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Republic of the Philippines

HOUSEOF REPRESENTATIVES cate: 0.3 DEC 2013,
Quezon City \ 6 WN os
SIXTEENTH CONGRESS \ o Ky
First Regular Session © iney ww ZA
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HOUSE BILL No.__ 3501

INTRODUCED BY HONORABLE CHERYL DELOSO-MONTALLA

EXPLANATORY NOTE

This bill seeks to establish the Zambales Special Economic Zone in the
Municipalities of San Antonio and San Narciso, all in the Province of Zambales.

The concept and objective behind this proposed Special Economic Zone in the
Province of Zambales is to develop the area defined in this bill into a self-sustaining
industrial, commercial and investment center that will put in place wide-reaching
employment and investment generation mechanisms to strengthen the global
competitiveness of the country. By way of this legislative measure, investments would
be attracted which will not only boost the local economy of the Province of Zambales
but will also contribute to the over-all economic growth of the nation.

‘As envisioned, the Zambales Special Economic Zone shall be operated to
basically provide incentives to ensure the free flow and movement of goods and
‘commodities within the ecozone. It shall also provide tax-based incentives for business
activities and concerns located and operating within the area.

In light of the foregoing, immediate passage of this bill is earneStly sought.

Ww

CHERYL P. DELOSO-MONTALLA
Repfesentative
2" Legislative District, Zambales



Republic of the Philippines
HOUSEOF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO._ 3501

INTRODUCED BY HONORABLE CHERYL DELOSO-MONTALLA

AN ACT
ESTABLISHING THE ZAMBALES SPECIAL ECONOMIC ZONE IN THE PROVINCE
OF ZAMBALES, CREATING FOR THE PURPOSE THE ZAMBALES SPECIAL
ECONOMIC ZONE AUTHORITY, APPROPRIATING FUNDS THEREFOR AND FOR
OTHER PURPOSES

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

Section 1. Short Title. - This Act shall be known as the - Zambales Special
Economic Zone Act of 2013.

Section 2. Declaration of Policy. - \t is hereby declared the policy of the State to
actively encourage, promote, induce and accelerate the sound and balanced industrial,
economic and social development of the country in order to provide jobs to the people,
especially those in rural areas, increase their productivity and their individual and family
income, and thereby improve the level and quality of their living conditions though the
establishment, among others, of special economic zones in suitable and strategic
locations in the country and through measures that shall effectively attract legitimate
and productive foreign investments.

Section 3. Creation of the Zambales Special Economic Zone. - In pursuit of the
foregoing declared policy, there is hereby established a special economic zone,
hereinafter referred to as the Zambales Ecozone. The Zambales Ecozone shall cover
Barangays West Dirita and San Miguel in the Municipality of San Antonio and
Barangays Beddeng and Natividad in the Municipality of San Narciso.

Section 4. Ecozone Exclusion from the Operation of Procalamation No. 938.
Barangays West Dirita and San Miguel and Barangays Beddeng and Natividad in the
Municipality of San Narciso are hereby excluded from the operation of Proclamation No
938 and shall be open to disposition under the provisions of RA &30 as amended to
bona fide residents actually occupying the same without public auction.

Section 5. Goveming Principles. - The Zambales Special Economic Zone shall
be managed and operated by the Zambales Special Economic Zone Authority,
hereinafter referred to as the ZASEZA, created under Section 10 of this Act, under the
following principles:

(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the Zambales 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 suitable residential areas.


(b) The Zambales Ecozone shall be provided with transportation,
telecommunications and other facilities needed to attract legitimate and
productive investments, generate linkage industries and employment
opportunities for the people of the Province of Zambales and its neighboring
towns and cities.

(©) The Zambales 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 (DT!), with foreign entities or enterprises.

(d) Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the Zambales Ecozone, either by
themselves or in joint venture with Filipinos in any sector of industry, international
trade and commerce within the Zambales Ecozone.

