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FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
Third Regular Session 
) 
9 
NOV 25 P 1 : 33 
SENATE 
3542 
S.B.No. __ 
Introduced by SENATOR PIA S. CAYETA~O 
EXPLANATORY NOTE 
Article XII. Section 1 of the 1987 Philippine Constitution provides that all sectors 
of the economy and all regions of the country shall be given optimum opportunity to 
develop. 
It is the duty of the State to promote, induce, and accelerate the sound and 
balanced industrial, economic and social development of the country to provide jobs to 
the people especially those in the rural areas and improve the level of condition of the 
populace. One way of accomplishing this objective is through the establishment of 
special economic zones in suitable and strategic locations with an authority that will be 
responsible for its management and administration. 
This bill seeks to establish the Cebu Economic Development Zone (CEDZ) 
covering all the nine (9) cities and forty-eight (48) municipalities of the province of Cebu 
and incorporating the eight (8) special economic zones into a single ECOZONE to 
ensure the free and easy flow or movement of goods, capital and investments within 
the area. This bill also creates the Cebu Economic Development Zone Authority which 
shall be responsible for the operation, administration and development of the CEDZ. To 
attract investors and private enterprises, the proposed measure further provides 
incentives and benefits like fiscal and tax incentives. 
Declaring the entire Island of Cebu as an ECOZONE is a way forward to speed-
up its growth. It is a means to capacitate local leadership to proactively orchestrate 
development policies, direct infrastructure support and effectively utilize and appropriate 
its share of national funds in making Cebu at par with, if not ahead of, other first-class 
investment destinations abroad. 
With the ultimate goal of ensuring the growth of the province of Cebu through 
government support and provisions for incentives to attract more investors, the early 
passage of this bill is earnestly requested. 


FOURTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Third Regular Session 
SENATEooe 
S.B. No. 3542 
) 
) 
) 
Introduced by SENATOR PIA S. CAYETANO 
AN ACT 
-;1; !·~"~T~_ 
[jFf~{ t »F "'<' SECREi/.lr .. 
S' 
M1V 25 P 1 :~)3 
ESTABLISHING THE CEBU ECONOMIC DEVELOPMENT ZONE COVERING ALL 
THE CITIES AND MUNICIPALITIES IN THE ISLAND OF CEBU, CREATING FOR 
THE PURPOSE THE CEBU ECONOMIC DEVELOPMENT ZONE AUTHORITY, 
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
1 
SECTION 1. Short Title. -
This Act shall be known as the "Cebu Economic 
2 
Development Zone Act of 2009". 
3 
4 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State 
5 
to actively encourage, promote, induce and accelerate the sound and balanced 
6 
industrial, economic and social development of the country in order to provide jobs to 
7 
the people especially those in the rural areas, increase productivity and individual and 
8 
family income, and thereby improve the level and quality of living conditions through the 
9 
establishment, among others, of special economic zones and freeports in suitable and 
10 
strategic locations in the country and through measures that will attract legitimate and 
1 1 
productive foreign investments. 
~2 
13 
SECTION 3. Creation of the Cebu Economic Deve/opment Zone. - In pursuit of 
14 
the foregoing declared policy and subject to the concurrence of the concerned local 
15 
governrnent units (LGUs) of Cebu affected by the zone, there is hereby established a 
16 
Cebu Economic Development Zone in the Province of Cebu, hereinafter referred to as 
17 
the CEDZ. The CEDZ shall cover the entire area embraced by all the cities and 
18 
municipalities in the Island of Cebu. The specific metes and bounds of the CEDZ shall 
19 
be more particularly defined in a presidential proclamation that shall be issued for this 
20 
purpose. 
21 
22 
SECTION 4. Governing Principles. - The CEDZ shall be managed and operated 
23 
by the Cebu Economic Development Zone Authority, hereinafter referred to as the 
24 
CEDZA created under Section 10 of this Act, under the following principles: 
25 
26 
(a) Within the framework and limitations of the Constitution and the applicable 
27 
provisions of the Local Government Code, the CEDZ shall be developed into and 
28 
operated 
as 
a 
decentralized, 
self-reliant 
and 
self-sustaining 
industrial, 
29 
commercial/trading, agro-industrial, tourist, banking, financial and investment 
30 
center with suitable residential areas; 
31 
32 
(b) The CEDZ shall be provided with transportation, telecommunications and 
33 
other facilities needed to attract legitimate and productive investments, generate 


1 
linkage industries and employment opportunities for the people of the Province of 
2 
Cebu and its neighboring towns and cities; 
3 
4 
(c) The CEDZ may establish mutually beneficial economic relations with other 
5 
entities or enterprises within the country or, subject to the administrative 
6 
guidance of the Department of Foreign Affairs (DFA), the Philippine Economic 
7 
Zone Authority (PEZA) and/or the Department of Trade and Industry (DTI), with 
B 
foreign entities or enterprises; 
9 
10 
(d) Foreign citizens and companies owned by non-Filipinos in whatever 
11 
proportion may set up enterprises in the CEDZ, either by themselves or in joint 
12 
venture with Filipinos in any sector of industry, international trade and commerce 
13 
within the CEDZ; 
14 
15 
(e) The CEDZ shall be managed and operated as a separate customs territory, 
16 
thereby ensuring the free flow or movement of goods and capital within, into and 
17 
out of the CEDZ and shall likewise provide incentives such as tax-and duty-free 
18 
importations of raw materials and capital equipment to registered enterprises 
19 
located therein. However, exportation or removal of goods from the territory of 
20 
the CEDZ to the other parts of the Philippine territory shall be subject to customs 
21 
duties and taxes under the Tariff and Customs Code of the Philippines, as 
22 
amended, and the National Internal Revenue Code (NIRC) of 1997, as amended; 
23 
24 
(f) The areas comprising the CEDZ may be expanded or reduced when 
25 
necessary. For this purpose, the CEDZA, in consultation with the LGUs, shall 
26 
have the power to acquire, either by purchase, negotiation or condemnation 
27 
proceedings, any private land within or adjacent to the CEDZ for the following 
28 
purposes: (1) consolidation of lands fOJ Cebu Ecozone development; (2) 
29 
acquisition of right-of-way to the CEDZ; and (3) the protection of watershed areas 
30 
and natural assets valuable to the prosperity of the CEDZ; 
31 
32 
(g) Goods manufactured by a CEDZA enterprise shall be made available for 
33 
immediate retail sale in the domestic market, subject to the payment of 
34 
corresponding taxes on raw materials and other regulations that may be 
35 
formulated by the CEDZA, together with the PEZA, the Bureau of Customs (BoC) 
36 
and the DTI, in accordance with the NIRC of 1997, as amended, and the Tariff 
37 
and Customs Code of the Philippines, as amended. However, in order to protect 
38 
domestic industries, a Negative List of industries shall be drawn up and regularly 
39 
updated by the PEZA. Enterprises engaged in industries included in such 
40 
Negative List shall not be allowed to sell their products locally; and 
41 
42 
(h) The defense of the CEDZ and the security of its perimeter fence shall be the 
43 
responsibility of the national government in coordination with the CEDZ and the 
44 
LGUs. For this purpose, a special defense team shall be organized to define its 
45 
powers, duties and responsibilities. 
