HOUSE OF REPRESENTATIVES

Republic of the Philippines Recer IVED
HOUSE OF REPRESENTATIVES, Q eu 20
Quezon City pik ~
tiwe:_ 374
SEVENTEENTH CONGRESS By:

First Regular Session ‘

HOUSE BILL NO. 346 RECISTRATION UNIT

INRODUCED BY: HON. YEDDA MARIE K. ROMUALDEZ

AN ACT
ESTABLISHING THE SPECIAL ECONOMIC ZONE IN THE CITY OF TACLOBAN,
CREATING FOR THIS PURPOSE THE TACLOBAN CITY SPECIAL ECONOMIC
ZONE AUTHORITY, APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES

XPLANATORY NOTE

This Bill seeks to establish the Special Economic Zone in the City of Tacloban, in the
province of Leyte

Section 5, paragraph (n) of Republic Act 7916, as amended, initially identifies Tacloban
City as a viable location for the establishment of an economic zone.

If there is anything clear in the world market of investments and to community of
investors, it is this: a country must look beyond the traditional way of doing things. It must
innovate to create opportunities where and by which it can give investors the maximum value
for their investments

The concept and objective is to develop these economic zone areas into a self-sustaining
industrial, commercial and investment centre that will put in place and wide reaching
employment and investment generation mechanism, all to strengthen the trading and foreign
exchange position of the country. On the whole, it is looking at effectively complementing an
announced aggressive export-oriented thrust of the country, thus enhancing the country’s global
competitiveness.

As envisioned, there shall be established a Tacloban City Freeport that shall be operated
as a separate customs territory and will basically provide incentives to ensure the free flow and
movement of goods and commodities within the Freeport area and their exportation there from.


shall provide tax-based incentives for business activities and concerns locating and
operating within the economic zone premises, not to mention other non-tax benefits like
exchange policies and the grant of permanent resident status to investors.

‘This bill does away with an authority-type of office to run the economic zone but directly
tasks a governing body composed of the elected chief executives of the localities involved and
the private sectors to do the job.

The competitive markets around us are moving fast, already leaving the country behind.
‘The performance of our neighboring countries in the Asian region such as Japan, Singapore,
South Korea and Taiwan had always been a source of envy despite the limited resources they
have Compared to the abundance our country enjoys. And now Thailand, Malaysia, Indonesia
and even Vietnam are surging ahead, outpacing even other western countries. Particularly,
because the proposed economic zone offers an environment that can match the capabilities and
resources of a comparable area anywhere in the country, this Bill may help the country, at least,
to keep pace with, not necessarily, to get ahead of the pack.

There are physical, geographic and natural attributes of the Tacloban City coastline area
that can make creation of a Freeport ideal therein. Tacloban port was a haven for international
ships and even carriers as evident during the relief operations of some foreign countries in the
aftermath of typhoon ‘Yolanda’ last November 8, 2013. The port can be easily accessible by big
‘commercial ships plying the route of the Asia-Pacific Region. It is also a few kilometers away
from the Tacloban City airport which has plenty of rooms to be upgraded into an international
airport.

In light of the foregoing, approval of Bill is earnestly sought.

YEDDA MA ROMUALDEZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

ag
HOUSE BILL NO. 348

Introduced By: HON. YEDDA MARIE K. ROMUALDEZ

AN ACT
ESTABLISHING THE SPECIAL ECONOMIC ZONE IN THE CITY OF TACLOBAN,
CREATING FOR THIS PURPOSE THE TACLOBAN CITY SPECIAL ECONOMIC
ZONE AUTHORITY,APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES

Be it enacted by’ the Senate and House of Representative of the Republic of the
Philippines in Congress assembled:

SECTION 1.Short Title. — Thi
Economic Zone Act of 2016”

act shall be known as the “Tacloban City Special

SECTION 2.Declaration of Policy.-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 of the country in order to provide jobs to the people especially those in
the rural areas, increase productivity and individual and family income, and thereby improve the
level and quality of living conditions through the establishment, among others, of special
economic zones in suitable and strategic locations in the country and through measures that will
attract legitimate and productive foreign investments.

