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THIRTEENTH CONGRESS OF THE 
1 
Third Regular Session 
1 
REPUBLIC OF THE PBILIPI’INES 
) 
” ,
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. .,. .. -pi?!/ 
S E N A T E  
S.B.No. 
~~~ 
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(In substitution o f  Senate Rill No. 2133, tal&g into consideration 
House Bill No. 5266) 
Prepared by the Committees on Economic Affairs; Local Government; Ways and 
Means; and Finance with Senators Recto, Roxas, Lim, Re& and Drilon 
as authors thereof. 
@P- 
AN ACT 
ESTABLISI-IING THE SAMAL ISLAND SPECIAL ECONOMIC ZONE IN 
THE ISLAND GARDEN CITY OF SAMAL, PROVINCE OF DAVAO DEL 
NOIZTE, CREATING FOR THE PURPOSE THE SAMAL ISLAND SPECIAL 
ECONOMIC ZONE AUTHORITY, APPROPRIATING FUNDS THEREFOR 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate nnd House of Kepresentaiives of the PhilQpines in 
Congress asseiii bled: 
Section 1. Short Title. - This Act shall be lcnown as the “Samal Island 
Special Economic Zone A ~ I  
or2007.” 
See. 2. Declriratiorz of Policy. - It is liereby declared the policy of the State 
to actively encourage, promote, induce, and accelerate tlie sound and balanced 
industrial, economic and social developtnent of the country in order to provide jobs to 
the people, especially those in rural areas, increase their productivity and their 
individual and family income, and thereby improve the level and quality of their 
living conditions through the cstablishment, among others, of special economic zones 
in suitable and strategic locations in the country and through measures that shall 
efkctively attract legitimate and productive foreign investments. 
Sec. 3. Creniion of the Snianl Islrinrl Specid Ecorroniic Zone. - In pursuit of 
tlie foregoing declared policy and subject to the concurrence of the concerned local 
government units or Samal Island affected by the zone, there is hereby established a 
Special Economic Zone in the Island Garden City of Samal in the Province of Davao 
del Norte, hereinafter referred to as the Samal Island Ecozone. The specific ineles and 
bounds of the Saiiial Island Ecozone shall be more particularly defined in a 
proclanialion to be issued by the President of the Philippines, upon the 
recomnieiidation of the Philippinc Economic Zone Authority (PEA), provided that 
the lands embraced therein shall be public lands. 
Sec. 4. Governing Pr‘uiizciples. - The Samal Island Special Economic Zone 
sliall be managed and operated by the Samal Island Special Economic Zone 


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3-7 
Aulliority, herein referred to as the SISEZA, created under Section 10 of this Act, 
under the following principles: 
(a) 
Within the framework and liinitations of the Constitution and 
applicable provisions of the Local Governnieut Codc, the Sanial Island Ecozone sliall 
be developed into and operated as a decentralized, self-reliant and self-sustaining 
industrial, coiiimercial/trading, agro-industrial, tourist, banking, financial and 
iiivestinciit center with suitable resideiitial areas. 
(17) 
The Samal lsland Ecozoiie shall be provided with transportation, 
telecoiiiiiiuiiicatioiis and other facilities needed to attract legitimate and productive 
investments, geiierate linltage industries and employment opportunities [or the peopfc 
o€ the Province of Samal Island atid its neigliboring towns aiicl cities. 
(c) 
The Samal Island Ecozone may establish niutually beneficial ecoiioinic 
relations with other entities or enterprises within the country or, subject to the 
administrative guidance of the I>epartinent of Foreign Affairs (DFA), the Philippine 
Economic Zone Authority (PEZA) and/or the Department of Tmde and Iiidustry 
(DTI), with foreign entities or enterprises. 
(d) 
Foreign cilizens and companies owned by non-Filipinos in whatever 
proportion niay set up enterprises in the Samal Island Ecozone, either by themselves 
or in joint venture with Filipinos in any sector of industry, international trade and 
coninierce within the Sanial Island Ecozone. 
(e) 
The areas comprising the Sanial Island Ecozone niay be expanded or 
reduced when necessary. For this purpose, the SISEZA, in consultation with the local 
government units, shall have the power to acquire either by purchase, negotiation or 
condemnation proceedings, any private land within or adjacent to the Sanial Island 
Ecozone for the following purposes: (1) consolidation of lands Cor Samal Islaiid 
Ecozone development; (2) acquisition of right of way to the Samal Island Ecozone; 
and (3) the protection of watershed areas and iialural assets valuable to the prosperity 
of the Samal Island Ecozone. 