(€) The areas comprising the Zambales Ecozone may be expanded or reduced
when necessary. For this purpose, the ZASEZA, in consultation with the LGUs,
shall have the power to acquire either by purchase, negotiation or condemnation
proceedings, any private land within or adjacent to the Zambales Ecozone for the
following purposes: (1) consolidation of lands for Zambales Ecozone
development; (2) acquisition of right of way to the Zambales Ecozone; and (3)
the protection of natural assets valuable to the prosperity of the Zambales
Ecozone.

(f) Goods manufactured by a Zambales 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 ZASEZA, 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
engaged in industries included in such negative list shall not be allowed to sell
their products locally.

(@) The national government shall maintain its ability to coordinate with the
Zambales Ecozone and the local government units.

Section 6. Incentives to Registered Enterprises. - The Zambales Special
Economie Zone Authority (ZASEZA) may administer the following incentives to the
registered enterprises located therein to the extent of the activity/project:

(A) _ Income Tax Holiday (ITH). - Registered enterprises shall be entitled to an
income tax holiday from the start of their commercial operations to the extent of
their activity under the following categories:

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

Category B - Registered domestic enterprise 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) Producing/rendering new products/services or having strong backward
or forward linkages.


Category C - Registered export enterprise shall be entitled to a six-year income
tax holiday: Provided, however, That lithe export enterprise complies with the
following: (1) large capital investments or sizeable employment generation; or (2)
use high level of technology; or (3) located outside 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 BO! may determine.

For this purpose, a registered enterprise shall be defined as any person, natural
or juridical, licensed to do business in the Philippines and registered with the
Zambales Special Economic Zone Authority (ZASEZA) to transact business
within the Zambales 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 in the project shall be entitled to the income tax holidays
corresponding to such investments as may be determined by the BOI. Additional
income tax holiday may be granted for as long as the investment is made on the
same project: Provided, That the project is listed in the IPP at the same time the
additional investment in the project is made: Provided, further, That the
entitlement period for additional investments shall not exceed three times the
period provided under this subsection: Provided, however, That the total ITH
period for an export enterprise availing of an eight-year ITH shall not exceed
twenty (20) years. Any unused incentives shall therefore be deemed forfeited if
not used during the incentive period.

Enterprises registered with the ZASEZA are required to share in the special
development fund of the BOI for investment promotion projects of the
government equivalent to one percent (1%) of the ITH granted for every
application.

The Bureau of Intemal Revenue (EIR) shall require a registered enterprise
availing of (TH or Net Operating Loss Carryover (NOLCO) to secure a certificate
of eligibility from the ZASEZA before submitting its income tax return (ITR) with
the ZASEZA for validation.

Failure to secure certification and/or to file the ITH or NOLCO availment for
validation by the ZASEZA within forty-five (45) days from the last day of each
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: Provided,
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 Zambales
Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall be
paid as follows:

(a)Three percent (3%) to the national government; and

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

All persons and service establishments in the Zambales 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 Secretary of
Finance and the provisions of the National Internal Revenue Code of 1997, as
amended.

(E) Capital Equipment incentives. -

(1) Importations of capital equipment, spare parts, tools and dye, or those
required for pollution abatement and control, cleaner production and waste
reduction including consignment thereof by registered enterprises upon
the 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, further, That the importation
of machinery and equipment and accompanying parts shall comply with
the following conditions:

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

(li) They are reasonably needed and will be used exclusively by the
registered enterprise in the manufacture of its products, unless prior
approval of the ZASEZA 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

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


Approval of the ZASEZA must be secured before any sale, transfer
or disposition of the imported capital equipment, machinery or
spare parts is made: Provided, That if such sale, transfer or
disposition is made within the first five years from date of
importation, any of the following conditions must be present:

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

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

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

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

When the aforementioned sale, transfer or disposition is made
under any of the conditions provided for in the foregoing
paragraphs other than paragraph (2) herein, the registered firm
shall not pay the taxes and duties waived all such items: Provided,
further, That if the registered enterprises sell, transfer or dispose
the aforementioned imported items without prior approval within five
years from the date of importation, the registered enterprise and the
vendee, transferee or assignee shall be solidarily liable to pay twice
the amount of the tax and duty exemption given it: Provided, finally,
That even if the sale, transfer or disposition of the capital
equipment, machinery or spare parts is approved after five years
from the date of importation, the registered enterprises are still
liable to pay the taxes and duties based on the net book value of
the capital equipment, machinery or spare parts if any of the
registration terms and conditions has been violated. Otherwise,
they shall no longer be subject to the payment of the taxes and
duties waived thereon.

(2) The purchase of machinery, capital equipment, raw materials,
supplies, parts and semi-finished products to be used in the fabrication of
machinery and capital equipment by a registered export-oriented
enterprise from a domestic manufacturer shall be subject to zero percent
(0%) value-added tax.

The registered export-oriented enterprise shall be granted a tax credit
equivalent to the amount of duties that would have been waived on the
machinery, capital equipment, raw materials, supplies, parts and semi-
finished products used in the fabrication of machinery and capital
equipment, had these items been imported, upon its submission to the
Department of Finance (DOF) of the bill of materials evidencing the
transaction value of such and other pertinent documents, for verification
and proper endorsement.

The availment by a registered export enterprise of the incentive stated
under the immediately preceding two paragraphs shall be subject to the
following conditions: (a) that said capital equipment, machinery and spare
parts will be used exclusively by the registered enterprise in its registered


activity; (b) that the capital equipment or machinery where the raw
materials, supplies, parts and semi-finished products were used would
have qualified for tax and duty-free importation; and (c) that the approval
of the ZASEZA is obtained by the registered enterprise. If the registered
enterprise sells, transfers or disposes of these machineries, capital
equipment and spare parts, the provision in the preceding paragraphs for
such disposition shall apply.

This incentive shall he deemed waived if application for tax credit under
this subsection was not filed within one year from the date of delivery,

(F) The importation of source documents by information technology-registered
enterprises shall be eligible for tax and duty free importation.

(G) Raw Materials Incentives. - Every registered export-oriented enterprise shall
enjoy a tax credit equivalent to the internal revenue taxes and customs duties
‘Paid on the supplies, raw materials and semi-manufactured products provided
the same are not sufficient in quantity, quality or are not competitively priced in
the Philippines and which are used in the manufacture, processing or production
of its export products forming part thereof, exported directly and indirectly by the
registered export-oriented enterprise, based on the actual taxes and duties paid
for such materials/supplies/semi-manufactured products by the registered
enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection was not med within one year from the date of exportation of the final
product.

(H) Incentives on Breeding Stocks and Genetic Materials. - Importation of
breeding stocks and genetic materials within ten (10) years from the date of
registration of commercial operation of the enterprise shall be exempt from all
taxes and duties: Provided, That such breeding stocks and genetic materials are
reasonably needed in the registered activity, and approved by the ZASEZA.

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

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

() Exemption from Wharfage Dues. - The provisions of law to the contrary
notwithstanding, exports by a registered enterprise shall be exempted from
wharfage dues.

(J) Deferred Imposition of the Minimum Corporate Income Tax. - The Corporate
Income Tax (CIT) of two percent (2%) of the gross income as of the end of the
taxable year shall be imposed when the CIT is greater than the income tax
computed under the NIRC of 1997, as amended, for the taxable year: Provided,
however, That said CIT shall be imposed only after the enterprise's entitlement
period to the income tax - based incentives has expired.

(K) Tax Treatment of Merchandise in the Zambales Ecozone. -


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

(b) Merchandise sent from the Zambales Ecozone to areas outside the
said ecozone shall, whether or not combined with or made part of other
articles while in the zone, be subject to rules and regulations governing
imported merchandise. The duties and taxes shall be based on the value
of said imported materials (except when the final product is exempt).

