AOR WN

Republic of the P
HOUSE OF REPRESE!
Quezon City

NINETEENTH CONGRESS
First Regular Session

c. 3696
House Bill No. |

Introduced by Representative
LEODY “ODIE” F. TARRIELA

EXPLANATORY NOTE

The island of Mindoro was previously referred to in some Chinese
Chronicles as the land “Ma‘I” where residents were believed to be trading
with merchants from other parts of the archipelago and Southeast Asia.
According to the Philippine Statistics Authority. the province of Occidental
Mindoro is an agricultural area devoted to the production of crops like rice,
com, onions, garlic, and other fruits which contributed to its income.
Strategically locaicd at the south of province of Batangas in Southern Luzon,
the province is considered as one of the major gateways to Visayas and
Mindanao as thousands of goods and people traverse within the province to
deliver goods and commodities.

Special Economic Zones or ECOZONEs are selected areas with highly
developed or which have the potential to be developed into agro-indust
industrial, tourist/recreational. commercial. banking, investment and financial
centers. An ECOZONE may contain any or all of the following: industrial
estates (IEs), export processing zones (EPZs), free trade zones, and
tourist/recreational centers.' Its objective is to promote the flow of investors.
both foreign and local, into special economic zones which would generate
employment opportunitics and establish backward and forward linkages
among industries in and around the economic zones.

This bill provides the establishment of Occidental Mindoro Special
Economic Zone within the Municipalities of Abra de Mog, Sta. Cruz and
Mamburao. which is situated at the center of the province. in order to

* See. 4, RA. No. 7916,


11
12
13
14
1s
16

encourage investors to explore countryside investments and provide economic
stimulus throughout the province. With this bill, the Province of Occidental
Mindoro will be transformed into a highly developed agro-industrial,
industrial, commercial, tourist, banking. investment, and financial centers,
where highly trained workers and efficient services will be available to
commercial enterprises.

In view of the foregoing, the passage of this bill is earnestly sought.

HE” F. TAI
Representative
istrict, Occidental Mindoro

ELA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3896

INTRODUCED BY REPRESENTATIVE
LEODY “ODIE” F. TARRIELA

AN ACT
ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE
MUNICIPALITIES OF ABRA DE ILOG, STA. CRUZ AND
MAMBURAO PROVINCE OF OCCIDENTAL MINDORO,
CREATING FOR THE PURPOSE THE OCCIDENTAL MINDORO
SPECIAL ECONOMIC ZONE AND FREEPORT AUTHORITY
(OMSEZA), AND APPROPRIATING FUNDS THEREFOR

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

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Occidental

Mindoro Special Economic Zone and Freeport Authority Act."

SEC. 2. Declaration of Policy. - It is declared the policy of the State to
encourage, promote. and accelerate the sound and balanced industrial.
economic. and social development of the country. ‘The establishment of
special economic zones shall attract legitimate and productive forcign
investments in strategic locations in the country. It shall generate employment,
enhance productivity. and increase individual and family incomes, thereby

enhancing the quality of life of the Filipino people.


1 CHAPTER II

2 CREATION OF THE ECONOMIC ZO!
4 SEC. 3. Creation of the Occidental Mindoro Special Economic Zone.
5 = In accordance with the foregoing declared policy and subject to the

6 concurrence of the local government units (L.GUs) of the MUNICIPALITIES
7 OF ABRA DE ILOG, STA. CRUZ AND MAMBURAO. PROVINCE OF
8 OCCIDENTAL MINDORO, there is hereby established a special economic
9 zone, hereinafter referred to as the Occidental Mindoro Special Economic

cidental Mindoro Ecozone shall

10 Zone or Occidental Mindoro Ecozone. The O

11 cover a particular area in the Municipalitics of Abra de Hog. Sta, Cruz and
12 Mamburao. Provinee of Occidental Mindoro, the specific metes and bounds
13 of which shall be more particularly defined in a presidential proclamation that
14 — shall be issued for this purpose: Provided. That the lands embraced therein

15 shall be contiguous to one another.

W SEC. 4. Creation of the Occidental Mindoro Special Economic Zone
18 and Freeport Authority. - ‘Vhere is hereby created a body corporate to be

19 _knownas the Occidental Mindoro Special Economic Zone Freeport Authority.

