Republic of the Philippines RECEIVED

HOUSE OF REPRESENTATIVES pare: 03 AUG 2016
Quezon City, Metro Manila A
TIME: :
SEVENTEENTH CONGRESS BY:

‘1st Regular Session
k ISTRY
BILLS AND INC

House BillNo.__ 2420

Introduced by Hon. Francis Gerald Aguinaldo Abaya

EXPLANATORY NOTE

This bill mandates the establishment of a special economic zone in Sangley
Point, Cavite City to promote and hasten the industrial, economic and social
development in the area.

The Philippine Constitution, in Article XII, Section 1 provides that all sectors
of the economy and all regions of the country shall be given optimum opportunity to
develop. Pursuant to this, RA 7916, otherwise known as the “Special Economic
Zone Act of 1995", was enacted to encourage economic growth through the creation
of special economic zones or Ecozones, which are developed into independent
communities with minimum government supervision. Over the years, these
economic zones have enjoyed the benefits provided under their enabling laws, such
as tax incentives and investor-friendly conditions.

The Province of Cavite has been playing a major role in the development of
economic zones and estates in the country which spurred and hastened the
development of the province as well as those succeeding other areas into self-
sustaining industrial, commercial, financial and investment centers in the
Philippines. There is a need to ensure that the gains and growth of Cavite be
sustained through government support and incentives to attract more investors.

Sangley Point is strategically located being only about eight miles southwest
of Manila and within the CALABARZON Region. It is widely regarded as a viable
international logistics hub and is already subject for development as such under EO
629. Its establishment as a special economic zone will enhance its potential and
will definitely spur economic growth not only of Cavite, but of the country in general.

In view of this, immediate passage of this measure is earnestly sought

@ESENTATIVE


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS
‘1st Regular Session

HOUSE BILL NO. _2425

Introduced by: REP. FRANCIS GERALD A. ABAYA

AN ACT ESTABLISHING THE SANGLEY POINT SPECIAL ECONOMIC ZONE IN
THE CITY OF CAVITE, PROVINCE OF CAVITE, CREATING FOR THE PURPOSE
THE SANGLEY POINT DEVELOPMENT AUTHORITY, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES.

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

SECTION 1. Short Title - This Act shall be known as the “Sangley Point
Special Economic Zone Act”

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 areas outside Metro Manila, increase their productivity
and their individual and family income, and thereby improve the level and quality of
their living conditions through the establishment, among others, of special economic
zones in suitable and strategic locations in the country and through measures that
shall effectively attract legitimate and productive foreign investments.

SECTION 3. Creation of the Sangley Point Special Economic Zone - In
pursuit of the foregoing declared policy and subject to the concurrence of the
concerned local government unit (LGU) of the province of Cavite affected by the
zone, there is hereby established a special economic zone, hereinafter referred to as
the Sangley Point Ecozone. The Sangley Point Ecozone shall cover the territorial
jurisdiction of the City of Cavite.

SECTION 4. Governing Principles - The Sangley Point Special Economic
Zone shall be managed and operated by the Sangley Point Development Authority,
hereinafter referred to as the SPDA, created under section 1 1of this Act under the
following principles:


(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the Ecozone shall be
developed into and operated as a decentralized self-reliant and self-
sustaining international logistics hub, industrial, commercial/trading,
agro-industrial, tourist, banking, financial and investment center suitable
residential areas in accordance with the plans and programs envisioned
under Executive Order No. 629 dated June 21, 2007 which mandates the
conversion of Sangley Point in Cavite City into an International Logistics
Hub thru an enabling reclamation component. Thus, the SPDA shall
administer the entire military reservations and camps of Sangley Point
without adversely affecting the value of the Armed Forces of the
Philippines for the national defense and security purposes.

(b) The Sangley Point Ecozone shall be provided with a modern seaport and
airport and other 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 Cavite and its neighboring towns and cities

(c) The Sangley Point 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 enterprise in the Sangley Point Ecozone, either by
themselves or in joint venture with Filipinos in any sector of industry,
international trade and commerce within the Sangley Point Ecozone.