SECTION 3. Creation of the Tacloban City Special Economic Zone. —\n pursuit of the
foregoing declared policy and subject to the concurrence of the concerned local government unit
(LGU) affected by the zone, there is hereby established a special economic zone consisting of an
industrial estate (IE), export processing zone (EPZ) and free trade zone in the City of Tacloban
to be known as the Tacloban City Special Economic Zone, hereinafter referred to as the
Tacloban City ECOZONE. The Tacloban City ECOZONE shall cover the areas as defined by the
Philippine Economic Zone Authority (PEZA), upon the recommendation of the City government
of Tacloban. The specific metes and bounds of the Tacloban City ECOZONE shall be more
particularly defined in presidential proclamation that shall be issued for this purpose


SECTION 4.Governing Principles. ~ The Tacloban City ECOZONE shall be managed
and operated by the Tacloban City Special Economic Zone Authority, herein referred to as the
TaCSEZA, created under Section 10 of this Act, under following principles:

(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the Tacloban City ECOZONE shall be developed into
and operated as a decentralize, self-reliant and self-sustaining industrial, commercial/trading,
agro-industrial, tourist, banking, financial and investment center with suitable residential areas.

(b) The Tacloban City ECOZONE shall be provided with transportation,
telecommunications and other facilities needed to attract legitimate and productive investment,
generate linkage industries and employment opportunities for the people of the City of Tacloban
and Province of Leyte as well as its neighboring towns in the entire Eastern Visayas Region

(c) The Tacloban City ECOZONE may establish mutually beneficial economic
relations with other entities or enterprises within the country or, subject to the administrative
guidance of the Department of Foreign Affairs (DFA), the Philippine Economic Zone Authority
(PEZA) and/or the Department of Trade and Industry (DT1), with foreign entities or enterprises.

(d) Foreign citizens and companies owned by non-Filipinos in whatever proportion
may set up enterprises in the Tacloban City ECOZONE, either by themselves or in joint venture
with Filipinos in any sector of industry, international trade and commerce within the Tacloban
City ECOZONE.

(ec) The Tacloban City ECOZONE shall be managed and operated as a separate
customs territory, thereby ensuring the free flow or movement of goods and capital within, into
and out of the Tacloban City ECOZONE and shall likewise provide incentives such as tax and
duty-free importations of raw materials and capital equipment to registered enterprises located
therein. However, exportation or removal of goods from the territory of theTacloban City
ECOZONE to other parts of the Philippine territory shall be subject to customs duties and taxes
under Tariff and Customs Code of the Philippines, as amended, and the National Internal
revenue Code (NIRC), as amended;

(8) The areas comprising the Tacloban City ECOZONE may be expanded or reduced
when necessary. For this purpose, the TaCSEZA, in consultation with the LGU of Tacloban,
shall have the power to acquire either by purchase, negotiation or condemnation proceedings,
any private land within or adjacent to the Tacloban City ECOZONE for the following purposes;
(1) consolidation of lands for TaclobanEcozone development; (2) acquisition of right-of-way to
the Tacloban City ECOZONE; and (3) the protection of watershed areas and natural assets
valuable to the prosperity of theTacloban City ECOZONE.


(g) Goods manufactured by the Tacloban City ECOZONE enterprises shall be made
available for immediate retail sale in the domestic market, subject to the payment of
corresponding taxes on raw materials and other regulation that may be formulated by the
TaCSEZA, together with the PEZA, the Bureau of Custom (BoC) and DTT in accordance with
NIRC of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.

However, in order to protect domestic industries, a Negative List of industries shall
be drawn up and regularly updated by the PEZA. Enterprises engaged in industries included in
such Negative List shall not be allowed to sell their products locally, and

(h) The defense of the Tacloban City ECOZONE and the security of its perimeter
fence shall be the responsibility of the national government (NG) in coordination with the
Tacloban City ECOZONEand the city government of Tacloban, For this purpose, a special
defense team shall be organized to define its power, duties and responsibilities

SECTION 5.Incentives to Registered Enterprises. - The TeCSEZAshall provide 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 the start of their commercial operations to the extent of their activity under the
following categories

(1) Category A ~ Registered domestic enterprises located in highly developed
areas, as determined by the Board of Investment (BOI), shall be entitled to four-year

income tax holiday.

(2) Category B ~ Registered domestic Enterprises on the following shall be
entitled to a six-year income tax holiday

i. Located in less developed areas as defined by BOI; or

ii, Producing/rendering new products/services or having backward or
forward linkages

(3) Category C - Registered export enterprises shall be entitled to a six-year
income tax holiday: provided, finally, that if the export enterprises complies with the

following:

i, Large capital investments or sizeable employment generation; or


ii, Use high level of technology; or

Located outside Metro Manila, it shall be entitled to an eight-year ITH.

