EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
)
SENATE
S. B. No. 2260
FLED
T W.1E¥
GILU&
NOEX
Introduced by SENATOR IMEE R. MARCOS
AN ACT ESTABLISHING THE ECONOMIC ZONE AND FREEPORT IN THE 
PROVINCE OF SOUTHERN LEYTE CREATING FOR THIS PURPOSE THE 
SOUTHERN LEYTE ECONOMIC ZONE AND FREEPORT AUTHORITY 
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Article II, Section 20 of the 1987 Philippine Constitution provides that, "The State 
recognizes the indispensable roie of the private sector, encourages private enterprise, 
and provides incentives to needed investments. "Also, the United Nations Conference 
on Trade and Development (UNCTAD) defines Special Economic Zones (SEZs) in its 
World Investment Report 2019 as geographically delimited areas within which 
governments facilitate industrial activity through fiscal and regulatory incentives and 
infrastructure support. Currently, there are over 5,300 SEZs in over 140 economies.
In consonance with the aforementioned constitutional provision and in keeping 
with our goal of reducing poverty in the Province of Southern Leyte, it is high time to 
launch initiatives that will create jobs in the province. Since special economic zones 
have been proven by time to generate sizable employment in other areas of the 
country, it is in our best interest to replicate the success of ecozones in other places 
for the province's economic benefits.
This bills therefore seeks to establish the economic zone and freeport in the 
Province of Southern Leyte, creating for this purpose the Southern Leyte Economic 
Zone and Freeport Authority. This proposed ecozone will not only benefit Southern 
Leyte but the entire country in terms of added revenue and national economic output.
In view of the 
sought.
foregoing, the immediate passage of this measure earnestly
IMEE R. MARCOS


EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
)
SENATE
S. B. No. 2260
TH.1E¥
GILLS
NDEX
Introduced by SENATOR IMEE R. MARCOS
AN ACT ESTABLISHING THE ECONOMIC ZONE AND FREEPORT IN THE 
PROVINCE OF SOUTHERN LEYTE CREATING FOR THIS PURPOSE THE 
SOUTHERN LEYTE ECONOMIC ZONE AND FREEPORT AUTHORITY 
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled:
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CHAPTER I
GENERAL PROVISIONS
SECTION 1. Short Title. - This Act shall be known as the "Southern Leyte 
Economic Zone and Freeport Act of2021
SEC. 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 and free ports in suitable and 
strategic locations in the country and through measures that will attract legitimate and 
productive foreign investments.
CHAPTER II
CREATION OF THE ECOZONE
SEC. 3. Creation of the Southern Leyte Economic Zone and 
Freeport. -In pursuit of the foregoing declared policy and subject to the concurrence 
of the concerned local government units (LGUs) of Southern Leyte by the zone, there 
is hereby established a special economic zone and free port in the Province of Southern 
Leyte to be known as the Southern Leyte Economic Zone and Freeport hereinafter 
referred to as the Southern Leyte Ecozone. The Southern Leyte Ecozone shall cover
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an area as much as necessary in the City of Maasin at Barangay Guadalupe or any
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barangay in Maasin City, Municipaiity of Bontoc, San Francisco, Hinundayan and other
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municipaiities that may be deciared by an ordinance of the iocal government of the
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Province of Southern Leyte.
