Republic of the Philippines

House of Representatives
Batasan Wills, Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL No. 6145

Introduced by Representatives Lucy Torres-Gomez and
Florencio “Bem” Noel

EXPLANATORY NOTE

This bill seeks to establish a special economic zone in Ormoc City,
Province of Leyte to be known as the Eastern Visayas Special Economic Zone.

Ormoc City is a first class independent component city in the Province of
Leyte. It is the largest city in land area in Leyte and second largest in Western
Visayas next to Calbayog City in Samar. Ormoc is part of the Fourth Legislative
District of Leyte together with Albuera, Kananga, Merida and Isabel towns.

The city’s economic base is a mixture of agriculture, aquaculture, tourism,
industrial and commercial services. Sugar cane, rice and pineapple comprise the
bulk of the city’s agricultural products.

Ormoc City supplies a large part of the country’s power needs with its
abundant geothermal power resource from the Tongonan Geothermal Power
Plant in Barangay Tongonan and Kananga town. The city is also the gateway to
the Leyte Industrial Development Estate in the nearby town of Isabel, home of
the Philippine Phosphate Fertilizer Plant, the largest fertilizer factory in Asia, and
the Philippine Associated Smelter and Refining Company, the country’s biggest
copper processing plant, among other industries.

On the commercial side, banks, virtual assistance center, restaurants, cafes,
night spots and sports centers mark the city life. Sizable shopping centers in
Ormoc City: Robinsons Place, Gaisano Riverside, SM Center, Ormoc Centrum,
the Point Mall and A Mall complete the amenities of city life. Several giftshops,


City. Leading telecommunication companies service the area which make business
and personal communications breeze comfortably.

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The demographics as well as the combined economic sources of Ormoc City
make it very conductive for the establishment of a special economic zone that can
truly provide the city and provincial folks a decentralized, self-reliant and self -
sustaining investment center with minimum government intervention.

In view of the foregoing, approval of this bill is urgently requested.
LUCY TORRE; IMEZ FLORENCIO “BEM” NOEL
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Republic of the Philippines
House of Representatives
Batasan Hills, Queson City

Eighteenth Congress
First Regular Session

HOUSE BILL No.__ 8245

Introduced by Representatives Lucy Torres-Gomez and
Florencio “Bem” Noel

AN ACT
ESTABLISHING A SPECIAL ECONOMIC ZONE IN ORMOC CITY,
PROVINCE OF LEYTE TO BE KNOWN AS THE “EASTERN VISAYAS
SPECIAL ECONOMIC ZONE,” AND APPROPRIATING FUNDS
THEREFOR

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

SECTION 1. Short Title.—This Act shall be known as the “Eastern Visayas
Special Economic Zone Act.”

SEC. 2. Declaration of Policy. —It is hereby declared the policy of the State
to encourage and promote the attainment of a sound and balanced industrial,
economic and social development in the country through the promotion of private
enterprises. Towards this end, the State shall endeavor to establish special
economic zones in suitable and selected areas in the country where enterprises are

given incentives to create an environment conducive to business. A friendly


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business envjronment will attract local and foreign investors, generate
employment opportunities, and encourage the regional dispersal of industries.

SEC. 3, Eastern Visayas Special Economic Zone. — In accordance with
the foregoing policy, there is hereby established a special economic zone in
Ormoce City, Province of Leyte, to be known as the “Eastern Visayas Special
Economic Zone,” hereinafter referred to as the EVIS Ecozone. The specific
metes and baunds of the EVIS Ecozone shall be more particularly defined in a
presidential proclamation that shall be issued for this purpose.

SEC. 4. Governing Principles. — The EV1S Ecozone shall be managed and
operated under the following principles:

a) Within the framework and limitations of the Constitution and the
applicable provisions of the Local Government Code, the EVIS Ecozone shall be
developed into a decentralized, self-reliant and self-sustaining export processing,
agro-industrial, commercial, financial, investment and tourist center with suitable
retirement and residential areas. The EVIS Ecozone shall be provided with
transportation, telecommunications, and other facilities needed to attract
legitimate Pe productive local and foreign investments, generate linkage
industries ind employment opportunities for the people of Leyte and its
neighboring towns and cities;

b) The EVIS Ecozone may establish mutually beneficial economic

relations with other entities within the country, subject to the administrative



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guidance of the Department of Foreign Affairs and the Department of Trade and

