FOURTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
This bill seeks to provide fiscal and non-fiscal incentives to registered enterprises 
in the tourism enterprise zones created herein to spur investments in the country, 
generate foreign exchange and employment, and promote tourism industry as an 
indispensable element of the national economy and an industry of national interest and 
importance. 
In a paper prepared by the Senate Economic Planning Office in August 2006, the 
Philippine tourism industry had a sustained growth in international arrivals for most of 
the 1990s at a high of 2.2 million visitors in 1997. The trend was overturned in the 
subsequent years, with an average contraction of 5.1 percent from 1998 to 2001. In 2004 
international arrivals grew by 20 percent with nearly 2.3 million arrivals. This continued 
in 2005 with the country having 2.6 million arrivals. But these figures fall short in 
comparison to other ASEAN nations, with Malaysia and Thailand posting tourist 
arrivals of 15.7 million and 11.7 million, respectively, in 2004. Vietnam's tourist arrivals, 
which used to lag behind the Philippines', surged ahead in 2000. It has since maintained 
its lead with 2.9 million arrivals in 2004. 
According to the United Nations World Tourism Organizatiofi, the geographical 
expansion and labor intensive nature of the tourism sector provide a spread of 
employment which is particularly relevant in remote and rural areas where many of the 
poor live. Moreover, favorable climactic conditions at destinations are key attractions 
for tourists, In general, for all forms of tourism activities taking place outdoors, accurate 
climate and weather information is key for the planning and carrying out of trips and 
programs. Therefore tourism is an important element in both poverty reduction and 
climate change. The government and the private sector must therefore consider both in 
tourism development strategies. 
In a country where agriculture remains to be the main source of livelihood in the 
rural areas and where small and medium enterprises (SMEs) represent the bulk of the 
economy, tourism's impact is particularly strong because it creates many ,direct and 
indirect jobs, offers a viable alternative to declining subsistence farming and promotes 
the development of a market economy where SMEs can expand. Likewise, there is now 
an increased awareness for developing ecological tourism zones in view of the 
environmental degradation that is prevalent in most areas in the country today. There 
is therefore a need to develop and promote tourism as a means to reduce poverty in the 
country and as an incentive to maintain the richness of its natural resburces. 


This bill seeks to address the need to tap tourism as a source of economic growth 
and an incentive to protect the environment by allowing the creation of tourism 
enterprises. Tourism enterprises are facilities, services and attractions involved in 
tourism, such as, but not limited to: travel agents; tour operators; tourist transport 
operators, whether for land, sea or air transportation; tour guides; adventure sports 
operators, such as those for mountaineering, spelunking, scuba diving and other water 
sports, and other sports activities of significant tourism potential; convention 
organizers; accommodation establishments, such as hotels, resorts, apartelles, tourist 
inns, motels, pension houses, home stay operators; restaurants, shops & department 
stores, sports & recreational centers, spas, museums & galleries, theme parks, 
convention centers and zoos. These enterprises shall be under the Tourism Enterprise 
Zone Authority created under this bill which shall be attached to the Department of 
Tourism for program and policy coordination. 
Aside from the reinforced Department of Tourism, this proposed measure 
creates new bureaus to ensure the proper implementation of this bill once enacted into 
law: Bureau of Tourism Development Planning that will prepare a national tourism 
development plan, a Bureau of Tourism Coordination that will assist in the 
coordination with national government agencies, local government units, non- 
governmental organizations, and other private entities for the development and 
implementation of the national tourism plans and policies, and a Bureau of Tourism 
Standards, Regulations and Industry Manpower Development that will formulate and 
enforce standards for tourism enterprises, prescribing minimum levels of operating 
quality and efficiency in order to ensure that facilities, personnel and services are 
maintained in accordance with acceptable local and international standards. 
Furthermore, this bill ensures a holistic government strategy in tourism 
promotion and development by rationalizing the functions of existing government 
agencies involved in tourism, to wit, the Philippine Tourism Authority (PTA), which 
will be renamed as the Philippine Tourism Assets Corporation, the Duty-Free 
Philippines Corporation, Film Development Council of the Philippines, Intramuros 
Administration, the National Parks Development Committee, , Nayong Pilipino 
Foundation, the Philippine Retirement Authority, and the Philippine Tourism Assets 
Corporation. 
Finally, this proposed legislation creates a body corporate to be known as 
Tourism Philippines that shall be responsible for marketing and promoting the 
Philippines domestically and internationally as a major global tourism destination, 
highlighting the uniqueness of its tourism products, development and assisting the 
development of such tourism products. 
In view of the foregoing, immediate passage of this bill is earnestly requested. 
Senator 


FOURTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
Introduced by Senator Loren Legarda 
AN ACT 
DECLARING A NATIONAL POLICY FOR TOURISM AS THE PRIMARY ENGINE 
OF 
INVESTMENT, 
EMPLOYMENT, 
GROWTH 
AND 
NATIONAL 
DEVELOPMENT, REORGANIZING THE DEPARTMENT OF TOURISM AND ITS 
ATTACHED AGENCIES ' TO EFFECTIVELY AND EFFICIENTLY IMPLEMENT 
THAT POLICY, PROVIDING NECESSARY INCENTIVES FOR INVESTMENT 
AND APPROPRIATING FUNDS THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
CHAPTER I. GENERAL PROVISIONS 
SECTION 1. Short Title. - This Act shall be known as "The Tourism Act of 
2007". 
SEC. 2. Declaration of Policy. - The State declares tourism as an indispensable 
element of the national economy and an industry of national interest and importance, 
which must be harnessed as an engine of socio-economic and cultural growth to 
generate investment, foreign exchange and employment, and mold gin enhanced sense 
of national pride for all Filipinos. 
The Department of Tourism may call upon all government departments, 
agencies and offices to coordinate their efforts in the implementation of this policy by 
providing the necessary infrastructure, creating an atmosphere of peace, order and 
security, and inculcating within the people a culture of tourism, within a framework of 
sustainable development, such that the benefits of tourism will contribute to bringing 
an end to poverty. 
SEC. 3. Declaration of Principles. - In the pursuit of this policy, the 
interpretation and implementation of this Act and all other laws, decrees, presidential 
issuances, and implementing rules and regulations on tourism, shall hereafter be 
governed by the following principles: 
A. 
Tourism development must be focused. The nation must seek to make the 
Philippines a premiere tourist destination in Asia, if not the world. Its 
government and its people must devote resources to attract tourists to 
generate investments, foreign exchange, employment and national pride 
Tourism development must be sustainable. The state must protect and 
preserve with prcde not only our natural, historical and cultural endowments, 
B. 


C. 
D. 
E. 
but more importantly the dignity of the’Filipino people, such that future 
generations of Filipinos wiIl be proud of themselves, and of their nation. 
Tourism development must be coordinated. All government departments, 
agencies and offices must realize the fundamental importance of tourism as 
an engine of growth and must direct their efforts to support the Department 
of Tourism in the creation of peace and order, public infrastructure, and a 
proud culture that cultivates tourism 
Tourism development must be responsive. Any investment made into every 
tourism enterprise must result in real jobs for real people, in the context of the 
needs of every affected community. Only by thei creation of real 
opportunities and real employment can people truly benefit from the benefits 
of tourism development 
Tourism development must begin at home. Only when Filipinos come to 
know and love their own country through domestic tourism and a dynamic 
educational system can a culture of tourism truly be created, allowing the 
Philippines and the Filipinos to truly take their place in, and connect with the 
rest of, the world. 
SEC. 4. Definition of Terms. - The following terms, as used in this Act, are 
defined as follows: 
a. 
b. 
d. 
e. 
f. 
g. 
h. 
i. 
C. 
i. 
k. 
Department - Department of Tourism 
Secretary - Secretary of Tourism 
TEZA - Tourism Enterprise Zone Authority 
Zone - Tourism Enterprise Zone 
Zone Operator - Tourism Enterprise Zone Operator 
Registered Enterprise - An enterprise located within a Zone that is 
duly-registered with the TEZA 
PTA - Philippine Tourism Authority 
PCVC - Philippine Conventions and Visitors Corporation 
DFP - Duty-Free Philippines 
Tourism enterprises - shall refer to facilities, services and attractions 
involved in tourism, such as, but not limited to: travel agents; tour 
operators; tourist transport operators, whether for land, sea or air 
transportation; tour guides; adventure sports operators, such as those 
for mountaineering, spelunking, scuba diving and other water sports, 
and other sports activities of significant tourism potential; convention 
organizers; accommodation establishments, such as hotels, resorts, 
apartelles, tourist inns, motels, pension houses, home stay operators; 
restaurants, shops & department stores, sports & recreational centers, 
spas, museums & galleries, theme parks, convention centers and zoos. 
Affected local government unit - shall refer to A province or city that 
has a Zone, or part thereof, within its territorial jurisdiction 
CHAPTER 11. TOURISM GOVERNANCE 
, 
Subchapter 11-A. Structure of the Department 
SEC. 5. Mandate. - The Department of Tourism shall be the primary 
government agency charged with the responsibility of determining tourism policies and 