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SEC. 4. Governing Principles. - The Southern Leyte Ecozone shali be managed
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and operated by the Southern Leyte Economic Zone and Freeport Authority,
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hereinafter referred to as the SLEZFA created under Section 5 of this Act. under the
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foilowing principles:
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(a) Within the framework and limitations of the Constitution and
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applicable provisions of the Local Government Code, the Southern Leyte Ecozone shall
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be developed into and operated as a decentralized, self-reliant and self-sustaining
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industrial, commercial/trading, agro-industrial, tourist, banking, financial and
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investment center with suitable residential areas;
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(b) The Southern Leyte Ecozone shall be provided with transportation,
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telecommunications and other facilities needed to attract legitimate and productive
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Investments, generate linkage industries and employment opportunities for the people
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of the Province of Southern Leyte and its neighboring towns and cities;
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(c) 
The Southern Leyte Ecozone may establish mutually beneficial economic
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relations with other entities or enterprises within the country or subject to the
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administrative guidance or the Department or Foreign Affairs (DEA), the Philippine
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Economic Zone Authority (PEZA) and/or the Department of Trade and Industry
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(DTI) with foreign entitles or enterprises;
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(d) 
Foreign citizens and companies owned by non-Filipinos in whatever
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proportion may set up enterprises in the Southern Leyte Ecozone, either by themselves
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or in Joint venture with Filipinos in any sector of industry, international trade and
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commerce within the Southern Leyte Ecozone;
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(e) The Southern Leyte Ecozone shall be managed and operated as a separate
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customs territory, thereby ensuring the free flow or movement of goods and capital
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within, into and’ out or the Southern Leyte Ecozone, and shall likewise provide
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incentives such as tax- and duty-free importations of raw materials and capital
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equipment to registered enterprises located therein. However, exportation or removal
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of goods from the territory of the Southern Leyte Ecozone to the other parts of the
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Philippine territory shall be subject to customs duties and taxes under the Tariff and
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Customs Code or the Philippines, as amended, and the National Internal Revenue
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Code (NIRC) of 1997, as amended.
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(f) The areas comprising the Southern Leyte Ecozone may be expanded or
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reduced when necessary. For this purpose, the SLEZFA, in consultation with the LGUs,
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shall have the power to acquire either by purchase, negotiation condemnation
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proceedings, any private land within or adjacent to the Southern Leyte Ecozone for
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the following purposes: (1) consolidation of lands for Southern Leyte Ecozone
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development; (2) acquisition of right-or-way to the Southern Leyte Ecozone; and (3)


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the protection of watershed areas and natural assets valuable to the prosperity of the 
Southern Leyte Ecozone;
(g) Goods manufactured by a Southern Leyte Ecozone enterprise shall be made 
available for 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 SLEZFA, 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 Southern Leyte Ecozone and the security of its perimeter 
fence shall be the responsibility of the national government in coordination with the 
Southern Leyte Ecozone and the LGUs. For this purpose, a special defense team shall 
be organized to define its power, duties and responsibilities.
CHAPTER III
GOVERNING STRUCTURES
SEC. 5. Creation of the Southern Leyte Economic Zone and Freeport Authority. 
— There is hereby created a body corporate to be known as the Southern Leyte 
Economic Zone and Freeport Authority hereinafter referred to as the SLEZFA, which 
shall manage and operate the Southern Leyte Ecozone in accordance with the 
provisions of this Act. This corporate franchise shall expire in fifty (50) years counted 
from the first year after the effectivity of this Act, unless otherwise extended by 
Congress. It shall be organized within one hundred eighty (180) days after the 
effectivity of this Act.
SEC. 6. Capitalization. — The SLEZFA shall have an authorized capital stock of 
two billion (2,000,000,000) no-par shares with a minimum issue of Ten pesos (PIO.OO) 
each. The majority shares of which shall be subscribed and paid for by the national 
government and the LGUs embracing the Southern Leyte Ecozone. The Board of 
Directors or the SLEZFA 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 SLEZFA to the general public under such policy as the Board and the Secretary 
or 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 SLEZFA.
The amount necessary to subscribe and pay for the shares of the national 
government to the capital stock of the SLEZFA 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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SEC. 7. Principal Office oftheSLEZFA. -The SLEZFA shall maintain its principal
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office in the City of Maasin, Province of Southern Leyte but it may establish branches
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within the Philippines as may be necessary for the proper conduct of its business.
