RECEIVED
SEVENTEENTH CONGRESS 25 AUG 2016
OF THE REPUBLIC OF THE PHILIPPINES } TE:
First Regular Session ) TINE ual
BY: Wa

HOUSE OF REPRESENTATIVES
House Bill No. 3342

REGISTRATION UNIT
BILLS AND INDEX

Introduced by
BEN P. EVARDONE

Representative, Lone District, Eastern Samar

HOUSE F REPRESENTATIVES

EXPLANATORY NOTE

Typhoon Yolanda proved to be the world’s deadliest and strongest typhoon. Its first
landfall in Guiuan, Salcedo and Mercedes towns in Eastern Samar left thousands of our
constituents homeless, and economically ‘broke’. Yet, despite its ferocity, Yolanda failed to take
away the actual wealth of our people— natural endowments especially from the seas.

Located at the southernmost tip of Eastern Samar, facing the Pacific Ocean, and bounded
to the South by Surigao Strait and the Leyte Gulf to the West, the towns of Salcedo, Mercedes and
Guiuan are known fishing communities. They are so rich in fishery and aquatic resources that the
area has been considered the best fishing belt in the region,

The coastal waters of these towns, especially in Guiuan, offer almost all species of marine
life: euchuema, abalone, ornamental fish, lobster and the Golden Cowry. They also offer
delicacies, shellcraft products as well as fresh and processed marine products.

Before typhoon Yolanda struck, most of the agricultural lands are dominantly planted with
coconut trees. Other major crops include vegetables, root crops, palay, com, banana and other fruit
trees, coffee and pineapple.

These towns boast of white sand beaches, not to mention its challenging waves kissing the
shores every now and then, playing host to both foreign and local surfing enthusiasts.

At the cliffside margin of Guiuan’s Calicoan island lie hidden the dozens of caves waiting
to satiate the appetite of spelunkers. On its northern tip are wetlands like the Everglades, teeming
with fish, shrimp, and crabs. The surrounding waters support several marine based industries such
as fish, seaweed, and pearl farming.

Our history books have made Guiuan widely known for two significant events 423 years
apart. In 1521, Ferdinand Magellan first set foot on Philippine soil in Homonhon island on his way
to discover the Philippines for the Western World. In 1944, the American Forces landed on the
island of Suluan where they fought their first battle in the Philippine territory three days before


Gen. Mac Arthur stormed the beaches of Leyte. During the Second World War, Guiuan served as
one of the Alliance's bases. What's left of the American occupation nowadays are just concrete
slabs which once served as the foundations of a vast supply depot, and an air strip which now
serves as the town's own airport.

However, despite these natural wonders and the rich history and culture and the abundance
of marine wealth, these towns are highly dependent on its internal revenue allocations (IRA).

Hence, through this bill, the establishment of a Special Economic and Tourism Zone and
Freeport in the Lone District of Eastern Samar, particularly in the towns of Salcedo, Mercedes and
Guiuan, including the islands of Homonhon, Manicani, Suluan and Calicoan is proposed once
again.

‘The author believes that now is the best time to realize such ecozone project if the
government is to fast-track the economic recovery of the country from the devastation of Typhoon
Yolanda.

On this score, the passage of this bill is urgently sought.

EVARDONE


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SEVENTEENTH CONGRESS
OF THE REPUBLIC OF THE PHILIPPINES 5
First Regular Session )
HOUSE OF REPRESENTATIVES

House Bill No.__ 3342

Introduced by
BEN P. EVARDONE
Representative, Lone District, Eastern Samar

AN ACT
CREATING A SPECIAL ECONOMIC AND TOURISM ZONE AND FREE PORT IN THE
MUNICIPALITIES OF SALCEDO, MERCEDES AND GUIUAN, INCLUDING THE
ISLANDS OF CALICOAN, HOMONHON, SULUAN AND MANICANI, IN THE
PROVINCE OF EASTERN SAMAR, CREATING FOR THIS PURPOSE THE EASTERN
SAMAR SPECIAL ECONOMIC AND TOURISM ZONE AUTHORITY,
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

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

assembled:

Section 1. Short Title. — This Act shall be known as the "Eastern Samar Special
Economic and Tourism Zone Act of 2014 (ESSETZA).”

Section 2. Declaration of Poli
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

. — It is hereby declared the policy of the State to

State shall endeavor to establish special economic zones in suitable and selected areas in the
country where enterprises will be given incentives to create an environment conducive to business.
This shall be the means to attract local and foreign investors, general employment opportunities,
encourage the regional dispersal of industries and promote tourism.