Registered enterprises embarking on new investments that are listed in the current
Investment Priorities Plan (IPP) shall be entitled to incentives provided herein pertaining to the
new investments and subject to such term and conditions as the BOI may determine. Additional
investment in the project shall be entitled to the ITH corresponding to such investment as may be
determined by the BOI. Additional ITH may be granted for as long as the investment is made on
the same project: provided, that the project is listed in the IPP at the same time the additional
investment in the project is made: provided, further, that he entitlement period for additional
investments shall not exceed three times the period provided under this subsection: Provided,
however, that the total ITH period for an export enterprises availing of an eight-year ITH shall
not exceed twenty (20) years. Any unused incentives shall therefore be deemed forfeited if not
used during the incentive period. Enterprises registered with the TaCSEZA are required to share
in the special development fund of the BOI for investment promotion projects of the government
equivalent to one percent (1%) of the ITH granted every application. The Bureau of Internal
Revenue (BIR) shall require a registered enterprises availing of the ITH or the net operating loss
carryover (NOLCO) to secure eligibility from the TaCSEZA before submitting its income tax
return (ITR) with the TaCSEZA for validation. Failure to secure certification and/or to file the
ITH or the NOLCO availment for validation by the TaCSEZA within forty-five (45) days from
the last day of statutory filing date for ITR shall cause the forfeiture of the availment for the
taxable period.

(b) Net Operating Loss Carryover (NOLCO) ~ The net operating loss carryover of the
business or enterprises during the first three years from the start of the commercial operations
which have not been previously offset as a deduction from the gross income shall be carried over
as deduction from the gross income for the next five consecutive years immediately following
the year of such loss: provided, however, that the operating loss resulting from availment of
incentives provided in this Code 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) -
Except for 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 the income tax, the excise tax and the franchise taxes shall be imposed on business
establishments operating within the Tacloban City ECOZONE. In lieu thereof, five percent (5%)
of the gross income earned by all the business enterprises with the TaCSEZA and remitted as
follows:


(1) Two per centum (2%) to the National Government, provided, that one per
centum (1%) of which will be allocated for the country’s disaster preparedness and
emergency management program nationwide;

(2) Two per centum (2%) to the city of Tacloban, provided, that one per
centum (1%) of which will be allocated for the city’s disaster preparedness and
emergency management assistance;

(3) One per centum (1%) to the TaCSEZA.

All persons and services establishments in the Tacloban City ECOZONE that are not
covered by Section 5 thereof shall be subject to national and local taxes under the NIRC of 1997,
as amended, and the Local Government Code.

(4) 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 and regulations
prescribed by the Secretary of Finance and the provision of the NIRC of 1997, as amended.

(€) Capital Equipment Incentives Importation of 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 enterprise upon the effectivity of this law
shall be exempted to the extent of one hundred percent (100s%) of the taxes and custom duties
Provided, that the importation thereof shall be used exclusively by the registered enterprises in
its registered activity within theTacloban City ECOZONE. Provided, further, that the importation
of machinery and equipment and accompanying parts shall comply with the following
conditions:

(1) These are not manufactured domestically in sufficient quantity, of comparable
quality and at reasonable prices;

(2) These are reasonably needed and will be used exclusively by the registered
enterprise in the manufactured of its products, unless prior approval of the TaCSEZA is
secured 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

(3) Approval of the TaCSEZA was obtained by the registered enterprise for the
importation of such machinery, equipment and spare parts. Approval of the



TaCSEZAmust be secured before any sale, transfer or disposition of the imported
capital equipment, machinery or spare parts are made: Provided, that if such sale
transfer or disposition is made within the first five years from the date of importation,
any following condition must be present:

(i) If made to another enterprise enjoying tax and duty exemption on imported
capital equipment,

(ii) If made to another enterprise not covered by part (i), upon payment of the
taxes and duties on the net book value of the capital equipment be sold;

(iii) Exportation of the capital equipment, machinery, spare parts or source
documents or those required for pollution abatement and control; and

(iv) For reasons of proven technical obsolescence. When the aforementioned
sale, transfer or disposition is made under the any of the conditions provided for in
the foregoing paragraphs other than paragraph.

