NINETEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
Frsf Regu/ar Session
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HOUSE OF REPRESENTATIVES
lntroduced by Representative Rufus B. Ro
EXPLANATORY NOTE
This blll seeks to establish a special economic zone in Barangay Balubal, Cagayan
de Oro City, Province of Misamis Oriental, pursuant to the general policies and guidelines
set forth under Republic Act No. 79'16, otherwise known as the "Special Economic Zone
Act of 1995."
Cagayan de Oro City is the gateway to the island of Mindanao. lt is the focal point
of domestic and foreign trade as well as the export outlet of the vast agricultural products
of Mindanao. The city is rich in agricultural and forest lands, mineral resources and scenic
tourist spots. lt has a typhoon-free climate, favorable peace and order condition and good
infrastructures and utilities. These factors are conducive to sustainable grolvth and
development.
Balubal is one ofthe fast-growing barangays in the eastern side of Cagayan de Oro
City. Its strategic location is an ideal site for industrial, commercial and recreational centers.
It can also serve as a major entry and exit point of trade considering that its neighboring
barangays have numerous seaports.
The establishment of a special economic zone will alleviate and improve the
economic condition of the City and the nearby provinces. The residents will be assured of
local employment opportunities which will hasten the economic grovvth not only in the area
but in the nearby provinces as well.
ln line with the government's policy to encourage, promote, induce and accelerate
a sound and balanced industrial, economic and social development of the country, the
establishment of Cagayan de Oro Special Economic Zone is earnestly recommended.
RU
RO
IJEZ
House Bill No.
July 6, 2022
5:53 pm
1459


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HOUSE OF REPRESENTATIVES
lntroduced by Represenaaffve Rufirs B. Ro
House Bill No.
AN ACT
ESTABLISHING THE CAGAYAN DE ORO SPEGIAL ECONOMIC ZONE IN BARANGAY
BALUBAL, CAGAYAN DE ORO CITY, PROVINCE OF MISAMIS ORIENTAL,
CREATING FOR THIS PURPOSE THE CAGAYAN DE ORO SPECIAL ECONOMIC
ZONE AUTHORITY, AND APPROPRIATING FUNDS THEREFOR
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
Assembled:
CHAPTER 1
GENERAL PROVISIONS
SEC 2. Declaration of Policy. - lt is hereby declared the policy of the State to actively
encourage, promote, and accelerate the sound and balanced industrial, economic and
social development in the country. The establishment of special economic zones shall
attract legitimate and productive foreign investments in strategic locations in the country. lt
shall generate employment and increase productivity and individual, as well as family
incomes, thereby enhancing the quality of life of the Filipino people.
CHAPTER 2
CREATION OF THE ECONOMIC ZONE
SEC 3. Creation of the Cagayan de Oro Special Economic Zone. - ln accordance with
the foregoing declared policy and subject to the concurrence of the concerned local
government units (LGUs) of Misamis Oriental affected by the zone, there is hereby
established a Special Economic Zone, hereinafter referred to as the Cagayan de Oro
Ecozone- The Cagayan de Oro Ecozone shall cover a particular area located in Barangay
Balubal, Cagayan de Oro City in the Province of Misamis Oriental. The specific metes and
bounds of the Cagayan de Oro Ecozone shall be more particularly defined in a presidential
proclamation that shall be issued for this purpose. Provided, That the lands embraced
therein shall be public lands and contiguous to one another.
SEC 4. Creafion of the Cagayan de Oro Special Economic Zone Authofty. - There is
hereby created a body corporate to be known as the "Cagayan de Oro Special Economic
Zone Authority" herein after referred to as the CDSEZA which shall manage and operate
the Cagayan de Oro Ecozone, in accordance with the provisions of this Act. This corporate
franchise shall expire in fifty (50) ears counted from the first year after the effec{ivity of this
Act, unless othenarise extended by Congress. lt shall be organized with one hundred eighty
(180) days after the efiectivity of this Act.
SEC 5. Governing Principles. - The Cagayan de Oro Ecozone shall be manage and
operated by the CDSEZA under the following principles:
NINETEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
Ftrst Regu/ar Sessrbn
SECTION 1. Shorf fit e. - This Act shall be known as the "Cagaya n de Oro Special
Economic Zone Acf' .
