THIRTEENTH CONGRESS OF THE 
1 
REPUBLIC OV TI-IE PfIIL,II’PINES 
1 
Third Regular Ses.sioi7 
) 
S F N A T E  
S. B. No. -9 
(In substitution of Senate Bill No. 2240, taking into consideration 
I-IOLIS~ 
Bill No. 505 1) 
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Prepared by the Committees on Economic Affairs; Local Government; Ways and 
Means; and Finance with Senators Roxas, Lini, IErecra and Driloii as authors thereof, 
AN ACT 
ESTABLlSfIlNG THE ILOCOS SUR SPECIAL ECONOMIC ZONE IN THE 
PROVINCE OF ILOCOS SUR, CHEATING FOR ?‘RE PURPOSE THE 
ILOCOS 
SUR 
SPECIAL 
ECONOMIC 
ZONE 
AUTHORITY, 
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PUllPOSES 
Be it enacted by the Senate and House of Representalives of the Philippirpiwes in 
yrnin, 
Congress assembled: 
Section 1. Short Title. - This Act shall be known as the “llocos Sur Special 
Economic Zone Act of 2007.” 
Sec. 2. Declaration ofl’olicy. - It is hereby declared the policy of the State 
to actively encourage, promote, induce, and accelerate the sound and balanced 
industrial, economic and social development oSthe country in order to provide jobs to 
the people, especially those in rural areas, increase their productivity and their 
individual and family income, and thereby improve the level and qualily of their 
living conditions through the establishment, among others, of special econoniic zones 
in suitable and strategic locations in the country and through measures that shall 
effectively attract legitiiuate and productive foreign investments. 
Sec. 3. Creation of the Ilocos Sur Special Econoinic Zone. - In pursuit OS 
the foregoing declared policy and subject to the coacurrence or thc concerned local 
government units of Ilocos Sur affected by the zone, there is hereby established a 
Special Economic Zone in the Province of Ilocos Sur, hereinafter referred to as the 
llocos Sur Ecozone. The Ilocos Sur Ecozone shall cover the entire Salomague Cove 
and the area embraced by the baraugays of Dardarat, Solotsolot, Surngit and Rcfaro in 
the Municipality of San Juan as well as Dardarat, Pila, Sagayaden, Salomague, 
Sabang, Nainruangan, Salapasap, Daclapan, Pug-os, ’Turod and Baclig in the 
Municipality of Cabugao. The specific metes and bounds of the Ilocos Sur Ecozone 
shall be more particularly defined in a proclamation to be issued by the President of 
the Philippines, upon the recommendation of the Philipl>ine Economic Zone Authority 
(PEZA), provided that the lands embraced therein shall be public lands. 


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Sec. 4. Governing P~irrciples. 
-. The Ilocos Sur Special Economic Zone shall 
be managed and operated by tlic Ilocos Sur Special l~conomlc Zone Authority, lierein 
referred to as tlie ISSEZA, created under Section 10 of this Act, under the following 
principles: 
(a) 
Within the framework and limitations of the Constitution and 
applicable provisions of the Local Government Code, tlie Ilocos Sur Ecozone shall be 
developed into and operated as a decentralized, self-reliant and self-sustaining 
industrial, cominercial/tradiiig, agro-industrial, tourist, banking, financial and 
investment center with suitable residential areas. 
(b) 
The Ilocos Sur Ecozone shall be provided with transportation, 
telecominuiiicatiotis and other facilities needed to attract legitimate and productive 
investments, generate linkage industries and employment opportunities for the people 
of the Province of llocos Sur and its neighboring towns and cities. 
(c) 
Tlie Ilocos Sur 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 (I'EZA) and/or the Department of Trade and Industry 
(DTI), with foreign entities or enterprises. 
(d) 
Foreign citizens and companies owned by non-Filipinos in whatever 
proportion may set up enterprises in the Ilocos Sur Ecozone, either by themselves or 
in joint venture with IGlipinos in any sector of industry, international trade and 
commerce within the Ilocos Stir Ecozone. 
(e) 
Tlie areas comprising the Ilocos Sur Ecozone may be expanded or 
reduced when necessary. For this purpose, the ISSEZA, in consultation with the local 
government units, shall have the power to acquire either by purchase, negotiation or 
condemnation proceedings, any private land within or adjacent to the Ilocos Sur 
Ecozone for the following purposes: (1) consolidation of lands for Ilocos Sur 
Ecozone development; (2) acquisition of right of way to the Ilocos Sur Ecozone; and 
(3) the protection o€ watershed areas and natural assets valuable to the prosperity of 
the Ilocos Sur Ecozone. 