46 
47 
SECTION 5. Incentives to Registered Enterprises. - The CEDZA shall provide 
48 
the following incentives to the registered enterprises located therein to the extent of the 
49 
activity/project: 
50 
51 
(a) Income Tax Holiday (ITH) - Registered enterprises shall be entitled to an ITH 
52 
from the start of their commercial operations to the extent of their activity under 
53 
the following categories: 
54 
(1) Category A -
Registered domestic enterprises producing/rendering 
55 
new products/services or having strong backward or forward linkages shall 
56 
be entitled to a six (6)-year ITH; and 
2 


1 
(2) Category B - Registered export enterprises shall be entitled to a six 
2 
(6)-year ITH: Provided, That the export enterprise complies with the 
3 
following: 
4 
(i) Large capital investments or sizeable employment generation; or 
5 
(ii) Use high level of technology; it shall be entitled to an eight (8) 
6 
year ITH. 
7 
8 
Registered enterprises embarking on new investments that are listed in 
9 
the current I nvestment Priorities Plan (I PP) shall be entitled to incentives 
10 
provided herein pertaining to the new investments and subject to such terms and 
11 
conditions as the Board of Investments (BOI) may determine. 
12 
Additional investments in the project shall be entitled to the ITH 
13 
corresponding to such investments as may be determined by the BOI. Additional 
14 
ITH may be granted for as long as the investment is made on the same project: 
15 
Provided, That the project is listed in the IPP at the same time the additional 
16 
investment in the project is made: Provided, further, That the entitlement period 
17 
for additional investments shall not exceed three (3) times the period provided 
18 
under this subsection: Provided, finally, That the total ITH period for an export 
19 
enterprise availing of an eight (8)-year ITH shall not exceed twenty (20) years. 
20 
Any unused incentives shall therefore be deemed forfeited if not used during the 
21 
incentive period. 
22 
Enterprises registered with the CEDZA are required to share in the special 
23 
development fund of the BOI for investment promotion projects of the 
24 
government equivalent to one percent (1 %) of the ITH granted for every 
25 
application. 
26 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise 
27 
availing of the ITH or the net operating loss carryover (NOLCO) to secure a 
28 
certificate of eligibility from the CEDZA before submitting its income tax return 
29 
(ITR) with the CEDZA for validation. 
30 
Failure to secure certification and/or to file the ITH or the NOLCO 
31 
availment for validation by the CEDZA within forty-five (45) days from the last day 
32 
of statutory filing date for the ITR shall cause the forfeiture of the availment for 
33 
the taxable period; 
34 
35 
(b) Net Operating Loss Carryover (NOLCO) - The net operating loss of the 
36 
business or enterprise during the first three (3) years from the start of commercial 
37 
operations which have not been previously offset as a deduction from the gross 
38 
income shall be carried over as a deduction from the gross income for the next 
39 
five (5) consecutive years immediately following the year of such loss: Provided, 
40 
however, That the operating loss resulting from the availment of incentives 
41 
provided in this Code shall not be entitled to the NOLCO. 
42 
Registered enterprises availing of the ITH as herein provided shall not be 
43 
entitled to avail of the NOLCO; 
44 
45 
(c) Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned (GIE) 
46 
- Except for real property tax on land, no local and national taxes, as prescribed 
47 
under Republic Act No. 8424, also known as "the National Internal Revenue 
48 
Code of 1997, As Amended", such as the income tax, the excise tax and the 
49 
franchise tax, shall be imposed on business establishments operating within the 
50 
CEDZ. In lieu thereof, there shall be imposed a tax rate of five percent (5%) on 
51 
the gross income earned by all the business enterprises with the CEDZA and 
52 
remitted as follows: 
53 
(1) Three percent (3%) to the national government; and 
54 
(2) Two percent (2%) which shall be directly remitted by the business 
55 
establishments to the treasurer's office of the municipality or city where 
56 
the enterprise is located. 