(e) The area comprising the Sangley Point Ecozone may be expanded when
necessary. For the purpose, the SPDA, in consultation with the LGUs,
shall have the power to acquire either by purchase, reclamation,
negotiation or condemnation proceedings, any private and public land,
foreshore or submerge areas, within or adjacent to the Sangley Point
Ecozone for the following purposes: (1) consolidation of Lands for
Sangley Point Ecozone development; (2) acquisition for right of way to
the Sangley Point Ecozone, and (3) the protection of natural assets
valuable to the prosperity of the Sangley Point Ecozone.

(f) Goods manufactured by a Sangley Point 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 SPDA together with the PEZA,
the Bureau of Customs and the DTI. However, in order to protect
domestic industries, a negative list of industries shall be drawn up and
regularly updated by the PEZA. Enterprise engaged in the industries



included in such negative list shall not be allowed to sell their products
locally

(g) The national government shall maintain its ability to coordinate with the
Sangley Point Ecozone and the local government units.

SECTION 5. Enabling Reclamation Component -— the SPDA shall have
three (3) major physical components namely

A

An enabling reclamation component covering the waters within the
area of jurisdiction of the 1° Congressional District of Cavite from
the Municipality of Noveleta up to the Municipality of Rosario with
land uses that will complement the developments in the SPDA.
This will also include the land use plans for DND/AFP/NAVY
installations and such other options as may be warranted

An international seaport and container port that will cater to
transport of passengers, shipment and transshipment of industrial
inputs and finished products in the industrial estates of Southern
Luzon such as but not limited to Cavite, Laguna, and Rizal, and to
serve the needs of an international logistics hub.

‘A modern international airport that will decongest the Ninoy Aquino
International Airport and make international travel in the area more
accessible, thereby opening up another gateway for people, skill
expertise and goods

The enabling reclamation component shall be implemented through joint
venture arrangement or under any of the appropriate BOT schemes

SECTION 6. Administration of Properties — The President shall transfer
forthwith to the SPDA the administration of the entire Sangley Point Station within
one hundred eighty (180) days after the effectivity of this Act

If viable, the Sangley Point Station shall be open for joint use by the SPDA,
civilian and DND without adversely affecting the value of the Armed Forces of the
Philippines for the national defense and security purposes. Otherwise, the DND
shall provide a perpetual easement of right-of-way in favor of the SPDA, its locators
and civilians who will be utilizing the SPDA facilities in accordance with this Act


SECTION 7. Incentives to Registered Enterprises - The Sangley Point
Development Authority (SPDA) may administer the following incentives to the
registered enterprise 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:

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

Category B - Registered domestic enterprise on the following shall be
entitled to a seven- year income tax holiday

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

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

Category C — Registered export enterprise shall be entitled to a six-year
income tax holiday Provided, however, that if the export enterprise complies with the
following; (1) large capital investments or sizeable employment generation; or (2)
use high level of technology; or (3) located outside of Metro Manila, it shall be
entitled to an eight-year income tax holiday.

Registered enterprise 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.

For this purpose, a registered enterprise shall be defined as any person,
natural or juridical, licensed to do business in the Philippines and registered with the
Sangley Point Development Authority (SPDA) to transact business within the
Sangley Point Special Economic Zone. A registered export enterprise shall be
defined as any registered enterprise engaged directly or indirectly in the production,
manufacture or trade of products or services which ears at least seventy percent
(70%) of its normal operating revenues from the sale of its products or services
abroad for foreign currency. A registered domestic enterprise, meanwhile, shall be
defined as any registered enterprise not falling under the definition of a registered
export enterprise

Additional investments in the project shall be entitled to the income tax
holidays corresponding to such investments as may be determined by the BOI.
Additional income tax holiday may be granted for as long as the investment is made
on the same project: Provided, that the project is listed in the IPP at the same time
the additional investment in the project is made: Provided, 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

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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

Enterprise registered with the SPDA 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 registered enterprise
availing of ITH or Net Operating Loss Carryover (NOLCO) to secure a certificate of
eligibility from the SPDA before submitting its income tax return (ITR) with the SPDA
for validation.

