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Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City

18" Congress
First Regular Session

House Bit no.__9263

Introduced by Hon. Josephine 16 Ramirez Sato

EXPLANATORY NOTE

This bill seeks to establish the Special Economic and Freeport Zone in the
Municipality of San Jose, Occidental Mindoro. Occidental Mindoro is not only an
agricultural haven but an emerging choice area for investors. Dubbed as the
"Gateway to the South," thousands of goods and people travel through and from the
Visayas and Mindanao thru the province and thus a creation of a Special Economic
and Freeport Zone is not only ideal but more importantly evident. It is also gifted with
diverse natural resources, progressive infrastructures in transportation, power and
an abundant supply of highly technical and skilled manpower and thus continues to
be one of the preferred alternatives to the Metro for investments.

Anchoring on the main objective of promoting the countryside as alternative
areas for investments which was the vision in the early 90s when most of the Special
Economic Zones were created, the bill envisions to create an Ecozone that will
alleviate and improve the economic condition of Occidental Mindoro and the nearby
provinces. The residents will be assured of local employment opportunities which will
hasten the economic growth not only in the area but in the nearby provinces as well.
It was to spur the development, through industrialization of the far flung areas in the
provinces. It was to uplift the welfare of the rural folks and the same time decongests
and arrests the cramming of the people to the cities.


The Economic and Freeport Zone is conceptualized as a self-sustaining
industrial, commercial and investment center that will encourage economic growth
and accelerate employment generation in the province. It envisions such Economic
zone to be operated as a separate customs territory that will provide incentives to
ensure free flow and movement of goods and commodities within the area and their
expression there from. Likewise, it shall provide tax-based incentives for business
operating within its premises. In addition, it shall also provide for non-tax benefits like
exchange policies and grant of permanent resident status to investors.

The establishment of a special economic and freeport zone is in line with the
government's policy to encourage, promote, induce and accelerate a sound and
balanced industrial, economic and social development of the country, the
establishment of Occidental Mindoro Special Economic Zone in the Municipalities of
San Jose and Magsaysay is earnestly recommended.

In view thereof, early consideration and approval of this bill is earnestly
sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

18" Congress
First Regular Session

~ 0263
HOUSE BILL NO.

Introduced by Hon. Josephine Y. Ramirez Sato

AN ACT ESTABLISHING A
SPECIAL ECONOMIC ZONE AND FREE PORT IN THE MUNICIPALITIES OF SAN
JOSE AND MAGSAYSAY IN THE PROVINCE OF OCCIDENTAL MINDORO
PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES

Sec 1. Short Title — This Act shall be known as the Occidental Mindoro Special
Economic Zone Act.”

Sec 2. Declaration of Policy ~ It is hereby declared the policy of the government to
actively encourage, promote, induce and accelerate a sound and balanced industrial,
economic and social development of the country in order to provide jobs to the
people especially those in the rural areas, increase their productivity and their
individual and family income, and thereby improve the level and quality of their living
condition through the establishment, among others, of special economic zones and
free ports in suitable and strategic locations in the country and through measures
that shall effectively attract legitimate and productive foreign investments.

Sec 3. The Occidental Mindoro Special Economic Zone and Free Port — In
accordance with the foregoing declared policy is hereby established as a special
economic zone and free port, to be known, as the Occidental Mindoro Special
Economic Zone, hereinafter known as Occidental Mindoro Ecozone, which shall

cover certain parts of Barangays Ansiray, Buri, Catayungan, and Natandol in lin

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Island in the Municipality of San Jose, and certain parts of Barangays Caguray and
Sta. Teresa in the Municipality of Magsaysay.