3 


1 
All persons and service establishments in the CEDZ that are not covered 
2 
by Section 5 hereof shall be subject to national and local taxes under the NIRC of 
'3 
1997, as amended, and the Local Govemment Code; 
4 
5 
(d) Accelerated Depreciation - Accelerated depreciation of plant, machinery and 
6 
equipment that are reasonably needed and actually used for the production and 
7 
transport of goods and services may be allowed using a rate not exceeding twice 
8 
the rate which would have been used had the annual allowance been computed 
9 
in accordance with the rules and regulations prescribed by the Secretary of 
10 
Finance and the provisions of the NIRC of 1997, as amended; 
11 
12 
(e) Capital Equipment Incentives -
Importations of capital equipment, spare 
13 
parts, tools and dye or those required for pollution abatement and control, 
14 
cleaner production and waste reduction including consignment thereof by 
15 
registered enterprises upon the effectivity of this Act shall be exempted to the 
16 
extent of one hundred percent (100%) of the taxes and customs duties: Provided, 
1 7 
That the importation thereof shall be used exclusively by the registered 
18 
enterprise in its registered activity within the CEDZ: Provided, further, That the 
19 
importation of machinery and equipment and accompanying parts shall comply 
20 
with the following conditions: 
21 
(1) These are not manufactured domestically in sufficient quantity, of 
22 
comparable quality and at reasonable prices; 
23 
(2) These are reasonably needed and will be used exclusively by the 
24 
registered enterprise in the manufacture of its products, unless prior 
25 
approval of the CEDZA is secured for the part-time utilization of said 
26 
equipment in a non-registered activity to maximize usage thereof or the 
27 
proportionate taxes and duties are paid on a specific equipment and 
28 
machinery being permanently used for nonregistered activities; and 
29 
(3) Approval of the CEDZA was obtained by the registered enterprise for 
30 
the importation of such machinery, equipment and spare parts. Approval 
31 
of the CEDZA must be secured before any sale, transfer or disposition of 
32 
the imported capital equipment, machinery or spare parts is made: 
33 
Provided, That if such sale, transfer or disposition is made within the first 
34 
five (5) years from the date of importation, any of the following conditions 
35 
must be present: 
36 
(i) If made to another enterprise enjoying tax and duty exemption 
37 
on imported capital equipment; 
38 
(ii) If made to another enterprise not covered by part (i), upon 
39 
payment of the taxes and duties on the net book value of the capital 
40 
equipment to be sold; 
41 
(iii) Exportation of the capital equipment, machinery, spare parts or 
42 
source documents or those required for pollution abatement and 
43 
control; and 
44 
(iv) For reasons of proven technical obsolescence. 
45 
46 
When the aforementioned sale, transfer or disposition is made under any 
47 
of the conditions provided for in the foregoing paragraphs other than paragraph 
48 
(ii), the registered firm shall not pay the taxes and duties waived on such items: 
49 
Provided, further, That if the registered enterprise sells, transfers or disposes the 
50 
aforementioned imported items without prior approval within five (5) years from 
!J I 
the date of importation, the registered enterprise and the vendee, transferee or 
52 
assignee shall be solidarily liable to pay twice the amount of the tax and duty 
53 
exemption given it: Provided, finally, That even if the sale, transfer or disposition 
54 
of the capital equipment, machinery or spare parts is approved after five (5) 
55 
years from the date of importation, the registered enterprise is still liable to pay 
56 
the taxes and duties based on the net book value of the capital equipment, 
57 
machinery or spare parts if it has violated any of its registration terms and 
4 


1 
conditions. Otherwise, it shall no longer be subject to the payment of the taxes 
2 
and duties waived thereon. 
3 
The purchase of machinery and capital equipment and raw materials, 
4 
supplies, parts and semi-finished products used in the fabrication of machinery 
5 
and capital equipment by a registered export-oriented enterprise from a domestic 
6 
manufacturer shall be subject to zero percent (0%) value-added tax. 
7 
The registered export-oriented enterprise shall be granted a tax credit 
8 
equivalent to the amount of duties that would have been waived on the 
9 
machinery, capital equipment and raw materials, supplies,· parts and semi-
10 
finished products used in the fabrication of machinery and capital equipment, had 
11 
these items been imported, upon its submission to the Department of Finance 
12 
(OOF) of the bill of materials evidencing the transaction value of such and other 
13 
pertinent documents, for verification and proper endorsement. 
14 
The registered export-oriented enterprise availing of the incentives 
15 
provided under the immediately preceding two (2) paragraphs shall be subject to 
16 
the following: (i) that said capital equipment, machinery and spare parts will be 
17 
used exclusively by the registered enterprise in its registered activity; (ii) that the 
18 
capital equipment or machinery where the raw materials, supplies, parts and 
19 
semi-finished products were used would have qualified for tax-and duty-free 
20 
importation; and (iii) that the approval of the CEDZA is obtained by the registered 
21 
enterprise. If the registered enterprise sells, transfers or disposes of these 
22 
machineries, capital equipment and spare parts, the provision in the preceding 
23 
paragraphs for such disposition shall apply. 
24 
This incentive shall be deemed waived if application for tax credit under 
25 
this subsection was not filed within one (1) year from the date of delivery; 
26 
27 
(f) The importation of source documents by information technology-registered 
28 
enterprises shall be eligible for tax- and duty- free importation; 
29 
30 
(g) Raw Materials Incentives - Every registered export-oriented enterprise shall 
31 
enjoy a tax credit equivalent to the internal revenue taxes and customs duties 
32 
paid on the supplies, raw materials and semi-manufactured products: Provided, 
33 
That the same are not sufficient in quantity, quality or are not competitively priced 
34 
which are used in the manufacture, processing or production of its export 
35 
products forming part thereof, exported directly and indirectly by the registered 
36 
export-oriented enterprise based on the actual taxes and duties paid for such 
37 
materials/supplies/semi-manufactured products by the registered enterprise. 