programs to develop and regulate tourism, implement such policies and programs on 
its own, through attached agencies, and in coordination with other government 
instrumentalities, and instill in the Filipino the fundamental importance of tourism in 
the generation of employment, investment and foreign exchange. 
SEC. 6. Powers and Functions. - The Department shall have the following 
powers and functions: 
a. 
b. 
C. 
d. 
e. 
f. 
g. 
h. 
i. 
j. 
k. 
1. 
m. 
Formulate policies, plans, programs, and projects for tourism as an engine of 
socio-economic and cultural growth 
Oversee and coordinate the implementation of tourism policy, plans and 
projects 
In coordination with local governments, delegate to regional offices specific 
powers and functions in the implementation of tourism policies, plans and 
projects 
Call upon all agencies of Government to properly carry out their programs in 
relation to and in coordination with the policies, plans and projects of the 
Department, and to assist in the implementation of tourism policies, plans 
and projects 
Represent the Government in all domestic and international conferences, and 
in all multilateral or bilateral treaties and international agreements, 
concerning tourism, and ensure government’s implementation and 
compliance with all obligations arising there from, particularly those that 
facilitate travel by air, sea and land 
Effect the removal of unnecessary barriers to travel, the integration and 
simplification of travel regulations, and ensure their efficient, fair and 
courteous enforcement to assure expeditious and hospitable reception of all 
visitors 
Issue timeIy advisories on the safety or viabiIity of trave1 to particular 
communities within the Philippines 
Participate at meetings of government agencies, offices, boards, commissions 
or committees that may, directly or indirectly, affect tourism, including but 
not limited to, transportation and travel, peace and order, national 
emergencies and disaster coordination, public utilities and other public 
infrastructure, foreign relations and immigration 
In cooperation with appropriate government agencies and the private sector, 
support, advance and promote the protection, maintenance and preservation 
of historical, cultural and natural endowments 
In consultation with the private sector, formulate and promulgate rules and 
regulations prescribing standards for the operation of tourism enterprises in 
accordance with the highest relevant international standards 
License, accredit and classify tourism enterprises, and when necessary to 
maintain the quality of service, suspend or prohibit their operation in 
accordance with duly promulgated rules and regulations 
Ensure 
the 
proper 
coordination, 
integration, 
prioritization 
and 
implementation of local government tourism development plans with that of 
the national government 
Receive and investigate complaints concerning tourism ‘enterprises, act on 
such complaints, and exercise quasi-judicial functions in the process of 
accreditation, suspension, or prohibition of the operation of tourism 
enterprises, and in such other processes necessary to properly implement the 
provisions of this Act 


n. 
Collect necessary fees and charges for the proper implementation of tourism 
policies, plans and projects. 
SEC. 7. Structure of the Department. - The Department shall consist of the 
Department Proper, Deparhnent Services, Bureaus and Offices and the Department’s 
Regional Offices. The Department Proper shall consist of the Offices of the Secretary, 
Undersecretaries and Assistant Secretaries. 
SEC. 8. Office of the Secretary. - The Office of the Secretary shall consist of the 
Secretary and his/her immediate staff. 
SEC. 9. Undersecretaries and Assistant Secretaries. - The Secretary shall be 
assisted by three (3) Undersecretaries, namely: 
a. 
Undersecretary for Tourism Development, who shall be responsible for the 
Bureau of Tourism Development Planning and Bureau of Tourism 
Coordination 
Undersecretary for Tourism Regulation, who shall be responsible for the 
Bureau of Tourism Standards, Regulations and Industry Manpower 
Development, and all Regional Offices 
b. 
c. 
Undersecretary for Internal Services. 
There shall be such number of Assistant Secretaries appointed by the President 
as may be required by the operations of the Department. 
SEC. 10. Bureau of Tourism Development Planning. - Recognizing the value of 
national tourism development planning, the Bureau of Tourism Development Planning 
shall have the following functions: 
a. 
b. 
Analyze specific geographical areas with potential tourism value leading to 
the preparation of a national tourism development plan 
Conduct research on the economic impact of tourism, and on necessary 
policies and programs for the sustainable tourism development of natural, 
cultural and historical endowments 
Formulate policies, programs and plans for national tourism development, 
coordinate with local government units for the formulation and preparation 
of local tourism development plans, and insure not only the integration of 
such local plans with that of the nation as provided under subchapter 11-E 
below 
Monitor and evaluate the implementation of plans and programs of the 
Department and of local government units. 
c. 
d. 
SEC. 11. Bureau of Tourism Coordination. - Recognizing increased linkages are 
necessary between various government offices and the private sector to properly 
implement tourism policy, the Bureau of Tourism Coordination shall have the 
following functions: 
a. 
Assist in the coordination with national government agencies, local 
government units, non-governmental organizations, and other private 
entities for the development and implementation of the national tourism 
plans and policies; 
Call upon the assistance and support of any or all of the government agencies 
in the implementation of the policies of the Department; and 
b. 


c. 
Support the private sector in all tourism activities requiring governmental 
coordination. 
SEC. 12. Bureau of Tourism Standards, Regulations and Industry Manpower 
Development. - Recognizing the need for internationally competitive standards of 
service, the Bureau of Tourism Standards, Regulations and Industry Manpower 
Development shall have the following functions: 
a. 
Formulate and enforce standards for tourism enterprises, prescribing 
minimum levels of operating quality and efficiency in order to ensure that 
facilities, personnel and services are maintained in accordance with 
acceptable local and international standards 
b. 
Coordinate with relevant tourism enterprise associations, including 
adventure sports associations, in the formulation of rules and regulations, 
accreditation, and enforcement 
License, regulate, classify, and monitor the operation of tourism enterprises, 
accredit tourism enterprises that comply with prescribed standards through a 
mandatory system of accreditation, and penalize and prohibit the operation 
of tourism enterprises that fail to meet such standards, under such terms as 
provided under subchapter 11-E below 
Establish a system of registration, information, linkage, and mutual assistance 
among accredited tourism enterprises to enhance the value of accreditation 
and improve the quality of service rendered by such enterprises 
Provide technical assistance, training and education programs to local 
governments, tourism enterprises, and other entities to improve the quality 
tourism services. 
c. 
d. 
e. 
SEC. 13. Regional Offices. - The Department shall establish, operate and 
maintain a Regional Office in each of the administrative regions of the country. A 
Regional Office shall be headed by a Regional Director and shall, within its 
administrative region, have the following functions: 
a. 
Implement and enforce laws, policies, plans, programs, rules and regulations 
of the Department, particularly those relating to the accreditation of tourism 
enterprises promulgated by the Department 
Coordinate with regional offices of other departments, bureaus, and agencies, 
local government units, non-governmental organizations, and the regional 
offices of the Department’s attached agencies in the implementation of such 
laws, policies, plans programs and rules and regulations 
Together with local government units, establish such tourist information and 
assistance offices as are necessary to assist tourists and tourism enterprises in 
all relevant matters. 
b. 
c. 
SEC. 14. Internal Services. - The Internal Services shall consist of the following 
services, and such other services as may be established by law, decree or executive 
order, each of which shall be headed by a Service Chief. 
SEC. 15. Financial and Management Service. - The Financial and Management 
Service shall provide the Department with staff advice and assistance on budgetary, 
financial and management matters and shall perform such other related functions as 
may be assigned or delegated to it by the Secretary. 