Industry with foreign entities or enterprises,

) Foreign citizens and companies owned by non-Filipinos in whatever

proportion may set up enterprises within the EVIS Ecozone, either by themselves

or in joint venture with Filipinos in any sector of industry, international trade and

commerce;

d) The EVIS Ecozone shall be managed and operated as a separate customs

territory to ensure and facilitate the free flow, entry and movement of machinery

and other an However, exportation or removal of goods, articles and capital

from the zor

to other parts of the Philippine territory shall be subject to customs

duties and taxes under the Customs and Tariff Code and other relevant tax laws

of the Philippines. It shall be vested with the authority to issue certificates of

origin for products manufactured or processed within the EVIS Ecozone in

accordance

with prevailing rules of origin, and the pertinent regulations of the

duly recognized national bodies tasked to oversee all other ecozones in the

country;

e) Duty free shops. shall be located only within the EVIS Ecozone;

to the exi

f) cm establishments operating within the EVIS Ecozone are entitled

ing fiscal incentives as provided for under Presidential Decree No. 66,

the law creating the Export Processing Zone Authority, or those provided under

Book VI of Executive Order No. 226, otherwise known as the “Omnibus

Investmen

Code of 1987," and such incentives, benefits or privileges presently

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enjoyed by business establishments operating within the Subic Special Economic
Zone pursuant to Republic Act No. 7227;

g) Any provision of existing laws, rules or regulations to the contrary
notwithstanding, no taxes, local and national, including final withholding taxes
‘on dividends to the parent company and branch profit remittances to the head
office of a business establishment, shall be imposed on business establishments
operating within the EVIS Ecozone. In lieu of all local and national taxes, said
business establishments shall pay to the National Government a final tax of eight
per centum (8%) of their net taxable income as determined in accordance with the
provisions of the National Internal Revenue Code, as amended, to be divided as
follows:

1) Three per centum (3%) shall accrue to the National Government;

2) Two per centum (2%) to the Province of Leyte;

3) One per centum (1%) to be shared by the municipalities affected
by the declaration of the EVIS Ecozone in proportion to their income from
business activities within the EVIS Ecozone; and

4) Two per centum (2%) to the Eastern Visayas Special Economic
Zone ‘Authority which shall be created under this Act: Provided, That the
final tax of eight per centum (8%) of net income may be increased by the
President of the Philippines after ten years from the effectivity of this Act
upon the recommendation of the Secretaries of Finance, and Trade and

Industry, the Chairperson of the National Economic Development

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Authority and the administrator of the Eastern Visayas Special Economic

Zone Authority: Provided, further, That in no case shall the final tax to be

imposed exceed fifteen per centum (15%) of net income.

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 the grant of incentives.

h) Except as otherwise provided herein, the local government units

embraced wi

thin the EVIS Ecozone shall retain and maintain their basic

autonomy and identity. Leyte shall operate and function in accordance with

Republic Act
1991;”

i) An

No. 7160, otherwise known as the “Local Government Code of

foreign investor who establishes a business enterprise within the

EVIS Ecozone and who maintains capital investment of not less than One

Hundred Fifty Thousand United States Dollars (US$150,000) shall be granted,

along with the foreign investor’s spouse, dependents and unmarried children

below twenty-one years of age, a permanent resident status within the EVIS

Ecozone;

Such foreign investor, spouse, dependents and unmarried children below

the age of twenty-one (21) years, shall have freedom of ingress and egress in the

EVIS Ecozone without any need of any special authorization from the Bureau of

Immigration.



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Likewise, the Eastern Visayas Special 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.

The names of the foreigners granted permanent resident status and working
visas by the Eastern Visayas Special 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.

j) The provisions of any law to the contrary notwithstanding, any foreigner,
partnership, corporation, or any other business association not created and
existing under the laws of the Republic of the Philippines, engaged in the
business of fetailing goods and merchandise, shall be permitted to engage in such
retail trade within the EVIS Ecozone after securing license for that purpose from
the Eastern Visayas Special Economic Zone Authority: Provided, That only
foreign nationals engaged in medium and large-scale retail trade may be
permitted to engage in such business within the EVIS Ecozone. The
determination of the medium and large-scale retail trade operation shall be the
responsibility of the Eastern Visayas Special Economic Zone Authority; and

k) Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and
regulations shall apply on foreign exchange and other current account trade and

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non-trade transactions, local and foreign borrowings, foreign investments,
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 Easter Visayas Special Economic
Zone Authority may, in coordination with the Bangko Sentral ng Pilipinas and
the Department of Trade and Industry, adopt more liberal rules to attract offshore
banking, financial services, trust or trading institutions to operate in the zone:
Provided, further, That such rules if adopted will be deemed to repeal, modify or
amend existing legislation on offshore banking, finance, financial services, trust
or trading institutions insofar as the EVIS Ecozone is concemed.