38 
This incentive shall be deemed waived if application for tax credit under 
39 
this subsection was not filed within one (1) year from the date of exportation of 
40 
the final product; 
41 
42 
(h) Incentives on Breeding Stocks and Genetic Materials -
Importation of 
43 
breeding stocks and genetic materials within ten (10) years from the date of 
44 
registration of commercial operations of the enterprise shall be exempt from all 
45 
taxes and duties: Provided, That such breeding stocks and genetic materials are 
46 
reasonably needed in the registered activity and approved by the CEDZA. 
47 
The availment of the incentives by a registered enterprise shall be subject 
48 
to the following: (i) that said breeding stocks and genetic materials would have 
49 
been qualified for tax-and duty-free importation under the preceding paragraph; 
50 
(ii) that the breeding stocks and genetic materials are reasonably needed in the 
51 
registered activity; (iii) that approval of the CEDZA has been obtained by the 
52 
registered enterprise; and (iv) that the purchase is made within ten (10) years 
53 
from the date of registration of commercial operations of the registered 
54 
enterprise. 
55 
This incentive shall be deemed waived if the application for tax credit 
56 
under this subsection is not filed within one (1) year from the date of delivery; 
57 
5 


1 
(i) Exemption from Wharfage Dues -
The provIsions of law to the contrary 
2 
notwithstanding, exports by a registered enterprise shall be exempted from 
3 
wharfage dues; 
4 
5 
U) Deferred Imposition of the Minimum Corporate Income Tax - The minimum 
6 
corporate income tax (MCIT) of two percent (2%) of the gross income as of the 
7 
end of the taxable year shall be imposed when the MCIT is greater than the 
8 
income tax computed under the N I RC of 1997, as amended, for the taxable year: 
9 
Provided, however, That said MCIT shall be imposed only after the enterprise's 
10 
entitlement period to the income tax-based incentives; 
11 
12 
(k) (1) Tax Treatment of Merchandise in the CEDZ - The free trade/freeport zone 
13 
shall be operated and managed as a separate customs territory ensuring free 
14 
flow or movement of goods within, into and exported out of the free trade/freeport 
15 
zone. Importations of raw materials and capital equipment are tax-and duty-free. 
16 
However, exportations or removal of goods from the free trade/freeport zones to 
17 
the other parts of the Philippine territory shall be subject to customs and internal 
18 
revenue regulations: 
19 
(i) Except as otherwise provided in this Act, foreign and domestic 
20 
merchandise, raw materials, supplies, articles, equipment, machineries, 
21 
spare parts and wares of every description, except those prohibited by 
22 
law, brought into the zone to be sold, stored, broken up, repacked, 
23 
assembled, installed, sorted, cleaned, graded or otherwise processed, 
24 
manufactured, mixed with foreign or domestic merchandise, whether 
25 
directly or indirectly related in such activity, shall not be subject to customs 
26 
and internal revenue laws and regulations nor to local tax ordinances, any 
27 
provision of law to the contrary notwithstanding; 
28 
29 
(ii) Merchandise purchased by a registered CEDZ enterprise, from the 
30 
customs territory and subsequently brought into the export processing 
31 
zone, shall be considered as export sales and exportation thereof shall be 
32 
entitled to the benefits allowed by law for such transaction; 
33 
34 
(iii) Domestic merchandise sent from the CEDZ to the customs territory 
35 
shall, whether or not combined with or made part of other articles likewise 
36 
of local origin or manufactured in the Philippines while in the export 
37 
processing zone, be subject to internal revenue laws of the Philippines as 
38 
domestic goods sold, transferred or disposed of for local consumption; 
39 
40 
(iv) Merchandise sent from the CEDZ to the customs territory shall, 
41 
whether or not combined with or made part of other articles while in the 
42 
zone, 
be 
subject to 
rules 
and 
regulations 
governing 
imported 
43 
merchandise. The duties and taxes shall be based on the value of said 
44 
imported materials (except when the final product is exempt); 
45 
46 
(v) Domestic merchandise on which all internal revenue taxes have been 
47 
paid, if subject thereto, and foreign merchandise previously imported on 
48 
which has been paid, or which have been admitted free of duty and tax, 
49 
may be taken into the CEDZ from the customs territory of the Philippines 
50 
and be brought back thereto free of quotas, duty or tax; 
51 
52 
(vi) Subject to such regulations respecting identity and safeguarding of 
53 
revenue as the CEDZA may deem necessary, when the identity of an 
54 
article entered into the export proceSSing zone under the immediately 
55 
preceding paragraph has been lost, such article when removed from the 
56 
zone and taken to the customs territory shall be treated as foreign 
6 


merchandise entering the country for the first time, under the provisions of 
2 
the Tariff and Customs Code of the Philippines, as amended; 
3 
4 
(vii) Articles produced or manufactured in the CEDZ and exported 
5 
therefrom shall, on subsequent importation into the customs territory, be 
6 
subject to the import laws applicable to like articles manufactured in a 
7 
foreign country; and 
8 
9 
(viii) Unless the contrary is shown, merchandise taken out of the export 
10 
processing zone shall be considered for tax purposes to have been sent to 
1.1 
customs territory. 