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Section 3. Creation of the Eastern Samar Special Economic and Tourism Zone. — In
accordance with the foregoing policy, there is hereby established a special economic and tourism
zone in the Municipalities of Salcedo, Mercedes and Guiuan, including the islands of Calicoan,
Homonhon, Suluan and Manicani, in the Province of Eastern Samar to be known as the Eastern
Samar Special Economic and Tourism Zone, hereinafter referred to as the ESSETZONE. The
specific metes and bounds of the ESSETZONE shall be more particularly defined in a presidential
proclamation that shall be issued for this purpose.

Section 4. Governing Principles. — The Eastern Samar Special Economic and Tourism
Zone 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 ESSETZONE shall be developed into a decentralized,
self-reliant and self-sustaining industrial, commercial, financial, investment and tourism
center and free port with suitable retirement and residential areas. The ESSETZONE shall
be provided with transportation, telecommunications, and other facilities needed to attract
legitimate and productive foreign investments, generate linkage industries and
employment opportunities for the people, and promote tourism in the municipalities
comprising the ESSETZONE and its neighboring towns and cities.

(b) The ESSETZONE may establish mutually beneficial economic relations with other
entities within the country, subject to the administrative guidance of the Department of
Foreign Affairs, and/or Department of Trade and Industry, and/or Department of Tourism
with foreign entities or enterprises.

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

(a) The ESSETZONE shall be managed and operated as a separate customs territory to ensure
and facilitate the free flow, entry and movement of machinery and other goods. It shall be

vested with the authority to issue certificates of origin for products manufactured or
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and unmarried children below twenty-one (21) years of age, a permanent resident status
within the ESSETZONE.

Such foreign investor and his or her spouse, dependents and unmarried children
below the age of twenty-one (21) years, shall have freedom of ingress and egress to and
from the ESSETZONE without any need of any special authorization from the Bureau of

Immigration.

‘The Eastern Samar Special Economic and Tourism 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 Samar Special Economic and Tourism 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.

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 retailing goods and
merchandise, shall be permitted to engage in the business in such retail trade within the
ESSETZONE after securing license for that purpose from the Eastern Samar Special
Economic and Tourism 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 ESSETZONE. The determination of the medium- and large-scale retail trade operation
shall be the responsibility of the ESSETZONE Authority.


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(@)_ Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall
apply on foreign exchange and other current account transactions (trade and non-trade),
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 5. Creation of the Eastern Samar Special Economic and Tourism Zone
Authority. — Subject to the concurrence of the local government units that will be affected by
the creation of the ESSETZONE, there is hereby created a body corporate to be known as the
Eastern Samar Special Economic and Tourism Zone Authority, hereinafter referred to as the
ESSETZONE Authority, which shall manage and operate the ESSETZONE, in accordance with
this Act. It shall be organized within one hundred eighty (180) days after the effectivity of this
Act.

Section 6. Principal Office. — The ESSETZONE Authority shall maintain its principal
office within the ESSETZONE, but it may establish branches and agencies within the Philippines
and abroad as may be necessary for the proper conduct of its business.

Section 7. Powers and Functions of the ESSETZONE Authority. — The ESSETZONE
Authority shall have the following functions:

{a) To operate, administer, and manage the ESSETZONE according to the principles
and provisions set forth in this Act;

(b) To recommend to the President the issuance of a proclamation to fix and delimit
the site of the ESSETZONE;

(c) To register, regulate and supervise the enterprises in the ESSETZONE in an
efficient and decentralized manner;


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(d)

(e)

(g)

(h)

0)

To regulate and undertake the establishment, operation and maintenance of utilities,
other services and infrastructure in the ESSETZONE such as heat, light and power,
water supply, telecommunications, transport, toll roads and bridges, port services,
among others, and to fix reasonable and competitive rates, fares, charges and prices
therefor;

To construct, acquire, own, lease, 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 (the build-operate-transfer law) as amended, or
in joint venture with the private sector, any or all of the public utilities and
infrastructure required or needed in the ESSETZONE in coordination with
appropriate national and local government authorities and in conformity with
applicable laws thereon;

To operate on its own, either directly or through a subsidy entity, or license to other
tourism related activities, including games, amusements and recreational and sports
facilities;

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 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 part of its property or assets;

To provide security for the ESSETZONE in coordination with national and local
governments. For this purpose, the ESSETZONE Authority may establish and
maintain its own security force and firefighting capability or hire others to provide

the same;

To protect, preserve, maintain and develop the virgin forests, beaches, coral and
functional units or offices within the ESSETZONE;


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(i) Tocreate, operate and/or contract to operate such agencies and functional units or
offices of the ESSETZONE Authority as it may deem necessary;

(k) To 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

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

Section 8. Non-profit Character of the ESSETZONE Authority. — The ESSETZONE
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 ESSETZONE Authority to pay its indebtedness and
obligations and in furtherance and effective implementation of the policy provided in this Act. In
consonance with this, the ESSETZONE Authority is hereby declared exempt from the payment of
all taxes, duties, fees, imposts, 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 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 ESSETZONE Authority and of its projected capital
and operating expenditures.