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SEC. 8. Powers and Functions of the SLEZFA. - The SLEZFA shall have the
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following functions: 
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(a) Operate, administer, manage and develops the Southern Leyte Ecozone according
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to the principles and provisions set forth in this Act;
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(b) Recommend to the President of the Philippines or the Governor of the Province of
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Southern Leyte the issuance of a proclaniation to fix and delimit the site of the
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Southern Leyte Ecozone; 
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(c) Register, regulate and supervise the enteiTrises in the Southern Leyte Ecozone in
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an efficient and decentralized manner, subject to existing laws;
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(d) Coordinate with LGUs and exercise general supervision over the development
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plans, activities and operations of the Southern Leyte Ecozone;
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(e) Authorize or undertake, on its own or through others, and regulate the
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establishment, operation and maintenance of public utilities, services and
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infrastructure in the Southern Leyte Ecozone such as shipping, barging,
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stevedoring, cargo handling, hauling, warehousing, storage or cargo, port services
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or concessions, piers, wharves, bulkheads, bulk terminals, mooring areas, storage
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areas, roads, bridges, terminals, conveyors, water supply and storage, sewerage,
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drainage, airport operations in coordination with the Civil Aeronautics Board, and
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such other services or concessions or infrastructure necessary or incidental to the
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accomplishment of the objectives of this Act: Provided, however. That the private
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investors in the Southern Leyte Ecozone shall be given priority in the awarding of
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contracts, franchises, licenses, permits for the establishment, operation and
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maintenance of utilities, services and infrastructure in the Southern Leyte Ecozone;
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(0 Regulate and undertake the establishment, operation and maintenance of utilities,
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other services and infrastructure in the Southern Leyte Ecozone such as but not
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limited to, heat, light and power, water supply, telecommunications, transport, toll
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roads and bridges, port services, etc. and to fix just, reasonable and competitive
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rates, charges and prices thereof;
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(g) Construct, acquire, own, lease, operate and maintain, on its own or through
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contracts, franchises, licenses, bulk purchases from the private sector or permits
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under any of the schemes allowed in Republic Act No. 6957 known as the Build-
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Operate-Transfer Law as amended, or joint ventures, adequate facilities and
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infrastructure required or needed for the operation and development of the
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Southern Leyte Ecozone in coordination with the appropriate national and local
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government authorities and in conformity with applicable laws thereon;
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(h) Operate on its own, either directly or accredited license other entities, recreational
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and sports facilities, other tourism-related activities and subject to a grant of
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franchise by Congress, gaming activities such as horse racing, dog racing, gambling


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casinos, internet and inter-active gaming and other games of chance: Provided, 
That registered locator enterprises shall not operate gaming activities unless 
granted a franchise by Congress;
(i) Subject to the approval of the President of the Philippines or the Governor of the 
Province of Southern Leyte 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 Southern Leyte Ecozone in coordination with the national 
and local governments. Military forces sent by the national government for the 
purpose or defense shall not interfere in the internal affairs or the Southern Leyte 
Ecozone and expenditures for these military forces shall be borne by the national 
government. For this purpose, the SLEZFA 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 within the Southern Leyte Ecozone;
' (I) Create, operate and/or contract operate such functional units or offices of the 
SLEZFA as it may deem necessary;
(m) Adopt, alter and use a corporate seal; contract, lease, buy, acquire, own or 
otherwise dispose 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 Southern 
Leyte Ecozone in accordance with prevailing rules of origin and the pertinent 
regulations of the PEZA, the DTI and/or the DOE;
(o) 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 or Labor and Employment (DOLE);
(p) Report to the Bureau of Immigration (Bl) the names of the foreigners who have 
been granted permanent status and working visas within thirty (30) days after the 
issuance 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
(r) Issue rules and regulations consistent with the provision or this Act as may be 
necessary to accomplish and implement the purposes, objectives and policies 
provided herein.
SEC. 9. Applicability Cause.—The provisions of Sections 30 to 41 of Republic
Act No. 7916 or the Special Economic Zone Act of 1995, as amended, on leases of
lands and buildings, land conversion, shipping and shipping register, protection of


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environment, termination of business, registration of business enterprises, one-stop 
shop center and on industrial harmony in the ecozones shall apply to the SLEZFA.
SEC. 10. Tax Exemptions. — The SLEZFA is hereby declared exempt from the 
payment of all taxes, duties, fees, imports, charges, costs and service fees in any court 
or administrative proceedings 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 SLEZFA 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 SLEZFA and of its 
projected capital and operating expenditures.
Furthermore, all donations made by any person or entity in favor of the 
SLEZFA 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.
SEC. 11. Administration, Impiementation and Monitoring of Incentives. - 
The SLEZFA 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 SLEZFA.
The following are the duties and responsibilities of the SLEZFA 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 
pplicies 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 or 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
(d) Perform all other duties and responsibilities as may be required by the President 
or the Philippines.