(4) The registered firm shall not pay the taxes and duties waived on such items:
Provided, that if the registered enterprise sells, transfers or disposes 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 liable
to pay twice the amount of the tax and duty exemption given it: Provided, finally, that
even if the sale, transfer or disposition of the capital equipment, machinery or spare
parts is approved after five years from the date of importation, the registered enterprise
is still liable to pay the taxes and duties based on the net book value of the capital
equipment, machinery or spare parts if it has violated any of its registration terms and
condition. Otherwise, it shall no longer be subject to the payment of taxes and duties
waived thereon.

The purchase of machinery and capital equipment and raw materials, supplies, parts
and semi-finished products used in the fabrication of machinery and capital equipment by
registered export-oriented enterprise from 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, and raw
materials, supplies, parts and semi-finished products used in fabrication of machinery and capital
equipment, had these items been imported, upon its submission to the Department of Finance
(DOF) of the bill of materials evidencing the transaction value of such and other pertinent
document, for verification and proper endorsement



The registered export enterprise availing of the incentive provided under the
immediately preceding two paragraphs shall be subject to the following:

(j) that said capital equipment, machinery and spare parts will be used exclusively by the
registered enterprises in its registered activity;

(ii) that the capital equipment or machinery where the raw materials, supplies, parts and
semi-furnished products were used would have qualified for tax and duty-free
importation; and

(iii) that the approval of the TaCSEZA is obtained by the registered enterprise. If the
registered enterprise sells, transfers or disposes of these machineries, capital equipment
and spare parts, the provision in the preceding paragraphs for such disposition shall
apply.

This incentive shall be deemed waived if application for tax credit under this subsection
was not filed within one year from the date of delivery.

(The importation of source documents by information technology-registered
enterprises shall be eligible for tax and duty free importation.

(g) Raw Material Incentives — Every registered export-oriented enterprises 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, that the same are not sufficient in quantity,
quality or are not competitively priced 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 enterprises based on the actual taxes and duties paid for such
materials/supplies/semi-manufactured products by the registered enterprise

This incentives shall be deemed waived if application for tax credit under this subsection
was not filed within one year from the date of exportation of the final product

(h) 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 TaCSEZA.

The availment of the incentives by a registered enterprise shall be subject to the
following:



(i) that said breeding stocks and genetic materials would have been qualified
for tax- and duty-free importation under the preceding paragraph;

(ii) that the breeding stocks and genetic materials are reasonably needed in the
registered activity;

(iii) that approval of the TaCSEZA has been obtained by the registered
enterprise; and

(iv) that the purchase in made within ten (10) years from the date of
registration of commercial operation of the registered enterprises.

The incentive shall be deemed waived if application for tax credit under this
subsection is not filed within one year from the date of delivery.

(i) Exemption from Wharfage Dues — The provisions of law to the contrary
notwithstanding, exports by a registered enterprise shall be exempted from wharfage dues.

(i) Deferred Imposition of the Minimum Corporate Income Tax - The minimum
corporate income tax (MCIT) of two percent (2%) of the gross income as of the end of the
taxable year shall be imposed when the MCIT is greater than the income tax computed under the
NIRC of 1997, as amended, for the taxable year: Provided, however; That said MCIT shall be
imposed only after the enterprise’s entitlement period to the income tax-based incentives

(k) (1) Tax Treatment of Merchandise in the Tacloban City ECOZONE —

(® Except as otherwise provided in this Act, foreign and domestic merchandise,
raw materials, supplies, articles, equipment, machineries, spare parts and wares of every
description, except those prohibited by law, brought into the zone to be sold, stored,
broken up, repacked, assembled, installed, sorted, cleaned, graded or otherwise
processed, manufactured, mixed with foreign or domestic merchandise, whether directly
or indirectly related in such activity, shall not be subject to customs and internal revenue
laws and regulations nor to local tax ordinances, any provision of law to the contrary
notwithstanding;

(ii) Merchandise purchased by a registered Tacloban City ECOZONE enterprise,
from the customs territory and subsequently brought into the export processing zone,
shall be considered as export sales and exportation thereof shall be entitled to the benefits
allowed by law for such transaction;