(0 
Goods manufiactured by a Samal Island Ecozone enterprise shall be 
made available for immediate retail sale in the domestic niarltet, subject to the 
payment or corresponding taxes on raw materials and other regulations that may be 
formulated by the SISEZA, 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 PEZA. Enterprises engaged in industries 
included in such Negative List shall not be allowed to sell their products locally. 
(g) 
The national govermnent shall maintain its ability to coordinate with 
the S a d  Island Ecozone and the local government units. 
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Scc. 5. Zitcentives To Registered Enterprises. - The Samal Island Special 
Economic Zone Authority (SlSEZA) may achiiiislcr tlie following incentives tu the 
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rcgistercd enterprises located tlicrcin to the extent of‘ the activitylprojcct: 
(A) 
Income Tax Holiday (ITH) - Registered enterprises shall be entitled to 
an incoiiie tax holiday froin the s t a t  of their coniniercial operations to the extent of 
their activity under the following categories: 
Category A - Registcred tlonicslic eiiierprise located in highly developed 
areas, as detcrinined by tlie Board of lnvcstiiients (BOI), shall be entitled to a 
four-year income tax holiday. 
Category B - Registered tloriicstic enterprise on the following shall be cntitled 
to a six-year income tax holiday: 
(1) Located in less developed areas as defined by the BOl; or 
(2) Producingirciidering new productsiservices or having strong 
backward or forward linkages 
Category C - Registered cxport enterprise shall be entitled to a six- ycar 
income tax holiday: Provided, however, ‘ k t  if tlie export enterprise complies 
with the following: (1) large capital investments or sizeable employtnent 
generation, or (2) use high level of technology or (3) located outside Metro- 
Manila, it shall be entitled to an eight-year income tax holiday. 
Registered enterprises embarking on new investments that are listed in the 
current Investment Priorities Plan (IPP) shall be entitled to incentives provided herein 
pertaining to tlie new investiiients and subject to such term and conditions as tlie BO1 
may determine. 
For this purpose, a registered enterprise shall be delined as any person, natural 
or juridical, licensed to do business in tlie Philippines and registered with the Samal 
Island Special Economic Zone Authority (SISEZA) to transact business within the 
S a d  Island Special Economic h n e .  A registered cxport enterprisc shall be dcfiiied 
‘as aiiy registered enterprise engaged directly or indirectly in the production, 
manufacture or trade of products or services which earns at least seventy perccnt 
(70%) of its normal operating revenues lrom the sale of its products or services 
abroad for foreign currency. A registered domestic enterprise, meanwhile, shall be 
defined as aiiy registered enterprise not falling under the definition of a registered 
export enterprise. 
Additional investments in the project shall be entitled to the incoinc tax 
holidays corresponcling to such investments as ~uay be determined by the BOl. 
Additiond income tax holiday may be granted for as long as tlie iiivestnient is liiade 
011 the same project: t’uovided, That the project is listcd in the Il’P at the same time tlie 
additionill inveshieiit in the project is made: Provided, ,filrlher, That the cntitlenient 
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period for adtlitioual iiivestmciits shall not exceed three times the period provided 
under this subsection: Provided, however, That the total ITH period for an cxpori 
cntcrprise availing of an eight year ITII shall not exceed twcnty (20) years. Ally 
unused incentives shall therefore be deemed forfeited if not used during the incentive 
period. 
Enterprises registered with SISEZA are required to share in the special 
development fund or the BO1 Cor investment promotion projects of the goveriinient 
equivalent to one pcrceiit (1%) of thc IIEI granted for cvery application. 
The Bureau of Jnternal Reveiiue (BIR) shall require a registered enterprise 
availing of ITIl or Net Operating Loss Carryover (NOLCO) to secure a certificate of 
eligibility froin the SISEZA becore submilling its income tax return (II’R) with 
SISEZA Tor validation. 
Failure to secure certification and/or to file the ITH or NOLCO availment for 
validation by the SISEZA within forty-five (4.5) days from the last day of each 
statulory filing date for ITR shall cause the forfeiture of the availineiit for the taxable 
period. 
(B) 
Nel Operating Loss Carryover (NOLCO) - Net operating loss of the 
busincss or enterprise during the first three years from start of commercial operations 
which have clot been previously offset as deduction from gross income shall be 
carried over as a deduction from gross income for the next five consecutive years 
iinniediately following the year of such loss: Provided hoi.iwer, That operatiiig loss 
resulting from availinent of incentives provided in this Act shall not be entitled to 
NOLCO. 