12 
13 
(2) Tax Treatment of Services in the CEDZ - (i) Sale of service by an 
14 
entity from the customs territory to a registered ecozone or free trade enterprise, 
15 
or by a registered ecozone or freeport enterprise to another ecozone or freeport 
16 
enterprise, shall be treated as indirect export and, hence, entitled to the benefits 
17 
allowed by law for such transaction; and (ii) Sale of service by a registered 
18 
ecozone or freeport enterprise to the customs territory shall be subject to 
19 
applicable internal revenue laws and regulations; 
20 
21 
(I) Registered export-oriented enterprise shall have access to the utilization of the 
22 
bonded warehousing system in aCcordance with the rules and regulations of the 
23 
BoC; and 
24 
25 
(m) Employment of Foreign Nationals - Subject to the provisions of Section 29 of 
26 
Commonwealth Act No. 613, as amended, a registered enterprise may employ 
27 
foreign nationals in supervisory or technical positions for a period not exceeding 
28 
ten (10) years from its registration: Provided, That when the majority of the 
29 
capital stock of a registered enterprise is owned by foreign investors, the 
30 
positions of the president, treasurer and general manager or their equivalents 
31 
may be retained by foreign nationals beyond the period set forth herein and such 
32 
officer is the owner or a stockholder owning at least ten percent (10%) of the 
33 
outstanding capital stock of the registered enterprise and he/she remains the 
34 
owner or maintains his/her stockholdings therein. 
35 
Foreign nationals under employment contract within the purview of this 
36 
incentive, their spouses and unmarried children under twenty-one (21) years of 
37 
age who are not excluded by Section 29 of Commonwealth Act No. 613, as 
38 
amended, shall be permitted to enter and reside in the Philippines during the 
39 
period of employment of such foreign nationals. They shall be issued multiple-
40 
entry visas, renewable every two (2) years and shall be allowed to enter and 
41 
leave the Philippines without further documentary requirements other than valid 
42 
passports or other travel documents in the nature of passports. 
43 
The foreign nationals admitted herein, as well as their respective spouses 
44 
and dependents, shall be exempt from: (1) obtaining alien certificates of 
45 
registration and emigration clearance certificates; and (2) securing the alien 
46 
employment permits (AEP) and all types of clearances, permits, licenses or their 
47 
equivalents required by any government department or agency. 
48 
49 
SECTION 6. Incentive to Investors. -
Any foreign national covered under 
50 
subsection (m) of Section 5 of this Act, who invests an amount of One hundred fifty 
51 
thousand US Dollars (US$150,OOO.OO), either in cash and/or equipment, in a registered 
52 
enterprise shall be entitled to an investor's visa: Provided, That, 
53 
(a) he is at least eighteen (18) years of age; 
54 
55 
(b) he has not been convicted of a crime involving moral turpitude; 
56 
57 
(c) he is not afflicted with any loathsome, dangerous or contagious disease; and 
7 


1 
2 
(d) he has not been institutionalized for any mental disorder or disability: 
3 
Provided, further, That in securing the investor's visa, the alien-applicant shall be 
4 
entitled to the same privileges as provided for under Section 5(m) herein, 
5 
6 
As a holder of an investor's visa, an alien shall be entitled to reside in the 
7 
Philippines while his investment subsists, For this purpose, he should submit an annual 
8 
report in the form duly prescribed for the purpose to prove that he has maintained his 
9 
investment in the country, Should said alien withdraw his investments from the 
10 
Philippines, then the investor's visa issued to him shall automatically expire, 
1 1 
12 
SECTION 7, Administration, Implementation and Monitoring of Incentives, The 
13 
CEDZA shall be responsible for the administration and implementation of the incentives 
14 
granted to its respective registered enterprises: Provided, That any incentive 
15 
administration policy adopted by the BOI for incentives common to all registered 
16 
enterprises shall be uniformly applied by the CEDZA, 
17 
18 
The following are the duties and responsibilities of the CEDZA in the 
19 
administration of incentives: 
, 
20 
(a) Adopt consistent procedures of administering incentives in accordance with 
21 
the guidelines established by the BOI and to amend the same when necessary; 
22 
23 
(b) Adopt and implement systems and procedures affecting trade and customs 
24 
policies in accordance with the requirements established by the DOF and the 
25 
BOI and to amend the same when necessary; 
26 
27 
(c) Submit data and information to the DOF and the BOI as required by any of 
28 
these agencies to ascertain consistency of investment policies and incentives, 
29 
including their implementation as provided in paragraph (a) and to ensure proper 
30 
implementation of systems and procedures affecting trade and customs policies 
31 
as provided in paragraph (b); and 
32 
33 
(d) Perform all other duties and responsibilities as may be required by the 
34 
President of the Philippines. 
35 
36 
For proper monitoring, the BOI shall create a single database of all incentives 
37 
provided by all incentives-granting agencies, including the CEDZA and all information 
38 
thereto, Double-entry accounting shall be done by the SOl in recording all incentives 
39 
granted by the govemment for transparency purposes, 
40 
41 
SECTION 8. Extension of Period of Availment. - The availment period of the 
42 
incentives provided herein may be extended by the CEDZA in the event that the 
43 
registered enterprise suffers operational force majeure or any event equivalent thereto, 
44 
impairing its viability, 
45 
46 
SECTION 9, Duration of Incentives, - Enterprises registered with the CEDZA 
47 
may enjoy the ITH or the NOLCO granted by the latter prior to the availment of the five 
48 
percent (5%) GIE, 
49 
50 
Fiscal incentives under this Act shall be terminated after a cumulative period of 
51 
twenty (20) years from the date of registration or the start of commercial operation, 
52 
whichever is applicable, except that it could be extended with regard to industries 
53 
deemed indispensable to national development as determined by the CEDZA, 
54 
55 
The industries exempted from this provision shall be recommended by the SOl, 
56 
with the concurrence of the secretaries of the DOF and the DTL 
57 
8 


1 
SECTION 10. Creation of the Cebu Economic Development Zone Authority 
2 
(CEDZA). - There is hereby created a body corporate to be known as the Cebu 
3 
Economic Development Zone Authority, hereinafter referred to as the CEDZA, which 
4 
shall manage and operate the CEDZ in accordance with the provisions of this Act. This 
5 
corporate franchise shall expire in fifty (50) years counted from the first year after the 
6 
effectivity of this Act, unless otherwise extended by Congress. It shall be organized 
7 
within one hundred eighty (180) days after the effectivity of this Act. 
