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FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
Second Regular Session 
9 
APR 20 P2 :25 
Introduced by Senator Miriam Defensor Santiago 
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EXPLANATORY NOTE 
The Constitution, Article 2, Section 20 provides: 
The State recognizes the indispensable role of the private sector, 
encourages private enterprise, and provides incentives to needed 
investments. 
The State must actively encourage and promote a sound and balanced industrial, 
economic and social development to provide jobs to the people especially those in the 
rural areas. This can be done through the establishment of special economic zones in 
suitable and strategic locations and through measures that can attract much needed 
foreign investments. 
Iloilo province is located in the Western Visayas region. Iloilo occupies the 
southeast portion of Panay Island and is bordered by Antique to the west and Capiz to the 
north. This is a strategic geographical location that makes it an attractive hub for 
investments in the Visayas region. 
This bill seeks to strengthen the economic potential of Iloilo by creating the 
Iloilo Special Economic Zone covering the entire province. Its primary goals include 
increasing employment in the region, strengthening the standards of living of its people, 
and developing the province as a center €or economic growth in the area. 


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OFFICE $3. 
i: ~<:,,lK:. 
f~ .,iZ, 
FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
Second Regular Session 
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20 P2 25 
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Introduced by Senator Miriam Defensor Santiago 
AN ACT 
ESTABLISHING A SPECIAL ECONOMIC ZONE 
AND FREE PORT IN THE PROVINCE OF ILOILO 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Iloilo Special Economic Zone 
Act of 2009.” 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of the government 
to actively encourage, promote, induce and accelerate a sound and balanced industrial, economic 
and social development 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 condition through the establishments, among others, 
of special economic zones and free ports in suitable and strategic locations in the country and 
through measures that shall effectively attract legitimate and productive foreign investments. 
SECTION 3. The Iloilo Special Economic Zone and Free Port. - In accordance with the 
foregoing declared policy, there is hereby established a special economic zone and free port, to 
be known as the Iloilo Special Economic Zone, here referred to as the Zone, which shall cover 
the entire area embraced by the Province of Iloilo. 
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SECTION 4. Governing Principle. - The Iloilo Special Economic Zone shall be managed 
and operated under the following principles: 
(A) Under the framework and limitations of the Constitution and the applicable 
provisions of the Local Government code, the Zone shall be developed into and operated as a 
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self-sustaining industrial, commercial, financial, investment, and tourism/recreational center and 
free port with suitable retirementiresidential areas, in order to create employment opportunities 
in and around the Zone, and lo effectively encourage and attract legitimate and productive 
foreign investments therein; 
(B) The Iloilo Ecozone shall be provided with transportation, teleconiiiiunications and 
other facilities needed to attract legitimate and productive investments, generate linkage 
industries and employment opportunities for the people of Iloilo and its neighboring towns and 
cities; 
(C) The Iloilo Ecozone may establish mutually beneficial economic relations with other 
entities or enterprises within the country or, subject to the administrative guidance of the 
Department of Foreign Affairs (DFA), the Philippine Economic Zone Authority (PEZA) and or 
the Department of Trade and Industry (DTI), With foreign entities or enterprises; 
(D) Foreign citizens and companies owned by non-Filipinos in whatever proportions may 
set up enterprises in the Iloilo Ecozone, either by themselves or in joint venture with Filipinos in 
any sector of industry, international trade and commerce within the Iloilo Ecozone. 
(E) Goods manufactured by an Iloilo Ecozone enterprise shall be made 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 SEZA, together with the PEZA, 
the Bureau of Customs, and the DTI. However, in order to protect domestic industries, a negative 
list of industries shall be drawn up and regularly updated by the PEZA. Enterprises eiigaged in 
industries included in such negative list shall be allowed to sell their products locally; 
(F) The national government shall maintain its ability to coordinate with the Iloilo 
Ecozone and the local government units. 
SECTION 5. Incentives to Registered Enterprises. - The Special Economic Zone 
Authority (SEZA) inay administer the following incentives to the registered enterprises located 
therein to the extent of the activity/ project: 
(A) Income Tax Holiday (ITH) - Registered domestic enterprises shall be entitled to an 
income tax holiday from the start of their commercial operations to the extent of their activity 
under the following categories: 
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Category A - Registered domestic enterprise located in highly developed areas, as 
determined by the Board of Investments (BOI) shall be entitled to a four-year income tax holiday 
Category B - Registered domestic enterprises on the following shall be entitled to a six- 
year income tax holiday; 
(1) Located in less developed areas as defined by the BOI; or 
(2) Producingi rendering new products/ services or having strong backward or 
forward linkages. 