(iii) Domestic merchandise sent from the Tacloban City ECOZONE to the
customs territory shall, whether or not combined with or made part of other articles
likewise of local origin or manufactured in the Philippines while in the export processing
zone, be subject to internal revenue laws of the Philippines as domestic goods sold,
transferred or disposed of for local consumption;


(iv) Merchandise sent from the Tacloban City ECOZONE to the customs territory
shall, whether or not combined with of 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);

(v) Domestic merchandise on which all internal revenue taxes have been paid, if
subject thereto, and foreign merchandise previously imported on which has been paid, or
which have been admitted free of duty and tax, may be taken into the Tacloban City
ECOZONE from the customs territory of the Philippines and be brought back thereto free
of quotas, duty or tax;

(vi) Subject to such regulations respecting identity and safeguarding of revenue as
the TaCSEZA may deem necessary, when the identity of an article entered into the export
processing zone under the immediately preceding paragraph has been lost, such article
when removed from the zone and taken to the customs territory shall be treated as foreign
merchandise entering the country for the first time, under the provision of the Tariff and
Customs Code of the Philippines, as amended;

(vii) Articles produced or manufactured in the Tacloban City ECOZONE and
exported therefrom shall, on subsequent importation into the customs territory, be subject
to the import laws applicable to like articles manufactured in a foreign country;

(viii) Unless the contrary is shown, merchandise taken out of the export
processing zone shall be considered for tax purposes to have been sent to customs
territory.

(2) Tax Treatment of Merchandise in the Tacloban City ECOZONE - The free
trade/freeport zone shall be operated and managed as a separate customs territory
ensuring free flow or movement of goods within, into and exported out of the free
trade/freeport zone. Importations of raw materials and capital equipment are tax- and
duty-free.

However, exportations or removal of goods from the free trade/freeport zones to other
parts of the Philippine territory shall be subject to customs and internal revenue
regulations.

(3) Tax Treatment of Services in the Tacloban City ECOZONE —

(i) Sale of service by an entity from the customs territory to a registered ecozone
or free trade enterprise, or by a registered ecozone or freeport enterprise to another
ecozone or freeport enterprise shall be treated as indirect export and hence, entitled to the
benefits allowed by law for such transaction; and


(ii) Sale or service by a registered ecozone or freeport enterprise to the customs
territory shall be subject to applicable internal revenue laws and regulations

(I) Registered export-oriented enterprise shall have access to the utilization of the
bonded warehousing system in accordance with the rules and regulations of the BoC.

(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 (10) years from its
registration: Provided, That when the majority of the capital stock of a registered enterprise is
owned by foreign investors, the positions of the president, treasurer and general manager or their
equivalents may be retained by foreign nationals beyond the period set forth herein and such
officer is the owner or a stockholder owning at least ten percent (10%) of the outstanding capital
stock of the registered enterprise and he remains the owner or maintains his stockholdings
therein.

Foreign nationals under employment 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 Commonwealth Act No. 613, as amended, shall be permitted to enter and reside in
the Philippines during the period of employment of such foreign nationals. They shall be issued a
multiple-entry visa, valid for a period of three years, and shall be allowed to enter and leave the
Philippines 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 foreign nationals admitted herein, as well as their respective spouses and dependents,
shall be exempt from:

(i) obtaining alien certificate of registration and emigration clearance certificates; and (ii)
securing the alien employment permit (AEP) and all types of clearances, permits, licenses or
their equivalents required by any government department or agency.

SECTION 6.Incentive to investors. ~ Any foreign national covered under subsection (m)
of Section 5 of this Act, who invests an amount of Two Hundred Fifty Thousand US Dollars
(US$ 250,000.00), either in cash and/or equipment, in a registered enterprise shall be entitled to
an investor’s visa: provided that,

(a) He is at least eighteen (18) years of age;

(b) He has not been convicted of a crime involving moral turpitude;

(c) He is not afflicted with any loathsome, dangerous or contagious disease, and

(d) He has not been institutionalized for any mental disorder or disability


Provided, further, That in securing the investor’s visa, the alien-applicant shall be entitled
to the same privileges provided for under Section S(M), last paragraph.

As a holder of an investor’s visa, an alien shall be entitled to reside in the Philippines
while his / her investment subsists. For this purpose, he / she should submit an annual report, in
the form duly prescribed for the purpose, to prove that he / she has maintained his / her
investment in the country. Should said alien withdraw his / her investments from the Philippines,
then the investor's visa issued to him / her shall automatically expire.