20 hereinafter referred to as the OMSEZA which shall manage and operate the
21 Occidental Mindoro Economic Zone, in accordance with the provisions of this
22 Act. The corporate life of the OMSEZA shall be perpetual, unless its articles
23 of incorporation provide otherwise. Jt shall be organized within one hundred.

24 eighty (180) days after the effectivity of this Act.

Governing Principles. - The OMSEZA shall manage and

cidental Mindoro Ecozone, under the following principles:

a) Within the framework and limitations of the Constitution and applicable


b)

c)

d)

e)

provisions of Republic Act No. 7160, or 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, tourist, banking, financial, and

investment center with suitable residential arcas:

The Occidental Mindoro Ecozone shall be equipped with transportation.

telecommunications. and other facilities needed to attract legitimate and
productive investments. generate linkage industries and employment
‘opportunities for the people of MUNICIPALITIES OF ABRA DE
ILOG, STA. CRUZ AND MAMBURAO, OCCIDENTAL MINDORO.

and those neighboring towns and cities:

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, the Philippine Economic Zone Authority (PEZA). and the
Department of ‘Trade and Industry (DTI), with foreign entities or

enterprises:

Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the Occidental Mindoro Eeozone,
cither by themselves or in a joint venture with Filipinos in any sector of
industry. international trade and commerce within the Occidental

Mindoro Ecozonc:

The Occidental Mindoro 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 its territory, and shall likewise



f

provide incentives subject to Title XIII of the National Internal Revenue
Code. as amended. 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
Republic Act No. 10863. otherwise known as the “Customs
Modernization and Tariff Act” and other relevant tax laws of the

Philippines:

The areas comprising the Occidental Mindoro Ecozone may be expanded
or reduced when necessary through a presidential proclamation issued for
the said purpose. 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
aw
ion of right of

Occidental Mindoro Ecozone for the following purpos:

consolidation of lands for zone development: (2) acqui
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;

Goods manufactured by an Occidental Mindoro Ecozone enterprise may
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, in coordination
with the PEZA, the Bureau of Customs, the Burcau of Internal Revenue.
and the DTI. However. in order to protect domestic industries, a

shall be drawn up and regularly updated by

Negative List of industrie:
the PEZA. Enterprises engaged in industries included in such Negative

List shall not be allowed to sell their products locally; and


h) The defense and security of the Occidental Mindoro Ecozone and its
perimeter fence shall be the responsibility of the national government, in

coordination with the OMSEZA and the concerned LGUs.

SEC. 6. Development Goals of the Occidental Mindoro Ecozone. - The
OMS

Ecozone within the framework of national development plans, policies, and

‘A shall determine the development goals of the Occidental Mindoro

goals. ‘The Chairperson-Administrator shall, upon approval by the Board of
the OMSEZA, submit the plans. programs. and projects of the Occidental
Mindoro Ecozone to the Regional Development Council for inclusion in the

regional development plan.

SEC. 7. Capitalization. - Tne OMSEZA shall have an authorized

capital stock of two billion (2.000.000,000) no par shares with a minimum.
issue of Ten pesos (Php10.00) 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
Seeretary of Finance may determine. The national government and the LGUs
of the Municipalitics of Abra de Ilog, Sta, Cruz and Mamburao shall in no

case own less than s

ty per centum (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
General Appropriations Act. For the LGUs of the Municipalities of Abra de

Tlog. Sta. Cruz and Mamburao. the funds shall be taken from their internal


13
14
15
16
a7
18

19

revenue allotment and other local funds.

SEC. 8. Principal Office of the OMSEZA. - ‘The OMSEZA shall
maintain its principal office in the Municipality of Mamburao, Province of

Oceidental Mindoro, but it may establish liaison offices within the Philippines

as may be necessary for the proper conduct of its busine:

SEC. 9. Powers and Functions of the OMSEZA. - The OMSEZA

shail have the following powers and functions:

a) To operate, administer. manage. and develop the Occidental Mindoro

Ecozone according to the principles and provisions sct forth in this Act:

in the Occidental

b) To register. regulate, and supervise the enterprises

Mindoro Ecozone in an efficient and decentralized manner, subject to

existing laws;

©) To coordinate with the LGUs and exercise general supervision over the
development plans. activities. and operations of the Occidental Mindoro

