authority, with the written concurrence of the
Secretary of Finance, may sell shares representing not more than forty per centum (40%)
of the capital stock of the ZAMBOECOZONE Authority to the general public with such
annual dividend policy as the Board and the Secretary of Finance may determine. The
national government shall in no case own less than sixty per centum (60%) of the
total issued and outstanding capital stock of the ZAMBOECOZONE Authority.”

SECTION 7. Section 14 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:


“Section 14. Relationship with Other Government Agencies. — In case of any conflict
between the ZAMBOECOZONE Authority and other government entities or
government instrumentalities on matters affecting the ZAMBOECOZONE other than
defense and security matters, the decision of the ZAMBOECOZONE Authority shall prevail.
The ZAMBOECOZONE shall be under the supervision of the Office of the President.”

SECTION 8. Section 16 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“SEC. 16. Criteria for the Expansion of the ZAMBOECOZONE. — In addition to the areas
identified as part of the ZAMBOECOZONE, other areas may be established as property of
the ZAMBOECOZONE in a proclamation to be issued by the President of the Philippines
subject to the evaluation and recommendation of the Authority, based on a detailed
feasibility and engineering study which must conform to the following criteria:

(a) The proposed area must be identified as a regional growth center in the Medium-
Term Philippine Development Plan or by the Regional Development Council;

(b) The existence of required infrastructure in the proposed area, such as roads, railways,
telephones, ports, airports, etc., and the suitability and capacity of the proposed site to
absorb such improvements;

(c) The availability of water source and electric power supply for use of the
ZAMBOECOZONE;

(d) The extent of vacant lands available for industrial and commercial development and
future expansion of the area as well as of lands adjacent to the area available for
development of residential areas for the ZAMBOECOZONE workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and
around the area;

(f) The area must have a significant incremental advantage over the existing economic
Zones and its potential profitability can be established;
(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to curtail
smuggling activities.

Other areas which do not meet the foregoing criteria may be established as
ZAMBOECOZONE property: Provided, That the said area shall be developed only through
local government and/or private sector initiative under any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national government: Provided, further, That the area can


be easily secured to curtail smuggling activities: Provided, finally, That after five (5) years
the area must have attained a substantial degree of development, the indicators of which
shall be formulated by the Authority.

SECTION 9. Section 17 of the Zamboanga City Special Economic Zone Act of 1995, is
hereby amended to read as follows:

“SEC. 17. Determination of the De Minimis Value.— No duties and taxes shall be collected
on goods with a Free on Board or Free Carrier At value of fifty thousand pesos
(P50,000.00) or below. The Secretary of Finance shall adjust the de minimis value as
provided herein, every three (3) years after the effectivity of this Act. The value herein
stated shall be adjusted to its present value using the Consumer Price Index, as published
by the Philippine Statistics Authority.”

SECTION 10. 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. All other provisions of RA 7903 which have not been enhanced or
amended by this Act shall remain in full force and effect.

SECTION 11. Repealing Clause. — A\l other laws, decrees, orders, issuances, or any
parts thereof which are inconsistent with the provisions of this Act are hereby repealed
or amended accordingly.

SECTION 12. Effectivity. — This Act shall take effect upon its publication in the Official
Gazette or in a newspaper of general circulation.

Approved,