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Republic of the Philippines ff RECEIVED 2\
HOUSE OF REPRESENTATIVES EsUN 30 202
Quezon City DAT "
i
NINETEENTH CONGRESS

First Regular Session

House Bill No. 38

Introduced by Hon. Robert Ace S. Barbers

AN ACT ESTABLISHING THE SURIGAO CITY SPECIAL ECONOMIC ZONE AND
FREEPORT, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES

EXPLANATORY NOTE

This bill seeks to create a special economic zone and freeport in the city of
Surigao to be known as the Surigao City Special Economic Zone and Freeport
(Surigao City Ecozone) which shall be managed and operated by the Surigao City
Special Economic Zone and Freeport Authority (SCEZA).

‘Special economic zones or ecozones remain an effective development tool in
the global marketplace. They increase trade balance, generate employment, increase
foreign investments, integrate local firms into global value chains, promote export
oriented-growth and effective administration.

Surigao City, as part of the fast growing CARAGA Region, is rich in mineral
deposits and marine fishing ground. It also serves as a vital transportation link bound
for Luzon and other parts of the country. Given its strategic position, it is now popular
for its eco-tourism and surfing destination.

Considering the city's economic promise, Surigao City will no doubt be a self-
reliant and self-sustaining ecozone and the establishment thereof will open windows
and more opportunities for both local and foreign investors. | wl contribute to
economic development not only in the city but in the entire regior/ as well.

In view of the foregoing, immediate approval of this bill if earneptly sought.

HON. ROBERT AC¥ S. BARBERS
2" District, Strigao del Norte



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

98

House Bill No.

Introduced by Hon. Robert Ace S. Barbers _

AN ACT ESTABLISHING THE SURIGAO CITY SPECIAL ECONOMIC ZONE AND
FREEPORT, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES.

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

CHAPTER!
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Surigao City Special
Economic Zone and Freeport Act.”

SEC. 2. Declaration of Policy. - \t is declared the policy of the State to
encourage, promote, and accelerate the sound and balanced industrial, economic and
social development of the country. The establishment of special economic zones shall
attract legitimate and productive foreign investments in strategic locations in the
country. It shall generate employment and increase productivity and individual, as well
as family incomes, thereby enhancing the quality of life of the Filipino people.

CHAPTER Il
CREATION OF THE ECONOMIC ZONE AND FREEPORT

SEC. 3. Creation of Surigao City Special Economic Zone and Freeport. - In
accordance with the foregoing declared policy and subject to the concurrence of the
concerned local government unit affected zone, there is hereby established a special
economic zone and freeport in the City of Surigao to be known as the Surigao City
Special Economic Zone and Freeport, hereinafter referred to as the Surigao City
Ecozone. The specific metes and bounds of the Surigao City Ecozone shall be more
particularly defined in a presidential proclamation that shall be issued for this purpose:
Provided, That the lands embraced therein shall be contiguous to one another.

SEC. 4. Creation of the Surigao City Special Economic Zone and Freeport
Authority. - There is hereby created a body corporate to be known as the “Surigao
City Special Economic Zone and Freeport Authority", hereinafter referred to as the
SCEZA which shall manage and operate the Surigao City Ecozone, in accordance
with the provisions of this Act. This corporate franchise shail expire in fifty (50) years
counted from the first year after the effectivity of this Act, unless otherwise extended
by Congress. It shall be organized within one hundred eighty (180) days after the
effectivity of this Act


SEC. 5. Governing Principles. - The SCEZA shall manage and operate the
‘Surigao City Ecozone, under the following principles:

(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, as amended, the Surigao City
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 Surigao City 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 Surigao City and its neighboring towns and
cities;

(c) The Surigao City 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 Surigao City Ecozone, either by
themselves or in joint venture with Filipinos in any sector of industry,
international trade and commerce within the Surigao City Ecozone;

(e) The Surigao City Ecozone shall be managed and operated as a separate
customs territory thereby ensuring the free flow or movement of goods and
capital within, into, and out of its territory, and shall likewise provide
incentives subject to Title XIII of the National Internal Revenue Code, as
amended. However, exportation or removal of goods from the territory of the
Surigao City Ecozone to other parts of the Philippine territory shall be
subject to customs duties and taxes under Republic Act No. 10863,
otherwise known as the “Customs Modernization and Tariff Act’ and other
relevant tax laws of the Philippines.