Ecozone:

d) To regulate and undertake the establishment, construction. operation, and

maintenance of public utilities, other services. and infrastructure in the

Occidental Mindoro Ecozone such as light and power. shipping, barging.
stevedoring, cargo handling, hauling, warehousing, storage of cargo, port
services or concessions, piers, wharves. bulkheads. bulk terminals,

storage areas, roads, telecommunications.

mooring are: transport,

bridges, terminals. conveyors. water supply and storage. sewerage.

drainage. port operations in coordination with Philippine Ports Authority.


a7
18

1s

g)

h)

airport operations in coordination with the Civil Aviation Authority of

sions or infrastructure

the Philippines, and such other services or conc

neces

ry or incidental to the accomplishment of the objectives of this

Act:

To 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, otherwise known as the “Build-Operate-Transfer Law”. as
amended, or joint venture, adequate facilitics and infrastructure 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;

‘To approve plans, programs. and projects of the Occidental Mindoro
Eeozone to be submitted to the Regional Development Council for

inclusion in the regional development plan:

To operate on its own. either directly or through licenses to others.
tourism-related activities. including games. amusements, recreational
and sports facilities, subject to the approval and supervision of the

Philippine Amusement and Gaming Corporation;

To raise or borrow. within the limitation provided by law. and subject to
the approval of the Monetary Board of the Bangko Sentral ng Pilipinas
(BSP).

foreign sources, to finance its projects and programs under this Act and

s the case may be, adequate and necessary funds from local or

for this purpose. to issue bonds. promissory notes. and other forms of

securities. and to secure the same by a guarantee, pledge. mortgage. deed


©

10
12
12

13

k)

of trust or an assignment of all or part of its property or assets:

To protect, preserve, maintain, and develop the forests. beaches, corals,
and coral reefs. and maintain ecological balance within the Occidental

Mindoro Ecozone. Notwithstanding the power of the OMSEZA to create

tules for such 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 OMSEZA:

Toa
of the OMS

‘atc, operate or contract to operate such functional units or office:

‘A as it may deem neces:

To adopt. alter, and use a corporate seal; contract. lease. buy, acquire.
own or otherwise dispose of personal or real property of whatever nature:
sue and be sued; and otherwise carry out its functions and duties as

provided for in this Act:

To issue certificates of origin for products manufactured or processed in
the Occidental Mindoro Ecozone in accordance with prevailing rules of
origin and the pertinent regulations of the PEZ.A. the DTL. and the
Department of Finance (DOF):

To establish one-stop shops for the issuance of all necessary permits,
clearances. licenses. and other similar certifications to conduct such
activities intended to improve the case of doing business within the

Occidental Mindoro Ecozone. in coordination with government agencies

having jurisdiction over activities thet

in: Provided, That all government

agencies are directed to provide and extend utmost and full cooperati

to the OMSEZA in the establishment of such one-stop shops;

190


°)

Pp)

To ensure that the area covered by the Occidental Mindoro Ecozone is
secure at all times: Provided, That the Armed Forces of the Philippines
(AFP) or the Philippine National Police (PNP) shall not interfere in the
internal affairs of the OMSEZA except to provide the necessary security
and defense, or law enforcement assistance. as the case may be:
Provided, finally. That expenses of the AFP or the PNP in the Occidental

Mindoro Ecozone shall be borne by the national government;

To exercise such powers as may be essential, necessary or incidental to

the powers granted to it by this Act. as well as those that shall enable it
to carry out. implement and accomplish the purposes. objectives and

policies set forth in this Act; and
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. 10. Board of Directors of the OMSEZA. - The powers of the

OMSEZA shall be vested in and exercised by a Board of Directors. hereinafier

referred to as the Board, which shall be composed of the following:

a)

b)

c)

A Chairperson, who shail at the same time be the administrator of the
OM!
AVi

the Board of Directors:

Ay

Chairperson who shall be elected from among the members of

Members consisting of:
1) The Governor of the Province of Occidental Mindoro or a duly-

authorized representative from the Provincial Government of

ql


ql

13

14

16

a7

18

Occidental Mindoro:
2) The mayors of the municipalities covered by the Occidental Mindoro
Ecozone:

3) One (1) representative from the investors’ group: and

4) One (1) representative from among the workers in the Occi

Mindoro Ecozone.