Registered enterprises availing of the ITII as herein provided shall no1 be 
entitled to avail of thc NOLCO. 
(C) Imposition of a tax rate of five percent (5%) 011 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 Samal Island 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; 
(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 thc Sainal Island Ecozone shall be 
subjecl to mtional and local taxes under the National Intermdl Revenue Code of 1997, 
as amended, and the Local Goveriiment Code. 
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D. Accelerated Depreciation -- Accelerated depreciation of plant, machinery 
and equipment that are reasonably needed and actually used for tlii: production and 
transport of goods and services may be allowcd using a rate not ex; :ding twice the 
rate which would have been used had the annual allowance been computed in 
accordance with the rulcs and regulations prescribed by the Secretary or Finance and 
the provisions or the National Internal Revenue Code (NIRC) of 1997, as amended. 
E. 
Capital Equipment Inceiitives - (1) Importations of capital equipment, 
spare parts, tools aiid dye, or those required for pollution abatement aiid control, 
cleaner production and waste reduction including consignment thereof by registered 
enterprises upon the effectivity of' this law, shall be exempted to the extent of one 
hundred percent (100%) of the taxes and cutonis duties: Provided, That the importcd 
items thereof shall be used cxclnsively by the registered enterprise in its registered 
activity. Provided, further, That the importation of machinery aiid equipment and 
accompanying parts shall comply with the following conditions: 
1. 
comparable quality and at reasonable prices; 
11. 
They are reasonably needed and will be used exclusively by the 
registered enterprise in the manufacture of its products, unless prior approval 
of the SISEZA is secured ror the part time utilization or said equipmcnt in a 
non-registered activity to maximize usage thereor or the proportionate taxes 
and duties are paid on a specific equipment and machinery being periiianently 
used for non-registered activities; and 
iii. 
the importation ol'such machinery, equipment and spare parts. 
Approval of the SISEZA must be secured before any sale, transfer or 
disposition of the imported capilal equipmelit, machinery or spare parts is made: 
Provj&d, 'rhat if such sale, transfer or disposition is made within the first five years 
They are not nianuljctured doiiiestically in sufficient quantity, of 
.. 
Approval of the SISEZA was obtained by the rcgistered enterprise for 
from date or importation, any of the following conditions must be present: 
1) 
The same is iiiade to another enterprise enjoying tax and duty 
exemption on imported capital equipment; 
The same is made to another enlcrprise, upon the payment or any 
taxes and duties on h e  net book value of the capital equipment to 
be sold; 
The exportation of the capital equipment, machinery, spare parts or 
source docuineuts or those required for pollution abatement and 
control; or 
Proven technical obsolescence of the said equipment, machinery or 
spare parls. 
2) 
3) 
4) 
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Wlien the aforementioned sale, transfer or disposition is ii,ade under any of the 
conditions provided [ox in tlie foregoing paragraphs other than paragraph (2) lierein, 
the registered firm sl~all not pay the taxes and duties waived on such items: Provided, 
further: That if thc registered entcrprises sell, transfer or disposc, the aforementioned 
inipoitcd items without prior approval within five years &om 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, 
Jinnlly, That even if the sale, transfer or disposition of the capital equipment, 
inachinery or spare parts is approved after five years from date or importation, the 
registered enterprises are still liable to pay the taxes and duties based on the net book 
value of the capital equipmcnt, 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 macliinery, capikal equipment, raw materials, supplies, 
.parts and semi-finished producls to be used in thc rabrication of machinery and capital 
equipment by a registered export-oriented entcrprise fioni a domestic inanuracturer 
shall be subject to zero percent (0%) value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit 
equivalent to the ainouiit or duties that would have been waived on the machinery; 
capital equipment; raw materials, supplies, parts and semi-finished products used in 
the fabrication ol‘ machinery and capital equipinelit, had these items been iniportcd, 
upon its subniission to the DOF of the bill of materials evidencing the transaction 
value of such and other pertinent docunients, for verification and proper endorsement. 
The availinent by a registered export enterprise of the incentive stated under 
the immediately preceding two paragraphs shall be subject to tlie following 
conditions: (a) That said capital equipment, niachinery and spare parts will be used 
exclusively by the registcred enterprise in its registered activity; (b) That the capital 
equipment or machinery where the raw materials, sul~plies, parts and semi-finishcd 
products were used would have qualified Cor tax and duty-Cree importalion; and (c) 
‘Kat the approval of the SISEZA is obtained by tlie registercd enterprise. If the 
registcrcd enterprise sells, transfers or disposes of these machineries, capital 
equipnient and spare parts, tlie provision in the preceding paragraphs for such 
disposition shall apply. 