SEC. 16. Administrative Affairs Service. - The Administrative Service shall 
provide the Department with staff advice and assistance on personnel information, 
records, communications, supplies, equipment, collection,. disbursements, security, 
other custodial work and such other related duties and responsibilities as may be 
assigned or delegated to it by the Secretary. 
SEC. 17. Legal Affairs Service. - The Legal Affairs Service shall: 
a. 
b. 
Exercise quasi-judicial functions in disputes relating to the system of permits 
and accreditation, as provided herein 
Provide the Department with staff advice and assistance on all legal matters 
affecting the Department and perform such other related functions as may be 
assigned or delegated to it by the Secretary. 
Subchapter 11-B. Rationalization of Functions 
SEC. 18. Reorganization of Offices. - The Philippine Tourism Authority (PTA) 
created under Presidential Decree No. 189 as amended is hereby renamed as the 
Philippine Tourism Assets Corporation, as hereinafter provided. The Philippine 
Conventions and Visitors Corporation (PCVC) created under Presidential Decree No. 
1448 as amended is hereby reorganized as Tourism Philippines as hereinafter,provided. 
The Bureaus for Domestic and International Tourism Promotions, and the Offices 
of Tourism Information and Product Development of the Department provided under 
the Administrative Code of 1987 are hereby absorbed within Tourism Philippines. 
SEC. 19. Human Resources. - Where certain functions are declared redundant 
on account of the reorganization, the Department, the TEZA Board, and the Tourism 
Board shall provide for the reassignment, insofar as practicable, of affected employees 
to' similar positions within the Department and its attached agencies, taking into 
consideration their skills and experience, without loss of seniority or other rights and 
privileges. In any case, all relevant laws, decrees, executive orders, rules and 
regulations concerning the rights of government employees in the reorganization of an 
office shall be respected. 
SEC. 20. Rationalization of Assets. - The assets and liabilities of the Philippine 
Tourism Authority shall be held in trust and managed by a special committee 
composed of the Secretaries of Tourism, Budget and Management, and Finance. Within 
one hundred and twenty (120) days from the effectivity of this Act, the committee shall 
prepare a report identifying all the assets of the Philippine Tourism Authority, 
indicating their values, and recommendations on the proper disposition of those 
assets. 
When economically feasible and financially viable, assets consisting of tracts of 
land may be assigned to the TEZA for sale, lease and/or development into Zones as 
hereinafter provided. All other assets, particularly those involving business operations, 
as well as liabilities and obligations shall continue to pertain to the Philippine Tourism 
Ailthority, which shall hereinafter be renamed the Philippine Tourism Assets 
Corporation. 
SEC. 21. Retirement and Separation Compensation. - Should any employee be 
separated from government service on account of the reorganization of the Department, 
said employee shall be entitled to claim separation or retirement benefits as may be 


provided under existing laws governing the civil service, as well as benefits granted 
under relevant laws, presidential decrees and executive orders. 
SEC. 22. Foreign Field Offices. - The operation and supervision of foreign field 
offices of the Department of Tourism shall be transferred to Tourism Philippines. 
Subsection 11-C. Attached Agencies and Corporations 
SEC. 23. Other Attached Agencies. - Tourism Philippines and the Tourism 
Enterprise Zone Authority created herein below shall be attached to the Department 
and shall be under the supervision of the Secretary for program and policy 
coordination. Furthermore, the following agencies and corporations shall be attached 
to the Department under the supervision of the Secretary for program and policy 
coordination: the Duty-Free Philippines Corporation as hereinafter provided, Film 
Development Council of the Philippines as created under Republic Act No. 9167, 
Intramuros Administration created under Presidential Decree No. 1616 as amended, the 
National Parks Development Committee created under Executive Order No. 30 (1963), 
Nayong Pilipino Foundation created under Presidential Decree No. 37, as amended, the 
Philippine Retirement Authority created under Executive Order No. 1037, as amended, 
and the Philippine Tourism Assets Corporation,, created under Presidential Decree No. 
189. Except as hereinafter provided, each of the attached agencies shall continue to 
operate under their respective charters. 
SEC. 24. Duty-Free Philippines Corporation. - A body corporate, "Duty Free 
Philippines Corporation", is hereby created to operate the duty and tax free 
merchandising system in the Philippines to augment the service facilities for tourists 
and to generate foreign exchange and revenue for the government, as established under 
Executive Order No. 46 (1986). 
Duty Free Philippines shall have the exclusive authority to operate, or to contract 
out the operation of, stores and shops that would sell, among others, tax and duty free 
merchandise, goods and articles, in international airports and seaports, and in tourism 
enterprise zones throughout the country, in a manner that: 
a. 
b. 
c. 
Such merchandise, goods and articles shall only be sold to persons departing for 
abroad. Under such limitations, rules and regulations that may be provided by the 
Department of Tourism and concurred in by the Department of Finance, such 
merchandise, goods and articles may be sold to foreign tourists for cpnsumption within 
a tourism zone, or to passengers arriving into the Philippines from abroad. The 
Department shall adopt appropriate rules to delimit the operations of Duty Free 
Philippines within Zones in a manner that allows the establishment, growth and 
development of other retailing and merchandising enterprises therein. 
Is competitive with international standards, 
Effectively showcases Philippine culture, craftsmanship and industry, and 
Efficiently and effectively generates foreign exchange. 
In the performance of its functions, Duty Free Philippines shall have all the 
general powers of a corporation established under the Batas Pambansa Blg. 68, the 
Corporation Code in furtherance of its Charter. 
Duty Free Philippines shall be governed by a Board of Directors composed as 
follows: 
a. 
b. 
Secretary of Tourism as Chairman, 
General Manager of Duty Free Philippines as Vice-chairman, 


c. 
d. 
e. 
Chief Operating Officer of Tourism Philippines, 
Administrator of Tourism Enterprise Zone Authority, and 
Four persons appointed by the President with recognized competence in 
business management, marketing, finance, tourism and related fields. 
The General Manager shall be appointed by the Secretary of Tourism to 
implement the plans, programs and policies of the Board of Directors. He/she must 
have recognized competence in business management, marketing, finance, tourism and 
felated fields. 
The properties, assets, funds currently being utilized by the present Duty Free 
Philippines system shall be considered as the capitalization of the new corporate entity. 
SEC. 25. Intramuros Administration. - Consistent with Presidential Decree No. 
1616, Section 13 as amended, the Intramuros Administration is hereby authorized to 
administer Tourism Enterprise Zone incentives as provided under Chapter IV of this 
Act to enterprises within Intramuros as Intramuros is hereby declared a Tourism 
Enterprise Zone. In addition to such incentives, an enterprise engaged in the restoration 
of structures within Intramuros shall be entitled to a tax credit equivalent to the full cost 
of such restoration activities. The TEZA shall supervise the grant of incentives by the 
Intramuros Administration. 
SEC. 26. Philippine Retirement Authority. - For purposes of policy and 
program coordination, the Philippine Retirement Authority is hereby attached to the 
Department and placed under the supervision of the Secretary. The Secretary shall be 
ex-officio Chairman of its Board of Trustees. 
SEC. 27. The Film Development Council of the Philippines. - To further 
integrate national promotions efforts, the Film Development Council of the Philippines 
shall be attached to the Department, and the Secretary shall be its ex-officio Chairman. 
In the award of privileges under its charter, the Film Development Council shall give 
preference to films which highlight Philippine history and culture, particularly those 
which receive international recognition. 
SEC. 28. Philippine Commission on Sports Scuba Diving. - The Philippine 
Commission on Sports Scuba Diving is hereby abolished and, to insure more stringent 
monitoring, its functions shall be hereby assumed by the Bureau of Tourism Standards 
and Manpower Development. 
SEC. 29. Philippine'Tourism Assets Corporation. - In lieu of the mandate of the 
former Philippine Tourism Authority provided under Presidential Decree No. 189 as 
amended, The Philippine Tourism Assets Corporation shall hereinafter be specifically 
mandated to manage tourism enterprises it currently operates with the specific goal of 
attaining self-sufficiency in its operations within five years from the effectivity of this 
Act. Toward this end, it shall be entitled to receive the amount of one hundred million 
pesos (PHP 100,000,000) from the annual collections of travel taxes by way of subsidy 
for its operations for five years from the date of effectivity of this Act. Should it fail to 
attain self-sufficiency at the end of that period, the corporation shall be dissolved and its 
assets disposed. The proceeds of such a disposition of assets shall be set aside in a trust 
fund as provided under Chapter 111 Section 50 below. 
Subchapter 11-D. Control and Supervision of Areas of Overlapping Jurisdictions 