Failure to secure certification and/or to file the ITH or NOLCO availment for
validation by the SPDA forty-five (45) days from the last day of each statutory filing
days for ITR shall cause the forfeiture of the availment for the taxable period

(B) Net Operating Loss Carryover (NOLCO). — 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 deduction from the gross
income shall be carried over as a deduction from gross income for the next five
consecutive years immediately following the year of such loss: Provided, however,
That operating loss resulting from availment of incentives provided in this Act shall
not be entitled to NOLCO

Registered enterprise 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 income tax, excise
tax and franchise taxes, shall be imposed on registered enterprises
operating within the Sangley Point Ecozone. In lieu thereof, five percent
(5%) of the gross income earned shall be paid as follows:

(a) Three percent (3%) to the national government; and
(b) Two percent (2%) shall be remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located.

All persons and service establishments in the Sangley Point Ecozone shall be
subject to national and local taxes under the National Internal Revenue Code 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 exceeding twice the rate which would have been used had the annual
allowance been computed in accordance with the rules and regulations


prescribed by the Secretary of Finance and the provisions of the National
Internal Revenue Code of 1997, as amended

(E) Capital Equipment Incentives. — (1) Importations of capital equipment
spare parts, tools and dye, or those required for pollution abatement and
control, cleaner production and waste reduction including consignment
thereof by registered enterprises upon the affectivity of this law, shall be
exempted to the extent of one hundred percent (100%) of the taxes and
customs duties: Provided, That the imported items thereof shall be used
exclusively by the registered enterprise in its registered activity: Provided,
further, That the importation of machinery and equipment and
accompanying parts shall comply with the following conditions:

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

(i) They are reasonably needed and will be used exclusively by the
registered enterprise in the manufacture of its products, unless prior
approval of the SPDA is secured for the part time utilization of said
equipment in a nonregistered activity to maximize usage thereof or the
proportionate taxes and duties are paid on a specific equipment and
machinery being permanently used for nonregistered activities; and

(iii) Approval of the SPDA was obtained by the registered enterprise for the
importation of such machinery, equipment and spare parts

Approval of the SPDA 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 first five years from
date of importation, any of the following conditions must be present

(1) the same is made to another enterprise enjoying tax and duty exemption
on imported capital equipment;

(2) the same is made to another enterprise, upon the payment of any taxes
and duties on the net book value of the capital equipment to be sold;

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

(4) the proven technical obsolescence of the said equipment, machinery or
spare parts.

When the aforementioned sale, transfer or disposition is made under any of
the conditions provided for in the foregoing paragraphs other than paragraph (2)
herein, the registered firm shall not pay the taxes and duties waived on such items
Provided, further, That if the registered enterprises sell, transfer or dispose the
aforementioned imported items without prior approval within five years from the date
of importation, the registered enterprise and the vendee, transferee or assignee shall


be solidarily liable to pay twice the amount of the tax 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 enterprises are still to pay the taxes and duties based on
the net book value of the capital equipment, machinery or spare parts if any of the
registration terms and conditions has been violated. Otherwise, they shall no longer
be subject to the payment of the taxes and duties waived thereon

(2) The purchase of machinery, capital equipment, raw materials, supplies,
parts and semi-finished products to be 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, 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 availment by a registered export enterprises of the incentives stated
under the immediately preceding two paragraphs shall be subject to the following
conditions: (a) that said capital equipment, machinery and spare parts will be used
exclusively by the registered enterprise in its registered activity, (b) that the capital
equipment or machinery where the raw materials, supplies, parts and semi-finished
products were used would have qualified for tax and duty-free _ importation; and (c)
that the approval of the SPDA is obtained by the registered enterprise. If the
registered enterprise sells, transfers or dispose 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 documentations by information technology-
registered enterprises shall be eligible for tax and duty free importation

(G)Raw Materials 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 the same are not sufficient in quantity, quality or are not
competitively priced in the Philippines and which are used in the
manufacture, processing or production of its export products forming part
thereof, exported directly and indirectly by the registered export-oriented
enterprise, based on the actual taxes and duties paid for such
materials/supplies/semi-manufactured products by the registered
enterprise.


The 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 alll taxes and duties: Provided, that such breeding stocks and genetic
materials are reasonably needed in the registered activity and approved by
the SPDA.