(c) Articles produced or manufactured in the Zambales Ecozone and
exported therefrom shall, on subsequent importation into the customs
territory, be subject to the import laws applicable to like articles
manufactured in a foreign country.

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

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

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

(N) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of
Commonwealth Act No. 613, as amended, a registered enterprise may employ
foreign nationals in supervisory or technical positions for a period not exceeding
ten (10) years from its registration: Provided, no Filipino is qualified for the said
supervisory or technical positions aforementioned at the time of hiring for the said
positions: Provided, further, That when the majority of the capital stock of a
registered enterprise is owned by foreign investors, the positions of the president,
treasurer and general manager or their equivalents may be retained by foreign
nationals beyond the period set forth herein and such officer is the owner or a
stockholder owning at least ten percent (10%) of the outstanding capital stock of
the registered enterprise and he remains the owner or maintains his
stockholdings therein.

Foreign nationals under employment contract within the purview of this incentive,
their spouses and unmarried children under twenty-one (21) years of age, who
are not excluded by Section 29 of Commonwealth Act No. 613, as amended,
shall be permitted to enter and reside in the Philippines during the period of
employment of such foreign nationals. They shall be entitled to a multiple entry
visa, valid for a period of three years, and shall be allowed to enter and leave the
Philippines without further documentary requirements other than valid passports
or other travel documents in the nature of passports. The validity of the multiple
entry visa shall be extendible yearly.

The said foreign nationals admitted under this provision, as well as their
respective spouses and dependents shall be exempt from: (a) obtaining alien
certificates of registration and immigration clearance certificates; and (b) securing



the Alien Employment Permit (AEP) and all types of clearances, permits, licenses
or their equivalents required by any government department or agency.

Section 7. Incentive fo Investors. - Any foreign national covered under
subsection (M) of Section 5 of this Act, who invests an amount of US$150,000.00, either
in cash and/or equipment, in a registered enterprise shall be entitled to an investor's
visa: Provided, That:

(1) He is at least eighteen (18) years of age;

(2) He has not been convicted of a crime involving moral turpitude;

(3) He is not afflicted with any loathsome, dangerous or contagious disease; and
(4) He has not been institutionalized for any mental disorder or disability:

Provided, further, That in securing the investor's visa, the alien-applicant shall be
entitled to the same privileges provided for under subsection (M), Section 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 8. Administration, Implementation and Monitoring of Incentives. - The
ZASEZA shall be responsible for the administration and implementation of the
incentives granted to its respective registered enterprises: Provided, That any incentive
administration policy adopted by the BOI for registered enterprises shall be uniformly
applied by the ZASEZA.

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

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

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

(C) To submit information on registered enterprises to the DOF and the BOI as
required by any of these agencies to ascertain consistency of investment policies
and incentives, inctuding their implementation as provided in paragraph (A)
herein, and to ensure proper implementation of systems and procedures.
affecting trade and customs policies as provided in paragraph (B) herein; and

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

For proper monitoring, the BO! shall create a single database of all incentives
provided by all incentives granting agencies, including the ZASEZA, and all
information thereto. Double entry accounting shall be done by the BOI in
recording all incentives granted by the government for transparency purposes.

Section 9. Extension of Period of Availment. - The availment period of the
incentives provided herein may be extended by the ZASEZA, in the event that the


registered enterprise suffers operational force majeure or any event equivalent thereto,
impairing its viability: Provided, That the availment period shall not exceed the duration
of the said force majeure or equivalent event.

Section 10. Duration of Incentives. - Enterprises registered with the ZASEZA
may enjoy ITH or NOLCO granted by the latter prior to the availment of the five percent
(5%) GIE.

Fiscal incentives under this Act shall be terminated after a cumulative period of
twenty (20) years from the date of registration or start of commercial operation,
Whichever is applicable, except that it could be extended with regard to industries
deemed indispensable to national development.