‘l’his incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year from date of delivery 
F. 
l‘lic importation or sonwe docunicnts by inforniation technology- 
registered enterprises shall be eligible for tax and duty free importation. 
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G. 
I
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Materials Incentives - Every registered cxport-oriented enterprise 
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shall enjoy a tax credit equivalent to the internal revenue taxes and customs duties 
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paid on tlie supplies, raw materials and semi-manuracturzd products provided tile 
same are not suflicient in quantity, quality or are not competitively priced in the 
Philippines and which are used in Lhe manukicture, processing or production o f  its 
export products forming part thereof, exported directly and indircctly by the registered 
export-oriented enterprise, based on the actual taxes and duties paid for such 
materialsisuppliesisemi-niaiiufact~i~e~~ 
products by the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year from date of exportation of the final product. 
1%. Incentives on Breeding Stocks and Genetic Materials. - Importation of 
breeding stocks and genetic inaterials within ten (1 0) years from the date of 
registration of coniinercial operation of the enterprise shall he exempt from all taxes 
and duties: Provided, That such breeding stoclts and genetic materials are reasonably 
needed in the registered activity; and approved by the SISEZA. 
The availment of the incentives by the registered cnterprise shall be subject to 
the following: (a) that said breeding stoclts and genetic materials would have been 
qualified for tax and duty-free importation under tlie preceding paragraph; (b) that the 
breeding stocks and genetic materials are reasonably needed in the registered activity; 
(e) that approval o€ the SISEZA has been obtained by tlie registered enterprise; and 
(d) that the purchase is made within ten (10) years from the date of registration OC 
commercial operation of the registered enterprise. 
This incentive shall be deemed waived if application Cor tax credit under this 
subsection is not filed within one year from date of delivery. 
I. Exemption from Wharfage Dues. - The provisions of law to tlie contrary 
notwitlistanding, exports by a registered enterprise shall be exempted from wharfage 
dues. 
J. 
Deferred Imposition of the Minimum Corporate Income Tax. - Thc 
Minimuin Corporate Income Tax (MCIT) of two percent (20/) of the gross income as 
of the end of the taxable year shall be imposed when the MCIT is greater than the 
iiicome tax computed under the NIRC o l  1997, as miendcd, for the taxable pear: 
Provided, however, That said MCIT shall be imposcd only after tlie enterprise's 
entitlement period to the income tax-based incentives has expired 
IC. Tax Treatment of Merchandise in the Samal Island Ecozone. - 
a. Domestic merchandise sent from the Samal Island EcoLone to areas 
outside tlie said Ecozone shall, wluSI1er or not combined with or iivade 
part of other articles likewise of local origin or manufactured in the 
Philippines while in the export proccssing zone, be subject to internal 
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b 
C 
d 
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revenue laws of the Philippines as domestic ;oods sold, transferred or 
disposed of for local consumption. 
Merchandise sent from the Saiiial Island Ecozone to areas outside the 
said Ecozone shall, whether or not combined with or made pavt of 
other articles while in the zone, be subject to rules and regulations 
governing iniported merchandise. The duties am 1 taxes shall be based 
on the value of said imported inaterials (except \\ lien the final product 
is exempt). 
Articles produced or manufactured in tlie Sainul Island Ecozone and 
exported therefrom shall, on subsequent iiiiportai ion into tlie customs 
territory, be subject to the import laws applic,able to like articles 
manuFwtured iii a foreign country. 
IJnless the coiilrary is shown, merchandise talwi out of the Samal 
Island Ecozone shall be considered for tax purposies to have been sent 
to ciistoiiis territory. 
Tax Treatment of Raw Materials and Capital E] tiipnieiit in the Samal 
lsland Ecozone. - hiportations of raw materials and capital equipment shall be treated 
as in tlie Omnibus Investnieiits Code. Registered export oriented enterprise shall have 
access to the utilization of the bonded warehousing system in accordance with the 
rules and regulations o C the Bureau of Custoins. 
M. Employment of Foreign Nationals. - Subject to llie provisions of 
Section 29 of Commonweallli Act No. 613, as amencled, a registered enterprise may 
employ foreign nationals in supervisory or technical positions for a period not 
excceding 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 tlie president, treasurer and general manager or their equivalents may be retained 
by foreign nalionals beyond tlie period set forth herein and such officer is tlie owncr 
or a stocl~holdcr owning at least ten percent (10%1) of the outstanding capital stock o f  
the registered enterprise and he remains the owner or maiiitains his stocldioldings 
therein. 