Category C - Registered export enterprises shall be entitled to a six-year income tax 
holiday: Provided, however, That if the export enterprise complies with the following: (1) large 
capital investments or sizeable employment generation; or (2) use high level of technology; (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 the 
new investments and subject to such terms and conditions as the BO1 may determine. 
For this purpose, a registered enterprise shall be defined as any pcrson, natural or 
juridical, licensed to do business in the Philippines and registered with the Special Economic 
Zone Authority (SEZA) to transact business within the Iloilo Special Economic Zone. A 
registered export enterprise shall be defined as any registered enterprise engaged directly or 
indirectly in the production, manufacture or trade of products or services which earns at least 
seventy percent (70%) of its normal operating revenues from the sale of its products or services 
abroad for foreign currency. A registered domestic enterprise, meanwhile, shall be defined as any 
registered enterprise not falling under the definition of a registered export enterprise. 
Additional investments on the project shall be entitled to the income tax holidays 
corresponding to such investments as may be determined by the BOI. Additional income tax 
holiday may be granted for as long as the investment is made on the same project; Provided, 
That the project is listed in the P P  at the same time the additional investment in the project is 
made; Provided, further, That the entitlement period for additional investment shall not exceed 
three times the period provided under this subsection; Provided, however, that the total ITH 
period for an export enterprise availing of an eight-year ITH shall not exceed twenty (20) years. 
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Any unused incentives shall therefore be deemed forfeited if not used during the incentive 
period. 
Enterprises registered with the SEZA are required to share in the special development 
fund of the BO1 for investment promotion projects of the government equivalent to one (1%0 of 
the ITH granted for every application. 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise availing of 
ITH or Net Operating Loss Carryover (NOLCO) to secure a certificate of eligibility from the 
SEZA before submitting its income tax return (ITR) with the SEZA for validation. 
Failure to secure certification and/or file the ITH or NOLCO availment for validation by 
the SEZA within forty-five (45) days from the last day of the statutory filing date for ITR shall 
cause the forfeiture of the availment for the taxable period. 
(B) Net Operating Loss Carryover (NOLCO). - Net operating loss of the business or 
enterprise during the first three years from the start of commercial operations which have not 
been previously offset as deduction from gross income shall be carried over as a deduction from 
gross income for the next five consecutive years immediately following the year of such loss; 
Provide, however, That operating loss resulting from availment of incentives provided in this Act 
shall not be entitled to NOLCO. 
Registered enterprises availing of the ITH as herein provided shall not be entitled to avail 
of the NOLCO. 
(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned (GIE) - Except 
for real property tax on land, no local and national taxes as prescribed under Republic Act No. 
8424, also known as “The National Internal Revenue Code of 1997, as Amended” such as 
income tax, excise tax and franchise taxes, shall be imposed on registered enterprises operating 
within the Iloilo Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall be 
paid as follows: 
(1) Three percent (3%) to the National Government; and 
(2) Two percent (2%) shall be remitted by the business establishments to the 
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treasurer’s office of the municipality or city where the enterprise is located, 
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All persons and service establishments in the Iloilo Ecozone shall be subject to national 
and local taxes under the National Internal Revenue Code of 1997, as amended, and the Local 
Government Code. 
(D) Accelerated Depreciation. - Accelerated depreciation of plant, machinery and 
equipment that are reasonably needed and actually used for the production and transport of goods 
and services may be allowed using a rate 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 Secrelary of Finance and the provisions of the National Internal Revenue Code 
of 1997, as amended. 