SEC. 30. Rationalization of Tourism Zones, Areas and Spots. - Any jurisdiction 
over any tourism zone, area or spot previously vested by law, executive order or 
presidential decree on the PTA or any other national government agency shall be vested 
in the Department. 
In the interest of efficiency in supervision and in recognition of local autonomy, 
within one (1) year from the effectivity of this Act, the Department through appropriate 
agreements may transfer control over a tourism zone, area or spot, or a portion thereof, 
to another agency or office of the government, or to a local government unit, 
Within ninety (90) days from the transfer of control, the relevant agencies, offices 
or local government units shall prepare comprehensive plans for the use, development, 
preservation and promotion of all tourism zones, areas, or spots, in a manner consistent 
with the tourism master plan. Such plans shall be subject to the approval of the 
Department. 
The Department shall exercise supervisory powers over such agency, office or 
local government unit in accordance with the terms of the agreement of transfer, or the 
development plan of the zone, area or spot. Where a national government agency or a 
local government unit fails to implement the comprehensive plan approved by the 
Department, the Department may, after due notice and hearing, revoke the agreement 
transferring of control over the tourism zone, area or spot. Where a local government 
unit is involved, the Department may also exercise powers provided under subchapter 
11-E below. 
SEC. 31. National Protected Areas System and the National Eco-tourism 
Policy. - Within one (1) year from the effectivity of this Act, the Department and the 
Department of the Environment and Natural Resources shall identify areas covered by 
the National Integrated Protected Areas System with ecotourism potential and prepare 
comprehensive plans for the use, development, preservation and promotion of these 
areas. When practicable, and with the concurrence of the Department of the 
Environment and Natural Resources, the Protected Area or portions thereof, and areas 
currently covered by the Eco-tourism Policy proclaimed under Executive Order No. 111 
(1999), may be organized as Zones under the supervision of the TEZA as hereinafter 
provided. 
Subchapter 11-E. Shared Responsibilities of National and Local Governments 
SEC. 32. Coordination between National and Local Governments. - In view of 
the urgent need to develop a national strategy for tourism development within a 
framework for decentralized governance in areas outside of Zones created under 
Chapter IV of this Act, the Department and local governments shall integrate and 
coordinate local and national plans for tourism development. Recognizing the strategic 
developmental value of tourism spearheaded by the national government, and the 
significant role local governments play in tourism development, greater coordination 
and support are required between national and local governments to truly implement a 
national policy for tourism. The Secretary, in the exercise of his/her rule making 
powers as required by the needs of industry regulation, shall have the power to identify 
the enterprises covered by this subchapter. 
SEC. 33. Tourism Development Planning. - Local governments shall coordinate 
with the Department for the preparation and implementation of tourism development 
plans for their respective jurisdictions. 


SEC. 34. Licenses and Permits. - Every local government unit with a duly- 
prepared tourism development plan shall have the authority to grant licenses and 
permits for the operation of tourism enterprises within their respective jurisdictions. 
Where the local government has not prepared a tourism development plan in 
coordination with the Department, the local government shall be empowered only to 
issue provisional licenses and permits for the operation of tourism enterprises. Such 
power to issue provisional licenses and permits shall not exceed two years from the 
approval of this Act. Thereafter, any local government without a duly-prepared tourism 
development plan shall be prohibited from issuing licenses or permits for the operation 
of tourism enterprises. 
The local government shall not renew any license or permit of any tourism 
enterprise that has failed to obtain or has lost accreditation from the Department. 
The Department shall, on its own or upon complaint, have the authority'to 
review the grant of such licenses and permits to ensure that the tourism development 
master plan is properly implemented. The Department is further empowered to require 
the relevant local government unit to adopt necessary measures and impose reasonable 
penalties to insure the proper implementation of the tourism development master plan. 
SEC. 35. Mandatory Accreditation. - In addition to the permits and licenses 
issued by the local government, every tourism enterprise shall, on a regular basis, 
obtain accreditation from the Department in relation to the quality of facilities and 
standard of service offered by such enterprise. Where an enterprise fails to obtain or 
qualify for accreditation, the Department shall notify the enterprise, giving it sufficient 
time to obtain accreditation, or to address deficiencies observed in the accreditation 
process. Where the enterprise still fails to obtain or qualify despite due notice, the 
Department shall notify the relevant local government unit of the fact, requiring it to 
take appropriate action against the enterprise, which may include monitoring, 
investigation, imposition of fines, or the suspension or cancellation of its license of 
permit. Where the local government fails to act within fifteen (15) days from receipt of 
notice, the Department shall be empowered to suspend or cancel the license or permit 
to operate of the enterprise. 
SEC. 36. Supervision over Local Governments. - Where the local government 
unit fails to act as required under this subchapter, after proper notice and hearing the 
Department shall take necessary action, which may include: 
a. 
b. 
c. 
d. 
Suspension of services rendered by the Department and its attached agencies 
to the local government 
Suspension of the power of the local government to issue licenses and 
permits for tourism enterprises. 
Imposition of reasonable fines and penalties against the responsible local 
government executive and subordinates. 
Elevation of the matter to the President in the latter's exercise of supervision 
over local governments. 
SEC. 37. Local Government Capabilities Enhancement. - The Department shall 
develop support and training programs to enhance the capacities and capabilities of 
local governments to monitor and administer tourism activities, and enforce tourism 
laws, rules and regulations in their respective jurisdictions. Funding for such programs 
shall be shared between the Department and the local government. 


SEC. 38. Reports. - Every local government unit shall periodically report to the 
Department on the status of tourism, plans and programs, tourist arrivals, and tourism 
enterprises, among others, within their jurisdictions. 
CHAPTER 111. TOURISM MARKETING AND PROMOTIONS 
Subchapter 111-A Tourism Philippines 
SEC. 39. Tourism Philippines. - Under the supervision of the Secretary and 
attached to the Department for purposes of program and policy coordination shall be a 
body corporate known as Tourism Philippines. 
SEC. 40. Mandate. - Tourism Philippines shall be responsible for marketing and 
promoting the Philippines domestically and internationally as a major global tourism 
destination, highlighting the uniqueness of its tourism products," development and 
assisting the development of such tourism products. 
SEC. 41. Board of Directors. - Tourism Philippines shall be governed and its 
powers exercised by a Board of Directors (the "Tourism Board), composed as follows: 
a. 
The Department Secretary, as chairperson 
b. 
The Tourism Philippines Chief Operating Officer, as vice-chairperson 
c. 
The General Manager of Duty Free Philippines 
d. 
A representative from the Philippine Amusements and Gaming 
Corporation 
e. 
A representative from the international airports and seaports providing 
the largest contribution to the Tourism Development Fund as provided 
under Section 52 below 
Five directors elected by the Tourism Congress as provided under Section 
43 below 
f. 
SEC. 42. The Chief Operating Officer. - Tourism Philippines shall have a Chief 
Operating Officer who shall be Filipino with a degree in business, law, tourism, public 
administration, or relevant fields, and have demonstrated expertise therein. Helshe 
must have been engaged in the managerial capacity for at least five (5) years prior to 
his/her appointment, The Chief Operating Officer shall be elected by a majority of the 
members of the Tourism Board, and shall serve at its pleasure. 
SEC. 43. Elected Directors. - The Tourism Congress as created under Chapter 
VI, Section 44 shall elect from among its members the directors to represent the tourism 
industry, specifically the following sectors: 
a. 
b. 
c. 
tour operators; 
d. 
travel agents; 
e. 
conventions organizers; and 
f. 
other tourism enterprises. 
Under the first election to implement this provision, the directors elected from 
the first three sectors above-mentioned shall serve terms of three years, while those 
from the last three sectors shall serve terms of two years. Thereafter, all directors shall 
serve terms of two years. These directors must be Filipinos engaged in the management 
air, sea and land tourist transportation operators; 
hotel and resort and other accommodation enterprises; 


of a business in the sectors they represent for at least five (5) years, and must remain 
engaged in business in the sector they have been elected to represent throughout their 
term of office. 
SEC. 44. Powers of Tourism Philippines. - Tourism Philippines shall have all 
powers of a corporation provided under the Batas Pambansa Blg. 68, the Corporation 
Code. Furthermore, it shall also have the following powers: 
a. 
Contract loans, indebtedness, credit and issue commercial papers and bonds, 
in any local or convertible foreign currency from international financial 
institutions, foreign government entities, and local or foreign private 
commercial banks or similar institutions under terms and conditions 
prescribed by law, rules and regulations 
Execute any deed of guarantee, mortgage, pledge, trust or assignment of any 
property for the purpose of financing the programs and projects deemed vital 
for the early attainment of its goals and objectives, subject to the provisions of 
the Constitution (Article VII, Section 20, and Article XII, Section 2, paragraphs 
Receive donations, grants, bequests and assistance of all kinds from local and 
foreign governments and private sectors and utilize the same 
Extend loans, provide grants and other forms of financial assistance for 
manpower training, heritage preservation, infrastructure development, and 
other programs of the Department 
Obtain the services of local and foreign consultants, and enter into contracts 
locally and abroad in the performance of its functions. 
b. 
(4) and (5) 
c. 
d. 
e. 
SEC. 45. Meetings of the Board. - The Tourism Board shall meet at least once a 
month at the Tourism Philippines’ principal office unless the Board had previously 
agreed in writing to meet at another location. 
SEC. 46. Internal Structure. - The Tourism Board shall have the power to 
determine its operational and staffing structure in a manner that will allow it to best 
implement its mandate. 
SEC. 47. Capitalization. From the collections of travel taxes, the national 
government shall set aside an amount of two hundred fifty million pesos (PhP 
250,000,000) to capitalize the operations of Tourism Philippines. 
SEC. 48. Strategic Marketing Plan. - Tourism Philippines shall draft 
comprehensive short-, medium- and long-term marketing plans for the Philippines as a 
destination for travel, business and investment, particularly tourism investment. It 
shall coordinate, insofar as practicable, with relevant agencies of government and the 
private sector in the preparation of such plans. 
Such plans shall be duly approved by the Tourism Board. The Chief Operating 
Officer shall ensure that the marketing plans are duly implemented, and shall 
periodically report to the Tourism Board the status of their implementation. He/she 
shall also coordinate to ensure that the other agencies of government and the private 
sector which assisted in the preparation of marketing plans perform their respective 
duties under the plans. 
SEC. 49. Foreign and Domestic Promotions Offices. In the implementation of 
its mandate, Tourism Philippines shall establish foreign and domestic offices, which 