1459


a. Wthin the framework and limitations of the Constitution and applicable provisions of the
Local Government Code, the Cagayan de Oro Ecozone shall be developed into and
operated as a decentralized self-reliant and self-sustaining industrial, commercial/trading,
agro-industrial, tourist, banking, financial and investment center with sustainable residential
areas.
b. The Cagayan de Oro Ecozone shall be provided with transportation, telecommunications
and other facilities needed to attract leg'rtimate and productive investments, generate
linkage industries and employment opportunities for the people of Cagayan de Oro City
and its neighboring towns and cities.
c. The Cagayan de Oro 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 lndustry (DTl), with foreign entities or enterprises.
d. Foreign citizens and companies owned by non-Filipinos, in whatever proportion, may set
up enterprises in the Cagayan de Oro Ecozone, either by themselves or in a joint venture
with Filipinos in any sector of industry, international trade and commerce with in the
Cagayan de Oro Ecozone.
e. the Cagayan de Oro Ecozone shall be managed and operated as a separate customs
territory thereby ensuring the free flow or movement of goods and capital within, into and
out of its territory, and shall likewise provide incentives such as tax and duty-free
importations of raw materials, eapital and equipment to registered enterprises located
therein.
f. The areas comprising the Cagayan de Oro Ecozone may be expanded or reduced when
necessary. For this purpose, the CDSEZA, in consultation with the LGUS concerned shall
have the power to acquire either by purchase, negotiation or condemnation proceedings,
any private land within or adjacent to the Cagayan de Oro Ecozone for the following
purposes: 1 . Consolidation of lands for zone development; 2. Acquisition of right of way to
the Cagayan de Oro Ecozone; and 3. The protection ofwatershed areas and natural assets
valuable to the prosperity of the Cagayan de Oro Ecozone.
g. Goods manufactured by a Cagayan de Oro 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 CDSEZA
together with the PEZA, the Bureau of Customs (BOC), and the DTl. However, in order to
protect domestic industries, a Negative List of industries shall be drawn up and regularly
updated by PEZA. Entenprises engaged in industries included in such Negative List shall
not be allowed to sell their products locally.
h. The defense of the Cagayan de Oro Ecozone and the security of its perimeter fence shall
be the responsibility of the national government in coordination with the CDSEZA and the
LGUs/
SEC 6. Caprfarizafion. - The CDSEZA shall have an authorized capital stock of Two Billion
(2,000,000,000) no par shares with a minimum issue of Ten Pesos (Php 10.00) each, the
majority shares of which shall be subscribed and paid for by the National Government and
the LGUs embracing the Cagayan de Oro Ecozone. The Board of Directors of the CDSEZA
may, with the written concunence ofthe Secretary of Finance, sell shares, representing not
more than forty per centum (4006) of the capital stock of the CDSEZA to the general public
under such policy as the Board and Secretary of Finance may determine. The National
Government and the LGUs shall in no case own less than sixly per centum (60%) of the
total issued and outstanding capital of the CDSEZA.


The amount necessary to subscribe and pay for the shares of the National
Govemment to the capital stock of the CDSEZA 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.
9EC 7 . Principal Office of the CDSEZA. - The CDSEZA shall maintain its principal office
in Cagayan de Oro City but it may establish branches within the Philippines as may be
necessary for the proper conduct of its business.
SEC 8. Powers and Functions of the CDSEZA. - The CDSEZA shall have the following
powers and functions:
a) To operate, administer, manage and develop the Cagayan de Oro Ecozone
according to the principles and provisions set forth in this Act;
b) To register, regulate and supervise enterprises in the Cagayan de Oro Ecozone in
an efficient and decentralized manner, subject to existing laws;
c) To coordinate with LGUS and exercise general jurisdiction over the development
plans, activities and operations of the Cagayan de Oro Ecozone;
d) To regulate and undertake the establishment, construction, operation and
maintenance of public utilities, other services and infrastructure in the Cagayan de
Oro Ecozone such as lights and power, shipping, barging, stevedoring, cargo
handling, hauling, warehousing, storage of cargo, port services or concessions,
piers, wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads,
telecommunications, transport, bridges, terminals, conveyors, water supply and
storage, sewerElge, drainage, airport operations in coordination with the Civil
Avlation Authority of the Philippines (CAAP), and such other services or
concessions or infrastructure necessary or incidental to the accomplishment of the
objectives of this Act.