(E) Capital Equipment Incentives. - (1) Importation of capital equipment, spare parts, 
tools and dye or lhose required for pollution abatement and control, cleaner production and waste 
reduction including consignment thereof by registered enterprises upon effectivity of this law, 
shall be exempted to the extent of one hundred percent (100%) of the taxes and customs duties; 
Provided, That the imported items thereof shall be used exclusively by the registered enterprise 
in its registered activity; Provided, futheu, That the importation of machinery and equipment and 
accompanying parls shall comply with the following conditions: 
(1) They are not manufactured domestically in sufficient quantity, of comparable 
quality and at reasonable prices; 
(2) They are reasonably needed and will be used exclusively by the registered 
enterprise in the manufacture of its products, unless prior approval of the SEZA 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 of the SEZA was obtained by the registered enterprise for the 
importation of such machinery, equipment and spare parts. Approval by the SEZA must be 
secured before any sale, lransfer or disposition of the imported capital equipment, machinery or 
spare parts is made; Puovided, That if such sale, transfer or disposition is made within the first 
five years from date of importation, any of the following conditions must be present: 
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(a) The same is made to another enterprise enjoying tax and duty exemption on 
capital equipment; 
(b) The same is made to another enterprise, upon the payment of any taxes and duties 
on the net book value of the capital equipment to be sold; 
(c)The exportation of the capital equipment, machinery, spare parts or source 
documents or those required for pollution abatement and control, or 
(d) Proven technical obsolescence of the said equipment, machinery or spare parts. 
When the aforementioned sale, transfer or disposition is made under any of the conditions 
provided for in the foregoing paragraph other than paragraph (2) herein, the registered firm shall 
not pay the tax'es and duties waived on such items; Provided, further, that if the registered 
enterprise shall sell, transfer or dispose the aforementioned imported items without prior 
approval within five years from the date of importation, the registered enterprise and the vendee, 
transferee or assignee shall be solidarily liable to pay twice the amount of taxes and duties based 
on the net book value of the capital equipment, machinery or spare parts if any of the registration 
terms and conditions has been violated. Otherwise, they shall no longer be subject to the 
payment of the taxes and duties waived thereon. 
The purchase of machinery, capital equipment, raw materials, supplies, parts and semi- 
finished products to be used in the fabrication of machinery and capital equipment by a 
registered export-oriented enterprise from a domestic manufacturer shall he subject to zero 
percent (0%) value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit equivalent to the 
amount of duties that would have been waived on the machinery, capital equipment, raw 
materials, supplies, parts and semi-finished products used in the fabrication of machinery and 
capital equipment, had these items been imported, upon submission to the Department of 
Finance (DOF) of the bill of materials evidencing the transaction value of such an other 
documents, for verification and proper endorsement. 
The availment by a registered export enterprise of the incentive stated under the 
immediately preceding two paragraphs shall be subject to the following conditions: (i) that said 
capital equipment, machinery and spare pads will be used exclusively by the registered 
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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 (iii) that the approval of the SEZA 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 paragraph for such disposition shall 
apply. 
This incentive shall be deemed waived if application for tax credit under this subsection 
was not field within one year from date of delivery. 
(F) The importation of source documents by information technology-registered 
enterprises shall be eligible for tax and duty free importation. 
(G) Raw Material Incentives. - Every registered export-oriented enterprise shall enjoy a 
tax credit equivalent to the internal revenue taxes and customs duties paid on the supplies, raw 
materials and semi-manufactured products provided the same are not sufficient in quantity or are 
not competitively priced in the Philippines and which are used in the manufactwe, processing or 
production of its export products forming part thereof, exported directly and indirectly by the 
registered export-oriented enterprise, based on the actual taxes and duties paid for such materials/ 
supplies semi-manufactured products by the registered enterprise. 
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. 
(H) Exemption from Wharfage Dues. - The provisions of law to the contrary 
notwithstanding, exports by a registered enterprise shall be exempted from wharfage dues. 
(I) Deferred Imposition of the Minimum Corporate Income Tax. - The Minimum 
Corporate Income Tax (MCIT) of two percent (2%) of the gross income as of the end of the 
taxable year shall be imposed when the MCIT is greater than the income tax computed under the 
NIRC of 1997, as amended, for the taxable year; Provided, however, That the MCIT shall be 
imposed only after the enterprise’s entitlement period to the income tax-based incentives has 
expired. 
(J) Tax Treatment of Merchandise in the Iloilo Ecozone. - (1) Domestic merchandise s.ent 
from the Iloilo Ecozone to areas outside the said ecozone shall, whether or not combined with or 
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made part of other articles likewise of local origin or manufactured in the Philippines while in 
the export processing zone, be subject to internal revenue laws of the Philippines as domestic 
goods sold, transferred or disposed of for local consumption. 