shall be responsible in their respective areas for marketing and promotions, market 
research, and such other functions delegated by the Board. Each office shall submit 
periodic reports to both the Tourism Board and the Secretary on the performance of its 
functions. The head of each Tourism Philippines foreign office shall be considered as a 
representative of the Philippine government for matters related to tourism. 
Subchapter 111-B Tourism Promotion and Development Fund 
SEC. 50. Tourism Promotion and Development Trust. - Should the Philippine 
Tourism Assets Corporation fail to attain self-sufficiency as provided under Chapter 11, 
Section 29 above, Tourism Promotion and Development Trust shall hereby be 
established from the proceeds of the sale of its assets. The Trust shall be managed by a 
government-owned bank or financial institution selected by the Tourism Board and 
approved by the President. Said bank or institution shall report on a quarterly basis to 
the Secretary and the Joint Congressional Tourism Oversight Committee the status and 
profitability of the Trust. 
SEC. 51. Tourism Promotion and Development Fund. - The proceeds of the 
following shall be placed in a special Tourism Promotion and Development Fund to 
finance the activities of Tourism Philippines: 
a. 
b. 
C. 
d. 
e. 
f. 
g. 
The investment earnings from the Tourism Promotion and Development 
Trust 
The full amount of travel taxes less the statutory allocations for the National 
Commission on Culture and the Arts, the Commission on Higher. Education 
and the Philippine Tourism Assets Corporation as provided above 
An appropriation from the national government of five hundred million 
pesos (PHP 500,000,000) annually for five years representing the budget 
formerly allocated to the Department of Tourism’s Bureaus for Domestic and 
International Promotions 
At least 50% of the net income of Duty Free Philippines, in’lieu of its statutory 
remittance to the National Government under Republic Act No. 7656 
At least 25% of.net income of the Philippine Amusements and Gaming 
Corporation, to be taken from the share of the National Government under 
Republic Act No. 7656 
At least 25% of the net income of international airport and seaports, to be 
taken from the share of the National Government under Republic Act No. 
7656 
A minimal tourism fee which shall initially not exceed five US dollars (USD 5) 
to be collected from foreign guests per night spent in accommodation 
establishments, to be collected by said establishments and remitted to 
Tourism Philippines. The amount shall be initially fixed and maybe revised 
from time to time by the Board. In determining and reviewing the fee, the 
Board shall consider the level of accreditation of the establishment, its 
location and its market. 
In no case shall promotions and marketing activities receive less than fifty 
percent (50%) of the annual utilization of the Fund. Not more than ten percent (10%) of 
the Fund shall be used for all other administrative and operating expenses of Tourism 
Philippines. The unallocated portion of the Fund shall be utilized by the Tourism 
Philippines in coordination with the Department to fund manpower training programs, 
particularly the grant of scholarships to trainings and courses abroad to enhance local 
skills and knowledge relevant to tourism, heritage preservation, and infrastructure 
development, among others. 


The collections of travel taxes, portions of the net income of government 
corporations and other enterprises, and all other fees and collections provided under 
this section due Tourism Philippines shall be remitted directly to Tourism Philippines. 
SEC. 52. Special Contingency Fund. At the beginning of each year, ten percent 
(10%) of the allocation for promotions and marketing shall be set aside as a special 
contingency fund to provide Tourism Philippines with sufficient resources to undertake 
marketing and promotions activities to encourage sustained tourism interest in the 
Philippines in the event of emergencies which may adversely affect the tourism 
industry. The Special Contingency Fund shall only be utilized upon a two-thirds vote 
of all the members of the Tourism Board upon a resolution recognizing the existence of 
an emergency and authorizing the release of the fund. Any balance at the end of each 
year in the Special Contingency Fund shall be returned to the Tourism Promotion and 
Development Fund. 
Chapter IV. Tourism Enterprise Zones 
Subchapter IV-A Tourism Enterprise Zones 
SEC. 53. Tourism Enterprise Zones. - Any geographic area with the following 
characteristics may be designated as a Zone: 
a. 
b. 
Capable of being defined into one contiguous territory 
With areas of historical and cultural significance, environmental beauty, or 
existing or potential integrated leisure facilities within its bounds or within 
reasonable distances from it 
c. 
Having, or potentially having, strategic access through transportation 
infrastructure, and reasonable connection with utilities infrastructure systems 
d. 
Possessing sufficient area to be further utilized for <bringing in new 
investments in tourism establishments and services 
e. 
Possessing strategic location to catalyze the socio-economic development of 
neighboring communities. 
SEC. 54. Designation. - The designation of a Zone may be proposed to the 
Tourism Enterprise Zone Authority by the national government, city govcrnments, 
provincial governments with the consent of component municipalities, private 
initiative, or by joint ventures between the public and private sectors. 
Zones shall not proliferate in a manner that diminishes their strategic economic and 
developmental value to the national economy. 
SEC. 55. Development Planning. - Each application for designation as a Zone 
shall be accompanied by a Zone development plan which shall, consistent with 
principles of economic, cultural and environmentally sustainable development, 
specifically identify: 
a. 
Features which satisfy the requisites for the designation of a Zone 
enumerated under Section 53 of this Chapter 
b. 
Areas for infrastructure development, for investment, and lor preservation, as 
well as the kind of development, nature of investment, or the sustainable 
activities allowed within preserved areas, respectively 
Medium and long-term studies on market trends, and corresponding 
development strategies for the Zone 
Studies on the economic impact of development within the Zone and in 
surrounding communities 
c. 
d. 


e. 
f. 
Studies on the environmental, cultural and social carrying capacity of the 
Zone and surrounding communities 
Design plans for structures which incorporate design and sustainability 
principles from local architecture and the surrounding environment 
No Zone shall be designated without a duly approved development plan by 
TEZA. Any deviation or modification from the development plan shall require the 
prior authorization of TEZA. TEZA may cause the suspension of granted incentives, 
withdrawal of recognition as a Zone Operator, as well as impose reasonable fines and 
penalties, upon Zone Operators and responsible persons for any failure to properly 
implement the approved development plan. 
Lands identified as 'part of a Zone shall be exempt from the coverage of the 
Urban Development and Housing Program Act of 1992 (Republic Act No. 7279) and the 
Comprehensive Agrarian Reform Law (Republic Act No. 6657). The TEZA shall, in 
coordination with the Department of Land Reform, adopt the necessary rules and 
regulations to implement this provision. 
SEC. 56. Operation of the Zone. The Zone proponent shall establish a corporate 
entity to administer the Zone and supervise activities within the Zone. 
The 
designation of a Zone does not vest ownership of the resources therein upon the Zone 
Operator. Where the Zone Operator possesses rights to land or other resources within 
the Zone, the Zone Operator shall be entitled to exercise such rights as allowed by 
existing laws in a manner consistent with the duly-approved development plan as 
provided under Section 55 above. 
Where rights to land and other resources within the Zone are vested in a private 
third party, the Zone Operator shall encourage the private third party to participate in 
policy, planning and program development and implementation by encouraging their 
registration as tourism enterprises where appropriate, and through the judicious 
administration of incentives and provision of services. 
Except as herein provided, local government units which comprise, overlap, 
embrace or include a Zone in their territorial jurisdictions shall retain their basic 
autonomy and identity in accordance with Republic Act No. 7160, otherwise known as 
the Local Government Code of 1991. 
The government shall encourage, provide incentives, and facilitate private sector 
participation in the construction and operation of the public utilities and idrastructure 
in and around Zones using any of the schemes allowed under the Build Operate and 
Transfer Law (Republic Act No. 6957, as amended). 
Subchapter IV-B. Tourism Enterprise Zone Authority 
SEC. 57. The Tourism Enterprise Zone Authority. Under the supervision of the 
Secretary shall be a body corporate known as the Tourism Enterprise Zone Authority 
(TEZA). 
SEC. 58. Mandate. - The TEZA shall supervise the cultural, economic and 
environmentally sustainable development of Zones. Pursuant thereto, it shall have the 
sole and exclusive jurisdiction to issue permits and licenses for the regulation of 
commercial activity, and enforce environmental and cultural heritage, zoning and 
traffic, and construction laws within Zones. It shall also coordinate with appropriate 