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

Section 11. Creation of the Zambales Special Economic Zone Authority. - There
is hereby created a body corporate to be known as the Zambales Special Economic
Zone Authority, hereinafter referred to as the ZASEZA, which shall manage and
‘operate, in accordance with the provisions of this Act, the Zambales Special Economic
Zone. This corporate franchise shall expire in fifty (50) years counted from the first day
of the fifth (5"") calendar year after the effectivity of this Act, unless otherwise extended
by Congress. {t shall be organized within one hundred eighty (180) days after the
effectivity of this Act.

Section 12. Principal Office of the ZASEZA. - The Zambales Special Economic
Zone Authority shall maintain its principal office in the Municipality of San Antonio, but it
may establish branches within the Philippines as may be necessary for the proper
conduct of its business.

Section 13. Powers .and Functions of the Zambales Special Economic Zone
‘Authority (ZASEZA). - The Zambales Special Economic Zone Authority shall have the
following powers and functions:

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

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

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

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

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


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

(g) Subject to the approval of the President of the Philippines and the Monetary
Board of the Bangko Sentral ng Pilipinas and upon the recommendation of the
Department of Finance, to raise or borrow adequate and necessary funds from
local or foreign sources to finance its projects and programs under this Act, and
for that 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;

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

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

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

(k) To issue certificates of origin for products manufactured or processed in the
Zambales Ecozone in accordance with prevailing rules of origin, and the
pertinent regulations of the PEZA, the DTI and/or the Department of Finance
(DOF),

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

(m) To report to the Bureau of Immigration the names of the foreigners who have
been granted permanent resident status and working visas within thirty (30) days
after issuance of such grant,

(n) To exercise such powers as may be essential, necessary or incidental to the
powers granted to it hereunder as well as those that shall enable it to carry out,
implement and accomplish the purposes, objectives and policies of this Act; and

(0) To issue rules and regulations consistent with the provisions of this Act as
may be necessary to accomplish and implement the purposes, objectives and
policies provided herein.

Section 14. Banking Rules and Regulations. -Existing laws and tules/regulations
of the Bangko Sentral ng Pilipinas (BSP) shall apply to banks and financial institutions
to be established in the Zambales Ecozone, such as those governing foreign exchange
and other concurrent account transactions (trade and non-trade), local and foreign
borrowings, foreign investments, establishment and operation of local and foreign
banks, foreign currency deposit units, offshore banking units and other financial
institutions under the supervision of the BSP.

Section 15. Remittance of Eamings. - In the case of foreign investments, a
registered enterprise in the ZASEZA shall have the right to remit earings 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 Section
74 of Republic Act No. 265, as amended.


Section 16. Board of Directors of the Zambales Special Economic Zone
Authority. - The powers of the Zambales Special Economic Zone Authority shall be
vested in and exercised by a Board of Directors, hereinafter referred to as the Board,
which shall be composed of the following;

(a) The Chairman who shall, at the same time be the administrator of the
ZASEZA;

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

(1) The Congressional Representative of the district covering the site of
the Zambales Ecozone;

(2) The mayor of the Municipality of San Antonio, Province of Zambales;
(3) One representative from the domestic investors;
(4) One representative from the foreign investors; and

(5) Two representatives from the workers working in the Zambales
Ecozone.

The Congressional Representative and the mayor of the Municipality of San
Antonio, Province of Zambales shall serve as ex officio members of the Board, whose
term in the Board corresponds to their terms as elected officials.

The Chairman and the members of the Board, except the ex officio members,
shall be appointed by the President of the Philippines to serve for a term of six (6)
years, unless sooner separated from 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.

Except for the representatives of the business and labor sectors, no person shall
be appointed by the President of the Philippines as a member of the Board unless he is
a Filipino citizen, of good moral character, of proven probity and integrity, and a degree-
holder in any of the following fields: economics, business, public administration, law,
management or their equivalent, and with at least ten (10) years relevant working
experience preferably in the field of management or public administration.

The members of the Board shall each receive per diem 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 (P10,000.00) for every Board
meeting.