For proper monitoring, the BOI shall create a single database of all incentives 
provided by all incentives-granting agencies, including the SLEZFA and all 
information thereto. Double-entry accounting shall be done by the BOI in recording 
all incentives granted by the government for transparency purposes.
SEC. 12. Board of Directors of the SLEZFA. — The powers of the SLEZFA 
shall be vested in and exercised by a board of directors, hereinafter referred to as the


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Board, which shall be composed of the following:
(a) The chairperson who shall, at the same time be the administrator of the SLEZFA;
(b) A vice chairperson who shall come from among the members of the Board:
(c) The Members consisting of:
(1) The governor or the Province of Southern Leyte:
(2) The congressional representative of the district covering the site of the 
Southern Leyte Ecozone;
(3) The mayor of any of the city or municipality covered by the Ecozone;
(4) One (1) representative from the domestic investors;
(5) One (1) representative front the foreign investors; and
(6) Two (2) representatives from labor from among the workers in the 
Southern Leyte Ecozone;
The governor, the congressional representative and the mayor of the City of 
Maasin shall serve as ex officio members of the Board, whose terms in the Board 
correspond their term as elected officials. The chairperson and the members of the 
Board, except the ex- officio members, shall be appointed by the President of the 
Philippines or the Governor of Southern Leyte 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 or 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 (4) meetings. Unless 
and until the President of the Philippines or the Governor of Southern Leyte 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.
SEC. 13. Powers and Duties of the Chairperson-Administrator. - The 
chairperson-administrator shall have the following powers and duties:
(a) Direct and manage the affairs of the SLEZFA In accordance with the policies of
the Board;
(b) Establish the internal organization of the SLEZFA under such conditions that
the Board may prescribe;


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(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 requited;
(e) Submit to the Board for its approval policies, systems, procedures, rules and 
regulations that are essential to the operation of the Southern Leyte Ecozone:
(f) Create a mechanism in coordination with relevant agencies for the promotion 
of industrial peace, the protection of the environment and the advancement or 
the quality of life; and
(g) Perform such other duties as may be assigned to him/her by the Board or 
which are necessary or incidental to his/her office.
SEC. 14. Organization and Personnel - The Board of Directors of the SLEZFA 
shall provide for an organization and staff of its officers and employees. Upon 
recommendation of the chairperson 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 SLEZFA, any provision of existing law to the contrary notwithstanding: 
Provided, Further, that the chairperson-administrator may carry out removal of such 
officers and employees.
The officers and employees of the SLEZFA, including all members of the 
Board, shall not engage, directly or indirectly in partisan activities nor take part in 
any selection, except to vote.
No officer or employee of the SLEZFA, subject to civil service laws and 
regulations, shall be removed or suspended except for cause, as provided by law.
SEC. 15. General Manager. - The Board of Directors of the SLEZFA shall 
appoint a full-time professional and competent administrator and chief executive 
officer for the SLEZFA 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 the SLEZFA shall 
be responsible to the Board and to the President of the Philippines and/or the 
Governor for the efficient management and operation of the SLEZFA.
SEC. 16. Legal Counsel. - The SLEZFA shall have its own internal legal 
counsel under the supervision of the Office or the Government Corporate Counsel 
(OGCC). When the exigencies or its businesses and operations demand it, the SLEZFA 
may engage the services of an outside counsel either on a case to case or on a fixed 
retainer basis.


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CHAPTER IV
INCENTIVES TO ECOZONE ENTERPRISES/INVESTORS
SEC. 17. Incentives to Registered Enterprises. - The SLEZFA shall provide 
the following incentives to the registered enterprises located therein to the extent of 
the activity/project:
(a) Income Tax Holiday (ITA) - Registered enterprises shall be entitled to an 
ITH from the start of their commercial operations to the extent of their 
activity under the following categories:
(1) Category A - Registered domestic enterprises producing/rendering 
new products/services or having strong backward or forward linkages 
shall he entitled to a six (6)-year ITH.
(2) Category B - Registered export enterprises shall be entitled to a six 
(6)-year ITH: Provided, the export enterprise shall be entitled to all 
eight (8)-year ITH if it complies with the following:
(i) Large capital investments or sizeable employment generation;
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(ii) Use of high level of technology.