agencies and government units for the facilitation of investments, and the development 
of communities surrounding or adjoining Zones. 
Supervisory jurisdiction over all tourism enterprises outside of Zones shall be 
shared between local governments and the Department, as provided under Chapter 11, 
subchapter C of this Act. Where investments in tourism enterprises are to be made in 
areas outside of Zones, they shall continue to be supervised by the relevant investment 
agency, subject to the Department’s notification and approval. 
SEC. 59. Board of Directors. - The TEZA shall be governed and its powers 
exercised by a Board of Directors (the ”TEZA Board”), composed as follows: 
a. 
b. 
c. 
d. 
e. 
f. 
g. 
The Department Secretary, as chairperson 
The Administrator of the Tourism Enterprise Zone Authority, as vice- 
chairperson 
The Undersecretary for Tourism Development 
A representative from the Department of Environment and Natural 
Resources 
A representative from the Department of Labor and Employment 
A representative from the Department of Trade and Industry 
Four directors to be appointed by the President as proyided in Section 61 
below. 
SEC. 60. Administrator. - The TEZA Administrator must be a Filipino with a 
bachelor’s degree in business, law, tourism, public administration, urban planning, or 
other relevant fields, and have demonstrated expertise therein. He/she must have been 
engaged in a managerial capacity for at least five (5) years prior to his/her 
appointment. He/she shall be appointed by the President and shall have a term of 
office of five (5) years. 
SEC. 61. Directors Appointed by the President. - The President shall appoint 
directors to represent each of the following sectors: 
a. 
b. 
c. 
d. 
Other tourism enterprises. 
Real estate development and land use planning; 
Hotels, resorts and other accommodation establishments; 
Air, sea and land tourism transport operators; 
These directors must be Filipinos engaged in management in the sectors they 
represent for at least five (5) years, and have recognized expertise,in their respective 
sectors. These directors shall serve terms of four (4) years. However, the first directors 
appointed under this provision shall respectively serve four, three, two and one years. 
SEC. 62. Meetings of the Board. - The TEZA Board shall meet at least once a 
month at the TEZA’s principal office unless the TEZA Board had previously agreed in 
writing to meet at another location. 
SEC. 63. General Powers and Functions of the TEZA. - The TEZA Board shall 
have the general powers of a corporation as provided under Batas Pambansa Blg. 68, 
the Corporation Code. Furthermore, it shall also have the following powers: 
a. 
Adopt rules and regulations necessary for the implementation of the 
provisions of this Chapter 


b. 
C. 
d. 
e. 
f. 
g. 
h. 
i. 
1. 
. .  
k. 
1. 
m. 
Enter into, make, perform and carry out contracts of every class, kind and 
description which are necessary or incidental to the realization of its purposes 
with any person, firm or corporation, private or public: and with foreign 
government entities 
Contract loans, indebtedness and credit, issue commercial papers and bonds, 
in any local or convertible foreign currency from international financial 
institutions, foreign government entities, and local or foreign private 
commercial banks or similar institutions under such terms and conditions 
prescribed by law, rules and regulations 
Execute any deed of guarantee, mortgage, pledge, trust or assignment of any 
property for the purpose of financing the programs and projects deemed vital 
for the early attainment of its goals and objectives, subject to the provisions of 
Article VII, Section 20, and Article XII, Section 2, paragraphs (4) and (5) of the 
Constitution 
Construct, own or lease, operate and maintain infrastructure facilities, and 
grant franchises for, and supervise the operation of, public utilities within 
Zones 
Undertake, or authorize the undertaking of reclamation projects within Zones 
Receive donations, grants, bequests and assistance of all kinds from local and 
foreign governments and private sectors and utilize the same 
Exercise eminent domain 
Coordinate with local government units and other government offices for the 
provision of basic services, utilities and infrastructure required by Zones 
Review and approve proposals for the designation of Zones based on criteria 
provided herein and approve, facilitate and assist in the organization of Zone 
Operators 
Supervise the operations of Zone Operators, review and enforce their 
development plans, and establish and implement other policies, plans and 
programs for the development and operation of Zones 
Register, monitor and regulate enterprises seeking to invest and operate 
within a Zone, and approve and grant incentives to such registered 
enterprises as provided under this Act 
Collect taxes as provided under Section 77 below, and necessary fees to 
defray administrative and operational expenses, and impose penalties and 
fines for violations of duly promulgated rules and regulations. 
TEZA shall be deemed a government infrastructure corporation under the 
provisions of the Administrative Code of 1987 (Executive Order SJo. 292, Book IV, 
Chapter 13, Section 58). 
SEC. 64. Powers and Functions of the Administrator. - The Administrator shall 
implement the policies, plans and programs of TEZA Board, and shall periodically 
report to the TEZA Board the status of their implementation. The TEZA Administrator 
shall also recommend to the TEZA Board all necessary acts to properly supervise the 
operations of Zone Operators. In addition, he/she shall have the following specific 
powers and responsibilities: 
a. 
b. 
Subject to the approval of the TEZA Board, determine the structure, staffing 
pattern, and personnel complement of TEZA 
Coordinate with the Philippine National Police for the proper maintenance of 
peace and order within Zones 


c. 
Ensure that all Zone Operators properly perform their functions and duties in 
accordance with ihis Act, TEZA implementing rules and regulations, and all 
other relevant laws and executive issuances 
Receive all protests, complaints, and claims concerning Zone Operators, and 
make recommendations to the TEZA Board for appropriate action 
Enforce all legal easements along seashores, lakeshores, riverbanks, among 
others, to allow free and open access thereto and aid in the proper 
development of the national patrimony 
Require owners of houses, buildings or other structures constructed without 
the necessary permit whether constructed on public or private lands within 
Zones, to remove or demolish such houses, buildings, structures within sixty 
(60) days after notice and upon failure of such owner to remove or demolish 
such house, building or structure within said period, the TEZA Administrator 
or his/her authorized representative may summarily cause its removal or 
demolition at the expense of the owner, any existing law, decree, executive 
order and other issuances or part thereof to the contrary notwithstanding 
Take such emergency measures as may be necessary to avoid or mitigate the 
impact of fires, floods, storms and other natural or pubfic calamities upon 
persons or properties within Zones and adjoining communities. 
d. 
e. 
f. 
g. 
' 
SEC. 65. Capitalization. - From the annual collections of travel taxes, the 
national government shall appropriate the sum of two hundred fifty million pesos (PW 
250,000,000.00) for the capitalization of TEZA. 
SEC. 66. Registration. Business enterprises within a Zone must be registered 
with TEZA to avail of the incentives and benefits provided for in this Act. 
SEC. 67. One-stop Shop Processing. - TEZA shall establish offices where 
prospective Zone investors can register to obtain the incentives and benefits under this 
Act, and obtain all necessary permits and licenses from all national .and local 
government offices. All government agencies shall coordinate with TEZA for the 
issuance of such permits and licenses. 
SEC. 68. Investigation and Inquiries. - Upon a written formal complaint made 
under oath, which on its face provides reasonable basis to believe that some anomaly or 
irregularity might have been committed within the Zone, the TEZA Administrator shall 
have the power to inquire into and investigate the conduct of Zone Operators, 
registered enterprises, or their employees. For that purpose, he/she may subpoena 
witnesses, administer oaths, and compel the production of books, papers, and other 
evidence. The TEZA Administrator may also grant immunity from prosecution to any 
person whose testimony or whose possessions of documents or other evidence is 
necessary or convenient to determine the truth in any investigation conducted by 
him/her or under his/ her authority. 
Subchapter IV-C. Zone Administration 
SEC. 69. Administration of Zones. - Each Zone shall be administered and 
supervised by a Zone Operator. A Zone Operator shall be an entity duly incorporated 
under general Philippine law, whose capital may be provided by the national 
government, one or more city and/or provincial governments, and private entities. 
SEC. 70. Articles of Incorporation and By laws of Zone Operators. - Except as 
provided herein and may be provided by rules and regulations duly promulgated by 