SEC. 5. Eastern Visayas Special Economic Zone Authority. — Subject to
the concurrence of the local government units that will be affected by the creation
of the EVIS Ecozone, there is hereby created a body corporate to be known as the
Eastern Visayas Special Economic Zone Authority, hereinafter referred to as the
Authority, which shall manage and operate the EVIS Ecozone, in accordance
with this Act. It shall be organized within one hundred eighty (180) days after
the effectivity of this Act.

SEC. 6. Principal Office. — The Authority shall maintain its principal
office in Ormoc City, Province of Leyte, but it may establish branches and
agencies within the Philippines and abroad as may be necessary for the proper

conduct of its business.


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SEC. 7, Powers and Functions of the Authority. — The Authority shall
have the following functions:

a) Operate, administer, and manage the EVIS Ecozone according to the
principles and provisions set forth in this Act;

b) Recommend to the President the issuance of a proclamation to fix and
delimit the site of the EVIS Ecozone;

c) Register, regulate and supervise the enterprises in the EVIS Ecozone in
an efficient and decentralized manner,

d) Regulate and undertake the establishment, operation and maintenance of
utilities, other services and infrastructure in the EVIS Ecozone such as heat, light
and power, water supply, telecommunications, transport, toll roads and bridges,
port services, and fix just, reasonable and competitive rates, fares, charges and
prices therefor;

e) Directly negotiate with and grant foreign or international airlines and
carriers entry permits and landing rights into the zone;

f) Have sole, absolute and exclusive authority to construct, acquire, own,
lease, assign, establish, operate and maintain on its own or through others by
virtue of contracts, franchises, licenses, or permits under any of the schemes
allowed in Republic Act No. 6957, otherwise known as the “Build-Operate
Transfer Law,” or in joint venture with the private sector without the necessity of
conducting public bidding thereon, any or all of the public utilities and

infrastructure required or needed in the EVIS Ecozone, which include

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transportation, construction of road networks, water and sewerage systems,

electric power, wireline and wireless telecommunications systems, networks,
facilities andl services, in coordination with appropriate national and local
government authorities and in conformity with applicable laws thereon;

g) To undertake all public infrastructure and utility projects within the
EVIS Ecozone and as provided for in this Act and to contract foreign loans and

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grants in accordance with existing laws;

h) Opqrate on its own, either directly or through a subsidiary entity, or
license to other tourism related activities, including games, amusements and
recreational and sports facilities to provide, in cooperation with the Department
of Tourism, ‘incentives to tourism-related businesses operating within the EVIS
Ecozone which include duty-free buying privileges for non-resident visitors;

i) Within the limitation provided by law, to raise or borrow adequate and
necessary finds from local or foreign sources to finance its projects and programs
under this A and for that purpose to issue bonds, promissory notes, and other
forms 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;

d Provide security for the EVIS Ecozone in coordination with the national

and local governments. For this purpose, the Authority may establish and
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maintain its own security force and firefighting capability or hire others to

provide the same;


k) Protect, preserve, maintain and develop, among others, the virgin
forests, beaches, coral and coral reefs and minerals and mineral deposits,
including precious metals within the EVIS Ecozone. For this purpose, the rules
and regulations of the Department of Environment and Natural Resources and
other government agencies involved in the above functions shall be implemented
by the EVIS$ Ecozone, including the issuance of environmental clearance
certificates, patents and leasehold rights over government lands and mining,
drilling and bes licenses;

1) Acquire private real properties or rights thereon for infrastructure and
other development projects, secure rights-of-way which are needed for said
projects and the settlement of claims for payment, without further need of
conducting feasibility studies, information campaign, engineering surveys,
project cost estimates as required by existing laws and regulations pertinent
thereto;

m) Charge reasonable fees for the provisions of services and the
maintenance of infrastructure and utilities;

n) Impose fines and penalties for violations of the provisions of this Act
and the rules and regulations to be issued by the Authority;

0) Phase the operationalization of the zone by delineating secured areas
within the zone: Provided, That privileges including tax and duty-free retailing
provided herein shall be accorded only to the secured areas: Provided, further,

That the Authority-registered enterprises located outside of the secured areas may

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still enjoy the income tax incentives and duty-free importation privileges herein
granted but may not engage in tax and duty-free retailing: Provided, finally, That
in such secured area, the component local government units may still exercise
their taxing and revenue generating authority but only insofar as persons or
enterprises not registered with the Authority as zone enterprises;

p) Create, operate or contract to operate such agencies and functional units
or offices of the Authority, as it may deem necessary;

q) Adopt, alter and use a corporate seal; make contracts, leases, own or
otherwise dispose of personal or real property; sue and be sued; and otherwise
carry out its functions and duties as provided for in this Act; and

r) Issue rules and regulations consistent with the provisions of this Act as
may be necessary to implement and accomplish the purposes, objectives, and
policies proyided therein.