Section 9. Board of Directors of the ESSETZONE Authority. — The powers of the
ESSETZONE Authority shall be vested in and exercised by a Board of Directors, hereinafier
referred to as the Board, which shall be composed of the following:


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(a) A chairman who shall, at the same time, be the administrator of the ESSETZONE
Authority;

(b) A vice-chairman who shall come from the national agency tasked to coordinate and
monitor special economic zones and the like in the country;

(©) Ten (10) members consisting of:

(1) The congressional representative of Eastern Samar;

(2) The mayors of the municipalities of Salcedo, Mercedes and Guiuan;

(3) One (1) representative each from the Sangguniang Bayan of the Municipalities of
Salcedo, Mercedes and Guiuan;

(4) One (1) representative from domestic investors in the ESSETZONE;

(5) One (1) representative from foreign investors in the ESSETZONE; and

(6) One (1) representative from the labor sector chosen from the workers in the
ESSETZONE.

The congressional representative, and the mayors of the Municipalities of Salcedo,
Mercedes and Guiuan, and the representatives of the respective municipal councils shall serve as
ex officio voting members of the Board.

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

Members of the Board shall receive a reasonable per diem which shall be fixed by the

President of the Philippines once every six (6) years for every Board meeting: 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
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members of the Board, such per diem shall not be more than Ten thousand pesos (P10,000.00) for
every Board meeting.

Section 10. Powers and Duties of the Chairman-Administrator. — The chairman-
administrator shall have the following powers and duties:

(a) To direct and manage the affairs of the Authority in accordance with the policies of the
Board;

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

(©) To submit an annual budget and necessary supplemental budget to the Board for its
approval;

(d) 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; and

(e) To perform such other duties as may be assigned to him by the Board.

Section 11. Promotion of Industrial Peace. — One representative each from the
Department of Labor and Employment (DOLE), labor sector, business and industry sectors shall
formulate a mechanism under a social pact for the enhancement and preservation of industrial
peace in the ESSETZONE within thirty (30) days after the effectivity of this Act.

Section 12. Capitalization. — The Eastern Samar Special Economic and Tourism Zone
Authority shall have an authorized capital stock of two billion (2,000,000,000) no par shares with
a minimum issue value of Ten pesos (P10.00) each. The national government shall initially
subscribe and fully pay three hundred million (300,000,000) shares of such capital stock. The
initial amount necessary to subscribe and pay for the shares of stock shall be included in the
General Appropriations Act of the year following its enactment into law and thereafter. The Board

of Directors of the ESSETZONE Authority may, from time to time and with the written
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concurrence of the Secretary of Finance, increase the issue value of the shares representing the
capital stock of the ESSETZONE Authority. The Board of Directors of the ESSETZONE
Authority, with the written concurrence of the Secretary of Finance, may sell shares representing
not more than forty per centum (40%) of the capital stock of the ESSETZONE Authority to the
general public with such annual dividend policy‘as the Board and the Secretary of Finance may
determine. The national government shall in no case own less than sixty per centum (60%) of the
total issued and outstanding capital stock of the ESSETZONE Authority.

Section 13. Supervision and Coordination of Development Plans. — For purposes of
policy direction and coordination, the ESSETZONE Authority shall be under the direct control
and supervision of the Office of the President, in the meantime that the agency tasked with the
coordination of special economic zones is not yet in place.

Section 14, Relationship with the Local Government Units. — In case of any conflict
between the ESSETZONE Authority and the municipalities concerned on matters affecting the
ESSETZONE other than defense and security matters, the decision of the ESSETZONE Authority
shall prevail.

Section 15. Auditing. — The Commission on Audit shall appoint a representative who
shall be a full time auditor of the ESSETZONE Authority 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 16. 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 17. Repealing Clause. — All laws, executive orders or issuance, or any parts
thereof which are inconsistent herewith, are hereby repealed or amended accordingly.

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Section 18. Effectivity Clause. — This Act shall take effect upon its publication in at least

two (2) newspapers of general circulation.

Approved,

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