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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
S.B. No. 
Introduced by SENATOR JUAN PONCE ENRILE 
EXPLANATORY NOTE 
The Province of Northern Samar is abundant in agricuItura1 land and natura1 
resources which have remained untapped and underdeveloped. The province also 
hosts a total population of 500,639, a huge portion of which may be educated, trained 
and equipped to serve and become agents of any development effort of the 
government. 
Presently, the government endeavors to stimulate economic development in 
various regions in the country. By creating industrial centers and establishing special 
economic zones in the rural and underdeveloped areas such as Northern Samar, the 
government hopes to encourage investors and spur activities that will generate 
employment and enhance productivity that will essentially redound to the benefit of 
not only the residents within these areas, but also of nearby provinces and regions as 
well. 
This proposed bill, therefore, proposes to create a special economic zone and free 
port in the province of Northern Samar, covering the municipalities of San Jose, Bobon 
and Catarman. The location of the proposed special economic zone is ideal as the Port 
of San Jose can be further developed into an international port which will serve the 
needs of the entire coastline of Samar. 
Furthermore, the bill seeks to create the Northern Samar Special Economic Zone 
Authority which will facilitate the development of the economic zone into a self- 
sustaining industrial, commercial, financial and investment center and free port. In 
encouraging and attracting investments into the province, the economic zone will 
hopefully serve as the main engine of growth in one of the most depressed parts of the 
country. 
In view of the foregoing, approval of the bill is earnestly requeste Y 


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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
S.E: No. 1127 
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Introduced by Senator Juan Ponce Enrile 
AN ACT 
ESTABLISHING A SPECIAL ECONOMIC ZONE AND FREE PORT IN THE 
PROVINCE OF NORTHERN SAMAR, COVERING THE MUNICIPALITIES OF 
SAN JOSE, BOBON AND CATARMAN, PROVIDING FUNDS THEREFOR, AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and House ofRepresentafiues of the Philippines in Congress 
assembled: 
SECTION 1. Short Title. - This act shall be known as the "Northern Samar 
Special Economic Zone Act of 2007". 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the 
government to actively encourage, promote, and accelerate a sound and balanced 
industrial, economic and social development of the country in order to provide jobs to 
the people especially those in the rural areas, increase their productivity and their 
individual and family income, and thereby improve the level and quality of their living 
conditions. Towards this end, the government shall pursue the establishment, among 
others, of special economic zones and free ports in suitable and strategic locations in the 
country and other measures that shall effectively attract legitimate and productive 
foreign investments. 
SEC. 3. The Northern Samar Special Economic Zone and Free Port. - In 
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accordance with the foregoing policy, there is hereby established a special economic 


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zone and free port, to be known as the Northern Samar Special Economic Zone, 
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hereafter known as the Ecozone, which shall cover the entire area embraced by the 
Municipalities of San Jose, Bobon and Catarman, all in the Province of Northern Samar: 
Provided, however, That the free port shalI be confined to the Municipality of San Jose 
and such nearby areas the President may proclaim when the need for it arises. 
SEC. 4. Governing Principles. - The Northern Samar Ecozone Zone and Free 
Port shall be managed and operated under the following principles: 
(a)Under the framework and limitations of the Constitution and the applicable 
provisions of the Local Government Code, the Zone shall be developed into and 
operated as a self-sustaining industrial, commercial, financial, investment and 
tourism/recreational center and free port with suitable retirement/residential 
areas, in order to create employment opportunities in and around the Zone, and 
to effectively encourage and attract legitimate and productive foreign investment 
therein; 
@)Business establishments operating within the Zone shall be entitled to the 
existing fiscal incentives as provided for under Presidential Decree No. 66, the 
law creating the Export Processing Zone Authority (EPZA), or those provided 
under Book VI of Executive Order No. 226, otherwise known as the Omnibus 
Investments Code of 1987; 
(c)Any provision of existing law, rules or regulations to the contrary 
notwithstanding, no taxes, local and national, including final withholding taxes 
on dividends and branch profit remittances to a business establishment’s mother 
company, shall be imposed on business establishment’s mother company, shall 