8 
9 
SECTION 11. Principal Office of the CEDZA. - The CEDZA shall maintain its 
10 
principal office in the City of Cebu, but it may establish branches within the Philippines 
11 
as may be necessary for the proper conduct of its business. 
12 
13 
SECTION 12. Powers and Functions of the CEDZA. - The CEDZA shall have the 
14 
following functions: 
15 
(a) Operate, administer, manage and develop the CEDZ according to the 
16 
principles and provisions set forth in this Act; 
17 
18 
(b) Recommend to the President of the Philippines the issuance of a 
19 
proclamation to fix and delimit the site of the CEDZ; 
20 
21 
(c) Register, regulate and supervise the enterprises in the CEDZ in an efficient 
22 
and decentralized manner, subject to existing laws; 
23 
:;4 
(d) Coordinate with the LGUs and exercise general supervision over the 
25 
development plans, activities and operations of the CEDZ; 
26 
27 
(e) Authorize or undertake, on its own or through others, and regulate the 
28 
establishment, operation and maintenance of public utilities, services and 
29 
infrastructure in the CEDZ such as shipping, barging, stevedoring, cargo 
30 
handling, hauling, warehousing, storage of cargo, port services or concessions, 
31 
piers, wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, 
32 
bridges, terminals, conveyors, water supply and storage, sewerage, drainage, 
33 
airport operations in coordination with the Civil Aeronautics Board, and such 
34 
other services or concessions or infrastructure necessary or incidental to the 
35 
accomplishment of the objectives of this Act: Provided, however, That the private 
36 
investors in the CEDZ shall be given priority in the awarding of contracts, 
37 
franchises, licenses or permits for the establishment, operation and maintenance 
38 
of utilities, services and infrastructure in the CEDZ; 
39 
40 
(f) Regulate and undertake the establishment, operation and maintenance of 
41 
utilities, other services and infrastructure in the CEDZ such as, but not limited to, 
42 
heat, light and power, water supply, telecommunications, transport, toll roads and 
43 
bridges, port services, etc. and to fix just, reasonable and competitive rates, 
44 
fares, charges and prices thereof; 
45 
46 
(g) Construct, acquire, own, lease, operate and maintain, on its own or through 
47 
contracts, franchises, licenses, bulk purchases from the private sector or permits 
48 
under any of the schemes allowed in Republic Act No. 6957 (the Build-Operate-
49 
Transfer Law, 
as amended), or joint venture, 
adequate facilities and 
50 
infrastructure required or needed for the operation and development of the 
51 
CEDZ, in coordination with appropriate national and local government authorities 
52 
and in conformity with applicable laws thereon; 
53 
54 
(h) Operate on its own, either directly or through licenses to others, recreational 
55 
and sports facilities, other tourism-related activities and, subject to a grant of 
56 
franchise by Congress, gaming activities such as horse racing, dog racing, 
57 
gambling casinos, internet and inter-active gaming and other games of chance: 
9 


1 
Provided, That registered locator enterprises shall not operate gaming activities 
2 
unless granted a franchise by Congress; 
3 
4 
(i) Subject to the approval of the President of the Philippines and the Monetary 
5 
Board of the Bangko Sentral ng Pilipinas (BSP) upon the recommendation of the 
6 
DOF, to raise or borrow adequate and necessary funds from local or foreign 
7 
sources to finance its projects and programs under this Act and, for that purpose, 
S 
to issue bonds, promissory notes and other forms of securities and to secure the 
9 
same by a guarantee, pledge, mortgage, deed of trust or an assignment of all or 
10 
part of its property or assets; 
11 
12 
U) I;.'rovide security for the CEOZ in coordination with the national and local 
13 
governments. Military forces sent by the national government for the purpose of 
14 
defense shall not interfere in the internal affairs of the CEOZ and expenditures for 
15 
these military forces shall be borne by the national government. For this purpose, 
16 
the CEOZA may establish and maintain its security forces and firefighting 
1 7 
capability or hire others to provide the same; 
18 
19 
(k) Protect, preserve, maintain and develop the virgin forests, beaches, coral and 
20 
coral reefs, and maintain ecological balance within the CEOZ; 
21 
22 
(I) Create, operate and/or contract to operate such functional units or offices of 
23 
the CEOZA as it may deem necessary; 
24 
25 
(m) Adopt, alter and use a corporate seal; contract, lease, bUY, acquire, own or 
26 
otherwise dispose of personal and/or real property of whatever nature; sue and 
27 
be sued; and otherwise carry out its functions and duties as provided for in this 
28 
Act; 
29 
30 
(n) Issue certificates of origin for products manufactured or processed in the 
31 
CEDZ in accordance with the prevailing rules of origin and the pertinent 
32 
regulations of the PEZA, the OTI and/or the OOF; 
33 
34 
(0) Issue working visas renewable every two (2) years to foreign executives and 
35 
foreign technicians with highly specialized skills which no Filipino possesses, as 
36 
certified by the Department of Labor and Employment; 
37 
38 
(p) Report to the Bureau of Immigration the names of the foreigners who have 
39 
been granted permanent resident status and working visas within thirty (30) days 
40 
after the issuance of such grant; 
41 
42 
(q) Exercise such powers as may be essential, necessary or incidental to the 
43 
powers granted to it hereunder, as well as those that shall enable it to carry out, 
44 
implement and accomplish the purposes, objectives and policies of this Act; and 
45 
46 
(r) Issue rules and regulations consistent with the provisions of this Act as may 
47 
be necessary to accomplish and implement the purposes, objectives and pOlicies 
48 
provided herein. 