Registered enterprises embarking on new investments that are listed in the 
current Investment Priorities Plan (IPP) shall be entitled to incentives provided herein 
pertaining the new investments and subject to such terms and conditions as the Board 
of Investments (BOI) may determine.
Additional investments in theprojectshallbe entitled 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 additional investments shall not exceed three (3) times the period provided 
under this subsection; Provided, however, that the total ITH period an export 
enterprise availing of an eight (8)-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 SLEZFA are required to share in the special


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development fund of the BOI for investment promotion projects of the government 
equivalent to one percent of the ITH granted for every application.
The Bureau of Internai Revenue (BIR) shail require a registered enterprise 
availing of the ITH or the net operating ioss carryover (NOLCO) to secure a certificate 
of eiigibility from the SLEZFA before submitting its income tax return (ITR) with the 
SLEZFA for validation.
Failure to Secure certification and/or to file the ITH or the NOLCO availment 
for validation by the SLEZFA within forty-five (45) days from the iast day of statutory 
filing date for ITR shall cause the forfeiture of the availment for the taxable period.
(b) Net Operating Loss Carry over (NOLCO) - net operating ioss of the 
business or enterprise during the first three (3) years from the start of commercial 
operations which have not been previousiy offset as a deduction from the gross 
income shall be carried over as a deduction from the gross income for the next five 
(5) consecutive years immediateiy foliowing the year of such ioss: Provided, however, 
That operating loss resulting from avaiiment of incentives provided in this Code shall 
be entitled to the NOLCO.
Registered enterprises avaiiing of the ITH as herein provided shall not be 
entitled to avail of the NOLCO.
(c) Impositionof 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 shaii be 
imposed on business establishments operating within the Southern Leyte Ecozone. In 
iieu thereof, there shall be imposed a tax of five percent (5%) of the gross income 
earned by ali the business enterprises within the SLEZFA and remitted as follows:
(1) Two per centum (2%) to the national government;
(2) Two per centum (2%) to the Province of Southern Leyte;
(3) One-haif per centum (1/2%) to be shared by the municipalities 
affected by the declaration of the SLEZFA in proportion 10 their 
income from business activities of the zone; and
(4) One-half per centum (1/2 %) to the SLEZFA
All persons and service establishments in the Southern Leyte Ecozone that 
are not covered by Section 17 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
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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 or the NIRC of 1997, as amended.
(e) Capital Equipment Incentives - 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 Act shall be exempted to the extent of one 
hundred percent (100%) or the taxes and customs duties: Provided, That the 
importation thereof shall be used exclusively by the registered enterprise in its 
registered activity within the Southern Leyte 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 SLEZFA 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 or the SLEZFA was obtained by the registered enterprise for the 
importation of such machinery, equipment and spare parts.
Approval of the SLEZFA 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 (5) 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) hereof. 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 pther than paragraph (ii), 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
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aforementioned imported items without prior approvai within five (5) 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 (5) 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, capital equipment, 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 lax.
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 or such and other pertinent documents, for verification and 
proper endorsement.
The registered export enterprise availing of the incentive provided under the 
immediately preceding two (2) 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 (lii) that the 
approval or the SLEZFA 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 (1) year from the date of delivery.
(f) Tax-and-Duty Free Importation - The importation of source documents by 
information technology registered enterprises shall be eligible for tax- and duty-free 
importation.
{q)Raw Materials Incentives - Every registered export-oriented enterprise shall 
enjoy a tax credit equivalent to the internal revenue taxes and customs duties paid on
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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 directiy and indirectly by the registered export-oriented enterprise based on 
the actuai 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 fiied within one (1) year from the date of exportation of the finai 
product.
(h) Incentives on Breeding Stocks and Genetic Materiais - Importation of 
breeding stocks and genetic materials within ten (10) years from the date or 
registration of commercial operations of the enterprise shall be exempt from all taxes 
and duties: Pmvided, That such breeding stocks and genetic materials are reasonably 
needed in the registered activity and approved by the SLEZFA.
The availment or the incentives by a registered enterprise shall be subject to 
the following: (1) that said breeding stocks and genetic materials would have been 
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 approval of the SLEZFA has been obtained by the registered 
enterprise; and (4) that the purchase is made within ten (10) years from the date or 
registration of commercial operations of the registered enterprise.