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, otherwise known as
the 'Build-Operate-Transfer Law" as amended, or joint venture, adequate facilities
and infrastructure required or needed for the operation and development of the
Cagayan de Oro Ecozone, in coordination with appropriate national and/or local
government authorities and in conformity with applicable laws thereon;
f) To approve plans, programs and projects of the Cagayan de Oro Ecozone to be
submitted to the Regional Development Council for inclusion and inputs to the
overall regional development plan;
g) To operate on its own, either directly or through licenses to others, tourism related
activities, including games, amusements, recreational and sports facilities, subject
to the approval and supervision of the Philippines Amusement and Gaming
Corporation (PAGCOR);
h) To raise or borrow, within the limitation provided by law and subject to the approval
or opinion of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), as the
case may be, adequate and necessary funds from local or foreign sources, to
finance its projects and programs under this Act and for this 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;
i) To protect, preserve, maintain and develop the forests, beaches, coral and coral
reefs, and maintain ecological balance within the Cagayan de Oro Ecozone.
Notwithstanding the authority of the CDSEZA to create rules for such purpose, the
rules and regulations of the Department of Environment and Natural Resources
(DENR) and other government agencies involved in the above functions shall be
implemented by the CDSEZA;
j) To create, operate, and/or contract to operate such functional units or offices of the
CDSEZA as it may deem necessary;


k) To adopt, alter, and use a corporate seal; contract, lease, buy, acquire, own or
otherwise dispose of personal and/or real property of whatever nature, sue and be
sued, and otherwise carry out its functions and duties as provided for in this Act;
l) To issue certificates of origin for products manufactures or processed in the
Cagayan de Oro Ecozone in accordance with prevailing rule$ of origin and the
pertinent regulations of the PEZA, DTI and/or DOF;
m) To establish one-stop shops for the issuance of all necessary permits, clearances,
licenses, and other $imilar certifications to conduct such activities intended to
improve the ease of doing business within the Cagayan de Oro Ecozone in
coordinalion with the government agencies having jurisdiction over activities
thercin. Prcvided, That all government agencies are directed to provide and extend
utmost and full cooperation to the Cagayan de Oro Ecozone in the establishment
of such one-stop shops;
n) To provide internal security to the Cagayan de Oro Ecozone in coordination with
the National Government and affected LGU. For this purpose, the CDSEZA shall
provide and establish its own internal security and firefighting forces or hire others
to provide the same. Military forces sent by the National Government for the
purpose of defense shall not interfere in the internal affairs of the Cagayan de Oro
Ecozone and expenditures for these military forces shall be borne by the National
Government;
o) 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 Acl; and
p) To issue rules and regulations consistent with the provisions of this Act as may be
necessary to accomplish and implement the purposes, objectives, and policies
provided herein.
SEC 9. Board of Dr?ectors. - The powers of the CDSEZA 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 Chairperson who shall, at the same time, be the Administrator of the CDSEZA;
b) The Governor of the Province of Misamis Oriental, or a duly authorized
representative;
c) The Representative of the 2nd Distriet of Cagayan de Oro City;
d) The Mayor of Cagayan de Oro City;
e) One (1) representative from the investors group; and
0 One (1) representative from among the workers in the ecozone.
A Vice-Chairperson shall be selected from among members of the Board.
The Governor of the Province of Misamis Oriental, Representative of the 2nd District
of Cagayan de Oro City, and city mayor shall serve as ex-officio members of the Board
whose terms in the Board correspond to their terms as elected officials.
The Chairperson-Administrator and the members of the Board, except the ex-ofrcio
members, shall be appointed by the President of the Philippines to serve for a term of six
(6) years, unless sooner separated from service due to death, voluntary resignation or
removal for cause, their replacements shall serve only the unexpired portion of the
respective terms.
The Chairperson-Administrator must be 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 a ratio to be determined
by the DBM in accordance with existing rules and regulations: Provided, however, That the
total per diem collected each month shall not exceed the equivalent of per diern for four (4)
meetings. Unless and until the President of the Philippines has fixed a higher amount of


per diem, the members of the Board shall receive per diem of not more than Ten Thousand
Pesos (PHP 10,000) for every Board meeting.
SEC 10. Organization and Pefsonnel. - The Board of Directors of the CDSEZA shall
provide for its organization and staff. The Board shall appoint and fix the remuneration and
other emoluments of its officers and employees in accordance with the existing laws on
compensation and position classification. The Board shall have exclusive and final authority
to promote, transfer, assign, reassign, or remove officers of the CDSEZA, any provision of
existing law to the contrary notwithstanding. The Chairperson-Administrator shall carry out
the decisions of the Board.
The officers and employees of the CDSEZA, including all members of the Board
except the ex-officio members, shall not engage directly or indirectly in partisan activities
nor take part in any election except to vote.