The availment of the incentives by the registered enterprise shall be subject to
the following: (a) that the said breeding stocks and genetic materials would have
been qualified for tax and duty-free importation under the preceding paragraph; (b)
that the breeding stocks and genetic materials are reasonably needed in the
registered activity, (c) that approval of the SPDA has been obtained by the registered
enterprise; and (d) that the purchase is made within ten (10) years from the date of
registration of commercial operation of the registered enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection is not filed within one year from the date of delivery.

(1) 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 has expired

(K)Tax Treatment of Merchandise in the Sangley Point Ecozone.- (a)
Domestic merchandise sent from the Sangley Point Ecozone to areas
outside the said ecozone shall, whether or not combined with or made part
of other articles likewise of local origin or manufactured in the Philippines
while in the export processing zone, be subject to internal revenue laws of
the Philippines as domestics goods sold, transferred or disposed of for
local consumption.

(b) Merchandise sent from the Sangley Point Ecozone to areas outside the
said ecozone 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)


(c) Articles produced or manufactured in the Sangley Point 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.

(d) Unless the contrary is shown, merchandise taken out of the Sangley Point
Ecozone shall be considered for tax purposes to have been sent to
customs territory,

(L) Tax Treatment of Raw Materials and Capital Equipment in the Sangley
Point Ecozone.- Importations of raw materials and capital equipment shall
be treated in the Omnibus Investments Code.

(M)Importations of raw materials and capital equipment shall be treated as in
the Omnibus Investments Code. Registered export-oriented enterprise
shall have access to the utilization of the bonded warehousing system in
accordance with the rules and regulations of the Bureau of Customs.

(N) 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 or
their equivalents may be retained by foreign nationals beyond the period
set forth herein and such officer is the owner or a stockholder owning at
least ten percent (10%) of the outstanding capital stock of the registered
enterprise and he remains the owner or 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 entitled to 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 said foreign nationals admitted under this provision, as well as their
respective spouses and dependents shall be exempt from: (a) obtaining alien
certificates of registration and immigration clearance certificates; and (b) securing
the Alien Employment Permit (AEP) and all types of clearances, permits, licenses or
their equivalents required by any government department or agency.

SECTION 8. Incentive to Investors - Any foreign national covered under
subsection (M) of Section 6 of this Act, who invests an amount of US $150,000.00
either in cash and/or equipment, in a registered enterprise shall be entitled to an
investor's visa: Provided that,


(1) He is at least eighteen (18) years of age
(2) He has not been convicted of a crime involving moral turpitude:

(3) He is not afflicted with any loathsome, dangerous or contagious disease;
and

(4) 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 subsection (M), Section 6
hereof

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

SECTION 9. Administration, Implementation and Monitoring of
Incentives - The SPDA 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 registered
enterprises shall be uniformly applied by the SPDA

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

(A)To adopt consistent procedures of administering incentives in accordance
with the guidelines established by the BOI;

(B)To adopt and implement systems and procedures affecting trade and
customs policies in accordance with the requirements established by the
Department of Finance (DOF) and the BOI;

(C)To submit information on registered enterprises 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
paragraph (A) herein, and to ensure proper implementation of systems
and procedures affecting trade and customs policies as provided in
paragraph (B) herein; and

(D)To perform all other duties and responsibilities as may be required by the
President of the Philippines

For proper monitoring, the BO! shall create a single database of all incentives
provided by alll incentives granting agencies, including the SPDA, and all information

10


thereto. Double entry accounting shall be done by the BOI in recording all incentives
granted by the government for transparency purposes.

SECTION 10. Extension of Period of Availment - The availment period of
the incentives provided herein may be extended by the SPDA, in the event that the
registered enterprise suffers operational force majeure or any event equivalent
thereto impairing its viability: Provided, That the availment period shall not exceed
the duration of the said force majeure or equivalent event

SECTION 11. Duration of Incentives - Enterprises registered with the SPDA
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 start of commercial operation,
whichever is applicable, except that it could be extended with regard to industries
deemed indispensable to national development

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

SECTION 12. Creation of the Sangley Point Development Authority -
There is hereby created a body corporate to be known as the Sangley Point
Development Authority, hereinafter referred to as the SPDA, which shall manage
and operate, in accordance with the provisions of this act, the Sangley Point Special
Economic Zone. This corporate franchise shall expire in fifty (50) years counted from
the first day of the fifth (5") calendar year after the effectivity of this Act, unless
otherwise extended by Congress. It shall be organized within one hundred eighty
(180) days after the effectivity of this Act.