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be imposed on business establishments operating within the Zone. In lieu of all 
local and national taxes, said business establishments shall pay to the national 
government a final tax of eight percent (8%) of their net income, to be divided as 
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follows: 
(1) Three per centurn (3%) shall accrue to the general fund of the national 
government; 
(2) Two per centum (2%) to the province of Northern Samar; 
(3) One per centum (1%) 
to be shared by the municipalities affected by the 
declaration of the Zone, in proportion to their income from business 
activities within the Zone; and 
(4)Two per centum (2%) to the Northern Samar Economic Zone 
Authority which shalI be created under this Act: Provided, however, 
that the final tax of eight percent (8%) of net income may be increased 
by the President of the Philippines after ten (10) years from the 
effectivity of this Act upon the recommendation of the Secretaries of 
Finance, and Trade and Industry, the Director General of the National 
Economic Development Authority, and the Administrator of the 
Northern Samar Economic Zone Authority; Provided, further, that in 
no case shall the final tax to be imposed exceed fifteen per cent (15%) 
of net income. 
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the latter. 
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Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and 
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regulations shall apply on foreign exchange and other current account 
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transactions (trade and non-trade), local and foreign banks, foreign investments, 
In case of conflict between local and national tax laws on the one hand, and the 
tax incentives herein granted on the other, the same shall be resolved in favor of 
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establishment and operation of local and foreign banks, foreign currency deposit 
units, offshore banking units and other financial institutions under the 
supervision of the BSP: Provided, however, that the Northern Samar Economic 
Zone Authority may, in coordination with the Bangko Senfral ng Pilipinas and the 
Department of Trade and Industry, adopt, more liberal rules to attract offshore 
banking, financial services or trading institutions to operate in the Zone: 
Provided, firfher, That such rules, if adopted, will be deemed to repeal, modify or 
amend existing legislation on offshore banking, financial, financial services or 
trading institutions insofar as the Zone is concerned; 
(e) Any foreign investor who establishes a business enterprise within the Zone and 
who maintains capital investment of not less that One Hundred Fifty Thousand 
United States Dollar (US$150,000.00) shall be granted, along with his or her 
spouse, dependents, and unmarried children below twenty-one (21) years of age, 
a permanent resident status within the Zone. The responsibility and authority to 
grant such permanent residents status is hereby delegated to the Northern Samar 
Economic Zone Authority. 
Such foreign investor and his or her spouse, dependents, and unmarried 
children below the age of twenty-one (21) years, shall have the freedom of 
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ingress and egress to and from the Zone without need of any special 
authorization from the Bureau of Immigration. 
Likewise, the Northern Samar Economic Zone Authority shall issue 
working visas renewable every two (2) years to foreign executives and foreign 
technicians with highly specialized skills which no Filipino possesses, as certified 
by the Department of Labor and Employment. 


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The names of foreigners granted permanent resident status and working 
visas by the Northern Samar Economic Zone Authority shall be reported to the 
Bureau of Immigration within thirty (30) days from such grant. 
The foregoing is without prejudice to a foreigner acquiring permanent 
resident status in the Philippines in accordance with applicable immigration, 
retirement and other related laws; and, 
(f) Except as otherwise provided herein, the local government units totally or 
partially embraced by the Zone shall retain and maintain their basic autonomy 
and identity. The municipalities of San Jose, Bobon and Catarman shall operate 
and function in accordance with Republic Act No. 7160, otherwise known as the 
Local Government Code of 1991, insofar as the areas within their respective 
jurisdiction covered in this Act are concerned. 
SEC. 5. Creation of the Northern Samar Economic Zone Authority. - A body 
corporate to be known as the Northern Samar Economic Zone Authority, hereafter 
referred to as the NSEZA, is hereby created to manage and operate, in accordance with 
the provisions of this Act, the Northern Samar Special Economic Zone and Free Port. 
This corporate franchise shall expire in fifty (50) years from the first day of the fifty (5th) 
calendar year after the effectivity of this Act, udess otherwise extended by Congress. 
SEC. 6. Powers and Functions of the Northern Samar Economic Zone Authority. 
- The Northern Samar Economic Zone Authority shall have the following powers and 
functions: 