SEC 1 '1. Powers and Duties of the Chairperson-Administrator - The Chairperson-
Administrator shall exercise the following powers and duties:
a) To direct and manage the affairs of the Cagayan de Oro Ecozone in accordance
with the policies of the Board;
b) To establish the intemal organization of the CDSEZA under such conditions that
the Board may prescribe;
c) To submit an annual budget and necessary supplemental budget to 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 ofthe Cagayan de Oro Ecozone;
f) To recommend to the Board the remuneration and other emoluments of its officers
and employees in accordance with existing laws on compensation and position
classification;
g) 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 Cagayan de Oro Ecozone; and
h) To perform such other duties as may be assigned by the Board or which are
necessary or incidental to his office.
SEC 12. Legal Counsel, - The CDSEZA shall have its own internal legal counsel under
the supervision of the Government Corporate Counsel. When the exigencies of its
businesses and operations demand it, the CDSEZA may engage the services of an outside
counsel either on a case to case or on fixed retainer basis.
CHAPTER 3
INCENTIVES TO ECOZONE ENTERPRISES/INVESTORS
SEC 13. lnvestor's Visa. - Any foreign national who invesls an amount of Two Hundred
Thousand US Dollars (US$200,000) either in cash and/or equipment, in a registered
enterprise shall be entitled to an investor's visa: Provided, That the foreign national has
the following qualifi cations:
Must be at least eighteen (18) years of age;
Must not have been convicted by finaljudgment of a crime involving moral
Must not be afflicted with any loathsome, dangerous, or contagious disease;
Must not have been institutionalized for any mental disorder, or disability; and
Must possess financial capability and capacity through verifiable and credible
a.
b.
d.
e"
rpitud
tu
evidence.


A foreign national may reside in the Philippines while the investment herein required
subsists. To prove this, the foreign national should submit an annual report, in the form duly
prescribed for the purpose. Should said investments be withdrawn from the philippines, the
investor's visa issued to said foreign national shall automatically expire and/or be
withdrawn.
The authority to issue visas and work permits shall remain with the Bureau of
lmmigration (Bl) and the Department of Labor and Employment (DOLE), respectively:
Provided, That the Bl and DOLE shall implement measures to expedite the processing of
such visas and permits for workers in the Cagayan de Oro Ecozone and coordinate with
CDSEZA for the purpose of improving ease of doing business.
SEC 14. Fiscal lncerrtives. - Registered enterprises operating within the Cagayan de Oro
Ecozone may be entitled to the existing pertinent fiscal incentives as provided under
existing laws and regulations and/or those that may be further granted as the need and
necessity arises by the appropriate government department, agency, or office: Provided,
That in the administration, implementation, and monitoring of incentives, the CDSEZA may
impose its own conditions not otherwise prohibited by this Act: Provided, fufther, Thal the
CDSEZA shall not be limited to the conditions provided under existing laws.
SEC '15. lmposition of a Tax Rate of Five Percent (5o/o) on Gross lncome Earned * No
taxes, local and national, shall be imposed on business establishmentg operating within the
Cagayan de Oro Ecozone, including income tax, wilhholding tax, donor's tax, percentage
tax, and documentary stamp tax. ln lieu thereof, and subject to Section 17 of this Act, said
business establishments shall pay a five percent (5olo) final tax on gross income earned:
Provided, That the proceeds from such final tax shall be shared by instrumentalities of the
government in accordance with the following schedule.
a. Three per centum (3%) to the National Government;
b. Two per centum (2%) shall be directly remitted by the business establishments
to the treasurer's office of the municipality or city where the enterprise is located.
The CDSEZA shall have the authority to grant income tax holiday (lTH) and net
operating loss carry over subject to Section 17 of this Act and conditions as it may have
imposed pursuant to Section 14 of this Act.
SEC 16. Admin istration, lmplementation and Monitoring of Incen ives. - ln the interest
of enhancing transparency in the managemont and accounting of tax incentives in the
Cagayan de Oro Ecozone, the CDSEZA shall comply with the provisions of Republic Act
No. 10708, otheruise known as "The Tax lncentives Management and Transparency Act
OIMTAI and its implementing rules and regulations for the proper administration,
management, enforcement, implementation and monitoring of tax incentives provided
under this law.
The BOC shall set up and establish a customs controlled area outside the gate of
the Cagayan de Oro Ecozone to facilitate payment of taxes on goods entering the
Philippines customs territory: Provided, That notwithstanding the limitations in this Acl, the
CDSEZA and BOC may coordinate and jointly implement measures on border protection.