SECTION 13. Principal Office of the SPDA - The Sangley Point
Development Authority shall maintain its principal office in the City of Cavite, but it
may establish branches within the Philippines as may be necessary for the proper
conduct of its business.

SECTION 14. Powers and Functions of the Sangley Point Development
Authority - The Sangley Point Development Authority shall have the following
powers and functions:

(a) To operate, administer, manage and develop the Sangley Point Ecozone
according to the principles and provisions set forth in this Act;

(b) To register, regulate and supervise the enterprises in the Sangley Point
Ecozone in an efficient and decentralized manner, subject to existing laws;

(c) To coordinate with local government units and exercise general
supervision over the development plans, activities and operations of the
Sangley Point Ecozone;

1


(d) To regulate and undertake the establishment, operation and maintenance
Of utilities, other services and infrastructure in the Sangley Point Ecozone
such as but not limited to heat, light and power, water supply,
telecommunications, transport, toll roads and bridges, port services, ete
and fix just, reasonable and competitive rates, fares, charges and prices
thereof,

(e) To construct, acquire, own, lease, operate and maintain on its own or
through contracts, franchise, licenses, bulk purchase from the private
sector or permits under any of the schemes allowed in Republic Act No.
6957 (the Build-Operate-Transfer Law, as amended by R.A. No. 7718), or
joint venture, adequate facilities and infrastructures required or needed for
the operation and development of the Sangley Point Ecozone, in
coordination with appropriate national and local government authorities
and in conformity with applicable laws thereon;

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

(g) Subject to the approval of the President of the Philippines and the
Monetary Board of the Bangko Sentral ng Pilipinas and upon the
recommendation of the Department of Finance, to raise or borrow
adequate and necessary funds from local or foreign sources to finance its
projects and programs under this Act. And for that purposes to issue
bonds, promissory notes, and other forms of securities, and to secure the
same by a guarantee, pledge, mortgage, deed of trust, or an assignment
of all or part of its property or assets;

(h) To protect, preserve, maintain and develop the virgin forests, beaches,
Coral and coral reefs and maintain ecological balance within the Sangley
Point Ecozone;

(i) To create, operate and/or contract to operate such functional units of
offices of the SPDA as it may deem necessary:

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

(K) To issue certificates of origin for products manufactured or processed in
the Sangley Point Ecozone in accordance with prevailing rules of origin,

12


and the pertinent regulations of the PEZA, the DTI and/or the Department
of Finance (DOF);

(I) To issue working visas renewable every two (2) years to foreign
executives and foreign technicians with highly specialized skills which no
Filipinos possesses, as certified by the Department of Labor and
Employment;

(m)To 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:

(n) To 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

(0) 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 therein

SECTION 15. Banking Rules and Regulations - Existing Laws and
rules/regulations of the Bangko Sentral ng Pilipinas (BSP) shall apply to banks and
financial institutions to be established in the Sangley Point Ecozone, such as those
governing exchange and other concurrent account transactions (trade and non-
trade), 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 16. Remittance of earnings - In the case of foreign investments, a
registered enterprise in the SPDA shall have the right to remit earnings from the
investments in the currency in which the investments was originally made and at the
exchange rate prevailing at the time of remittance, subject to provisions of Section
74 of Republic Act No. 265, as amended

SECTION 17. Board of Directors of the Sangley Point Development
Authority - The powers of the Sangley Point Development 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) The Chairman who shall, at the same time be the administrator of the
SPDA;

(b) A Vice Chairman who shall come from among the members of the Board
(c) Members consisting of

(1) The Governor of the Province of Cavite

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(2) The Congressional Representative of the district covering the site of the
Sangley Point Ecozone;

(3) The Mayor of the City of Cavite, Province of Cavite;
(4) One representative from the domestic investors;