SECTION 7. Administration, Implementation and Monitoring of Incentive.The
TaCSEZA 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 BOI for incentives common to all registered enterprises shall be uniformly
applied by the TaCSEZA.

The following are the duties and responsibilities of the TaCSEZA in the administration of
incentives:

(a) Adopt consistent procedures of administering incentives in accordance with
the guidelines established by the BOI and to amend the same when necessary;

(b) Adopt and implement systems and procedures affecting trade and customs
policies in accordance with the requirements established by the DOF and the BOI and to
amend the same when necessary;

(c) Submit data and information to the DOF and the BOI as required by any of
these agencies to ascertain consistency of investment policies and incentives , including
their implementation as provided in (a) and to ensure proper implementation of systems


Fiscal incentives under this Act shall be terminated after a cumulative period of twenty
(20) years from the date of registration or the start of commercial operation, whichever is
applicable, except that it could be extended with regard to industries deemed indispensable to
national development as determined by TaCSEZA.

The industries exempted from this provision shall be recommended by the BOT, with the
concurrence of the secretaries of the Department of Finance and of Trade and Industry.

SECTION 10. Creation of the Tacloban City Special Economic Zone Authority. —
There is hereby crated a body corporate to be known as the Tacloban City Special Economic
Zone Authority, hereinafter referred to as the “TaCSEZA”, which shall manage and operate the
Tacloban City ECOZONE in accordance with the provisions of this Act. This corporate franchise
shall expire in fifty (50) years counted from the first year after the effectivity of this Act, unless
otherwise extended by Congress. It shall be organized within one hundred eighty (180) days after
the effectivity of this Act

SECTION 11. Principal Office of the TaCSEZA. The TaCSEZA shall maintain its
principal office in the City of Tacloban, but it may establish branches within the Philippines as
may be necessary for the proper conduct of its business.

SECTION 12. Powers and Functions of the TaCSEZA. ~ The TaCSEZA shall have the
following functions:

(a) Operate, administer, manage and develop the Tacloban City 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 Tacloban City ECOZONE;

(c) Register, regulate, and supervise the enterprises in the Tacloban City
ECOZONE in an efficient and decentralized manner, subject to existing laws;

(d) Coordinate with city government and exercise general supervision over the
development plans, activities, and operations of the Tacloban City ECOZONE;

(e) Authorize or undertake, on its own or through others, and regulate the
establishment, operation and maintenance of public utilities, services, and infrastructures
in the Tacloban City Zone such as shipping, barging, stevedoring, cargo handling,
hauling, warehousing, storage of cargo, port services or concessions, piers, wharves,
bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges, terminals,
conveyors, water supply and storage, sewerage, drainage, airport operations in
coordination with the Civil Aeronautics Board, and such other services or concessions or
infrastructure necessary or incidental to the accomplishment of the objectives of this Act.
Provided, however, That the private investors in the Zone shall be given priority in the
awarding of contracts, franchises, licenses, or permits for the establishment, operation
and maintenance of utilities, services and infrastructure in the Zone,


(8) Regulate and undertake the establishment, operation and maintenance of
utilities, other services and infrastructure in the Tacloban City ECOZONE such as, but
not limited to, heat, light and power, water supply, telecommunications, transport, toll
roads and bridges, port services, etc. and to fix just, reasonable and competitive rates,
fares, charges and prices thereof,

(g) Construct, acquire, own, lease, operate and maintain on its own or through
contracts, franchise, licenses, bulk purchase from the private sector or permits under any
of the schemes allowed in Republic Act No. 6957 (the Build-Operate-Transfer Law, as
amended), or joint venture, adequate facilities and infrastructure required or needed for
the operation and development of the Tacloban City ECOZONE, in coordination with
appropriate national and local government authorities and in conformity with applicable
laws thereon,

(h) Operate on its own, either directly or through a subsidiary entity or licenses to
others, tourism-related activities, including games, amusements, recreational and sports
facilities, such as horse racing, dog racing, gambling casinos, game of chance, golf
courses and others, under priorities and standards set by TaCSEZA;

(i) Subject to the approval of the President and the Monetary Board of the
BangkoSentralngPilipinas (BSP) upon the recommendation of the DOF, to raise or
borrow adequate and necessary funds from local or foreign sources to finance its projects
and programs under this Act and for that purpose, to issue bonds, promissory notes and
other 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;

(j) Provide security for the Tacloban City ECOZONE in coordination with the
national and local governments.