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(a) To adopt, alter, use a corporate seal; to contract, lease, buy, sell, acquire, own and 
dispose movabIe and immovable as well as personal and real property of 
whatever nature (including but not limited to shares of stock or participation in 
private corporations or in limited partnerships, or in joint ventures with limited 
liability), bonds, precious metals in bullions, ingots and easily convertible foreign 
exchange, to sue and be sued in order to carry out its duties, responsibilities, 
privileges, powers and functions as granted and provided for in this Act; and to 
exercise the power of eminent domain for public use and public purposes; 
(b) Within the limitation provided by laws, to raise or borrow adequate and 
necessary funds from local or foreign sources to finance its projects and 
programs under this Act, and for that purpose to issue bonds, promissory notes, 
and other form of securities, and to secure the same by a guarantee, pledge, 
mortgage, deed of trust, or an assignment of all or part of its property or assets; 
(c) To approve, accept, accredit and allow any local or foreign business, enterprise 
or investment in the Zone subject only to such rules and regulations as NSEZA 
may promulgate from time to time in conformity with the provisions of this Act 
and the limitations provided in the Constitution; 
(d) To authorize or undertake, on its own or through others, and regulate the 
establishment, operation and maintenance of public utilities, services and 
infrastructure in the Zone such as shipping, ship building, ship registry and 
every matter related or attendant thereto, barging, stevedoring, cargo handling, 
hauling, warehousing, storage or cargo, port services or concessions, piers, 
wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges, 
terminals, conveyors, water supply and storage, sewerage, drainage, airport 


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operations in coordination with the Civil Aeronautics Board, and such other 
services or concessions or infrastructure necessary or incidental to the 
accomplishment of the objectives of this Act; Provided, however, That the private 
investors in the Zone shall be given priority in the awarding of contracts, 
franchises, licenses, or permits for the establishment, operation and maintenance 
of utilities, services and infrastructure in the Zone; 
(e) To construct, acquire, own, lease, operate and maintain on its own or through 
others by virtue of contracts, franchises, licenses, or permits under the build- 
operate-transfer scheme or under a joint venture with the private sector any or 
all of the public utilities and infrastructure required or needed in the Zone, in 
coordination with appropriate national and local government authorities and in 
conformity with applicable laws thereon; 
(f) To operate on its own, either directly or through a subsidiary entity, or license to 
others, tourism-related activities, under priorities and standards set by the 
NSEZA; 
(g) To protect, preserve, maintain and develop, among others, the virgin forests, 
beaches, coral and coral reefs within the Zone. The virgin forests within the 
Zone shall be proclaimed as a national park and shall be covered by a permanent 
total log ban. For this purpose, the ruIes and regulations of the Department of 
Environment and Natural Resources and other government agencies involved in 
the above functions shall be implemented by the NSEZA, including the issuances 
of environmental clearance certificates, patents and leasehold rights over 
government lands and mining, drilling and timber licenses; 


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(h) To adopt, implement and enforce reasonable measures and standards to control 
pollution within the Zone; 
(i) To provide security for the Zone in coordination with the national and local 
governments. For this purpose, NSEZA may establish and maintain its own 
security force and firefighting capability or hire others to provide the same; 
(j) To form, establish, organize and maintain subsidiary corporations, as its business 
and operations may require, whether under the laws of the Philippines or not; 
(k) To issue rules and regulations consistent with the provisions if this Act as may be 
necessary to implement and accomplish the purposes, objectives and policies 
herein provided; 
(I) To provide, in cooperation with the Department of Tourism, incentives to 
tourism-related business operating within the Zone, such as but not liited to 
duty-free buying privileges for non-resident visitors; 
(m)To charge reasonable fees for the provisions of services and the maintenance of 
infrastructure and utilities; 
(n) To impose fines and penalties for violations of the provisions of this Act, the 
rules and replations to be established by the NSEZA or any other law that the 
NSEZA is tasked to enforce; and 