Sec 4. Governing Principles. - The Occidental Mindoro Ecozone shall be managed
and operated by the Occidental Mindoro Special Economic Zone Authority,
hereinafter referred to as the OMSEZA created under Section 5 of this Act, under the
following principles:

(a) Within the framework and limitations of the Constitution and the applicable
provisions of the Local Government Code, as amended, the Occidental
Mindoro Ecozone shall be developed into and operated as a
decentralized, self-reliant and self-sustaining industrial, commercial /
trading, agro-industrial, tourism, banking, financial and investment center
with suitable residential areas;

(b) The Occidental Mindoro Ecozone shall be provided with transportation,
telecommunications and other facilities needed to attract legitimate and
productive investments, generate linkage industries and employment
opportunities for the people of the Province of Occidental Mindoro and its
neighboring towns and cities;

(c) The Occidental Mindoro 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 or Trade and Industry (DTI), with foreign entities or
enterprises;

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

(e) The Occidental Mindoro Ecozone shall be managed and operated as a
separate customs territory ensuring free flow or movement of goods and
capital within into and out of its territory;


() The Occidental Mindoro Ecozone may provide incentives such as tax and
duty-free importations of raw materials, capital equipment to registered
enterprises located therein. However, exportation or removal of goods
from the territory of the Occidental Mindoro Ecozone to the other parts of
the Philippine territory shall be subject to customs duties and taxes under
the Tariff and Customs Code of the Philippines, as amended, and the
National Internal Revenue Code (NIRC) of 1997, as amended;

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

(h) Goods manufactured by Occidental Mindoro Ecozone enterprise shall be

made available for immediate retail sale in the domestic market, subject to

the payment of corresponding taxes on raw materials and other
regulations that may be formulated by the OMSEZA, together with the

PEZA, the Bureau of Customs (BoC) and the DTI. However, in order to

protect domestic industries, a negative list of industries shall be drawn up

and regularly updated by the PEZA and the Board of Investments (BOI),

Enterprises engaged in industries included in such negative list shall not

be allowed to sell their products locally; and

The defense of the Occidental Mindoro Ecozone and the security of its

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perimeter fence shall be the responsibility of the national government in
coordination with the Occidental Mindoro Ecozone and the LGUs
concerned. For this purpose, a special defense team shall be organized to
define its power, duties and responsibilities.

Sec 5. Creation of Occidental Mindoro Economic Zone — There is hereby created
a body corporate to be known as the Occidental Mindoro Special Economic Zone
and Freeport Authority, hereinafter referred to as the OMSEZA , which shall manage
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and operate Occidental Mindoro 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,

Sec 6. Capitalization - The OMSEZA shall have an authorized capital stock of two
billion (2,000,000,000) no-par value 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 LGUs embracing the Occidental Mindoro
Ecozone. The Board of Directors of the OMSEZA 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 OMSEZA to the general public under
such policy as the Board and the Secretary of Finance may determine. The
national government and the LGUs shall, in no case, own less than sixty per
cent (60%) of the total issued and outstanding capital of the OMSEZA.

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

Sec 7. Principal Office of the Occidental Mindoro Special Economic Zone and
Freeport Authority — The OMSEZA shall maintain its principal offices at Magsaysay
and San Jose, Occidental Mindoro, but it may establish branches in the Philippines
as may be necessary for the proper conduct of its business.

Sec 8. Powers and Functions of the OMSEZA ~ The OMSEZA shall have the
following functions:
(a) Recommend to the President of the Philippines the issuance of
a proclamation to fix and delimit the site of the Occidental Mindoro
Ecozone;
(b) Operate, administer, manage and develop the Occidental Mindoro
Ecozone according to the principles and provisions set forth in this Act


(c) Register, regulate and supervise the enterprises in the Occidental
Mindoro Ecozone in an efficient and decentralized manner, subject to
existing laws.

(@) To adopt, alter use a corporate seal; to contract, lease, buy, sell, acquire,
own and dispose movable and immovable as well as personal and real
property of whatever nature (including but not limited to shares of stock or
participation in private corporations or in limited partnerships, or in joint
ventures with limited liability), bonds, precious metals in bullions, ingots and
easily convertible foreign exchange; to sue ad be sued in order to carry out
its duties, responsibilities, privileges, powers and functions as granted and
provided for in this Act; and to exercise the power of eminent domain for
public use and public purpose;

(e) Within the limitation provided by law, to raise or borrow adequate and
necessary funds from local or foreign sources to finance its projects and
programs under this Act, and for the purpose to issue bonds, promissory
notes, and other form of securities and to secure the same by a guarantee,
pledge, mortgage, deed of trust, or an assignment of all or part of its
property or assets;

(f) To approve, accept, accredit and allow any local or foreign business,
enterprise or investment in the Zone subject only to such rules and
regulations as OMSEZA may promulgate from time to time in conformity
with the provisions of this Act and the limitations provided in the
Constitution;