The Governor or the Governor's duly authorized representative and the
mayors of the municipalities of Abra de Hog, Sta. Cruz and Mamburao shall
serve as ex officio members of the Board, whose terms in the Board shall

correspond to their terms as elected officials.

The Chairperson-Administrator and the members of the Board, except
for the representatives of the investors and workers groups and the ex officio
members, 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. In case of death. resignation or
removal for cause, their replacements shall serve only the unexpired portion
of the respective terms. No person shall be appointed as a member of the
Board unless the person is a Filipino citizen. of good moral character. of
proven probity and integrity. and a degree holder in any of the following

. busine:

ficlds: economi 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. except the ex officio members, shall each
receive a per diem allowance at rates to be determined by the Department of
Budget and Management in accordance with existing rules and regulations:

Provided, however, That the total per diem allowance collected cach month

12


shall not cx

ced the equivalent of four (4) meetings unless and until the
President of the Philippines has fixed a higher rate for the per diem allowance
for the members of the Board. such allowance shall not be more than Ten

thousand pesos (Php 10,000.00) for every Board meeting.

SEC. 11. Organization and Personnel, — The Board of Directors of the
OMSEZA shall provide for its organization and staff. 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.

The Board shall have exclusive and final authority to promote. transfer.

as

ign, reassign, or remove officers of the OMSEZA. any provision of existing

law to the contrary notwithstanding. The Chairperson-Administrator shall

execute the decisions of the Board.

The officers and employees of the OMSEZA shall not engage directly

or indirectly in partisan activities nor take part in any election, except to vote.

No officer or employee of the OMSEZA shall be removed or suspended

except for cause, as provided by civil service rules and regulations.

SEC. 12. Powers and Duties of the Chairperson-Administrator. ~The

Chairperson-Administrator shall have the following powers and duties:

a) To direct and manage the affairs of the OMSEZA in accordance with

the policies of the Board;

b) To establish the internal organization of the OMSEZA under such

conditions that the Board may prescribe:

13


10
al
12
13
14
15
16

d)

h)

To submit an annual budget and necessary supplemental budget to the

Board for its approval:

To submit within thirty (30) days after the close of cach fiscal ye

an

annual report to the Board and such other reports as may be required:

‘To submit to the Board for its approval. policies, systems, procedures,
rules. and regulations that are essential to the operation of the

Occidental Mindoro Lcozone;

‘To recommend to the Board the remuncration and other emoluments of
its officers and employees in accordance with existing laws on

compensation and position classification:

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 Occidental Mindoro

Ecozone; and

‘Yo perform such other duties as may be assigned by the Board or which

are necessary or incidental to the offic:

SEC. 13. Legal Counsel. - The OMSEZA shall have its own internal

legal counsel who shall be under the supervision of the Government Corporate

Counsel. When the exigencies of business and operations demand it, the

OMSEZA may engage the scrvices of an outside counsel cither on a case-to-

case or on a fixed retainer basis.

14


CHAPTER 1
INCENTIVES TO ECOZONE ENTERPRISES AND INVESTORS.

SEC. 14. Investors Visa. - Any foreign national who invests an amount
of Two hundred thousand US dollars (US$200,000.00) in a registered
enterprise. either in cash or equipment, shall be entitled to an investor's

visa: Provided. hat the foreign national has the following qualifications:

a) Must be at least eightcen (18) years of a

b) Must not have been convicted by final judgment of a crime involving
moral turpitude:

©) Must not be afflicted with any dangerous or contagious disease:

d) Must not have been confined in an institution for any mental disorder or
disability; and

©) Must be financially capable as borne out by credible and verifiable

evidence.

With an investor's visa, an alien shall be entitled to reside in the
Philippines while the investment subsists. ‘The alien investor shall submit an
annual report in the form duly prescribed for the purpose of proving that the
investment in the country subsists. Should said alicn investor withdraw the
investments from the Philippines, then the investor's visa issued to said alien

shall automatically expire and be withdrawn.

The authority to issue visas and work permits shall remain with the
Bureau of Immigration (BI) and the Department of Labor and Employment

(DOLE). respectively: Provided, That the BI and the DOLE shall implement

for workers in

measures to expedite the processing of such visas and permits

15


10

13

14

15

No

the Occidental Mindoro Ecozone and coordinate closely with the OMSEZA

to facilitate the conduct of business operations.