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(0) To exercise such powers as may be essential, necessary or incidental to the 
powers granted to it hereunder as well as those that shall enable it to carry out, 
implement, and accomplish the purposes, objectives and policies of this Act. 
SEC. 7. Board of Directors of NSEZA. - The powers of the Northern Samar 
Economic Zone Authority shall be vested in and exercised by a Board of Directors, 
hereinafter referred to as the Board, which shall be composed of eleven (11) members, 
to wit; 
(a) The Secretary of the Trade and Industry who shall serve as an ex-officio voting 
chairman of the Board of Directors; 
(b) The Administrator of NSEZA who shall serve as ex-officio voting Vice Chairman 
of the Board; 
(c) The Director-General of the National Economic And Development Authority, or 
his representative, as ex-officio voting member of the Board; 
(d)The Mayors of the Municipalities of San Jose, Bobon, and Catarman, all in the 
Province of Northern Samar, as ex-officio voting members; 
(e) One (1) representative of labor from among the workers in the Northern Samar 
Special Economic Zone; 
(9 Two (2) representatives from the business and investments sectors in the Zone, 
one (1) of whom must come from the investors in the Municipalities of San Jose, 
Bobon, and Catarman; and, 


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@One (I) representative of the private sector coming from the residents of the 
municipalities of San Jose, Bobon, and Catarman. 
The Members of the Board, except the ex-officio voting members, shall be 
appointed by the President of the Philippines to serve for a term of three (3) years, 
unless sooner removed for cause, dies or resigns voluntarily. In case of death, 
resignation or removal for cause, the replacement shall serve only the unexpired 
portion of the term. 
Except for the representatives of the business and investment 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 and of recognized competence in some 
relevant fields in business, banking, shipping, business or labor management, port, 
operations, engineering, or law. 
The Members of the Board shall receive a per diem of not more than Ten 
Thousand Pesos (Pl0,OOO.OO) 
for every board meeting actually attended: Provided, 
however, That no per diem shall be paid for more than four (4) Board Meetings per 
month: Provided, further, That the President of the Philippines may fix a higher per diem 
for the members of the Board. 
SEC. 8. Administrative and Chief Executive Officer. - The President of the 
Philippines shall appoint a full time professional and competent administrator and chief 
executive officer for the Northern Samar Economic Zone Authority who shall serve for 
a term of six (6) years and whose compensation shall be determined by its Board of 
Directors. The Administrator as chief executive officer NSEZA shall be responsible to 


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the Board and the President of the Philippines for the efficient management and 
operation of the Northern Samar Special Economic Zone. 
SEC. 9. Capitalization. - The Northern Samar Economic Zone Authority shall 
have an authorized capital stock of Two Billion (P2,000,000,000.00) no par shares with a 
minimum issue value of Ten Pesos (PlO.00) each. The National Government shall 
initially subscribe and fuIIy pay Three Hundred MiIIion (300,aoO,000.00) shares of such 
capital stock. All unoccupied government-owned lands as of the creation of the Zone, 
falling within its jurisdiction shall also be included as part of the equity of NSEZA and 
may only be disposed of by the NSEZA Provided, That, in case of absolute sale or 
conveyance, NSEZA shall seek the approval of the Office of the President. The initial 
amount necessary to subscribe and pay for the shares of stock shall be included in the 
General Appropriation Act of the year following its enactment into law and thereafter. 
The Board of Directors of NSEZA may from time to time and with the written 
concurrence of the Secretary of Finance, increase the issue value of the shares 
representing the capital stock of the Northern Samar Economic Zone Authority. The 
Board of Directors of NSEZA, with the written concurrence of the Secretary of Finance, 
may sell shares representing not more than forty per centum (40%) of the capital stock 
of the NSEZA to the general public with such annual dividend policy as the Board and 
the Secretary of Finance may determine. The National Government shall in no case 
own less than sixty per centum (60%) of the total issued and outstanding capital stock of 
the NSEZA. 
SEC. 10. Supernision. - The Northern Samar Special Economic Zone shall be 
under the direct control and supervision of the Office of the President for purposes of 
policy direction and coordination. 