(5) One representative from foreign investors;

(6) Three representatives from the private sector and

(7) The Chairman of the Philippine Reclamation Authority

The Governor, the Congressional Representative and the Mayor of the City of
Cavite Province of Cavite shall serve as ex officio members of the Board, whose
term in the Board corresponds to their terms 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 seven (7) years, unless sooner separated from service due to death, voluntary
resignation or removal for cause. In case of death, voluntary resignation or removal
for cause, the replacement shall serve only the unexpired portion of the term

Except for the representatives of the foreign investor, 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 for every board
meeting, Provided, however, That the total per diem collected each month shall not
exceed the equivalent per diem for four (4) meetings. Unless and until the President
of the Philippines has fixed a higher per diem for the members of the Board, such
per diem shall not be more than Ten thousand pesos (P10, 000.00) for every Board
meeting.

SECTION 18. Powers and Duties of the Chairman-Administrator - The
Chairman-Administrator shall have the following powers and duties:

(a) To direct and manage the affairs of the SPDA in accordance with the
policies of the Board;

(b) To establish the internal organization of the SPDA including the hiring of
consultants such as legal or technical under such conditions that the
Board may prescribed;

(c) To submit an annual budget and necessary supplemental budget of the
Board for its approval,


(d) To submit within thirty (30) days after the close of each fiscal year an
annual report to the Board and such other reports as may be required

(e) To submit to the Board for its approval policies, systems, procedures, rules
and regulations that are essential to the operation of the Sangley Point
Ecozone.

(f) To create a mechanism in coordination with relevant agencies for the
promotion of industrial peace, the protection of the environment, and the
advancement of the quality of life in the Sangley Point Ecozone; and

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

SECTION 19. Organization and Personnel - the Board of Directors of the
SPDA 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; Provided, That the Board shall have exclusive and final authority
to promote, transfer, assign or reassign officers and employees of the SPDA 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 SPDA, 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 SPDA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by law.

SECTION 20. Ipso Facto Clause - Sections 30-41 of Republic Act No. 7916,
shall ipso facto apply to the Sangley Point Special Economic Zone

SECTION 21. Capitalization - The Sangley Point Development Authority
shall have an authorized capital stock of one billion (1,000,000,000) 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 National Government and the local government.
units (LGUs) embracing the Sangley Point Special Economic Zone. The Board of
Directors of the SPDA 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 SPDA 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 centum (60%) of the total issued and outstanding capital of
the Sangley Point Development Authority

The amount necessary to subscribed and pay for the shares of the national
government to the capital stock of the SPDA 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.

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SECTION 22. Supervision - The Sangley Point Economic Zone shall be
under the direct control and supervision of the Philippine Economic Zone Authority
(PEZA) for purposes of policy direction and coordination

SECTION 23. Relationship with the Regional Development Council - The
Sangley Point Development Authority shall determine the development goals for the
Sangley Point Ecozone within the framework of national development plans, policies
and goals. The Administrator shall, upon approval by the Board, submit the Sangley
point Ecozone plans, programs and projects to the Regional Development Council
for inclusion and inputs to the overall regional development plan,

SECTION 24. Relationship with Local Government Units - Except as
herein provided, the local government units comprising the Sangley Point Special
Economic Zone shall retain their basic autonomy and identity. In case of any conflict
between the SPDA and the Province of Cavite on matters affecting the Sangley
Point Ecozone other than defense and security matters, the decision of the SPDA
shall prevail

SECTION 25. Interpretation/Construction - The powers, authorities and
functions that are vested in the SPDA are intended to decentralize government
functions and authority and promote an efficient and effective working relationship
between the Sangley Point Ecozone, the national government, and the local
government units.

SECTION 26. Auditing - The Commission on Audit shall appoint a
representative who shall be a full time auditor of the SPDA 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 27. 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 28. Repealing Clause - All laws, executive orders and issuance, or
any part thereof, which are inconsistent herewith are hereby repealed or amended
accordingly.

SECTION 29. Effectivity Clause - This Act shall take effect upon its
publication in the Official Gazette or in at least one newspaper of general circulation

Approved,

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