TEZA, each Zone Operator may draft its articles of incorporation and by-laws as it sees 
fit. 
SEC. 71. Boards of Directors and Consultative Bodies of Zone Operators. - The 
seats of the Board of Directors of a Zone Operator shall be allocated pro-rata according 
to the respective capital contributions of the Zone Operator’s shareholders. 
Zone Operators are encouraged to reserve seats on their Boards of Directors for 
special interest groups relevant to their Zones, such as those representing 
environmental, religious, cultural communities, Zone investors, Zone residents, and 
other interests. In any case, Zone Operators shall form consultative bodies for such 
special interest groups to assist it in the formulation and implementation of policies, 
plans and projects. 
SEC. 72. Zone Administration. - The Board of Directors of ekch Zone Operator 
shall appoint its respective Zone Administrator. The Zone Administrator shall be 
responsible for implementing the policies, plans and projects of the Zone Operator 
Board of Directors. 
TEZA shall provide guidelines on the necessary educational and practical 
qualifications required of a Zone Administrator. In addition to such qualifications, all 
Zone Administrators must undergo, complete and pass a training program created by 
the Department to provide Zone Administrators with knowledge and skills relevant to 
the operation of the Zone. 
SEC. 73. Civil Dispute Resolution. - TEZA shall establish a civil dispute 
mediation office to effectively and efficiently resolve civil disputes within the Zone 
where at least one of the parties to the dispute was temporarily residing in the Zone at 
the time the dispute arose, and is still residing within the Zone at the time the complaint 
was filed with the mediation office. No civil dispute may be filed in court without 
having undergone mediation proceedings as provided under this section. 
SEC. 74. Labor Dispute Resolution. - To resolve disputes getween employees 
and employers for any violation of the Labor Code (Presidential Decree No. 442, as 
amended), the TEZA, in coordination with the Department of Labor and Employment, 
shall establish special labor dispute resolution offices within or near each Zone to 
effectively and efficiently resolve disputes between registered enterprises and their 
employees. Any other agency charged with the enforcement of the Labor Code or its 
rules and regulations shall not acquire jurisdiction over any dispute involving a 
registered enterprise unless such a complaint has undergone labor dispute mediation 
through such offices, and that such mediation has failed. 
In order to promote a stable investment climate, realizing the critical role tourism 
plays in the Philippine economy, and recognizing that the right to strike may be 
regulated by law, employees of registered enterprises shall be prohibited from engaging 
in strikes or strike-related activity within five years from the registration of the 
enterprise. 


Subchapter IV-D. Incentives for Zone Operators and Locators 
SEC. 75. Grant and Administration of Incentives. - Recognizing the strategic 
economic importance of tourism, the necessity that investments within Zones be 
properly coordinated with environmental, cultural and developmental imperatives, and 
fundamental differences between the export manufacturing and tourism industries, 
TEZA shall have sole and exclusive jurisdiction to grant the incentives hereinafter 
provided, and administer them through Zone Operators, in a manner that ensures that 
incentives properly encourage the development of tourism enterprises within Zones, 
consistent with TEZA's mandate to ensure the cultural, economic and environmentally 
sustainable development of the Zones. 
In the formulation of rules and regulations defining and implementing the 
incentives hereinafter provided, and without derogating from the *incentives granted 
herein, TEZA may coordinate with the Board of Investments and other government 
agencies or entities responsible for the grant and administration of incentives to assist in 
the development of a rationalized national investment incentive policy. In the grant of 
incentives, it shall give greater preference to large investments and those with great 
potential for employment generation. 
TEZA shall further coordinate with the Bureau of Customs and the Bureau of 
Internal Revenue in the preparation and enforcement of rules and regulations to 
prevent the abuse of these incentives. 
The jurisdiction of TEZA in the grant and administration of incentives cannot be 
impliedly repealed or modified. 
SEC. 76. Fiscal Incentives Available to Zone Operators and Registered 
Enterprises. - The following incentives may, in the discretion of the TEZA Board, be 
granted to registered enterprises within Zones: 
a. 
Income Tax Holiday. New enterprises shall, from the start of operations, not 
be subject to any tax on income for a period of six years. This income tax 
holiday may be extended if the enterprise undertakes a substantial expansion 
or upgrade of its facilities prior to the expiration of the first six years. This 
extension shall consider the cost of such expansion or upgrade in relation to 
the original investment, but shall in no case exceed an additional six years. 
An existing enterprise shall be entitled to avail of a non-extendible income tax 
holiday if it undertakes an extensive expansion or upgrade of facilities. Such 
an income tax holiday shall consider the cost of such expansion or upgrade in 
relation to the original investment, but shall in no case exceed six years. 
Gross Income Taxation. In lieu of all other national and local taxes, license 
fees, imposts and assessments, except real estate taxes and such fees as may 
be imposed by the TEZA, a new enterprise shall pay a tax of 3% on its gross 
income, which shall be distributed as follows: 
1. One-third to be proportionally allocated among affected local 
governments; 
2. One-third to the national government; and 
3. One-third to the TEZA for the funding of its operations and its programs 
in Zones, which shall include the protection, maintenance and enrichment 
of the environment, tangible cultural and historical heritage, and the 
b. 


intangible cultural heritage of communities within and surrounding 
Zones. 
Gross income as used herein is defined under Republic Act No. 8424 (The 
National Internal Revenue Code), Section 27(A) and further defined under 
relevant rules and regulations. 
Goods and Services. Subject to rules and regulations which properly define 
goods and services necessary for various kinds of tourism enterprises, 
registered enterprises shall be entitled to the following: 
1. Importation of goods actually consumed in the course of services actually 
rendered by or through registered enterprises within a Zone shall be 
exempt one hundred percent (100%) of all taxes aAd customs duties; 
Provided hoo~ver, That no goods shall be imported for the purpose of 
operating a wholesale or retail establishment in competition with Duty- 
free Philippines 
c. 
2. A tax credit equivalent to all national internal revenue taxes paid on all 
locally-sourced goods and services directly or indirectly used by the 
registered enterprise for services actually rendered within the Zone. 
d. 
Social Responsibility Incentive. A registered enterprise shall be entitled to a 
tax credit equivalent to a reasonable percentage, not exceeding fifty percent 
(50%), of the cost of environmental protection or cultural heritage 
preservation 
activities, 
sustainable 
livelihood 
programs .for local 
communities, and other similar activities it undertakes. 
SEC. 77. Non-fiscal Incentives Available to Zone Operators and Locators. - The 
following incentives may, in the discretion of the TEZA Board, be granted to registered 
enterprises within Zones: 
a. 
b. 
C. 
d. 
Emplovment of foreign nationals. A registered enterprise may employ 
foreign nationals .in executive, supervisory, technical or advisory positions for 
such reasonable periods and under such terms as may be provided by the 
TEZA Board, with due regard for the proper protection and representation of 
foreign investments in registered enterprises, and the need to ensure easy 
travel into and out of the Philippines by such nationals and their immediate 
families 
Special Investor's Resident Visa. Under such terms as may be provided by the 
TEZA Board, a foreign national who shall have made an investment with a 
value of at least fifty thousand US dollars (US$ 50,000) in a registered 
enterprise shall be entitled to a Special Investor's Resident Visa. With such 
Visa, the foreign national shall be entitled to reside in the Philippines while 
his/her investment subsists 
Foreinn 
- Currencv Transactions. Subject to the provisions of Section 74 of 
Republic Act No. 265 as amended 
Repatriation of Investments. In the case of foreign investments, the right to 
repatriate the entire proceeds of the liquidation of thewinvestment in the 
currency in which the investment was originally made and at the exchange 
rate prevailing at the time of repatriation. 


e. 
f. 
g. 
h. 
i. 
Remittance of Foreign 
- Exchange. The right to remit earnings from a foreign 
investment in the currency in which the investment was originally made and 
at the exchange rate prevailing at the time of remittance. 
Foreign Loans and Contracts. The right to remit at the exchange rate 
prevailing at the time of remittance such sums as may be necessary to meet 
the payments of interest and principal on foreign loans and foreign 
obligations arising from technological assistance contracts 
Freedom from Expropriation. There shall be no expropriation by the 
government of the property of a registered enterprise or represented by 
investments except for public use or in the interest of national welfare or 
defense. In any case, the affected person shall be entitled to just 
compensation, and shall have the right to repatriate such compensation as 
provided in paragraph c above 
Requisition of Investment. There shall be no requisition of the property of 
enterprises or represented by investment, except in the event of war or 
national emergency, and only for the duration thereof. In any case, the 
affected person shall be entitled to just compensation, and shall have the right 
to repatriate such compensation as provided in paragraph c above 
Lease of Land. Consistent with the provisions of the Investor’s Lease Act 
(Republic Act No. 7652), lands and buildings in each Zone may be leased to 
foreign investors for a period not exceeding fifty (50) years, renewable once 
for a period of not more than twenty-five (25) years. The leasehold right 
acquired under long-term contracts may be sold, transferred or assigned, 
subject to the conditions set forth under the Investor’s Lease Act. 
CHAPTER V. INCREASED TOURIST ACCESS 
SEC. 78. International Tourist TraveI. - The department shaII utilize its powers 
to increase and improve the accessibility of the Philippines to foreign tourists. Realizing 
the critical importance fast, friendly and flexible travel plays in tbe development of 
tourism: 
a. 
b. 
The Secretary shall be Chairman of the Civil Aviation Board 
The Secretary shall be ex oficio Chairman of the Manila International Airport 
Authority and the governing boards of other international airports. The 
Secretary shall be authorized to appoint a representative to the .Board of 
Directors of each international seaport of the Philippines 
Unless otherwise provided by relevant international agreements, or curtailed 
by the requirements of national security, emergencies or crises, short stay 
visas for the entry of tourists shall be valid for a minimum of thirty (30) days. 
The Secretary shall further have the power to allow the visa free entry for up 
to thirty (30) days for particular nationalities or classes of tourists. 
c. 
SEC. 79. Domestic Tourist Travel. - Transportation for tourist use must first 
obtain the approval of the Department prior to the issuance of a certificate of public 
convenience from the pertinent agency of government. Only taxis accredited by the 
Department shall be authorized to pick up passengers at international and domestic 
airports. 
CHAPTER VI. CREATING A CULTURE OF TOURISM 
SEC. 80. Tourism Coordinating Council. - A council shall be formed consisting 
of the Department Secretary, as chairman, his/her undersecretaries, the TEZA 