Foreign nationals uiider employment contract within the purview of this 
incentive, their spouses and unmalried children under twenty-one (2 1) years of age, 
who are not excluded by Section 29 of Commonwealth Act No. 613, as anlended, 
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 111Llltiple entry visa, 
valid for a period of three years, and shall be allowed to enter and leave the 
Philippines without riirther documentary requirements other tlian valid passports or 
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otlicr travel documents in the nature of passports. The validity of the inultiple entry 
visa shall be extendible yearly. 
Thc said Coreigu nationals aclmittcd under this provision, as wcll as their 
respective spouses and depcndcnts shall be exempt froiii: 
(a) obtaining alien 
certificate of registration aiid iiiimigratioii clearance certificates; aid (b) securing the 
Alien Ihployment Permit (AEP) and all types of‘clearances, permits, licenscs or their 
equivalents required by any government department or agency. 
Sec. 6. Irrcentive to Zrilvestors. - Any foreign iiational covered iindcr 
Subsection (M) of Section 5 ofthis Act, who invests an amouut of US $ 150,000.00, 
either in cash and/or equipment, in a registered eiiterprise shall be entitled to an 
investor’s visa: Provided, ‘That, 
(1) He is at least eighteen (1 8) ycars of age; 
(2) He has not been convicted of a crime involving moral turpitude; 
(3) Me is not arIlicted with any loathsome, dangerous or contagious disease; 
and 
(4) He has not been institutionali~ed for my mental disorder or disability. 
Provided, fiirther, That in securing the investor’s visa, tlie alien-applicant shall bc 
entitled to the same privileges provided for under paragraph (M), Section 5 hereof. 
As a holder of investor’s visa, a11 alien shall be entitled to rcside iii the 
Philippines while his iiivesttnent subsists. For this purpose, he should submit an 
annual report, in tlie form duly prescribed for the pwpose, to prove that he has 
inaiiitained his investiiient in the country. Should said alien witlidraw his investments 
from the Philippines, them the investor’s visa issued to him shall automatically expire. 
See. 7. Arlniiizistmtion, Zfii~le~rrefft[i~ioii 
arid Morritorirrg qf Irzcerrtives. - 
The SISEZA shall be responsible for the adininistratio~i and iniplenicntation or the 
incentives granted to its respective registered enterprises: 
Providecl, That any 
inccntivc adiiiiiiistration policy adopted by the BO1 for registered enterprises shall be 
uiiiformly applied by SISEZA. 
The following are the dutics and responsibilities or the SISEZA in lhc 
adiiiiiiistration o F incentives: 
(A) To adopt coiisistent procedures of administering inceiitives in 
accordance with the guidelines established by the DOI; 
To adopt and iinplemcilt systems and procedures aKectiiig trade and 
custoins policics in accordance with the rcquircriiciits established by the 
Department of Finance (DOF) and the BOI; 
To submit itiformation on regislered enterprises to the DOF and the BO1 
as required by any of these agencies to ascertain consistency of‘ 
inveslment policics and incentives, including their iniplen~entation as 
(B) 
(C) 


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provided in paragraph (a) herein, and to ensurc propcr iiiipleiiieiitatioii of 
systems and procedures affecting trade and customs policies as provided 
in paragraph (b) lierein; and 
To perform all other duties and respousibilities as may be required by 
the President ofthe Philippines. 
(D) 
For proper monitoring, the 1301 shall create a single database of all incentives 
provided by all incentives granting agencies, including SISCZA, and all information 
thereto. Double entry accounting shall be done by thc 1301 in recording all incentives 
granted by the government for transparency purposes. 
SCC. 8. Extension of Period of Avuilnierzt. - Tlie availnient period of the 
incentives provided herein may be extended by SISEZA, in the event that tlie 
registered enterprise surfers operational force /najew.e or any event equivalent thereto, 
impairing its viability, provided that tlie availnient period shall not exceed the 
duration of the saidforce niujewe or equivalent event. 
Scc. 9. Df,trntiotr of Incentives. - Enterprises registered with SISEZA may 
enjoy ITH or NOICO granted by tlie latter prior to the availineiit of the five percent 
(5%) GIE. 
Fiscal incentives under this Act shall be terniinated after a cuniulative period 
of twcnty (20) years lrom date of registration or start of commcrcial operation, 
whichever is applicable, except that it could be extendcd with regard to industries 
deemed indispensable to national development. 
Tlie industries exempted from this provision shall be recommended by €301, 
witb the concurrence of the Secretaries of the Department of Finance and Trade and 
Industry. 