Military forces sent by the NG for the purpose of defense shall not interfere in the
internal affairs of the Tacloban City ECOZONE and expenditures for these military
forces shall be borne by the NG. For this purpose, the TaCSEZA may establish and
maintain its security forces and firefighting capability or hire others to provide the same;

(k) Protect, preserve, maintain and develop the virgin forests, beaches, coral and
coral reefs, and maintain ecological balance and adopt a climate change resilient program
within the Tacloban City ECOZONE and neighboring municipalities;

(1) Create, operate and/or contract to operate such functional units or offices of the
TaCSEZA as it may deem necessary;

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


(n) Issue certificates of origin for products manufactured or processed in the
Tacloban City ECOZONE in accordance with prevailing rules of origin, and the pertinent
regulations of the PEZA, the DTI and/or the DOF;

(0) Issue working visas renewable every three (3) years to foreign executives and
foreign technicians with highly specialized skills which no Filipino possesses, as certified
by the Department of Labor and Employment;

(p) Report to the Bureau of Immigration the names of the foreigners who have
been granted permanent resident status and working visas within thirty (30) days after
issuance of such grant,

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

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

SECTION 13. Tax Exemptions. — The TaCSEZA is hereby declared exempt from the
payment of all taxes, duties, fees, imports, charges, costs, and service fees in any court or
administrative proceedings in which it may be a party. 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 shall find the TaCSEZA 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 TaCSEZA and of its projected capital and operating expenditures

Furthermore, all donations made by any person or entity in favor of the TaCSEZA shall
be exempt from the payment of the donor’s tax and the same shall be considered as deductible
from the gross income of the donor, pursuant to the NIRC of 1997, as amended.

SECTION 14. Banking Rules and Regulations. — Existing banking laws and
rules/regulations of the BSP shall apply to banks and financial institutions to be established in
the Tacloban City ECOZONE, such as those governing foreign exchange and other current
account transactions (trade and nontrade), 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.

SECTION 15.Remittance of Earnings. — In the case of foreign investments, a registered
enterprise in the TaCSEZA shall have the right to remit earnings from the investment in the
currency in which the investment was originally made and at the exchange rate prevailing at the
time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as amended.


SECTION 16. Board of Directors of the TaCSEZA. ~ The powers of the TaCSEZA
shall be vested in and exercised by a board of directors, hereinafter referred to as the Board,
which shall be composed of the following:

(a) The chairman who shall, at the same time, be the administrator of the TaCSEZA;
(b) A vice chairman who shall come from among the members of the Board,
(c) Members consisting of:

(1) The City Mayor of Tacloban;

(2) The congressional representative of the district covering the site of the
Tacloban City ECOZONE;

(3) One representative from the domestic investors,
(4) One representative from the foreign investors; and

(5) Two representatives from labor from among the workers in the Tacloban City
ECOZONE.

‘The city mayor, the congressional representatives shall serve as ex officio members of the
Board, whose terms in the Board correspond to their term as elected officials.

The chairman and the members of the Board, except the ex officio members, shall be
appointed by the President of the Philippines to serve for a term of six (6) years unless sooner
removed for cause or dies or resigns voluntarily. In case of death, resignation or removal for
cause, the replacement shall serve only the unexpired portion of the term.

Except for the representatives of the business and labor sectors, no person shall be
appointed by the President of the Philippines as a member of the Board unless he is a Filipino
citizen, of good moral character, of proven probity and integrity, and a degree holder in any of
the following fields: economics, business, public administration, law, management or their
equivalent, and with at least ten (10) years relevant working experience preferably in the field of
‘management or public administration

The members of the Board shall each receive per diem at rates to be determined by the
Department of Budget and Management (DBM) in accordance with existing rules and
regulations: Provided, however, That the total per diem collected each month shall not exceed
the equivalent per diem for four 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 (10,000.00) for every Board meeting.