(g) To authorize or undertake, on its own or through others, and regulate the
establishment, operation and maintenance of public utilities, services, and
infrastructure in the Zone such as shipping, 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;

(h) To construct, acquire, own lease, operate and maintain on its own or
through others by virtue of contracts, franchise, licenses, 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 infrastructures required or needed for the operation and
development of the Occidental Mindoro Ecozone, in coordination with
appropriate national and local government authorities and in conformity
with applicable laws thereon;

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Operate on its own, either directly or through a subsidiary entity, or
concession or license to other, tourism-related activities and sports
facilities, such as golf courses and others, under priorities and standards
set by OMSEZA;

(j) Protect, preserve, maintain and develop the virgin forests, beaches, coral

and coral reefs within the Zone. The virgin forest within the Zone will be
proclaimed as a national park and will be covered permanent total log ban.
For his purpose, the rules and regulations of the Department of
Environment and Natural Resources and other government agencies in
the above functions shall be implemented by the OMSEZA.

(k) To adopt, implement and enforce reasonable measures and standards to
control pollution within the Zone;

(1) To provide security for the Zone in coordination with the national and local
governments. For this purpose, OMSEZA may establish and maintain its
‘own security force and firefighting capability or hire others to provide the
same;

(m)Coordinate with LGUs and exercise general supervision over
the development plans, activities and operations of the Occidental
Mindoro Ecozone;

(n) To form, establish, organize and maintain subsidiary corporations, as
its business and operations may require whether under the laws of the
Philippines or not;

(0) 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

(p) To 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.

Sec 9. Board of Directors of OMSEZA — The powers of the Occidental Mindoro
Special Economic Zone and Freeport Authority shall be vested in and exercised by a
Board of Directors, hereinafter referred to as the Board, which shall be composed of
fifteen (15) members, to wit:

(a) The Secretary of Trade and Industry who shall serve as an ex officio
chairman of the Board of Directors and four (4) other representatives of
the national government;

(b) The Mayor of Municipalities of San Jose and Magsaysay, and the Province
of Occidental Mindoro, as ex officio voting members;

(c) Two (2) representatives of labor from among the workers in the Occidental
Mindoro Special Economic Zone;

(d) Four (4) representatives from the business and investment sectors in the
Zone

(e) Two (2) representatives of the private sector coming from the residents of
the municipalities of San Jose

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 three (3)
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 investment sectors, no
person shall be appointed by the President of the Philippines as a member of the
Board unless he is a Filipino citizen, of good moral character and of recognized
competence in some relevant fields in business, banking, shipping, business or labor
management, port operations, engineering, or law.


Members of the Board shall receive a reasonable per diem which shall not be
less than the amount equivalent to the representation and transportation allowances
of the members of the Board and/or as may be determined by the Department of
Budget and Management: Provided, however, that the total per diem collected each
month shall not exceed the equivalent per diems 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) for
every Board meeting.

Sec 10. Administrative and Chief Executive Officer - The President of the
Philippines shall appoint a full-time professional and competent administrator and
chief executive officer for the Occidental Mindoro Special Economic Zone and
Freeport Authority 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 OMSEZA shall
be responsible to the Board and the president of the Philippines for the efficient
management and operation of the Occidental Mindoro Special Economic Zone.

Sec 11. Supervision — The Occidental Mindoro Special Economic Zone shall be
under the direct control and supervision of the Office of the President of the
Philippines for the purpose of policy direction and coordination in the meantime that
the agency tasked with the coordination of special economic zones is not yet in
place.

Sec. 12. Separability Clause - In case any provision of this Act is found to be
unconstitutional upon final declaration by the appropriate Court, the other provisions
not so declared unconstitutional or unaffected by the declaration shall remain valid
and effective and shall continue to be implemented by relevant government
agencies.

Sec 13. Repealing Clause — All laws, executive orders or issuances, or any parts
thereof which are inconsistent wherewith are hereby repealed or amended

accordingly.

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Sec. 14. Effectivity Clause — this Act shall take effect fifteen (15) days after its
publication in a newspaper of general circulation in the Philippines.

Approved,

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