SEC. 8. Non-profit Character of the Authority. — The Authority shall be
non-profit and shall devote the use of its returns from capital investments, as well
as excess revenues from its operations, for the development, improvement, and
maintenance and other related expenditures of the Authority to pay its
indebtedness and obligations and in furtherance and effective implementation of
the policy provided in this Act. In consonance thereto, the Authority is hereby
declared exempt from the payment of all taxes, duties, fees, imposts, charges,
costs and service fees as well as any other costs and charges in any court or

administrative proceedings in which it may be a party.


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‘The foregoing exemptions may however be entirely or partially lifted by
the President of the Philippines upon the recommendation of the Secretary of
Finance, not earlier than five (5) years from the effectivity of this Act, if the
President finds the Authority to be self-sustaining and financially capable by then
to pay such taxes, customs duties, fees and other charges after providing for debt
service requirements of the Authority and of its projected capital and operating
expenditures.

SEC. 9. Board of Directors; Composition; Tenure of the Authority. —
The powers of the Authority are vested in and exercised by a Board of Directors,
hereinafter referred to as the Board. The Board is composed of the following;

a) The chairperson who is appointed by the President of the Republic of
the Philippines;

b) The president and chief executive officer (CEO) who is appointed by

the Board and who is the vice chairperson of the Board;

c) One representative from the domestic investors;

d) one representative from the foreign investors;

e) Ore representative from the workers working in the EVIS Ecozone; and

{) Two prominent citizens of the Philippines of whom one shall be @
resident of the Province of Leyte, as members.

‘The chairperson and the members of the Board shall be appointed by the
President of the Philippines to serve for a term of six (6) years, unless sooner

separated from service due to death, voluntary resignation or removal for cause.

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In case of death, resignation or removal for cause, the replacement shall serve
only the unexpired portion of the term. The president and CEO shall serve for a
term of three (3) years subject to reappointment by the Board.

Except for the representatives of the investors and labor sectors, no person
shall be appointed by the President of the Philippines as a member of the Board
unless the Peete 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 are entitled to receive per diem at a rate to be
determined by the Department of Budget and Management in accordance with
existing rules and regulations: Provided, however, That the total per diem
collected each month shall not exceed the equivalent per diem for four (4)
meetings. Unless and until the President of the Philippines has fixed a higher
per diem for the members of the Board, such per diem shall not be more than
Ten thousand pesos (P10,000.00) for every Board meeting.

SEC. 10. Powers and Duties of the Chairperson, President and CEO of
the Authority. — The chairperson shall have the following powers and duties:

a) Ta exercise supervision over the affairs of the Authority;

b) To preside over all the meetings of the Board;


c) To spearhead the formulation of policies and procedures for the Board
and the Authority with the concurrence of the majority of its members;

d) To direct the affairs of the Authority in accordance with the policies of
the Board through its president and CEO;

e) To ensure that the goals and objectives set forth by the Board are
achieved and its policies implemented; and

f) To lead the Board in carrying out the powers and functions of the
Authority as enumerated in Section 7 of this Act.

The president and CEO shall, among other powers and duties, execute,
carry out and administer the policies, measures, orders and resolutions approved
by the Board; direct and supervise the day to day operation and administration of
the EVIS Ecozone; and exercise such other powers and perform such other
functions or duties as may be directed to or assigned by law or by the Board
from time to time. Particularly, the president and CEO shall exercise the
following powers and duties:

a) To) serve as the vice chairperson of the Board and to assist the
chairperson and, in case of absence or incapacity act in stead of the chairperson:
Provided, however, That in case both are absent, the Board shall designate a
temporary chairperson from among its members;

b) To sign and execute all contracts concluded by the Authority and enter

into all necessary obligations required or permitted by the charter upon proper



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authorization by the Board; and sign all major documents, notes and checks for
the EVIS Ecozone;

©) To exercise full discretion in the management of the affairs of the
Authority in accordance with law and in accordance with the provisions of this
Act and be accountable to the Board;

d) To establish the internal organization of the Authority under such
conditions that the Board may prescribe;

e) To Boh an annual budget and necessary supplemental budget to the
Board for its approval;

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

g) To submit to the Board for its approval policies, systems, procedures,
rules and regulations that are essential to the operation of the EVIS Ecozone;

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

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

SEC. 11. Organization and Personnel. — The board of directors of the
Authority are entitled to organize its own personnel to assist the Board in the
exercise of its functions and to provide for an organization of the Authority

officers and employees. Upon recommendation of the President and CEO, the

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Board shall appoint and fix the remunerations 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 officers of the Authority, any
provision of existing law to the contrary notwithstanding: Provided, further,
That the President and CEO may carry out removal of such officers and
employees.