(2) Merchandise sent from the Iloilo Ecozone to areas outside the said ecozone shall, 
whether or not coinbined with or made part of other articles while in the zone, be subject to rules 
and regulations governing imported merchandise. The duties and taxes shall be based on the 
value of said imported materials (except when the final product is exempt). 
(3) Articles produced or manufactured in the Iloilo Ecozone and exported tehrefrom 
shall, on subsequent importation into the customs territory, be subject to the import laws 
applicable to like articles manufactured in a foreign country. 
(4) Unless the contrary is shown, merchandise taken out of the Iloilo Ecozone shall be 
considered for tax purposes to have been sent to customs territory. 
(K) Tax Treatment of Raw Materials and Capital Equipment in the Iloilo Ecozone. - 
Importation of raw materials and capital equipment shall be treated as in the Omnibus Investment 
Code. 
(L) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of 
Commonwealth Act No. 613, as amended, a registered enterprise may employ foreign nationals 
in supervisory or technical positions for a period not exceeding ten (10) years from its 
registration; Provided, That when the majority of the capital stock of a registered enterprise is 
owned by foreign investors, the positions of the resident, treasurer and general manager or their 
equivalents may be retained by foreign nationals beyond the period set forth herein and such 
officer is the owner or a stockholder owning at least ten percent (10%) of the outstanding capital 
stock of the registered enterprise and he remains the owner or maintains his stockholdings 
therein. 
Foreign nationals under employment contract within the purview of this incentive, their 
spouses and unmarried children under twenty one (21) years of age, who are not excluded by 
Section 29 of Commonwealth Act No. 613, as amended, shall be permitted to enter and reside in 
the Philippines during the period of employment of such foreign nationals. They shall be entitled 
to a multiple entry visa, valid for a period of three (3) years, and shall be allowed to enter and 
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leave the Philippines without further documentary requirements other than valid passports or 
other travel documents in the nature of passports. The validity of the multiple entry visa shall be 
extendible yearly. 
The said foreign nationals admitted under this provision, as well as their respective 
spouses and dependents shall be exempt from: (a) obtaining alien certificates of registration and 
immigration clearance certificates; and (b) securing the Alien Employment Permit (AEP) and all 
types of clearances, permits, licenses or their equivalents required by any government 
department or agency. 
SECTION 6. Incentives to Investors. - Any foreign national covered under Subsection 
(L) of Section 5 of this Act, who invests an amount o f  US $ 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 (1 8) years of age; 
(B) He has not been convicted of a crime involving moral turpitude; 
(C) He is not afflicted with any loathsome, dangerous or contagious disease; and 
@)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 paragraph (L), Section 5 hereof. 
As a holder of investor’s visa, an alien shall be entitled to reside in the Philippines while 
his investment subsists. For this purpose, he should submit an annual report, in the form duly 
prescribed for the purpose, to prove that he has maintained his investment in the country. Should 
said alien withdraw his investments from the Philippines, then the investor’s visa issued to him 
shall automatically expire. 
SECTION 7. Duration of Incentives. - Enterprises registered with the SEZA may enjoy 
ITH or NOLCO granted by the latter prior to the availment of the five percent (5%) GIE. 
Fiscal incentives under this Act shall be terminated after a cumulative period of twenty 
(20) years from the date ofregistration or start of commercial operation, whichever is applicable, 
except that it could be extended with regard to industries deemed indispensable to national 
development. The industries exempted from this provision shall be recommended by the BOI, 
with the concurrence o f  the Secretaries o f  the Departments of Finance and Trade and Industry. 
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SECTION 8. Creation of the Special Economic Zone Authority. - A body corporate to be 
known as the Special Economic Zone Authority, hereinafter referred to as SEZA, is hereby 
created to manage and operate, in accordance with the provisions of this Act, the Special 
Economic Zone and Free Port. This corporate franchise shall expire fifty (50) years counted fiom 
the first day of the fifth (5"') calendar year after the effectivity of this Act, unless otherwise 
extended by Congress. 