Sec. 10. Crecitiozi of the Sumd Islitrid Specid Economic Zone Autltority. - 
There is hereby created a body corporate to be known as the Sanial Island Special 
Econoniic Zone Authority, hereinafter referred to as the SlSEZA, which shall manage 
i1nd operate, in accordance with the provisio~~s 
of this Act, the Samal Island Special 
Economic Zone. This corporate franchise shall expire in fifty (50) years counted froin 
the first day of the fifth (5"') calendar year a
h
 
the effectivity of this Act, nniess 
otherwise extended by Congress. It shall be organized within one hundred eighty 
(180) days after tlie erfectivity of this Act. 
SCC. 11. Principcil Office ofSIsEz,4. - The Sainal Island Special Economic 
Zolie Authority shall maintain its principal o f k e  in Samal District, but it may 
establish branclies within the Philippines as may be necessary for Ilie proper conduct 
36 
of its business. 
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SIX. 12. Powers crnil Functions of the Snnzal IsluiidSpeciul i?cconornic Zone 
Autliority. - The Sanial Islaiid Special Economic Zone Authority shall have thc 
following powers and hictions: 
(a) To operate, administer, manage and dcvelop the Samal Lsland Ecozone 
according to the principles and provisions set forth in this Act; 
(b) To register, regulate and supervise the enterprises in the Samal Island 
Ecozone in an efficient and decentralized manner, subject to existing laws; 
(c) To coordinate with local goveriiment uiiits and exercise general 
supervision over the dcveloptiieiit plans, activities and operations of the 
Saiiial Island Ecozone; 
(d) To regulate and undertake the establishment, operation and maintenance 
of utilities, otlier services and infrastructurc in the Samal Islaiid &ozone 
such as but not liniited to heat, light and power, water supply, 
telccoiiimuiiicatioiis, transport, toll roads aud bridges, port services, cte. 
and Lo fix just, reasonable and competitive rates, fares, charges and prices 
thereof; 
(e) To construct, acquire, own, lease, operate and maiiitaiil on its own or 
through contracts, franchise, licenses, bulk purchase from the private 
sector or permits under any of the sclicmes allowed in Republic Act No. 
6957 (the Build-Operate-'Sraiisfer Law, as amended by RA 771 8), or joint 
venture, adequate Pacilities aid infras\ructure required or needed Cor the 
operation and development o f  the Samal Island Ecozone, in coordination 
with appropriate national and local government authorities and in 
conformity with applicable laws tliereon; 
(f) To operate on its own, either directly or through a license to other 
tourism-related activities, iiiclnding games, amusements, recreational and 
sports facililies; 
(g) Subject to the approval of the President and the Monetary Board of the 
Banglco Seiitral ng Pilipinas upon the recoiiimendation of the Department 
of Finance, to raise or borrow adequate and necessary funds from local or 
foreign sources to liuance its projects and programs under this Act, aid 
lor that purpose to issue bonds, promissory notes, and otlier forms or 
securities, and lo secure ilie saine by a gumantee, pledge, mortgage, clced 
or 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 Samal 
Island Ecozonc; 


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(i) To create, operate and/or contract to operate such fhctional units of 
offices of the SISEZA as it may deem necessary; 
(j) 'To adopt, alter and n ~ e  
a corporatc seal; make contracts, leases, own, 01 
otherwise dispose of personal or real property; sue and be sued; and 
otherwise carry out ils hiclions arid dulies as provided for in this Act; 
(I<) To issue certificates of origin for products tllanufactured or processed in 
the Samal Lsland Ikozone in accordance with prevailing rules of origin, 
and the pertinent regulations of the PIXLA, DTI and/or the Department of 
Finance (DOF); 
(I) To issue worlting visas renewable every two (2) years to loreign 
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 pemaiient resident status and working visas within 
thirty (30) days after issuance ol'such grant; 
(n) To exercise such powers as maybe essential, necessary or incidental to the 
powers grsinted to il hereunder as well as those that shall enable it to carry 
out, implement and accoinplish the purposes, objectives and policies of 
this Act; and 
(0) To issue rules and regulations consistent with the provisions of this Act as 
maybe necessary to accoinplish and iniplement the purposes, objectives 
and policies provided herein. 
Sec. 
13. Banking RIIICS and Regnlcitiorrs. - Existing laws and 
rules/rcgulations of the Drmglco S e n k l  ng Pilipinus (1331') shall apply to banks and 
,financial institutions to be esldblished in the S a n d  Island Ecozone, such as those 
governing foreign exchange and other concurrent account lraiisactions (trade and non- 
trade), local and foreign borrowings, foreign investnlents, estilblishnlent and operation 
of local and foreign hanlts, foreign currency deposit units, offshore banking units and 
other financial institutions under the supervision of the RSP. 