Section 17. Powers and Duties of the Chairman-Administrator. - The Chairman-
Administrator shall have the following powers and duties:

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

(b) To establish the internal organization of the ZASEZA under such conditions
that the Board may prescribe;


(0) 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 of the Zambales Ecozone;

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

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

Section 18. Organization and Personnel. - The board of directors of the ZASEZA
shall provide for an organization and staff of its officers and employees. Upon
recommendation of the Chairman-Administrator, the Board shall appoint and fix the
remuneration and other emoluments of its officers and employees in accordance with
existing laws on compensation and position classification: Provided, That the Board
shall have exclusive and final authority to promote, transfer, assign or reassign officers
of the ZASEZA, any provision of existing law to the contrary notwithstanding: Provided,
further, That the Chairman-Administrator may carry out removal of such officers and
employees.

The officers and employees of the ZASEZA, including all members of the Board,
shall not engage directly or indirectly in partisan activities nor take part in any election,
except to vote.

No officer or employee of the ZASEZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by law.

Section 19. /pso Facto Clause. - Sections 30-41 of Republic Act No. 7916, shall
ipso facto apply to the Zambales Special Economic Zone.

Section 20. Capitalization. - The Zambales Special Economic Zone Authority
shall have an authorized capital stock of one billion (1,000,000,000) par shares with a
minimum issue of Ten pesos (P10.00) each, the majority shares of which shall be
subscribed and paid for by the National Government and the local government units
(LGUs) embracing the Zambales Special Economic Zone. The board of directors of the
ZASEZA may, with the written concurrence of the Secretary of Finance, sell shares,
representing not more than forty per centum (40%) of the capital stack of the ZASEZA
to the general public under such policy as the Board and the Secretary of Finance may
determine. The National Government and the LGUs shall, in no case, own less than
sixty per centum (60%) of the total issued and outstanding capital of the Zambales
Special Economic Zone Authority.

The amount necessary to subscribe and pay for the shares of the national
government to the capital stock of the ZASEZA 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.

Section 21. Supervision. - The Zambales Special Economic Zone shall be under
the direct control and supervision of the Philippine Economic Zone Authority (PEZA) for
purposes of policy direction and coordination.


Section 22. Relationship with the Regional Development Council. - The
Zambales Special Economic Zone Authority shall determine the development goals for
the Zambales Ecozone within the framework of national development plans, policies
and goals. The Administrator shall, upon approval by the Board, submit the Zambales
Ecozone plans, programs and projects to the Regional Development Council for
inclusion and inputs to the overall regional development plan.

Section 23. Relationship with Local Govemment Units. - Except as herein
provided, the local government units comprising the Zambales Special Economic Zone
shall retain their basic autonomy and identity. The barangays within the Zambales
Ecozone in the Municipalities of San Antonio and San Narciso shall operate and
function in accordance with the Local Government Code of 1991. In case of any conflict
between the ZASEZA and the Province of Zambales on matters affecting the Zambales
Ecozone other than defense and security matters, the decision of the ZASEZA shall
prevail.

Section 24. Interpretation/Construction. - The powers, authorities and functions
that are vested in the ZASEZA are intended to decentralize governmental functions and
authority and promote an efficient and effective working relationship between the
Zambales Ecozone, the national government, and the local government unit.

Section 25. Auditing. - The Commission on Audit shall appoint a representative
who shall be a full time auditor of the ZASEZA and assign such number of personnel as
may be necessary to assist said representative in the performance of his/her duties.
The salaries and emoluments of the assigned auditor and personnel shall be in
accordance with pertinent laws, rules and regulations.

Section 26. Separability Clause. - If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall remain in full
force and effect.

Section 27. Repealing Clause. - All laws, executive orders and issuances, or any
part thereof, which are inconsistent herewith are hereby repealed or amended
accordingly.

Section 28. Effectivity Clause. - This Act shall take effect upon its publication in
the Official Gazette or in at least one newspaper of general circulation.

Approved,