(f) The areas comprising the Surigao City Ecozone may be expanded or
reduced when necessary through a presidential proclamation issued for this
purpose. For this purpose, the SCEZA, in consultation with the LGU, shall
have the power to acquire either by purchase, negotiation or condemnation
proceedings, any private land within or adjacent to the Surigao City Ecozone
for the following purposes: (1) consolidation of lands for zone development;
(2) acquisition of right of way to the Surigao City Ecozone; and (3) the
protection of watershed areas and natural assets valuable to the prosperity
of the Surigao City Ecozone;


(g) Goods manufactured by the Surigao City 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 SCEZA, together with the PEZA, the Bureau of
Customs (BOC), the Bureau of Internal Revenue, 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:

(h) The defense of the Surigao City Ecozone and the security of its perimeter
fence shall be responsibility of the national government in coordination with
the SCEZA and the LGU.

SEC. 6. Development Goals of the Surigao City Ecozone. - The SCEZA shall
determine the development goals of the Surigao City Ecozone within the framework
of national development plans, policies, and goals. The Chairperson-Administrator
shall, upon approval by the Board of the SCEZA, submit the Surigao City Ecozone
plans, programs, and projects to the Regional Development Council for inclusion in
the regional development plan.

SEC. 7. Capitalization. - The SCEZA shall have an authorized capital stock of
Two Billion (2,000,000,000) no 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 city government of Surigao. The board of directors of
the SCEZA may, with the written concurrence of the Secretary of Finance, sell shares,
representing not more than forty per centurm (40%) of the capital stack of the SCEZA
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 SCEZA.

The amount necessary to subscribe and pay for the shares of the National
Government to the capital stock of the SCEZA shall be included in the annual General
Appropriations Act. For LGUs concerned, the funds shall be taken from their internal
revenue allotment and other local funds.

SEC. 8. Principal office of the SCEZA. - The SCEZA shall maintain its principal
Office in the City of Surigao, but it may establish liaison offices within the Philippines
as may be necessary for the proper conduct of its business.

SEC. 9. Powers and Functions of SCEZA. — The SCEZA shall have the
following powers and functions:

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

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


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

(d) To regulate and undertake the establishment, construction, operation and
maintenance of public utilities, other services and infrastructure in the
Surigao City Ecozone such as but not limited to light and power, shipping,
barging, stevedoring, cargo handling, hauling, warehousing, storage of
cargo, port services or concessions, piers, wharves, bulkheads, bulk
terminals, mooring areas, storage areas, roads, telecommunications,
transport, bridges, terminals, conveyors, water supply and storage,
sewerage, drainage, airport operations in coordination with the Civil Aviation
Authority of the Philippines (CAAP) and such other services or concessions
or infrastructures necessary or incidental to the accomplishment of the
objectives of this Act;

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

(f) To approve plans, programs and projects of the Surigao City Ecozone to be

submitted to the Regional Development Council for inclusion and inputs to

the overall regional development plan;

(g) To operate on its own, either directly or through a license to other tourism-
related activities, including games, amusements, recreational and sports
facilities, subject to the approval and supervision of the Philippine
Amusement and Gaming Corporation;

(h) To raise or borrow, within the limitation provided by law, and subject to the
approval or opinion of the Monetary Board of the Bangko Sentral ng
Pilipinas (BSP), as the case may be, adequate and necessary funds from
local or foreign sources, to finance its project and programs under this Act
and for this purpose, to issue bonds, promissory notes and other forms of
securities, and to secure the same by guarantee, pledge, mortgage, deed
of trust or an assignment of all or parts of its property or assets;

(i) To protect, preserve, maintain and develop the forests, beaches, or coral

and coral reefs, and maintain ecological balance within the Surigao City

Ecozone. Notwithstanding the authority of the SCEZA to create rules for

such purpose, the rules and regulations of the Department of Environment

and Natural Resources (DENR) and other government agencies involved in
the above functions shall be implemented by the SCEZA;


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

(k) To adopt, aiter and use a corporate seal; contract, lease, buy, acquire, own,
or otherwise dispose of personal and/or real property of whatever nature;
sue and be sued; and otherwise carry out its functions and duties as
provided for in this Act:

(

To issue certificates of origin for products manufactured or processed in the
Surigao City Ecozone in accordance with prevailing rules of origin, and the
pertinent regulations of the PEZA, the DTI and the Department of Finance
(D0F);

(m)To establish one-stop shops for the issuance of all necessary permits,
clearances, licenses, and other similar certifications to conduct such
activities intended to improve the ease of doing business within the Surigao
City Ecozone, in coordination with government agencies having jurisdiction
over activities therein: Provided, That all government agencies are directed
to provide and extend utmost and full cooperation to the Surigao City
Ecozone in the establishment of such one-stop shops;

(n) To ensure that the area covered by the Surigao City Ecozone is secure at
all times: Provided, That the Armed Forces of the Philippines (AFP) or the
Philippine National Police (PNP) shall not interfere in the internal affairs of
the SCEZA except to provide the necessary security and defense, of law
enforcement assistance, as the case may be: Provided, That expenses of
the AFP or the PNP in the Surigao City Ecozone shall be borne by the
national government;

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

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

SEC. 10. Board of Directors of the SCEZA. - The powers of the SCEZA 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) A Chairperson, who shall, at the same time be the administrator of the
SCEZA;
() A Vice-Chairperson, who shall be elected from among the members of the
Board;
(c) Members consisting of:
(1) The Socio-Economic Planning Secretary or a designated
representative of the National Economic and Development Authority
(NEDA);


(2) The Secretary or a designated representative of the DTI;

(3) The Secretary or a designated representative of the DTI;

(4) One (1) representative from the Province of Surigao

(5) One (1) representative from the City of Surigao:

(6) One (1) representative from the business sector whose business is
located within the legislative district covering the premises of the
Surigao City Ecozone;

(7) One (1) representative from the domestic investors in the Surigao
City Ecozone:

(8) One (1) representative from the foreign investors in the Surigao City
Ecozone; and

(9) One (1) representative from the workers working in the Surigao City
Ecozone.

The Chairperson and the members of the Board, 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 representative from 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 rates to be
determined by the Department of Budget and Management (DBM) 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.

SEC. 11. Organization and Personnel. ~ The Board of Directors of the SCEZA
shall provide for its organization and staff. The Board shall appoint and fix the
remuneration and other emoluments of its officers and employees in accordance with
existing laws on compensation and position classification. The Board shall have
exclusive and final authority to promote, transfer, assign, reassign, or remove officers
of the SCEZA, any provision of existing law to the contrary notwithstanding. The
Chairperson-Administrator shall execute the decisions of the Board.

The officers and employees of the SCEZA, 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 SCEZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by civil
service law and regulations.

SEC. 12. Powers and Duties of the Chairperson-Administrator. - The
Chairperson-Administrator shall have the following powers and duties:

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

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

(c) To submit an annual budget and necessary supplemental budget to the
Board for its approval;

(d) To submit within thirty (30) days after the close of each fiscal year an annual
report to the Board and such other reports as may be required;

(e) To submit to the Board for its approval policies, systems, procedures, rules
and regulations that are essential to the operation of the Surigao City
Ecozone;

(f) To recommend to the Board the remuneration and other emoluments of its
officers and employees in accordance with existing laws on compensation
and position classification;

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

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

SEC. 13. Legal Counsel. - The SCEZA shall have its own internal legal counse!
under the supervision of the government corporate counsel. When the exigencies of
its businesses and operations demand, the SCEZA may engage the services of an
outside counsel either on a case-to-case basis or on a fixed retainer basis.

CHAPTER Ill
INCENTIVES TO ECOZONE ENTERPRISES/INVESTORS

SEC. 14. Investors Visa. - Any foreign national who invests an amount of two
hundred thousand US dollars (US$200,000.00) either in cash and/or equipment, in a
registered enterprise shall be entitled to an investor's visa: Provided, That the foreign
national:

a) Must be at least eighteen (18) years of age;


b) Must not have been convicted by final judgment of a crime involving moral
turpitude;

c) Must not be afflicted with any loathsome, dangerous or contagious disease;

d) Must not have been confined in an institution for any mental disorder or
disability; and

e) Must be financial capable as borne out by credible and verifiable evidence.