Sec. 14. Renriitnitce of' Earnings. - In the case oE foreign investments, a 
registered enterprise in the SISEZA shall have the right to remit earllings from the 
investment in the currency in which the investlnent was originally made and at the 
exchange rate prevailing at the tiinc of remittance, subject to the provisions of Section 
74 of Republic Act No. 265, as amended. 
See. IS. Board of Directors of tlie Simal Island Specid Eeononiic Zoue 
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Arrt/~ority. - 'l'lie powers of the Samal Island Special Economic Zone Authority shall 
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be vested in and exercised by a i3oard 7f Directors, hereinafter rc [erred to as the 
Board, which shall be composed of ilie foii.,wing: 
a) The Chairman who shall, at [I e same time be the administrator of the 
SISEZA; 
b) A Vice-Chairman who shall conic Cram among the menibcrs of the Board; 
c) Members consisting of: 
(1) The Governor of the Proviiii : 
of Davao del Nortc; 
(2) The Congrcssional Represcrimtive of the district covering tlie site 
of the Sanial Island Ecozoiie; 
( 3 )  The mayor o l  the Island Gardc. I City of Samal, Province of Davao 
del Norte; 
(4) One (1) representative from the <iomestic investors; 
( 5 )  One (1) representative from the I :  reign investors; aid 
(6) Two (2) representatives Croni the \vorlcers working in Samal Island 
Ecozone. 
The Governor, the Congressional representati: i: and the mayor of the Island 
Garden City of Sainal, the Province of Davao del K x t e  shall serve as ex-ojjcio 
members of the Board, whose term in the Board corresl:onds to their term as elected 
officials. 
The Chairman and the iiiembers of tlie Board, exccp~ the ex-officio 
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members, 
shall be appointed by the President of the Philippines to serve lor a term of six (6) 
years, unless sooner separated from service due to death, voliintary resignation, or 
reinoval for cause. In case of death, resignation or removal Cor c a m ,  tlie replacement 
shall scrve only the unexpired portion of the term. 
Except for tlie representatives of the busincss and labor sec.tors, no person 
shall be appointed by the President of the Philippines as a nieinbcr of the Board unless 
he i s  a Filipino citizen, of good inoral character, of proven probity and intcgrity, and a 
degree-holdcr in any of tlie Iollowing fields: 
cconoinics, business, public 
administration, law, management or their equivalent, anti with at least ten (1 0) years 
relevant working experience prclerably in the field of nianagenient or public 
administration. 
The Members of the Board shall each receive per diem at rate to be 
determined by the Department of Budget and Management in accordance with 
existing rules and regulations: Provided however, That the total per diem collected 
each ~nontli shall not exceed the equivalent per diem for four (4) meetings. Unless 
and nntil the President of the Philippines has fixed a higher per diem lor tlie members 
oI the board, such per diem shall not be more than ten thousand pcsos (I’l0,000.00) 
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every Board meeting. 
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Scc. 16. Powis nnd Duties of the Clzaiinzan-A~fnziriisticitor. - The 
Cliairiiiaii-Administrator shall have the following powers and tlutics: 
a) 
To direct ant1 manage the a€fairs oftlie SlSEZA iii accordance wit11 
the policies orthe Board; 
To establish the internal orgcmization of the SISEZA under such 
conditions that the Board iiiay prescribe; 
To submit an annual budget and necessary supplemental budget to 
the Board Tor its approval; 
To submit within thirty (30) days after tlie close of each fiscal year 
an annual report to the Board aiid such other rcports as may be 
required; 
b) 
e) 
d) 
e) 
To subinit to the Board for its approval policies, systems, 
procedures, rules and regulations that are esseiitial to the opcratioii 
ofthe Samal Island Ecozoiie; 
To create a mechanism in coordination with relevant agencies for 
the promotion or industrial peace, the protectioii of the eiivironmcnt, 
and the advaiicemeiit of the quality of lire in the Sand Island 
Ecozone; aiid 
To perform such other duties as may be assigned to him by the 
Board or wliich are necessary or incideiitd to his office. 
r) 
g) 
Sec. 17. Organiznriurr and Personnel. - The Hoard OF Directors of the 
SISEZA sliall provide for an organization and staff of its officers and employees. 