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SEC. 11. Relationship with the municipalities of San Jose, Bobon, and 
Catarman. - In case of any conflict between the Northern Samar Economic Zone 
Authority and the Municipalities of San Jose, Bobon, and Catarman on matters affecting 
the Northern Samar Special Economic Zone other than in defense and security matters, 
the decision of NSEZA shall prevail. 
SEC. 12. Legal Counsel. - The Northern Samar Economic Zone Authority and 
the corporations in which NSEZA owns a majority of the issued capital stock shall have 
its own internal legal counsel who shall be solely responsible for reviewing the 
contracts entered into by the NSEZA. When the exigencies of its business and 
operations demand it, the NSEZA may engage the services of an outside counsel either 
on a case to case basis or on a fixed retainer. 
SEC. 13. Non-Applicability of Sala y Standardization Law and Revised 
Compensation and Positive Classification System. - The provisions of Republic Act 
No. 6758, otherwise known as the Salary Standardization Law, and the Revised 
Compensation and Position Classification System, shall not apply to the Northern 
Samar Economic Zone Authority. The salaries, benefits and other emoluments of the 
officers, directors and employees of the NSEZA shall be commensurate to private 
industry standards to be determined by the Board of Directors of NSEZA. 
SEC. 14. Retention of allEarning. - The NSEZA shall retain all earnings from all 
its activities, regulatory or propriety, and need not remit the same to the National 
Treasury. Such earnings shall be considered as corporate income which NSEZA may 
invest in its various infrastructure or special projects, corporate undertakings, payments 
of salaries, honoraria, per diem and/or related matters. 


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SEC. 15. Auditor. The Commission on Audit shall appoint a representative who 
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shall be a full-time auditor of the Northern Samar Economic Zone Authority and its 
subsidiaries in which it controls a majority of the shares of stock, and assign such 
number of persome1 as may be necessary to assist said representative in the 
performance of his/her duties. The salaries and emoluments of the assigned auditor 
and personnel of the Commission on Audit shall be accordance with the revised 
compensation and position classification system. The Commission on Audit shall 
render an annual report to the President of the Philippines and to the Congress on the 
business activities, transactions and operations of the Northern Samar Economic Zone 
Authority. 
To ensure the expeditious implementation of the economic policy and purpose 
embodied in this Act, the Commission of Audit in cooperation with the Northern Samar 
Economic Zone Authority, shall formulate special rules on audit, disbursement funds, 
bidding, procurement of good and services, accounting, use of government equipment 
and resources and the like, towards realizing the aforesaid needs: Provided, That such 
rules and any amendment thereto shall be approved by the Office of the President. 
SEC. 16. Injunctions, Restvaining Orders and Other Interlocutory Orders. The 
development of the Northern Samar Special Economic Zone and Free Port is a National 
Government priority and, therefore, no injunctions, restraining order and other 
interlocutory order which seek to stop or interrupt any contract entered into or project 
undertaken by the NSEZA may be issued by any court of law or quasi-judicial body 
except by the Supreme Court of the Philippines. 
SEC. 17. Any incentives, powers, privileges, exemption and immunities granted 
to the Subic Special Economic Zone and Free Port, the Cagayan Special Economic Zone 


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and Free Port, and the Zamboanga City Special Economic Zone under Republic Act No. 
7227, Republic Act No. 7922 and Republic Act No. 7903, respectively, except the 
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operation of any gambling, games, amusements, recreational and sports activities such 
as horse racing, casinos and cock fighting which are not granted to the Northern %mar 
Special Economic Zone and Free Port, as if such incentives, powers, privileges, 
exemptions and immunities are granted and embodied in this Act. 
SEC. 18. 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. 19. Repealing Clause. All laws, executive order or issuances, or any parts 
thereof which are inconsistent herewith are hereby repealed or amended accordingly. 
SEC. 20. Eflectivity Clause. This Act shall take effect upon its publication in at 
least one (1) newspaper of general circulation. 
Approved,