(0 
Goods manufactured by an Ilocos Sur 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 ISSEZA, together with the PEZA, the Bureau of Customs and the 
DTI. However, in order to protect domestic industries, a Negative List of industries 
shall be drawn up and regularly updaled by PEZA. Enterprises engaged in industries 
included in such Negative List shall not be allowed to sell their products locally. 
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(g) 
The national government shall maintain its ability to coordinate with 
tlie Ilocos Sur Ecozone and the local govcrument units. 
SCC. 5. ftrceatives To Registered Eitterimkcs. - ‘I‘he Ilocos Sur Special 
Economic Zone Authority (ISSEZA) may administer the following incentives to the 
registered enterprises located therein to the extent of the activity/project: 
(A) 
Income Tax Holiday (ITH) - Registered enterprises shall be entitled to 
an income tax holiday from thc start of their commercial operations to the extent of 
their activity under the following catcgories: 
Category A - Registered domestic enterprise located in highly developed 
areas, as determined by tlie Board of Investments (BO]), shall be entitled to a 
four-year income tax holiday. 
Category B - Registered domcstic enterprise on the following shall be entitled 
to a six-year income tax holiday: 
(1) Located in less developed areas as defined by the BOI; or 
(2) I’roduciag/rendering new products/services or having strong 
backward or foiward linkages 
Category C - Registered export enterprise shall be entitled to a six- year 
income tax holiday: Provided, however, ‘That if the export enterprise complies 
with the following: (1) large capital investments or sizeable employment 
generation, or (2) use high level of technology or (3) located outside Metro- 
Manila, it shall be entitled to an eight-year income tax holiday. 
Registered enterprises einbarking on new investments that are listed in the 
current Iiivestmeiit Priorities Plan (IPP) shall be entitled to incentives provided herein 
pertaining to the new investments and subject to such terms and conditions as the BO1 
may determine. 
For this purpose, a registered enterprise shall be defined as any person, natural 
or juridical, licensed to do busiiiess in the Philippines and registered with the Ilocos 
Sur Special Economic Zone Authority (ISSEZA) to transact business within the 
Ilocos, Sur Spccial Ecoiioniic Zone. A registered export enterprise shall be defined as 
any registered enterprise eugagcd directly or indirectly in the production, manufacture 
or trade of products or services which earns at least seventy percent (70%) of its 
normal operating revenues from the sale of its products or services abroad for foreign 
currency. A registered domestic enterprise, meanwhile, shall be defined as any 
registered enterprise not falling under the definition of a registered export enterprise. 
Additional investments in the project shall be entitled to the income tax 
holidays corrcsponding to such investments as may be determined by the BOI. 
Additional income tax holiday may be granted for as long as the investment is made 
on the same project: Provided, l‘hat the project is listed in the IPP at the same time the 
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additional investment in the project is made: PmCdect ,firthel: That h e  entitlement 
period for additional investments shall not excecd three tinies the period provided 
under this subsection: Provided, however; That the total I1’I-I period for an export 
enterprise availing of an eight year ITII shall not exceed twenty (20) years. Any 
unused incentives shall therefore be deemed forfeited if not used during the incentive 
period. 
Enterprises registered with ISSEZA are required to share in the special 
development Iirnd of the BO1 for investment promotion projects of the government 
equivalent to one percent (1%) ofthe ITH granted for every application. 
The Bureau of Internal Revenue (BIl1) shall require a registered enterprise 
availing of ITI-I or Net Operating Loss Carryover (NOLCO) to secure a certificate of 
eligibility from the ISSEZA before submitting its income tax return (ITR) with 
ISSEZA for validation. 
Failure to secure certification and/or to file the ITH or NOLCO availment for 
validation by the ISSEZA within forty-five (45) days from tlie last day of each 
statutory filing date for ITR shall cause the forfeiture of the availment for the taxable 
period. 
(B) 
Net Operating Loss Carryover (NOLCO) - Net operating loss of the 
business or enterprise during the first tlrce years from start of coinrnercial operations 
which have not been previously offset as deduction from gross income shall be 
carried over as a deduction from gross income for the next five consecutive years 
immediately following the yvar of such loss: Provided however, That operating loss 
resulting from availinent of incentives provided in this Act shall not be entitled to 
NOLCO. 
Registered enterprises availing of the ITH as herein provided shall not be 
entitled to avail of the NOLCO. 