Upon recommendation of the Cliairiiiaii-Administrator, the Board shall appoint and 
fix the remuneration and other emoluments or its officers and employees in 
accordance with existing laws on compensation and position classification: Provided 
That the Board shall have exclusive and fiiial authority to proiiiote, transfer, assign or 
reassign officers of tlie SISEZA, any provision of existing law to the contrary 
iiotwithstanding: f’rovitlecl, ,fi~rfher, That the Cliair~iian-Admi~~islrator 
may carry out 
removal of such officers and employees. 
The officers and employees of the SISEZA, including all Members of the 
Board, slmll no( engage directly or indirectly in partisan activities nor takc part in any 
election, except to vote. 
No officer or employce of the SISEZA, subject to Civil Service laws and 
regulations, sliall be removed or suspended except for cause, as provided by hw. 
Sec. 18. Ipso Fncto Clairse. - Sections 30-41 of Rcpublic Act 7916, shall 
@so,fiic~o apply to the Sanial Island Spccial Economic Zone. 
Sec. 19. 
Capitalization. - The Samal Island Special Economic Zone 
Autliorily shall have an authorized capital stock of One Billion (1,000,000,000) 1-10 par 
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shares with a niininittm issue of Ten Pesos (P10.00) each, tlie majority shares of 
which shall be subscribed and paid for by the National Goveriiinent and the Local 
Government Uiiits (LGUs) embracing the Samal Island Special Economic Zone. Tile 
Board of Directors or the SISEZA inay, with the written concurrence of the Secretary 
of Finance, sell shares, representing not m r e  than forty per centuln (40%) of (he 
capital stock of the SISEZA to Lhc general public under such policy as thc Board alld 
the Secretary of l%ance may determine. 7'1ie National Government a d  thc LGUs 
shall in no case own less than sixty per cenlLiiii (60%) of the total issued and 
outstanding capital of tlie Samal Island Special Economic Zone Authority. 
The amount necessary to suhscribe and pap for ilie shares of the National 
Govcrntnent to the capital stock of the SISEZA shall be included in the Aniiual 
General Appropriations Act. For LGUs, the hnds shall be talten froin their internal 
revenue allotment and other local funds 
Sec. 20. Supervision. - The Samal Island Special Ecoiio~nic Zone shall be 
under tlie direct control and supcrvision of the Philippine Economic Zone Authority 
(I'EZA) lor purposes of policy direction and coordination 
Sec. 21. Relntionsitip ivitli file Regional Developmmt Council. - The Samal 
Island Special Economic Zone Authority shall determine the development goals for 
the Samal Island Ecozone within the framework of national development plans, 
policies and goals. 'I'he Adtninistralor shall, upon approval by the Hoard, submit the 
Samal Island Ecozone plans, programs and projccts to the Regional Developinent 
Council lor inclusion and inputs to thc overall regional developmiit plan. 
Sec. 22. Relntionsitip ivifli Local Governnteirf Unifs.-- Except as herein 
provided, the local government tillits comprising the Samal Island Special Economic 
Zone shall relain their basic autonomy and identity. The Island Garden City of San~al 
shall operate and hiction in accordance with the Local Government Code of 1991. In 
case of any conflict betwccn thc SISEZA and the Province of Davao del Norte on 
lnattcrs affecting the Samal Island Ecozoae othcr than deknse and security tnatters, 
the decision of the SISEZA shall prevail. 
Sec. 23. Iriterj)retntioii/C~tisf~iictioti. 
- The powers, authorities and litnctioiis 
that are vested in the SISEZA are iiiteiided to deceiitralize governmental functions and 
authority and promote an efficient and effective working relationship between the 
Samal Island Ecozone, the NG, and the local government units. 
SCC. 24. Auditing. - 'Ihe Commission on Audit shall appoint a represenlative 
who shall be a full time auditor of the SISEZA and assign such number ol'personnel 
as tnay be liccessary to assist said represeiitativc in the perforniance of liis/her duties. 
The salaries and emoluments on the assigned auditor and pcrsoiincl shall be in 
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accordance with pertinent laws, rules and regulations. 
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See. 25. Separability Clause. - If any provisions ol' this Act sliall be held 
uncons~itiitiona1 or invalid, tlic otlier provisions not otherwise alTccted sl~all rcmain ill 
full forcc and effcct. 
See. 26. Repealing Clause. -All laws, executive orders and issuances, or any 
parts thereof, which are inconsistent herewith are hcreby rcpealed or amended 
accordingly. 
Scc. 27. Effectivity Clause. - This Act shall t&c effect upon its publication 
in at least one (1) newspaper of gcneral circulation. 
Approved, 
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