All positions in the Authority shall be governed by a compensation,
position, classification system and qualification standards approved by the
chairperson with the concurrence of the Board based on a comprehensive job
analysis and audit of actual duties and responsibilities. The compensation plan
must be comparable with the prevailing compensation plans in the Subic Bay
Metropolitan Authority (SBMA), the Clark Development Corporation (CDC),
the Bases Conversion and Development Authority (BCDA) and the private
sector and subject to the periodic review by the Board no more than once every
two (2) years without prejudice to yearly merit reviews or increases based on
productivity and profitability. The Authority shall therefore be exempt from
existing laws, rules and regulations on compensation, position classification and
qualification standards. It shall, however, endeavor to make its systems conform
as closely as possible with the principles under Republic Act No. 6758,
otherwise known as the “Compensation and Position Classification Act of

1989,” as amended.


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The officers and employees of the Authority, including its appointive
members of the Board, shall not engage directly or indirectly in partisan
activities nor take part in any election, except to vote.

No officer or employee of the Authority, subject to civil service laws and
regulations, shal be removed or suspended except for cause, as provided by law.

SEC. 12. Labor and Management Relations. — Except as otherwise
provided in this Act, labor and management relations in the EVIS Ecozone shall
be governed by applicable rules and regulations under the Labor Code of the
Philippines, as amended. Employees and personnel in the registered enterprises
shall receive salaries and benefits and shall enjoy working conditions provided
under the Labor Code and other relevant laws and issuances of the Philippine
government and the DOLE. The Authority shall allow the visitorial power of
the Secretary of Labor and Employment or the duly authorized representative.

SEC. B Ipso Facto Clause. — Sections 30-41 of Republic Act No. 7916,
otherwise known as the “Special Economic Zone Act of 1995,” as amended by
Republic Att No. 8748, shall ipso facto apply to the EVIS Ecozone.

SEC. ua. Capitalization. — The Authority shall have an authorized capital
stock of Twp billion pesos (P2,000,000,000) no par shares with a minimum issue
of Ten pesos (P10.00) each, the majority shares of which shall be subscribed and
paid for by the National Government and the local government units (LGUs)
comprising the EVIS Ecozone. The Board of Directors of the Authority may,
with the written concurrence of the Secretary of Finance, sell shares,

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representing not more than forty per centum (40%) of the capital stock of the
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Authority to the general publie under such policy as the Board and the Secretary
of Finance ah determine. The National Government and the LGUs shall, inno
case, own less than sixty per centum (60%) of the total issued and outstanding
capital of the: Autor

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

SEC. is Supervision. — The EVIS Ecozone shall be under the direct
control and supervision of the Philippine Economic Zone Authority for purposes
of policy direction and coordination.

SEC. 16. Relationship with the Regional Development Council. — The
Authority | determine the development goals for the EVIS Ecozone within
the a. of national development plans, policies and goals. The president
and CEO shall, upon approval by the Board, submit the plans, programs and
projects to the Regional Development Council for inclusion and inputs to the

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overall regional development plan.

SEC. 17. Relationship with Local Government Units. — Except as herein

provided, the local government units comprising the EVIS Ecozone shall retain

their basic pe and identity. In case of any conflict between the Authority


and the Province of Leyte on matters affecting the EVIS Ecozone other than
defense and security matters, the decision of the Authority prevails.

SEC. 18. Interpretation and Construction. — The powers, authorities and
functions that are vested in the Authority are intended to decentralize
governmental functions and authority and promote an efficient and effective
working relationship between the EVIS Ecozone, the National Government, and
the local government units.

SEC. 19. Auditing. — The Commission on Audit shall appoint a
representative who shall be a full time auditor of the Authority and assign such
number of personnel as may be necessary to assist said representative in the
performance of official duties. The salaries and emoluments of the assigned
auditor and personnel shall be in accordance with pertinent laws, rules and
regulations.

SEC. 20. 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. 21. Repealing Clause. — All laws, executive orders and issuances,
or any part thereof, which are inconsistent herewith are hereby repealed or
amended accordingly.

SEC. 30. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,

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