SECTION 9. Powers and Functions of the Special Economic Zone Authority. - The 
Special Economic Zone Authority shall have the following powers and functions: 
(A) To adopt, alter, use a corporate seal; to contract, lease, buy, sell, acquire, own and 
dispose movable and immovable as well as personal and real property of whatever nature 
(including but not limited to shares of stock or participation in private corporations or in limited 
partnerships, or in joint ventures with limited liability), bonds, precious metals in bullions, ingots 
and easily convertible foreign exchange; to sue and be sued in order to carry out its duties, 
responsibilities, privileges, powers, and functions as granted and provided for in this Act; and to 
exercise the power of eminent domain for public use and public purpose; 
(B) Within the limitation provided by law, to raise or borrow adequate and necessary 
funds from local or foreign sources to finance its projects and programs under this Act, and for 
that purpose to issue bonds, promissory notes, and other form 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; 
(C) To approve, accept, accredit and allow any local or foreign business, enterprise or 
investment in the Zone subject only to such rules and regulations as SEZA may promulgate from 
time to time in conformity with the provisions of this Act and the limitations provided in the 
Constitution; 
(D) To authorize or undertake, on its own or through others, and regulate the 
establishment, operation and maintenance of public utilities, services, and infrastructure in the 
Zone such as shipping, barging, stevedoring, cargo handling, hauling, warehousing, storage of 
cargo, port services or concessions, piers, wharves, bulkheads, bulk terminals, mooring areas, 
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storage areas, roads, bridges, terminals, conveyors, water supply and storage sewerage, drainage, 
airport operations in coordination with the Civil Aeronautics Board, and such other services or 
concessions or infrastructure necessary or incidental to the accomplishment of the objectives of 
this Act: Provided, however, That the private investors in the Zone shall be given priority in the 
awarding of contracts, franchises, license, or permits for the establishment, operation and 
maintenance of utilities, services and infrastructure in the Zone; 
(E) To construct, acquire, own, lease, operate and maintain on its own or through others 
by virtue of contracts, franchises, licenses, or permits under the build-operate-transfer scheme or 
under a joint venture with the private sector any or all of the public utilities and infrastrncture 
required or needed in the Zone in coordination with appropriate national and local government 
authorities and in conformity with applicable laws thereon; 
(F) To operate on its own either directly or through a subsidiary entity, or license to 
others, tourism-related activities, including games, amusement, recreational and sports facilities 
such as horse racing, dog racing, gambling casinos, golf courses, and others, under priorities and 
standards set by the SEZA; 
(G) To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral 
reefs within the Zone. The virgin forest within the Zone will be proclaimed as a national part and 
will be covered by a permanent total log ban For this purpose, the rules and regulations of the 
Department of Environment and Natural Resources and other government agencies involved in 
the above functions shall be implemented by the SEZA; 
(H) To adopt, implement and enforce reasonable measures and standards to control 
pollution within the Zone; 
(I) To provide security for lhe Zone in coordination with the national and local 
governments. For this purpose, SEZA may not establish and maintain its own security force and 
firefighting capability to hire others to provide the same; 
(J) To form, establish, organize and maintain subsidiary corporation, as its business and 
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operations may require, whether under the laws of the Philippines or not; 
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(K) To issue rules and regulations consistent with the provisions of this Act as may be 
necessary to implement and accomplish the purposes, objectives and policies herein provided; 
and 
(L) To exercise such powers as may be essential, necessary or incidental to the powers 
granted to it hereunder as well as those that shall enable it to carry out, implement and 
accomplish the purposes, objectives and policies of this Act. 
SECTION 10. Board ofDirectors of SEZA. - The powers of the SEZA shall be vested in 
and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be 
composed of eighteen (1 8) members, to wit: 
(A)The Chairperson who shall come from among the members of the Board of Directors; 
(B) A Vice Chairperson who shall come from among the members of the Board of 
Directors: 
(C) Members consisting of: 
(1) The Governor of the Province of Iloilo; 
(2) The Congressional Representatives of the five districts of Iloilo Province; 
(3) Five Mayors to be chosen by all the municipal mayors in the Province of Iloilo; 
(4) The President of the Chamber of Commerce and Industry of Iloilo. 
(5) Four (4) representatives from the business and investment sectors in the Zone. 
The Governor, the Congressional Representatives and the Mayors and President of the 
Chamber of Commerce and Industry shall serve as ex-officio members of the Board, whose term 
in the Board corresponds to their terms as elected officials. 
The Chairperson shall be appointed by the President of the Philippines upon the 
nomination of the Board of Directors to serve for a tern of six (6) years, unless separated from 
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service due to death, voluntary resignation or removal for cause. In case of death, resignation or 
removal for cause, the replacement shall serve only the unexpired portion of the term. 