(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned 
(GIE) - Exccpt Cor real property tax on land, no local and national taxes as prescribed 
under Republic Act No. 8424, also known as “The National Internal Revenue Code of 
1997, as Amended” such as incotne tax, excise tax, and franchise taxes, shall be 
iniposed on registered entcrprises operating within the llocos Sur Ecozone. In lieu 
thereof, five percent (5%) of the gross income earned shall be paid as follows: 
(a) Three percent (3%) to the natiotial government; 
(b) Two percent (2%) shall be reinitled by the business establishments to the 
treasurer’s officc of tlie municipality or city where the enterprise is 
1 oca t e d ; 
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All persons and service establishments in the Ilocos Sur Ecozone shall be 
subject to nalional and local taxes under the National Internal Revenue Code of 19Y7, 
as amended, and the Local Governnient Code. 
D. Accelerated Depreciation - Accelerated depreciation of plant, machinery 
and equipment that are reasonably needed and actually used for the production and 
transport of goods and services may be allowed using a rate not exceeding twice the 
rate which would have been used had the annual allowance been computed in 
accordance with the rules aiid regulations prescribed by the Secretary of Finance and 
the provisions ofthe National Internal Revenue Code (NIRC) of 1997, as amended. 
E. 
Capital Equipment Incentives - (1) Importations ol' capital equipment, 
spare parts, tools and dye, or those required for pollution abatement and control, 
cleaner production and waste reduction including consignment thereof by registered 
enterprises upon the effectivity of this law, shall be exempted to the extent of one 
hundred percent (100%) of the taxcs and customs duties: Provided, That the imported 
items thereol' shall be used exclusively by the registered enterprise in its registered 
activity. Provided. fid/er, Thai the importation of maclinery and equipment and 
accompanying parts shall comply with the following conditions: 
I. 
comparable quality and at reasonable prices; 
11. 
They arc reasonably needed and will be used exclusively by the 
registered enterprise in the manufacture of its products, unless prior approval 
of the ISSEZA is securcd for the part time utilization of said equipment in a 
non-registered activity to maximize usage thereof or the proportionate taxes 
and duties are paid on a specific equipment and machinery being permanently 
used for non-registered activities; and 
iii. 
the importation of such machinery, equipment and spare parts. 
Approval of the ISSEZA must be secured before any sale, transfer or 
disposition of the imported capital equipment, machinery or spare parts is made: 
Provided, That if such sale, transfer or disposition is made within the fkst five years 
from date of importalion, any of the foiollowing conditions must be present: 
They are not manufactured domestically in sufkicient quantity, of 
.. 
Approval of the ISSELA was obtained by the registered enterprise for 
1) 
'The same is made to another enterprise enjoying tax aiid duty 
exemption on imported capital equipment; 
The same is made to another enterprise, upon the payment of any 
taxes and duties on the net book value of the capital equipment to 
be sold; 
2) 
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3) 
The exportation of the capital equipment, machinery, spare parts or 
soiircc documelits or those required for pollution abatement and 
conlrol; or 
Proven technical obsolescence of the said equipment, machinery or 
spare parts. 
4) 
When the aforementioned sale, transfer or disposition is made under any ofthe 
conditions provided for in the foregoing paragraphs other than paragraph (2) herein, 
the registered firm shall not pay the taxes and duties waived on such items: Provided, 
further, That if the registered enterprises sell, transfer or dispose the aforementioned 
imported items without prior approval within five years from the date of importation, 
the registered enterprise and the vendee, transferee, or assignee shall be solidarily 
liablc to pay twice the amount of the tax and duty exemption given it: Provided, 
flnully, That even if the sale, transfer or disposition of the capital equipment, 
machinery or spare parts is approved after five years from date of importation, the 
registered enterprises are still liable to pay the taxes and duties based on the net book 
value of the capital equipment, machinery or spare parts if any of the registration 
terms and conditions has been violated. Otherwise, they shall no longer be subject to 
the payment of the taxes and duties waived thereon. 
(2) 
The purchase of machinery, capital equipment, raw materials, supplies, 
parts and semi-finished products to be used in the fabrication of machinery and capital 
equipment by a registered export-oriented enterprise hom a domestic manufacturer 
shall be subject to zero percent (0%) value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit 
equivalent to the amount of duties that would have been waived on the machinery; 
capital equipment; raw materials, supplies, parts and semi-finished products used in' 
the fabrication or machinery and capital equipment, had these items been imported, 
upon its submission to thc DOF of the bill of materials evidencing the transaction 
value of such and other pertincnt documents, for verification and proper endorsement. 
