Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Third Regular Session

House Bill No. _5962

Introduced by HONORABLE SCOTT DAVIES 8. LANETE, M.D.

EXPLANATORY NOTE

The Province of Masbate, found at the heart of the Philippines, beams with economic
potential by virtue of its strategic location, Fast growing markets in Legazpi City, and the
Islands of Mindoro, Panay, Negros and Cebu surround it. This makes Masbate a viable center
for import and export of goods coming from and bound for its surrounding islands.
Specifically, Port of Masbate located in Masbate City, Province of Masbate is equipped with
the characteristics of existing economic and. free port zones in the country.

However huge Masbate’s potential may be, it remains untapped and undeveloped. Its snail-
paced economic progress has been partly caused by the lack of support from the national
government in the form of economic incentives and programs. Thus, in order to achieve its
full potential, there is a need to establish a special economic zone and free port within
Masbate City similar to those found in Subic, Clark, Cagayan and Aurora, among others,

By establishing a special economic zone and free port within Masbate City, economic
progress Will instantly be felt by its people. In addition, the distribution of goods from apd
Masbate City’s surrounding islands will become easier, Hence, the passage of this
urgently sought,

SCOTT DAVIES S. LANETE, M.D?
Representative
Third District, Province of Masbate


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Third Regular Session

House Bill No._ 5962

Introduced by HONORABLE SCOTT DAVIES S. LANETE, M.D.

AN ACT ESTABLISHING A SPECIAL ECONOMIC ZONE AND FREE PORT IN
MASBATE CITY, PROVINCE OF MASBATE,
PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES,

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

Section 1. Short Title. This Act shall be known as “Masbate Economic Zone Act.”

Sec. 2. Declaration of Policy. It is hereby declared the policy of the State 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 Masbate Special Economic and Free Port Zone. In accordance with the foregoing
declared policy, there is hereby established a special economic zone and free port, to be
known as the Masbate Special Economic Zone, hereinafter known as the Zone, which shall
cover the entire area embraced by Masbate City, Province of Masbate.

Sec 4, Governing Principles, The Masbate Special Economic Zone shall be managed and
operated under the following principles:

(a) Under the framework and limitations of the Constitution and the applicable
provisions of the Local Government Code, the Zone shall be developed into and
operated as a self-sustaining industrial, commercial, financial, investment, and
tourism/recreational center and free port with suitable opportunities in and
around the Zone, and {o effectively encourage and attract legitimate and
productive foreign investments therein;

(b) Business establishments operating within the Zone shall be entitled to the
existing fiscal incentives as provided for under Presidential Decree No. 66, the
aw creating the Export Processing Zone Authority (EPZA), or those provided


under Book VI of Executive Order No, 226, otherwise known as the Omnibus
Investments Code of 1987;

(©) Any provision of existing law, rules or regulations to the contrary
notwithstanding, no taxes, local and national, shall be imposed on business
establishments operating within the Zone. In lieu of paying taxes, said business
establishments shall pay and remit to the national government five per centum
(5%) of their gross income, to be divided as follows

(1) Two per centum (2%) shall accrue to the general fund of the national
government;

(2) One per centum (1%) to the Province of Masbate,

(3) (3) One-half per centum (14%) to be shared by the municipalities
affected by the declaration of the Zone in the proportion to their income
from business activities within the Zone; and

(4) One and one-half per centum (1. 14%) to the Masbate Economic Zone
Authority which shall be created under this Act,

(d) 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;

(©) Any foreign investor who establishes a business enterprise within the Zone
and who maintains capital investment of not less than One Hundred Fifty
Thousand United States dollars (US$150,000.00) shall be granted, along with
his or her spouse, dependents, and unmarried children below twenty-one (21)
years of age, a permanent resident status within the Zone, The responsibility and
authority to grant such permanent resident status is hereby delegated to the
Masbate Economic Zone Authority referred to in Section 5 of this Act.

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

Likewise, the Masbate Economic Zone Authority shall issue working visas
renewable every two (2) years to foreign executives and foreign technicians
with highly specialized skills which no Filipino possesses, as certified by the
Department of Labor and Employment.

‘The names of foreigners granted permanent resident status and working visas by
the Masbate Economic Zone Authority shall be reported to the Bureau of
Immigration within thirty (30) days from such grant.

The foregoing is without prejudice to a foreigner acquiring permanent resident
status in the Philippines in accordance with applicable immigration, retirement,
and other related laws; and


(£) Except as otherwise provided herein, the local government units totally or
partially embraced within the Zone shall retain and maintain their basic
autonomy and identity. Masbate City shall operate and function in accordance
with Republic Act No, 7160, otherwise known as the Local Government Code
of 1991, insofar as the areas within their respective jurisdiction covered in this
Act are concerned.