All members of the Board, whether ex oflcio or chosen by the Board to represent the 
Industry sector in Iloilo Province shall be appointed by the President of the Philippines to serve 
for a term of six (6) years. In case of death, resignation or removal for cause, the replacement 
shall serve only the unexpired portion of the term. 
Except for representatives of the business and labor sectors, no person shall be appointed 
by the President of the Philippines as member of the Board unless he is a Filipino citizen, of 
good moral character, 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 receive a reasonable per diem at a 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 month shall not exceed the equivalent 
per diem for four (4) meetings. Unless and until the President of the Philippines has fixed a 
higher per diem for the members of the Board, such per diem shall not be more than Ten 
thousand pesos (Php 10,000) for every Board Meeting. 
SECTION 11. Administrative and Chief Executive Of$cev. - The President of the 
Philippines shall appoint a full-time professional and competent administrator and chief 
executive officer for the SEZA 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 SEZA shall be responsible to the Board 
and the President of the Philippines for the efficient management and operation of the Special 
Economic Zone. 
SECTION 12. CupituZizution. - The SEZA shall have an authorized capital stock of two 
billion (2,000,000) no par shares with a minimum issue value of Ten (10) pesos each. The 
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national government shall initially subscribe and fully pay three hundred million (300,000,000) 
shares of such capital stock. The initial amount necessary to subscribe and pay for the shares of 
stock shall be included in the General Appropriations Act of the year following its enactment 
into law and thereafter. The Board of Directors of SEZA may, fkom time to time and with the 
written concurrence of the Secretary of Finance, increase the issue value of the shares 
representing the capital stock of the SEZA. The Board of Directors of SEZA, with the written 
concurrence of the Secretary of Finance, may sell shares representing not more than forty per 
centum (40%) of the capital stock of the SEZA to the general public with such annual dividend 
policy as the Board and the Secretary of Finance may determine. The national government shall 
in no case own less than sixtyper centum (60%) of the total issued and outstanding capital stock 
of the SEZA. 
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SECTION 13. Supervision. - The Special Economic Zone shall be under the direct 
control and supervision of the Office of the President of the Philippines for purposes of policy 
direction and coordination, in the meantime that the agency tasked with the coordination of 
special economic zones is not yet in place. 
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SECTION 14. Relationship with the Regional Development Council. - The Special 
Economic Zone Authority shall determine the development goals for the Iloilo Ecozone within 
the framework of national development plans, policies and goals. The Administrator shall, upon 
approval by the Board, submit the Iloilo Ecozone plans, programs and projects to the Regional 
Development Council for inclusion and inputs to the overall regional development plan. 
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shall prevail. 
SECTION 15. Relationship with Local Government Units. - Except as herein provided, 
the local government units comprising the Iloilo Ecozone Zone shall retain their basic autonomy 
and identity. The province, municipalities, and their component barangays shall continue to 
operate and function in accordance with the Local Government Code of 1991. In case of any 
conflict between the SEZA and the Province of Iloilo or any of the municipalities, on matters 
affecting the Iloilo Ecozone other than defense and security matters, the decision of MITSEZA 
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SECTION 16. Interpretation/ Construction. - The powers, authorities and hnctions that 
are vested in the SEZA are intended to decentralize governmental functions and authority and 
promote efficient and effective working relationships between the Iloilo Ecozone, the national 
government, and the local government units. 
SECTION 17. Legal Counsel. - The SEZA and the corporations in which SEZA owns a 
majority of the issued capital stock 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 SEZA may engage the services of an outside counsel either on a case 
to case basis or on a fixed retainer. 
SECTION 18. Auditor. - The Commission on Audit shall appoint a representative who 
shall be a full-time auditor of the SEZA and its subsidiaries, and assign such number of 
personnel as may be necessary to assist said representative in the performance of his or her 
duties. The salaries and emoluments of the assigned auditor and personnel of the Commission on 
Audit shall be in accordance with the revised compensation and position classification system. 
The Commission on Audit shall render an annual report to the President of the Philippines and to 
Congress on the business activities, transactions and operation of the SEZA. 
SECTION 19 Separability Clause. - If any provision or part hereof, is held invalid or 
unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
valid and subsisting. 
SECTION 20. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, administrative order, rule or regulation contrary to or is inconsistent 
with the provision of this Act is hereby repealed, modified, or amended accordingly. 
SECTION 21. Eflectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation. 
Approved, 
lapm100708abgl 60409 
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