The availment by a registered export enterprise of' the incentive stated under 
the immediately preceding twu paragraphs shall be subject to the following 
conditions: (a) l'hat said capital equipment, machinery and spare parts will be used 
exclusively by the rcgistered entcrprise in its registered activity; (b) lhat the capital 
equipment or machinery wherc the raw materials, supplies, parts and semi-finished 
products were used would have qualified for tax and duty-kee importation; and (c) 
That the approval of the ISSEA is obtained by the registered enterprise. If the 
registered enteiprise sells, transfers or disposes of these machineries, capital 
equipment and spare parts, the provision in the preceding paragraphs for such 
disposition shall apply. 
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Tliis incentive shall be deemed waived if' application for tax credit under this 
subsection was not filed within onc year [rom date of delivery 
I;. 
The importation of source documents by information teclinology- 
registered enterprises shall be eligible for tax and duty free importation. 
G. 
Raw Materials Incenlives - Every registered export-oriented enterprise 
shall enjoy a tax credit equivalent to the internal revenue taxes and customs duties 
paid on the supplies, raw materials and semi-manufactured products provided the 
same are not sufficient in quantity, quality or are not competitively priced in the 
Philippines and which are used in the manufacture, processing or production of its 
export products forming part thereof, exported directly and indirectly by the registered 
export-oriented enterprise, based on the actual taxes and duties paid for such 
niaterials/supplies/senii-manufactured products by the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year from date of exportation of tlie final product. 
13. Incentives on Breeding Stocks and Genetic Materials. - Importation of 
breeding stocks and genetic materials within ten (10) years from the date of 
registration of commercial operation of the enterprise shall be exempt from all taxes 
and duties: Provided, That such breeding stocks and genetic materials are reasonably 
needed in the registered activity; and approved by the ISSEZA. 
The availmeni of ihe inccntives by the registered enlerprise sl~all be subject to 
the followiiig: (a) that said breeding stocks and genetic materials would have been 
qualified for tax and duty-fm importation under the preceding paragraph; (b) that the 
breeding stocl<s and genetic materials are reasonably needed in the registered activity; 
(c) that approval of tlie ISSEZA has been obtained by the registered enterprise; and 
(d) that the purchase is made within ten (IO) years from the date of registration of 
commercial operation of the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection is not filed within one year from date ofdelivery. 
1. Exemption from Wharfage Dues. - The provisions of law to the contrary 
notwithstanding, exports by a registered enterprise shall be exempted from whxfage 
dues. 
J. Deferred Imposition of the Minimum Corporate Income Tax. - The 
Minimum Corporaie Income Tax (MCIT'J of two percent (2%) of the gross income as 
of the end of the taxable year shall be iniposed when the MCIT is greater than the 
income tax computed under the NIRC of 1997, as amended, for the taxable year: 
Providerl, however, That said MClT shall be imposed only after the enterprise's 
entitlement period to the income tax-based incentives has expired 
K. Tax 'Treatment of Merchandise in the Ilocos Sur Ecozone. - 
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a. 
b. 
C. 
d. 
L. 
Domestic merchandise sent from the Ilocos Sur Ecozone to areas 
outside the said Ecozoiie shall, whetlicr or not combined with or made 
part of other articles likewise of local origin or muiufactured in the 
Philippines while in the export processing zone, be subject to internal 
revenue laws o€ the Philippines as domestic goods sold, transferred or 
disposed of for local consumption. 
Merchandise sent lrom the Ilocos Sur Ecozoiie to areas outside the said 
Ecozone shall, whether or not combined with or made part of other 
articles while in the zone, be subject to rules and regulations governing 
imported merchandise. The duties and taxes shall be based on the 
value of said imported materials (except when the final product is 
exempt). 
Articles produced or manufactured in the Ilocos Sur Ecozone and 
exported therefrom shall, on subsequent importation into the customs 
territory, he subject to the import laws applicable to like articles 
manuhctured in a foreign country. 
Unless the contrary is shown, merchandise taken out of the Ilocos Sur 
Ecozoiie shall be considered for tax purposes to have been sent to 
customs territory. 
Tax Treatment of Raw Materials and Capital Equipment in the Ilocos 
Sur Ecozone. - Importations of raw materials and capital equipment shall be treated as 
in the Omnibus Investments Code. Kegislered export oriented enterprise shall have 
access to the utilization of the bonded warehousing system in accordance with the 
rules and regulations ofthe Bureau of Customs. 
M. 