This incentive shall be deemed waived if application for tax credit under this 
subsection is not filed within one (I) year from the date of delivery.
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(i) Exemption from Wharfage Dues- the provision of iaw to the contrary
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notwithstanding, exports by a registered enterprise shall be exempted from wharfage
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dues.
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(j) Deferred Imposition of the Minimum Corporate Income Tax - The
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minimum corporate income tax (MCIT) of two percent (2%) of the gross income as of
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the end of the taxable year shall be imposed when the MCIT is greater than the income
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tax computed under the NIRC of 1997, as amended, for the taxable year: Provided,
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however, That said MCIT shall be imposed only after the enterprise's entitlement
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period to the income tax-based incentives.
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(k) Tax Treatment of Goods and Services in the Southern Leyte Ecozone.
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(a) 
TaxTreatmentof Merchandise in the Southern Leyte Ecozone—
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The free trade/free port zone shall be operated and managed as a
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separate customs territory ensuring free flow or movement of goods
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within, into and exported out of the free trade/free port zone. 
Importations of raw materials and capital equipment are tax- and duty 
free. However, exportations or removal of goods the free trade/free port 
zones the other parts of the Philippine territory shall be subject to 
customs and internal revenue regulations.
(i) 
Except as otherwise provided in this Act, foreign and domestic 
merchandise 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 Southern Leyte 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 Southern Leyte 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 
or the Philippines as domestic goods sold transferred or disposed of for 
local consumption.
(iv) Merchandise sent from the Southern Leyte 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 he 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 
imposed on which taxes have been paid, or which have been admitted 
free of duty and tax, may be taken into the Southern Leyte 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 SLEZFA may deem necessary, when the identity of an 
article entered into the export processing zone under the immediately
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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) 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
(b) Tax Treatment of Services - (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.
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(I) Bonded Warehousing System- Registered export-oriented enterprise
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shall have access to the utilization of the bonded warehousing system in accordance
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with the rules and regulations of the BOC.
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(m) Employment of Foreign Nationals — Subject to the provisions of Section
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29 of Commonwealth Act No. 613. otherwise known as "The Philippine Immigration
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Act of 1940", as amended, a registered enterprise may employ foreign nationals in
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supervisory or technical positions for a period not exceeding ten (10) years from its
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registration: Provided, That when the majority of the capital stock or a registered
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enterprise is owned by foreign investors, the positions of the president, treasurer
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and general manager or their equivalents may be retained by foreign nationals
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beyond the period set forth herein and such officer is the owner or a stockholder
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owning at least ten percent (10%) of the outstanding capital stock of the registered
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enterprise and he/she remains the owner or maintains his/her stockholdings therein.
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Foreign nationals under employment contract within the purview of this
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incentive, their spouses and unmarried children under twenty-one (21) years or age,
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who are not excluded by Section 29 or Commonwealth Act No, 613, as amended,
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shall be permitted to enter and reside in the Philippines during the period of
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employment of such foreign nationals. They shall be issued multiple-entry visas,
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renewable every two (2) years, and shall be allowed to enter and leave the
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Philippines without further documentary requirements other than valid passports or
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other travel documents in the nature of passports.
The foreign nationais admitted herein as weli as their respective spouses and 
dependents shail be exempt from (1) obtaining aiien certificates of registration and 
emigration ciearance certificates; and (2) securing aiien employment permits (AEP) 
and ali types of clearances, permits, licenses or their equivalents required by any 
government department or agency.
SEC. 18. Extension of Period Availment - The availment period of the 
incentives provided herein may be extended by the SLEZFA in the event that the 
registered enterprise suffers operational force majeure or any event equivalent 
thereto, impairing its viabiiity.
SEC. 19. Duration of Incentives. - Enterprises registered with the SLEZFA may 
enjoy ITH or NOLCO granted by the latter prior to the availment of the five percent 
(5%) Gross Income Earned (GIE).
Fiscal incentives under this Act shail be terminated after a cumulative period of 
twenty (20) years from the date of registration or the start of commercial operations, 
whichever is applicabie, except that it could be extended with regard to industries 
deemed indispensable to national development as determined by the SLEZFA.