SEC. 15. Fiscal Incentives. - Registered enterprises of the Occidental
Mindoro Ecozone may be entitled to pertinent fiscal incentives granted under
Title XIII (Tax Incentives) of the National Internal Revenue Code. as

amended.

SEC. 16. Imposition of a Tax Rate of Five Percent (5%) on Special

. local and national, shall be imposed on

Corporate Income Tax. — No tax
business establishments operating within the OMSEZA Ecozone. including
income tax, withholding tax, donor's tax. percentage tax. and documentary
stamp tax. In licu thereof, and subject to Section 15 of this Act, said business
establishments shall pay a five percent (5%) final tax on special corporate
income tax: Provided. ‘That the proceeds from such final tax shall be shared
by instrumentalities of the government in accordance with the following

schedule:

a) Three per centum (3%) to the National Government;

b) Two per cemum (2%) shall be directly remitted by the business

establishments to the treasurer's office of the municipality where the

enterprise is located.

The OMSEZA shall have the authority to grant income tax holiday and
net operating loss carry over subject to Section 15 of this Act and conditions

as it may have imposed pursuant to Section 15 of this Act.

SEC. 17. Banking Rules and Regulations Governing Banks and
Other Financial Institutions. - Banks and other BSP-supervised financial

institutions to be established in the Occidental Mindoro Ecozone shall be

16


10

11

12

13

14

15

16

under the supervision of the BSP and subject to existing banking laws, rules

and regulations.

SEC. 18. Remittances. - In the case of foreign investments, a duly
registered entity or enterprise within the Occidental Mindoro Ecozone shall
have the right to remit earnings to its investors 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 Republic Act No. 7653. otherwise

known as the “New Central Bank Act” as amended.

CHAPTER IV
NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 19, Supervision and Control. - For purposes of policy direction
and coordination, the OMSEZA shall be under the direct control and

supervision of the Office of the President of the Philippines.

SEC. 20. Relationship with Local Government Units. — Except as
hercin provided, the LGUs comprising the Occidental Mindoro Ecozone shall
retain their basic autonomy and identity. The Municipalities of Abra de Tog,
Sta. Cruz and Mamburao, Province of Occidental Mindoro shall operate and
function in accordance with the framework of the Constitution, the Local

Government Code of 1991, as amended, and this Act.

In case of any conflict among the OMSEZA, the LGUs and the national
government on matters affecting the Occidental Mindoro Ecozone, other than
national defense and security matters, the decision of the OMSEZA shall

prevail.

17


1

3

4

SEC. 21. Audit. - The Commission on Audit shall appoint a full-time

auditor for the OMSEZA and may assign such number of personnel as may

be necessary to assist the auditor in the performance of the auditor's functions.
CHAPTER V
MISCELLANEOUS

SEC. 22. Interpretation and Construction. - The powers. authorities
and functions that are vested in the OMSEZA are intended to enhance national
security, encourage self-sufficiency. foster meaningful decentralization of
governmental functions and authority, and promotion the of an efficient and
effective collaboration among the OMSEZA. the national government and the

LGUs of the municipalities of Abra de Ilog. Sta. Cruz and Mamburao. Any

interpretation of this Act shall consider such intentions. In the event of conflict
of interpretation and provided the intentions cannot be harmonized, the
provisions of this Act shall be construed in favor of an interpretation that shall

protect national security.

SEC. 23. Applicability Clause. ~ Insofar as they are consistent with
the provisions of this Act, the provisions of Sections 30 to 41 of Republic Act
No. 7916, otherwise known as "The Special Economic Zone Act of 1995". as.

amended. shall likewise apply to the Occidental Mindoro Ecozone.

SEC. 24. Implementing Rules and Regulations. - Within sixty (60)
days from effectivity of this Act. the DTI shall, in coordination with the DOF
and the National Economic and Development Authority, formulate rules and

regulations for the effective implementation of the provisions of this Act.

18



1

10

a1

12

SEC. 25, 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. 26. Repealing Clause. - All laws. cxccutive orders or issuances
or any part thereof, which are inconsistent herewith, are hereby repealed or

amended accordingly.

SEC. 27. Effectivity, - This Act shall take effect fifteen (15) days after

its publication in the Official Gazette or in a newspaper of general circulation.

Approved.

19