49 
50 
SECTION 13. Authority of the Bureau of Customs to Examine the Entry and Exit 
51 
of Imported Articles in the CEDZ. - The BoC, in coordination with the appropriate 
52 
government agencies such as, but not limited to, the Departments of Trade and 
53 
Industry, Agriculture, Transportation and Communications and Health shall have the 
54 
authority to examine the entry and exit of imported articles in the CEOZ for the purpose 
55 
of determining: (a) the quantity and description of subject imported articles; and (b) the 
56 
compliance with the sanitary and agricultural reqUirements. 
57 
10 


1 
SECTION 14. Tax Exemptions. - The CEDZA is hereby declared exempt from 
2 
the payment of all taxes, duties, fees, imports, charges, costs and service fees in any 
. 3 
court or administrative proceedings in which it may be a party. 
4 
5 
The foregoing exemptions may, however, be entirely or partially lifted by the 
6 
President of the Philippines, upon the recommendation of the Secretary of Finance, not 
7 
earlier than five (5) years from the effectivity of this Act, if the President shall find the 
8 
CEDZA to be self-sustaining and financially capable by then to pay such taxes, customs 
9 
duties, fees and other charges after providing for debt service requirements of the 
10 
CEDZA and of its projected capital and operating expenditures. 
1 1 
12 
Furthermore, all donations made by any person or entity in favor of the CEDZA 
. 13 
shall be exempt from the payment of the donor's tax and the same shall be considered 
14 
as deductible from the gross income of the donor, pursuant to the NIRC of 1997, as 
15 
amended. 
16 
17 
SECTION 15. Banking Rules and Regulations. - Existing banking laws and rules 
18 
and regUlations of the BSP shall apply to banks and financial institutions to be 
19 
established in the CEDZ, such as those governing foreign exchange and other current 
20 
account transactions (trade and nontrade), local and foreign borrowings, foreign 
21 
investments, establishment and operation of local and foreign banks, foreign currency 
22 
deposit units, offshore banking units and other financial institutions under the 
23 
supervision of the BSP. 
24 
25 
SECTION 16. Remittance of Earnings. - In the case of foreign investments, a 
26 
registered enterprise in the CEDZA shall have the right to remit earnings from the 
27 
investment in the currency in which the investment was originally made and at the 
28 
exchange rate prevailing at the time of remittance, subject to the provisions of Section 
29 
74 of Republic Act No. 265, as amended. 
30 
31 
SECTION 17. Board of Directors of the CEDZA. - The powers of the CEDZA 
32 
shall be vested in and exercised by an eleven (11 )-man Board of Directors, hereinafter 
33 
referred to as the Board, which shall be composed of four (4) representatives from the 
34 
LGUs as follows: 
35 
(a) The Governor of the Province of Cebu; 
36 
37 
(b) The Mayor of the City of Cebu; 
38 
39 
(c) The president of the league of city mayors of the component cities of the 
40 
Province of Cebu; 
41 
42 
(d) The president of the league of municipal mayors of the Province of Cebu; and 
43 
44 
(e) Seven (7) representatives from the private sector who shall elect from among 
45 
themselves a chairperson and a vice chairperson. 
46 
47 
The governor and the mayors of the cities and municipalities of the Island of 
48 
Cebu shall serve as ex officio members of the Board, whose terms in the Board 
49 
correspond to their term as elected officials. 
50 
51 
The chairperson and the members of the Board, except the ex officio members, 
52 
shall be appointed by the President of the Philippines to serve for a term of three (3) 
53 
years unless sooner removed for cause or dies or resigns voluntarily. In case of death, 
54 
resignation or removal for cause, the replacement shall serve only the unexpired portion 
55 
of the term. 
56 
1 1 


1 
2 
3 
4 
5 
;6 
7 
8 
9 
10 
1 1 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
The seven (7) private sector representatives to be appointed by the President of 
the Philippines shall be taken from a short list prepared and submitted by the Cebu 
Chamber of Commerce and Industry. 
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. 
, 
, 
SECTION 18. Powers and Duties of the Chairp,'erson-Adminislralor. -
The 
chairperson-administrator shall have the following powers ard duties: 
(a) Direct and manage the affairs of the CEDZA in f1ccordance with the policies 
of the Board; 
. 
(b) Establish the internal organization of the CEDZA under such conditions that 
the Board may prescribe; 
(c) Submit an annual budget and necessary supplemental budget to the Board 
for its approval; 
(d) Submit within thirty (30) days after the close of each fiscal year an annual 
report to the Board and such other reports as may bEl required; 
(e) Submit to the Board for its approval policies, systems, procedures, rules and 
regulations that are essential to the operation of the «:;EDZ; 
36 
(f) Create a mechanism in coordination with relevan! agencies for the promotion 
37 
of industrial peace, the protection of the environmen~ and the advancement of the 
38 
quality of life; and 
39 
40 
(g) Perform such other duties as may be assignedi to him/her by the Board or 
41 
which are necessary or incidental to his/her office. 