Administrator, the Tourism Philippines Chief Operating Officer, representatives from 
the Tourism Congress, the heads of other agencies attached to the Department, the 
Secretaries of the Departments of Transportation and Communication, Public Works 
and Highways, Foreign Affairs, Environment and Natural Resources, Education, 
Interior and Local Government, and Labor and Employment, and the heads of the 
Philippine National Police, Bureaus of Immigration, Internal Revenue and Customs, 
National Historical Institute, National Commission for Culture and the Arts, Philippine 
Sports Commission, Philippine Amusements and Gaming Corporation, the Leagues of 
Local Governments, and such other government agencies that the President may 
designate, that shall serve as a coordinating body for national tourism development 
efforts. 
The Council shall prepare 5-year strategic plans to develop and enhance a 
culture of tourism. It shall also approve an annual infrastructure development plan that 
shall promote access to and from airports and seaports, and Zones and other tourism 
destinations which shall be accorded priority by the relevant infrastructure agencies of 
the national government. 
SEC. 81. Education. - The Department shall work closely with the Department of 
Education for the development of educational programs for the primary and secondary 
educational levels that assist in the creation of a culture of tourism, specifically through 
the enhancement of education in languages, history and culture. 
The Department shall also work closely with the Commission for Higher 
Education in the regulation of colleges and universities that grant undergraduate and 
postgraduate degrees in tourism. 
The Technology and Skills Manpower Development Administration is hereby 
mandated to develop programs, in conjunction with the Department, for the training of 
tourism entrepreneurs by providing programs for languages, history and cultural 
appreciation, and small business management. 
SEC. 82. Peace and Order. - Under the supervision of the Philippine National 
Police and in coordination with local government units, the Department shall establish 
a Tourism Security Force to assist the Philippine National Police in maintaining peace 
and order within areas of high tourism traffic. The Department shall ensure the 
training of members of the Force in cultural sensitivity, languages and relevant laws. 
Security arrangements within particular Zones shall be the responsibility of the 
Zone Operator. 
SEC. 83. Funding Grassroots Tourism Enterprises. - Insofar as allowed by 
applicable laws and their respective charters, government owned and controlled banks 
and financial institutions shall provide microfinance schemes for the assistance and 
development of small and medium scale enterprises in the tourism industry. 
SEC. 84. Congressional Oversight. - An oversight committee consisting of five 
members each from both houses of Congress shall constitute a Joint Congressional 
Oversight Committee responsible for overseeing the implementati6n of this Act. The 
Oversight Committee shall be composed of representatives from each House from their 
respective Committees of Tourism; Government Corporations and Public Enterprises; 
Environment; Education, Arts and Culture; and Local Governments. 


The Secretary shall report to the Oversight Committee on a monthly basis the 
latest statistics on tourism arrivals and other relevant data. He/she shall also report on 
a quarterly basis the status of implementation of this Act. 
SEC. 85. The Tourism Congress. - Within thirty 30 days from the effectivity of 
this Act, the Secretary shall convene a Tourism Congress of representatives of all 
accredited tourism enterprises to serve as the private sector consultative body to assist 
the government in the development, implementation and coordination of Philippine 
tourism policy. 
* 
Under a constitution adopted and ratified by the Congress, it shall elect its 
officers and establish a secretariat, both for the Congress as a whole and for component 
sectors. It shall also elect such representatives as required under this Act. 
CHAPTER VII. MISCELLANEOUS PROVISIONS 
SEC. 86. Personnel and Compensation. - The employees of TEZA, Tourism 
Philippines and DFP, including the TEZA Administrator, Tourism Philippines Chief 
Operating Officer, and DFP General Manager, shall be covered by the salary 
standardization law. However, their respective Boards of Directors shall be 
empowered to grant bonuses and other incentives in consideration of the financial 
condition of the corporation, its success in generating sales, investments or in meeting 
tourist arrival targets, as the case may be. 
Subject to existing constitutional and legal prohibitions on double compensation 
for Board members in an ex-oficio capacity, the members of the TEZA Board, Tourism 
Board, DFP Board shall not be entitled to compensation, but may receive reasonable per 
diems for attendance at regular and special Board meetings. 
' 
SEC. 87. Reportoria1 Requirements. - All attached agencies of the Department 
shall submit a quarterly report to the Secretary and to the Joint Congressional Oversight 
Committee on Tourism on the implementation of their respective programs. 
SEC. 88. Budgetary Approval. - All attached agencies of the Department shall 
submit their annual budgets to the Secretary for his/her approval, and shall furnish 
copies of the same to the Joint Congressional Oversight Committee on Tourism. 
The budgets of TEZA, Tourism Philippines and DFP reported to the Joint 
Congressional Oversight Committee must contain detailed information on the 
compensation and benefits received by their employees. 
SEC. 89. Other Incentives. Tourism enterprises not located within Zones shall, 
upon approval by the Department, be entitled to avail of any economic incentives found 
under existing laws, such as the Omnibus Investments Code, Foreign Investments Act, 
Special Economic Zone Act of 1995, the Bases Conversion and Develdpment Act, among 
others. 
Subject to rules and regulations jointly promulgated by the Department and the 
relevant government agency, such as the Board of Investments or the Philippine 
Economic Zone Authority, an existing accommodation establishment not located within 
a Zone shall be entitled to claim an income tax holiday for up to six years for any 
significant expansion, renovations or upgrades in its facilities in relation to the amount 


of the original investment. They shall also be entitled to import capital equipment free 
of taxes and duties when necessary for such expansion, renovation o~upgrades. 
The Department and the Department of Trade and Industry shall promulgate 
rules and regulations to govern the relationship between Zones created under this Act, 
and economic zones created under Republic Acts No. 7227 or 7916, as amended, where 
an area comprising a Zone overlaps, falls within or encompasses that of an economic 
zone; Provided, That such rules and regulations shall consider the special nature and 
requirements of tourism in relation to other industries, establishments and operations in 
economic zones. 
The investment incentives offered under this Act shall be without prejudice to 
availing other incentives provided under other laws, decrees, and presidential 
issuances. However, where such other laws, decrees or presidential issuances provide 
for similar or identical benefits, the beneficiary may only elect to avail of the benefit 
provided under one particular law, decree or presidential issuance. 
Local governments are likewise encouraged to provide incentives for tourism 
enterprises through, among others, reductions in applicable real estate taxes, and 
waivers of fees and charges, among others. Should a local goveznment grant such 
incentives, it shall report the same to the Department and Tourism Philippines to assist 
in the marketing and promotions of investment in that local government. 
SEC. 90. Implementing Rules and Regulations. - Except as otherwise provided, 
the Secretary of Tourism shall have the power to issue rules and regulations to 
implement this Act. 
SEC. 91. Repealing Clause. - The provisions of Executive Orders No. 292 (The 
Administrative Code of 1987, as amended), Presidential Decree No. 189, as amended, 
(creating the Philippine Tourism Authority), Presidential Decree No. 1448, as amended, 
(creating the Philippine Convention and Visitors Corporation), the Labor Code 
(Presidential Decree No. 442, as amended), the Local Government Code (Republic Act 
No. 7160), Presidential Decree No. 1616 (Creating the Intramuros Administration), and 
all other laws, presidential decrees, executive orders, proclamations and administrative 
regulations inconsistent with the provisions of this Act are hereby amended, modified, 
superseded or repealed accordingly. 
SEC. 92. Separability Clause. - In the event that any provieion of this Act or 
parts thereof be declared unconstitutional, such declaration shall not affect the validity 
of the other provisions. 
SEC. 93. Effectivity Clause. - This Act shall take effect one month after the 
completion of its publication in a newspaper of general circulation. 
Approved,