See. 5. Creation of the Masbate Economic Zone Authority. ~ A body corporate to be known
as the Masbate Economic Zone Authority, hereinafter referred to as the MEZA, is hereby
created to manage and operate, in accordance with the provisions of this Act, the Masbate
Special Economic Zone and Free Port. This corporate franchise shall expire in fifty (50) years
counted from the first day of the fifth (Sth) calendar year after the effectivity of this Act,
unless otherwise extended by Congress

Sec. 6. Powers and Functions of the Masbate Economic Zone Authority, - ‘The Masbate
Economic Zone Authority shall have the following powers and functions:

(a) 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 bullions, ingots, and easily convertible
foreign exchange; to sue and 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 to power of eminent domain for public use and public
purpose;

(b) 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 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;

(©) 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 MEZA may promulgate from time to time in conformity with the provisions
of this Act and the limitations provided in the Constitution;

(d) 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 Boards, 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;



(e) To construct, acquire, own, lease, operate and maintain on its own or through
others by virtue of contracts, franchises, licenses, or permits under the build-
operate-transfer scheme or under a joint venture with the private sector any or
all of the public utilities and infrastructure required or needed in the Zone, in
coordination with appropriate national and local government authorities and in
conformity with applicable laws thereon;

(0 To operate on its own, either directly or through a subsidiary entity, or
license to others, tourism-related activities, including games, amusements,
recreational and sports facilities such as horse racing, dog racing, gambling
casinos, golf courses, and others, under priorities and standards set by the
MEZA;

(g) To 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 by a permanent total log ban.
For this purpose, the rules and regulations of the Department of Environment
and Natural Resources and other government agencies involved in the above
functions shall be implemented by the MEZA;

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

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

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

(k) 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 herein provided: and

(D) To 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, objective and policies of this Act.

Sec 7. Board of Directors of MEZA. ~ The powers of Masbate Economic Zone Authority shall
be vested in and exercised by a Board of Directs, 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 and vice-mayor of Masbate City, Province of Masbate, as ex
officio voting members;


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

(a) Four (4) representatives from the business and investment sectors in the
‘Zone, who must come from the investors in Masbate City; and

(e) Two (2) representatives of the private sector coming from the residents of
Masbate City.

‘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 of 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 (Php 10,000.00) for every Board meeting,

Sec. 8, 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 Masbate Economic Zone 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 MEZA shall be
responsible to the Board and the President of the Philippines for the efficient management
and operation of the Masbate Special Economic Zone

Sec. 9. Compensation. ~ ‘The Masbate Economic 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 (Php 10,00) 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 MEZA
may, {rom time to time and with the written concurrence of the Secretary of Finance, increase
the issue value of the shares representing the capital stock of the Masbate Economic Zone
Authority, The Board of Directors of MEZA, 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 MEZA 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 MEZA



Sec. 10, Supervision. ~ The Masbate Special Economic Zone shall be under the direct control
‘and supervision of the Office of the President of the Philippines for purposes of policy
direction and coordination, in the meantime that the agency tasked with the coordination of
special economic zone is not yet in place.

Sec. 11. Relationship with Masbate City. ~ In case of any conflict between the Masbate
Economic Zone Authority and Masbate City on matters affecting the Masbate Special
Economic Zone other than in defense and security matters, the decision of MEZA shall
prevail

Sec. 12. Legal Counsel. ~ The Masbate Economic Zone Authority and the corporations in
which MEZA 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 MEZA may engage the services of an outside
counsel either on a case to case basis or on a fixed retainer.

Sec. 13, Auditor. ~ The Commission on Audit shall appoint a representative who shall be a
full-time auditor of the Masbate Economic Zone Authority and its subsidiaries, and assign
such number of personnel as may be necessary to assist said representative in the
performance of his or her duties. ‘The salaries and emoluments of the assigned auditor and
personnel of the Commission on Audit shall be in accordance with the revised compensation
and position classification system, The Commission on Audit shall render an annual report to
the President of the Philippines and to Congress on the business activities, transactions and
operations of the Masbate Economic Zone Authority

See. 14. 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. 15. Repealing Clause. ~ All laws, executive orders or issuances, or any parts thereof
Which are inconsistent herewith are hereby repealed or amended accordingly.

Sec. 16. Effectivity Clause, ~ This Act Shall take effect upon its publication in at least one (1).
newspaper of general circulation

Approved.