42 
43 
SECTION 19. Organization and Personnel. - The Board of the CEDZA shall 
44 
provide for an organization and staff of its officers ~nd employees. Upon the 
45 
recommendation of the chairperson-administrator, the Board shall appoint and fix the 
46 
remuneration and other emoluments of its officers and erlilployees in accordance with 
47 
existing laws on compensation and position classification: Provided, That the Board 
48 
shall have exclusive and final authority to promote, transfer, assign or reassign officers 
49 
of the CEDZA, any provision of existing law to the contrary notwithstanding: Provided, 
50 
further, That the chairperson-administrator may carry out nemoval of such officers and 
51 
employees. 
52 
53 
The officers and employees of the CEDZA, including all members of the Board, 
54 
shall not engage directly or indirectly in partisan activities nor take part in any election, 
55 
except to vote. 
56 
12 


1 
No officer or employee of the CEDZA, subject to civil service laws and 
2 
regulations, shall be removed or suspended except for cause, as provided by law. 
3 
4 
SECTION 20. General Manager. - The Board of the CEDZA shall appoint a full-
5 
time professional and competent administrator and chief executive officer for the 
6 
CEDZA whose compensation shall be determined by its Board and shall be in 
7 
accordance with the revised compensation and position classification system. The 
8 
administrator as chief executive officer of the CEDZA shall be responsible to the Board 
9 
and the President of the Philippines for the efficient management and operation of the 
10 
CEDZA. 
1 1 
12 
SECTION 21. Applicability Clause. - The provisions of Sections 30 to 41 of 
13 
Republic Act No. 7916, as amended, on leases of lands and buildings, land conversion, 
14 
shipping and shipping register, protection of environment, termination of business, 
15 
registration of business enterprises, one-stop shop center and on industrial harmony in 
16 
the ecozones shall apply to the CEDZA. 
17 
18 
SECTION 22. Capitalization. -
The CEDZA shall have an authorized capital 
19 
stock of two billion (2,000,000,000) no-par shares with a minimum issue of Ten pesos 
20 
(P10.00) each, the majority shares of which shall be subscribed and paid for by the 
21 
national government and the LGUs embracing the CEDZ. The Board of the CEDZA 
22 
may, with the written concurrence of the Secretary of Finance, sell shares, representing 
23 
not more than forty per centum (40%) of the capital stock of the CEDZA to the general 
24 
public under such policy as the Board and the Secretary of Finance may determine. The 
25 
national government and the LGUs shall, in no case, own less than sixty per centum 
26 
(60%) of the total issued and outstanding capital of the CEDZA. 
27 
28 
The amount necessary to subscribe and pay for the shares of the national 
29 
government to the capital stock of the CEDZA shall be included in the annual General 
30 
Appropriations Act. For LGUs, the funds shall be taken from their internal revenue 
31 
allotment and other local funds. 
32 
33 
SECTION 23. Supervision and Coordination of Development Plans. -
For 
34 
purposes of policy direction and coordination, the CEDZA shall be under the direct 
35 
control and supervision of the Office of the President of the Philippines. 
36 
37 
SECTION 24. Relationship with the Regional Development Council. -
The 
38 
CEDZA shall determine the development goals for the CEDZ within the frameworK of 
39 
national development plans, policies and goals. The administrator shall, upon approval 
40 
by the Board, submit the CEDZ plans, programs and projects to the Regional 
41 
Development Council for inclusion and inputs to the overall regional development plan. 
42 
43 
SECTION 25. Relationship with the LGUs. -
Except as herein provided, the 
44 
LGUs comprising the CEDZ shall retain their basic autonomy and identity. The cities 
45 
and municipalities of the Island of Cebu shall operate and function in accordance with 
46 
the Local Government Code of 1991. In case of any conflict among the CEDZA and the 
47 
cities and municipalities of the Island of Cebu on matters affecting the CEDZ other than 
48 
defense and security matters, the decision of the CEDZA shall prevail. 
49 
50 
SECTION 26. Legal Counsel. - The CEDZA shall have its own internal legal 
51 
counsel under the supervision of the Office of the Government Corporate Counsel 
52 
(OGCC). When the exigencies of its businesses and operations demand it, the CEDZA 
53 
may engage the services of an outside counsel either on a case to case or on a fixed 
54 
retainer basis. 
55 
56 
SECTION 27. Interpretation/Construction. -
The powers, authorities and 
57 
functions that are vested in the CEDZA are intended to decentralize governmental 
13 


• 
1 
functions and authority and promote an efficient and effective working relationship 
2 
among the CEDZ, the national government and the LGUs. 
3 
4 
SECTION 28. Auditing. -
The Commission on Audit shall appoint a 
5 
representative who shall be a full-time auditor of the CEDZA and assign such number of 
6 
personnel as may be necessary to assist said representative in the performance of 
7 
his/her duties. The salaries and emoluments of the assigned auditor and personnel shall 
8 
be in accordance with pertinent laws, rules and regulations. 
9 
10 
SECTION 29. Separability Clause. - If any provision of this Act shall be held 
11 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in full 
12 
force and effect. 
13 
14 
SECTION 30. Repealing Clause. - All laws, executive orders or issuances or any 
15 
part thereof which are inconsistent herewith are hereby repealed or amended 
16 
accordingly. 
17 
18 
SECTION 31. Effectivity Clause. - This Act shall take effect fifteen (15) days 
19 
after its publication in at least two (2) national newspapers of general circulation. 
20 
21 
22 
Approved, 
14