SEC 17. Duration of lncentives. - Fiscal incentives under this Act shall be terminated
after a oumulative period of twenty (20) years from 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 and interest. The industries exempted ftom
this provision shall be determined by CDSEZA, in consultation with other government
agencies-
SEC 1 8. Sequential Availment of lncentives. - Registered enterprises may enjoy the ITH
granted by CDSEZA prior to the availment of the 5% final tax on gross income earned


incentive: Provided, That in the event a registered enterprise elects to avail of the final tax
incentive, such registered enterprise shall be barred from availing the ITH incentive.
SEC 19. Extension ol Pertod of Availment. - The CDSEZA may extend the period of
validity ofthe incentives extended to a registered enterprise in the event that it suffers, due
lo force majeure, a cessation or suspension of operations that impairs it viability or
profitability.
SEC 20. Banking Rules and Regulations. - Banks and Financial lnstitutions to be
established in the Cagayan de Oro Ecozone shall be underthe supervision ofthe BSP and
subject to existing banking laws, rules and regulations.
SEC 21. Remittances. - ln the case of foreign investments, a duly registered entity or
enterprise within the Cagayan de Oro Ecozone shall have the right to remit eamings from
the investment in the currency in which the investment was originally made and at the
exchange rate prevailing at the time of remittance, subject to the provisions of Republic Act
No. 7653, otherwise known as the "New Central Bank Act".
CHAPTER 4
NATIONAL GOVERNMENT AND OTHER ENTITIES
SEC 22. Superuision and Control. - For purposes of policy direction and coordination,
the CDSEZA shall be underthe direct control and supervision of the Office ofthe President.
SEC 23. Development Goals of the Cagayan de Oro Ecozone. - The CDSEZA shall
determine the development goals for the Cagayan de Oro Ecozone within the framework
of national development plans, policies and goals. The Chairperson-Administrator shall,
upon approval by the Board, submit the Cagayan de Oro Ecozone plans, programs and
projects to the Regional Development Council for inclusion and inputs to the overall regional
development plan.
SEC 24. Relationship with Local Govemment Uni6. - Except as herein provided, the
LGUS comprising the Cagayan de Oro Ecozone shall retain their basic autonomy and
identity. The City of Cagayan de Oro, Province of Misamis Oriental, shall operate and
function in accordance with the framework of the Constitution, the Local Government Code
and this Act.
ln case of any conflict among the CDSEZA, the LGUs and the National Government
on matters affecting the Cagayan de Oro Ecozone, otherthan national defense and security
matters, the decision of the CDSEZA shall prevail.
SEC 25. Audit - The Commission on Audit shall appoint a full time auditor in the CDSEZA
or may assign such number of personnel as may be necessary in the performance of their
functions.
CHAPTER 5
MISCELLANEOUS
SEC 26. lnterpretation/Construction. - The powers, authorities and functions that are
vested in the CDSEZA are intended to establish national seff-sufficiency and self-reliance
in the advancement of and protection of the national integrity, enhancement of national
security, decentralization of governmental functions and authority, and promote an efficient
and effective working relationship among CDSEZA, the National Government and the
LGUs. Any interpretation of this Act shall consider such intentions. ln the event of conflict
of interpretation and provided the intentions cannot be harmonized, the provisions of this
Act shall be construed in favor of an interpretation that would tend to protect national
security.


SEC 27. Applicability Clause. - lnsofar as they are consistent with the provisions of this
Act, Sections 30 to 41 of Republic Act No. 7916, otherwise known as "The Special
Economic Zone Act of 1995", as amended shall likewise apply to the Cagayan de Oro
Ecozone.
SEC 28. lmplementing Rule.s and Regulations. - The NEDA, in coordination with the
DTI and DOF, shall formulate the implementing rules and regulations of this Act within
ninety (90) days after its approval.
SEC 29. Repealing Clause. - All laws, decrees, executive orders, rules and regulations
and other issuances, or parts thereof, inconsistent with the provisions of this Act, are hereby
repealed or modified accordingly.
SEC 30. Sepanbility Clause. - lf any part or provision of this Act is declared
unconstitutional, or other parts or provisions hereof which are not affected thereby shall
continue to be in full force and effect.
SEC 31. Effectiv@. - This Act shall take effect fifteen (15) days after its publication in at
least one (1) national newspaper of general circulation.
Approved,