Employment of Foreign Nationals. - Subject to the provisions of 
Section 29 of Commonwealth Act No. 613, as amended, a registered enterprise may 
employ foreign nationals in supervisory or technical positions for a period not 
exceeding ten (IO) years from its registration: Providecl l'hat when the majority of 
the capital stock oca registered enterprise is owned by foreign investors, the positions 
of tlie president, treasurer and general manager or their equivalents may be retained 
by foreign nationals beyond the period set forth herein and such officer is tlie owner 
or a stockholder owning at least ten percent (IOU/) of the outstanding capital stock of 
the registered enterprise and he remains the owner or maintains his stockholdings 
therein. 
Foreign nationals under eniployment contract within the purview of this 
incentive, their spouses and unmarried children under twenty-one (21) years of age, 
who are not excluded by Section 29 of Conimonwealth Act No. 613, as amended, 
shall be permitted to enter and reside in the Philippines during the period of 
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employment of such foreign nationals. They shall be entitled to a multiple entry visa, 
valid for a period of three ycars, and shall be allowed to enter and leave the 
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Philippincs without further documentary requirements other than valid passports or 
other travel documents in the nature of passports. The validity of the multiple entry 
visa shall be extendible yearly. 
The said foreign nationals admitted under this provision, as well as their 
respective spouses and dependents shall be exempt from: 
(a) obtaining alien 
certificate of registration and immigration clearance certificates; and (b) securing the 
Alien Employment Permit (AEP) and all types of clearances, permits, licenses or their 
equivalents required by ally government department or agency. 
Sec. 6. Incentive to Investors.- Any foreign national covered under 
Subsection (M) of Section 5 of this Act, who invests an amount of US $ 150,000.00, 
either in cash and/or equipment, in a registered enterprise shall be entitled to an 
investor’s visa: Provided, That, 
(1) He is at least eighteen (18) ycars of age; 
(2) He has not been convicted of a crime involving inoral turpitude; 
(3) Me is not afflicted with any loathsome, dangerous or contagious disease; 
and 
(4) IIe has not been institutionalized for,any mental disorder or disability. 
Provided jiulher, That in securing the investor’s visa, the alien-applicant shall be 
entitled to the same privileges provided for under paragraph (M), Section 5 hereof. 
As a holder of investor’s visa, an alien shall be entitled to reside in the 
Philippines while his investment subsists. For this purpose, he should submit an 
annual report, in the form duly prescribed for the purpose, to prove that he has 
maintained his iiivestnient in the country. Should said alien withdraw his investments 
from the Philippines, then the investor’s visa issued to him shall automatically expire. 
Sec. 7. Administration, Zncplementaiion and Monitoring of Znceniives. - 
The ISSEZA shall be responsible for the administration and implementation of the 
incentives granted to its respective registered enterprises: 
Provided, That any 
incentive administration policy adopted by the BO1 for registered enterprises shall be 
uniformly applied by ISSEZA. 
The following are the duties and responsibilities of the ISSEZA in the 
administration of incentives: 
(A) To adopt consistent procedures of administering incentives in 
accordance with the guidelines established by the BOI; 
To adopt and implement systems and procedures affecting trade and 
customs policies in accordance with the requirements established by the 
Department of Finance (DOF) and the BOI; 
(B) 
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(C) 
To submit inforination on registered enterprises to the DOF and the BO1 
as required by any of fhcse agcticies to ascertain comistency of 
iiivcstiiicnt policics and incentives, including their implementation as 
provided in paragraph (a) herein, and to ensure proper implementation of 
systems aiid procedures affecting trade and customs policies as provided 
in paragraph (b) herein; and 
To perform all other duties aiid responsibilities as may be required by 
the President of the Philippines. 
(D) 
For proper monitoring, the BO1 shall create a single database of all incentives 
provided by all iiiceiitives granting agencies, including ISSEZA, aiid all inforniation 
thereto. Double entry accounting shall be done by the BO1 in recording all incentives 
granted by the government for transparency purposes. 
Sec. 8. Exterzsiori of Period of Availiftent. - l'he availinent period of' the 
iiicentives provided herein may be extended by ISSEZA, in the event that the 
registered enterprise srrffers operational f i r e  /najewe or any event equivalent thereto, 
impairing its viability, providcd that the availment period shall not exceed the 
duration of the said,fome majeure or equivalent event. 
Sec. 9. Duration of Incentives. - Enterprises registered with ISSEZA may 
eiijoy ITI-I or NOLCO granted by the latter prior to the availiiietit of the five percent 
(5%) GIE. 