The industries exempted from this provision shall be recommended by the BOI 
or the Governor of the Province of Southern Leyte with the concurrence of the 
secretary of the DOF.
SEC. 20. Incentive to Investors. - Any foreign national covered under 
subsection (m) or Section 17 of this Act, who invests an amount of One hundred fifty 
thousand US Dollars (USD 150,000.00) 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 invoiving 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 17, last paragraph.
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As a holder of an investor's visa, an alien shall be entitled to reside in the
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Philippines while his investment subsists. For this purpose, he shall submit an annual
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report, in the form duly prescribed for the purpose to prove that he has maintained
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his investment in the country. Should said alien withdraw his investments from the
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Philippines, then the investor's visa issued to him shall automatically expire.
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SEC. 21. Banking Rules and Regulations. - Existing banking laws and
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rules/regulations of the Bangko Sentral ng Pilipinas (BSP) shall apply to banks and
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financial institutions to be established in the Southern Leyte Ecozone, such as those
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governing foreign exchange and other current account transactions (trade and
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nontrade), local and foreign borrowings, foreign investments, establishment and
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operation of local and foreign banks, foreign currency deposit units, offshore banking
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units and other financial institutions under the supervision of the BSP.
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SEC. 22. Remittance of Earnings. - In the case of foreign investments, a
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registered enterprise in the SLEZFA shall have the right to remit earnings from the
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investment in the currency in which the investment was originally made and at the
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exchange rate prevailing at the time of remittance, subject to the provisions of
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Section 74 of Republic Act No. 265, (The New Central Bank Act), as amended.
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CHAPTERV
NATIONAL GOVERNMENT AND OTHER ENTITIES
SEC. 23. Interpretation/Consttuctton. - The powers, authorities and functions 
that are vested in the SLEZFA are intended to decentralize governmental functions 
and authority and promote an efficient and effective working relationship among the 
Southern Leyte Ecozone, the national government and the LGUs.
SEC. 24. Supen/ision and Coordination of Development Rians. - For purposes of 
policy direction and coordination, the Southern Leyte Ecozone shall be under the direct 
control and supervision of the Office of the President through the Governor of the 
Province of Southern Leyte.
SEC. 25. Authority of the Bureau Customs (BOC) Examine the Entry and Exit of 
Imported Art'cies in the SLEZFA. - The BOC, in coordination with the appropriate 
government agencies such as, but not limited to, the Departments of Trade and 
Industry, Agriculture, Transportation and Communications, and Health shall have the 
authority to examine the entry and exit of imported articles in the SLEZFA for the 
purpose of determining: (a) the quantity and description of imported articles; and (b) 
compliance with the sanitary and agricultural requirements.
SEC. 26. Relationship with the Regional Development Counai. -The SLEZFA shall 
determine the development goals for the Southern Leyte Ecozone within the
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framework of national development plans, policies and goals. The administrator shall,
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upon approval by the Board, submit the Southern Leyte Ecozone plans, programs and
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projects to the Regional Development Council Inclusion and inputs to the overall
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regional development plan.
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SEC. 27. Relationship witiiLGUs. - Except as herein provided, the LGUs comprising 
the Southern Leyte Ecozone shall retain their basic autonomy and identity. The City 
of Maasin, Municipality of Bontoc, San Francisco, Hinundayan, Southern Leyte shall 
operate and function in accordance with the Local Government Code of 1991. In case 
of any conflict among the SLEZFA and City of Maasin, Municipality of Bontoc, San 
Francisco, Hinundayan, Province of Southern Leyte on matters affecting the Southern 
Leyte Ecozone other than defense and security matters, the decision of the SLEZFA 
shall prevail.
SEC. 28. Auditing. - The Commission on Audit shall appoint a representative 
who shall be a full-time auditor of the SLEZFA 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.
CHAPTER VI 
MISCELLANEOUS
SEC. 29. Separability Qause. - 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.
SEC. 30. Repealing Qause. — All laws, executive orders or issuances or any 
part thereof which are inconsistent herewith are hereby repealed or amended 
accordingly.
SEC. 31. EffecUvity Qause. —This Act shall take effect fifteen (15) days after 
its publication in at least two (2) national newspapers of general circulation.
Approved,
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