SECTION 17. Powers and Duties of the Chairman-Administrator. — The chairman-
administrator shall have the following powers and duties:



(a) Direct and manage the affairs of the TaCSEZA in accordance with the policies of the
Board;

(b) Establish the internal organization of the TaCSEZA 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 be required;

(e) Submit to the Board for its approval policies, systems, procedures, rules and
regulations that are essential to the operation of the Tacloban City ECOZONE;

(f) 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 Tacloban City ECOZONE; and

(g) Perform such other duties as may be assigned to him by the Board or which are
necessary or incidental to his office

SECTION 18. Organization and Personnel. The Board of Directors of the TaCSEZA
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 remuneration 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 TaCSEZA, any provision of existing law to
the contrary notwithstanding: Provided, further, That the chairman-administrator may carry out
removal of such officers and employees

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

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

SECTION 19. General Manager. — The Board of Directors of the TaCSEZA shall
appoint a full-time professional and competent administrator and chief executive officer for the
TaCSEZA whose compensation shall be determined by its Board of Directors and shall be in
accordance with the revised compensation and position classification system. The administrator
as chief executive officer of TaCSEZA shall be responsible to the Board and the President of the
Philippines for the efficient management and operation of the TaCSEZA.


SECTION 20. Applicability Clause. — The provisions of Sections 30 to 41 of Republic
Act No. 7916, as amended, on lease of lands and buildings, land conversion, shipping and
shipping register, protection of environment, termination of business, registration of business
enterprises, one-stop shop center and on industrial harmony in the ecozones shall apply to the
TaCSEZA.

SECTION 21. Capitalization. ~ The TaCSEZA shall have an authorized capital stock of
Two Billion (2,000,000,000) no par shares with a minimum issue of Ten Pesos (P10.00) each,
the majority shares of which shall be subscribed and paid for by the NG and the LGUs
embracing the Tacloban City ECOZONE. The Board of Directors of the TaCSEZA may, with
the written concurrence of the Secretary of Finance, sell shares, representing not more than forty
per centum (40%) of the capital stock of the TaCSEZA to the general public under such policy as
the Board and the Secretary of Finance may determine. The NG and the LGUs shall, in no case,
own less than sixty per centum (60%) of the total issued and outstanding capital of the
TaCSEZA

‘The amount necessary to subscribe and pay for the shares of the NG to the capital stock
of the TaCSEZA shall be included in the annual General Appropriations Act. For LGU, the
funds shall be taken from their internal revenue allotment and other local funds.

SECTION 22. Supervision and Coordination of Development Plans. — For purposes of
policy direction and coordination, the Tacloban City ECOZONE shall be under the direct control
and supervision of the Office of the President.

SECTION 23.Relationshipwith the Regional Development Council The TaCSEZA
shall determine the development goals for the Tacloban City ECOZONE within the framework
of national development plans, policies, and goals, The administrator shall, upon approval by the
Board, submit the Tacloban City ECOZONE plans, programs and projects to the Regional
Development Council for inclusion and inputs to the overall regional development plan.

SECTION 24.Relationship with LGU. — Except as herein provided, the LGU comprising
theTacloban City ECOZONE shall retain its basic autonomy and identity. It shall operate and
function in accordance with the Local Government Code of 1991. In case of any conflict among
the TaCSEZA and the city government of Tacloban on matters affecting the Tacloban City
ECOZONE other than defense and security matters, the decision of the TaCSEZA shall prevail

SECTION 25. Legal Counsel. — The Tacloban City Special Economic Zone Authority
and the corporations in which the TaCSEZA owns a majority of the issued capital stock shall
have its own internal legal counsel under the supervision of the government corporate counsel.
When the exigencies of its businesses and operations demand it, the TaCSEZA may exchange
the services of an outside counsel either on a case to case or on a fixed retainer basis.

SECTION 26. Interpretation/Construction. ~ The powers, authorities, and functions
that are vested in the TaCSEZA are intended to decentralize governmental functions and
authority and promote an efficient and effective working relationship among the Tacloban City
ECOZONE, the NG, and the LGU


SECTION 27.Auditing. - The Commission on Audit shall appoint a representative who
shall be a full-time auditor of the TaCSEZA and assign such number of personnel as may be
necessary to assist said representative in the performance of his/her duties. The salaries and
emoluments of the assigned auditor and personnel shall be in accordance with pertinent laws,
rules and regulations.

SECTION 28. 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.

SECTION 29.Repealing Clause. — All laws, executive orders or issuances, or any part
thereof which are inconsistent herewith are hereby repealed or emended accordingly

SECTION 30.Effectivity Clause. ~ This act shall take effect fifteen (15) days after
publication in at least two (2) national newspapers of general circulation

Approved