Fiscal incentives under this Act shall be terminated after a cumulative period 
of twenty (20) years fiom date of registration or start of commercial operation, 
whichever is applicable, except that it could be extended with regard to industries 
deemed indispensable to national development. 
The industries exempted from this provision shall be recommended by BOI, 
with the concurrence of the Secretaries of tlie Department of Finance and 'I'rade and 
Industry. 
See. 10. Creation of the Ilocos Stir Speciai Economic Zone Aiitliori@, - 
There is hereby created a body corporate to be known as the Ilocos Sur Special 
Economic Zone Authority, hereinafter relei-red to as tlie ISSEZA, which shall manage 
and operate, in accordance with the provisions of this Act, the Ilocos Sur Special 
Econoiiiic Zone. This corporate franchise shall expire in fifty (50) years counted from 
the first day of the fifth (5"') calendar year after the effectivity of this Act, unless 
otherwise extended by Congress. It shall be organized within one hundred eighty 
(1 80) days after the elfeclivity o l  this Act. 
Sec. 11. 
Principal Office of ISSEZA. - The Ilocos Sur Special Economic 
Zone Authority shall maintain its principal office in the Municipality of Cabugao, 
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Province of Ilocos Sur, but it may establish branches within the Philippines as may be 
necessary for the proper conduct of its business. 
SIX. 12. P(IIIJWS 
rrrrrl Ficncfions of- flit iiocos Sur Sjlecini Economic Zone 
Autliorify. - The Ilocos Sur Special Economic Zone Authority shall have the 
following powers and functions: 
(a) To operate, administer, manage and develop the Ilocos Sur Ecozone 
according to the principles and provisions set forth in this Act; 
(b) To register, regulate and supervise the enterprises in the Ilocos Sur 
Ecozone in a11 efficient and decentralized manner, subject to existing laws; 
(c) To coordinate wit11 local government units and exercise general 
supervision over the dcvelopnient plans, activities and operations of the 
Ilocos Sur Ecozone; 
(d) To regulate and undertake the establishment, operation and maintenance 
of utilities, other services and infrastructure in the Ilocos Sur Ecozone 
such as but not limited to heat, figlit and power, water supply, 
telecoinmuiiications, transport, toll roads and bridges, port services, etc. 
and to fix just, reasonable and competitive rates, fares, chilrges and prices 
thereof; 
(e) To construct, acquire, own, lease, operate and maintain on its own or 
through contracts, franchise, iicenses, bulk purchase from the private 
sector or permits under any of the schenies allowed in Republic Act No. 
6957 (the Build-Operate-'Trdnsfer Law, as amended by RA 7718), or joint 
venture, adequate facilities and infrastructure required or needed for the 
operation and development of the Ilocos Sur Ecozone, in coordination 
with appropriate national and local government authorities and in 
conformity with applicable laws thereon; 
(9 To operate on its own, either directly or through a license to other 
tourism-related activities, including games, amusements, recreational and 
sports facilities; 
(g) Subject to the approval of the President and the Monetary Board of the 
Banglco Sentral ng Pilipinas upon the recommendation of the Department 
of Finance, to raise or borrow adequate and necessary funds from local or 
foreign sources to finance its pro.jects and programs under this Act, and 
for that purpose to issue bonds, promissory notes, and other forms of 
secwitics, and to secure the same by a guarantee, pledge, mortgage, deed 
of trust, or an assignment of all or par1 of its property or assets; 
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To protect, preserve, maintain and develop the virgin forests, beaches, 
coral and coral reefs and maintain ecological billance within the Ilocos Sur 
Ecozonc; 
To create, operate and/or contract to operate such functional units of 
offices of the ISSEZA as it may deem necessary; 
To adopt, alter and use a corporate seal; make contracts, leases, own, or 
otherwise dispose of persoiial or real property; sue and be sued; and 
otherwisc carry out its functions and duties as provided for in this Act; 
To issue certificates of origin for products manufactured or processed in 
the Ilocos Sur Ecozone in accordance with prevailing rules of origin, and 
the pertinent regulations of the PEZA, DTI and/or the Department of 
Finance (DOF); 
To issue working visas renewable every two (2) years to foreign 
executives and foreign technicians with highly specialized skills which no 
Filipinos possesses, as certiiied by the Department of Labor and 
Employment; 
(in) To report lo the Bureau of Immigration the names of the foreigners who 
have been granted permanent resident status and working visas within 
thirty (30) days alter issuance of such grant; 
(11) To exercise such powers as maybe essential, necessary or incidental to the 
powers granted to it hereunder as well as those that shall enable it to carry 
out, implcinent and accomplish the purposes, objectives and policies of 
this Act; and 
(0) To issue rules and regulations consistent with the provisions of this Act as 
maybe necessary to accomplish and implement the purposes, objectives 
and policies provided herein. 
Sec. 13. Banking Rides and Regulations.- Existing laws and rules/regulations 
of the Bangko Sentrd ng Pilipinas (BSP) shall apply to banks and financial 
institutions to be establishcd in the Ilocos Sur Ecozone, such as those governing 
foreign exchange and other concurrent account transactions (trade and non-trade), 
local and foreign borrowings, foreign investments, establishnient and operation of 
local and foreign banks, foreign currency deposit units, offshore banking units and 
other financial institutions under the supervision of the BSP. 
Sec. 14. Reinittatice of Earnings.- 
In the case of foreign investments, a 
registered enterprise in the ISSEZA shall have the right to remit earnings lrom the 
investment in the currency in which the investment was originally made and at the 
exchange rate prevailing at the timc of remittance, subject to the provisions of Section 
74 of Republic Act No. 265, as amended. 
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Sec. 15. Board of Directors of the IIoeos Sur Special Economic Zone 
AufIiority.- The powers of the Ilocos Sur Special Economic Zone Authority shall be 
vested in and cxcrciscd by n Board of Directors, hereinafter referred to as the Board, 
which shall be composed of the following: 
a) The Chairman who shall, at the same time be the administrator of the 
ISSEZA; 
b) A Vice-Chairman who shall come from among the members of the Board; 
c) Members consisting of: 
(1) The Governor of the Province of Ilocos Sur; 
(2) The Congressional Representative of the district covering the site 
of the Ilocos Sur Ecozone; 
(3) 'k mayors of the Municipalities of Cabugao and San Juan, 
Province of Ilocos Sur; 
(4) One (1) representiative from the domestic investors; 
(5) One (1) representative from the €oreign investors; and 
(6) Two (2) representatives €room the workers working in Ilocos Sur 
Ecozone. 
The Governor, the Congressional representative and the mayors of the 
Municipalities of Cabugao and Sail Juan, Province of Ilocos Sur shall serve as ex- 
officio members of the Board, whose term in the Board corresponds to their term as 
elected oflkials. 
Thc Chairman and the members of the Board, except the ex-oflcio members, 
shall be appointed by the President of the Philippines to serve for a term of six (6) 
years, unless sooner separated €rom 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 €or the representatives of the business and labor sectors, no person 
shall be appointed by the President of the Philippines as a member of the Board unless 
he is a Filipino citizen, of good moral character, of proven probity and integrity, and a 
degree-holder in any of the following fields: 
economics, business, public 
administration, law, management or their equivalent, and with at least ten (IO) years 
relevant working experience preferably in the field of management or public 
administration. 
The Members of the Board shall each receive per diem at rate to be 
determined by the Department of Budget and Management in accordance with 
existing rules and regulations: !'r.ovided, h o w ~ ~ r . ,  
'lhat 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 
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of the board, such per diem shall not be more than ten thousand pesos (P10,OOO.OO) 
Sec. 16. Puivers cind Duties uf tlte Clrmirnian-A~ministrrrtor.- The Chairman- 
Administrator shall have the following powers and duties: 
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To direct and maiiage the affairs of the ISSEZA in accordance with 
the policies of the Board; 
To establish the internal organization of the ISSEZA under such 
coiiditions that the Board may prescribe; 
To submit an annual budget and necessary supplemental budget to 
the Board for its approval; 
To submit within thirty (30) days afier the close of each fiscal year 
aii aiuoal report to the Board and such other reports as may be 
required; 
To submit to the Board for its approval policies, systems, 
procedures, rules and regulations that are essential to the operation 
or the Ilocos Sur Ecozone; 
To create a mechanism in coordination with relevant agencies for 
the promotion or industrial peace, the protection of the environment, 
and the advancement of the quality of life in the Ilocos Sur Ecozone; 
and 
To perform such other duties as may be assigned to him by the 
Board or which are necessary or incidental to his office. 
Sec. 17. 
Orgurzizntiun arid Personnel. - The Board of Directors of the 
ISSEZA shall provide for an organization and staff of its officers and employees. 
Upon recommendation of the Chairman-Administrator, the Board shall appoint and 
fix the remuiieration and other emoluments of its officers and employees in 
accordance with existing laws on compensation and position classification: Provided, 
That the Board shall have exclusive and final authority to promote, transfer, assign or 
reassign oflicers of the ISSEZA, any provision of existing law to the contrary 
notwithstanding: Provided, further, That the Chairinan-Administrator may carry out 
removal of such ofliccrs aid employees. 
The officers and e~nployees ol' the ISSEZA, including all Members of the 
Board, shall not eiigagc directly or indi~ectly in partisan activities nor take part in any 
election, except to vote. 
No officer or cmployx of the ISSELA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by law. 
Sec. 18. Zpsu Facto Clause. - Sections 30-41 of Republic Act 7916, shall 
ipsofaclo apply to the Ilocos Sur Special Economic Zone. 
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Sec. 19. Capifufizufion.- The Ilocos Sur Special Economic Zone Authority 
shall have an authorizccl capital stock of One kMlion ( I  ,000,000,000) iio par shares 
with a inininiuni issue of Teu Pesos (1’10.00) each, the majority sliares of which shall 
be subscribed and paid for by the National Government and tlie Local Government 
Units (LGUs) embracing the Ilocos Sur Special Economic Zone. The Board of 
Directors of tlie ISSEZA may, with the written concurrence of the Secretary of 
Finance, sell shares, representing not more than forty per centuni (40%) of the capital 
stock of the ISSEZA to the general public under such policy as tlie Board and the 
Secretary of Finance may determine. ?‘he Natioual Goveriiment and the LGUs shall in 
no case own less than sixty per ceiitum (60%) or the total issued and outstanding 
capital o f  the Ilocos Sur Special Econoniic Zoiie Authority. 
The amount necessary to subscribe and pay for tlie shares of the National 
Government to the capital stock of the ISSEZA sliall be included in the Annual 
General Appropriations Act. For LGUs, tlie funds shall be taken I?om their internal 
revenue allotment and other local funds 
See. 20. Supervision, - The Ilocos Sur Special Economic Zone shall be under 
the direct control and supervision of‘the I’liilippine Economic Zone Authority (I’EZA) 
for purposes of policy direction and coordination 
Sec. 21. Relationsltiy with the Kegionni Development Comcil. - The Ilocos 
Sur Special Econoinic Zone Authority shall determine the development goals for tlie 
Ilocos Sur &ozone within the framework of national devclopment plans, policies and 
goals. The Administrator shall, upon approval by the Board, submit the llocos Sur 
Ecozone plans, programs and projects to tlie Regional Development Council for 
inclusion and inputs io the overall regional development plan. 
Scc. 22. Relationsltip with Locnl Govcritnicnt Units. - Except as herein 
provided, the local government units comprising tlie Ilocos Sur Special Economic 
Zone sliall retain their basic autononiy and identity. The barangays of Dardarat, Pila, 
Sagayaden, Salomague, Sabang, Namruangan, Salapasap, Daclapan, Pug-os, Turod 
and Baclig in tlie Municipality of Cabugao; am1 tlie barangays of Ikdamt, Solotsolot, 
Surngit and Refaro in the Municipality of San Juan shall operate and function in 
accordance with tlie Local Govemnicnt Code of 1991. In case of any coiiilict between 
the ISSEZA and tlie Province of Ilocos Sur on matters affecting the Ilocos Sur 
Ecozone other than defense and security matters, tlic decision of the ISSEZA shall 
prevail. 
Sec. 23. Zizterpretntioij/eonst~uction. - Tlic powers, authorities and functions 
that are vestcd in the ISSEZA are intended to decentralize governincntal functions and 
authority and promote an efilcient and effective working relationship between tlie 
Ilocos Sur Ecozone, tlie NG, and the local governiiient units. 
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Sec. 24. Auditing. - The Commission on Audit shall appoint a representative 
who shall be a Full time auditor o f  the ISSEZA and assign such niiin0cr o f  persolinel 
as may be necessary to assist said reprcsentalive in thc perionnancc of hisiher duties. 
The salaries and cmoluments on the assigned auditor and personnel shall be in 
accordance with pertinent laws, rules and regulations. 
Scc. 25. Separability Clause. - If any provisions of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 
full force and elfect. 
Sec. 26. Repealing Clause.- 
All laws, executive orders and issuances, or 
any pai-ts thereof, which are inconsistent herewith are hereby repealed or amended 
accordingly. 
Sec. 27. Effectivity Clause. - This Act shall take effect upon its publication in 
at least one (1) newspaper of general circulation. 
Approved, 
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