A foreign national may reside in the Philippines while the investment subsists.
To prove this, the foreign national should submit an annual report in the form duly
prescribed for the purpose. Should said investments be withdrawn from the
Philippines, the investor's visa to said foreign national shall be automatically expire or
be withdrawn.

The authority to issue visas and work permits shall remain with the Bureau of
Immigration (BI) and the Department of Labor and Employment (DOLE), respectively;
Provided, That the BI and the DOLE shall implement measures to expedite the
processing of such visas and permits for workers in the Surigao City Ecozone and
coordinate with SCEZA for the purpose of improving ease of doing business.

SEC. 15. Fiscal Incentives. - Registered enterprises operating within the
Surigao City Ecozone may be entitled to the existing pertinent fiscal incentives granted
under Executive Order No. 226, as amended, otherwise known as the "Omnibus
Investment Code of 1987”, and to such other fiscal incentives as may be provided by
law.

SEC. 16. Administration, Implementation and Monitoring of Incentives. — IN the
interest of enhancing transparency in the management and accounting of tax
incentives in the Surigao City Ecozone, and ensuring the proper administration,
management, enforcement, implementation, and monitoring of tax incentives, the
SCEZA shall comply with the provisions of Republic Act No. 10708, otherwise known
as the “tax Incentives Management and Transparency Act (TIMTA)’ and its
implementing rules and regulations.

The BOC shall set up and establish a custom-controlled area outside the
premises of the Bulacan Ecozone to facilitate payment of duties and taxes on goods
entering the Philippine customs territory: Provided, That notwithstanding the
limitations on this Act, the SCEZA and BOC may coordinate and jointly implement
measures on border protection.

SEC. 17. Banking Rules and Regulations. ~ Banks and financial institutions to
be established in the Surigao City Ecozone shall be under the supervision of the BSP
and subject to existing banking laws, rules and regulations.

SEC. 18. Remittances. — In the case of foreign investments, a duly registered
entity or enterprise within the Surigao City Ecozone shall have the right to remit
earnings from the investment in the currency in which the investment was originally
made and at the exchange rate prevailing at the time of remittance, subject to the
provisions of Republic Act No. 7653, otherwise known as the "New Central Bank Act”,
as amended.


CHAPTER IV
NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 19. Supervision and Control. - For purposes of policy direction and
coordination, the SCEZA shall be under the direct control and supervision of the Office
of the President of the Philippines.

SEC. 20. Relationship with Local Government Unit. — Except as herein
provided, the city government of Surigao shall retain its basic autonomy and identity.
It shall operate and function in accordance with the framework of the 1987
Constitution, Local Government Code of 1991, and this Act.

In case of any conflict between the SCEZA, the city government of Surigao,
and the National Government on matters affecting the Surigao City Ecozone, other
than national defense and security matters, the decision of the SCEZA shall prevail.

SEC. 21. Audit. - The Commission on Audit shall appoint a full-time auditor in
the SCEZA or may assign such number of personnel as may be necessary in the
performance of their functions.

CHAPTER V
MISCELLANEOUS PROVISIONS

SEC. 22. Interpretation/Construction. — The powers, authorities and functions
that are vested in the SCEZA are intended to establish national self-sufficiency and
self-reliance in the advancement of the protection of the national integrity,
enhancement of national security, decentralization of governmental functions and
authority, and promote an efficient and effective working relationship among the
Surigao City Ecozone, the National Government, and the local government units. Any
interpretation of this Act shall consider such intentions. In the event of conflict of
interpretation and provided the intentions cannot be harmonized, the provisions of this
Act shall be construed in favor of an interpretation that would tend to protect national
security.

SEC. 23. Applicability Clause. — Insofar as these are consistent with the
provisions of this Act, the provisions of Sections 30 to 41 of Republic Act No. 7916,
otherwise known as “The Special Economic Zone Act of 1995” shall likewise apply to
the Surigao City Ecozone.

SEC. 24. Implementing Rules and Regulations. - The DTI, DOF and the
National Economic Development Authority (NEDA) shall formulate the implementing
rules and regulations of this Act.

SEC. 25. 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.

SEC. 26. Repealing Clause. — All laws, executive orders or issuances or any
part thereof, which are inconsistent herewith, are hereby repealed or amended

accordingly.


SEC. 27. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved.