NINETEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
First Regular Session
Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
3471

HOUSE BILL NO.

Introduced by Honorable Celso G. Regencia

EXPLANATORY NOTE

This bill seeks to establish a special economic zone in the area
occupied and utilized by then National Steel Corporation located
at Barangay Suarez, Iligan City, Lanao del Norte, pursuant to
general policies and guidelines set forth under Republic Act 7916
otherwise known as Economic Zone Act of 1995.

Section 1, Article XII, 1987 Constitution provides that the goals of
the national economy points to equitable distribution of
opportunities, income as well as wealth, and in the pursuit of these
goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop, and pursuant to this
declaration, RA 7916 otherwise knownas Economic Zone Act of 1995
was enacted to encourage economic growth via special economic zones}
development of investor-friendly atmosphere.

Located in the northern part of Mindanao with a suitable climate and
available workforce, Iligan City is a strategic and ideal location
for industrial and commercial centers. It can also serve as entry
and exit points for the needs of the business sectors operating
within the City and other neighboring areas.

The establishment of a special economic zone will enhance and
improve the economic conditions of Iligan City and nearby provinces
translating to sustainable development.

In line with policy of the government promoting equitable
industpdal, social and economic development, the establishment
of IJfgan Special Economic Zone is respectfully recommended.



NINETEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES)
First Regular Session )

HOUSE OF REPRESENTATIVES
Introduced by Representative CELSO G. REGENCIA
House @ili wo. 3471

AN ACT ESTABLISHING ILIGAN SPECIAL ECONOMIC ZONE IN THE AREA
OCCUPIED AND UTILIZED BY THEN NATIONAL STEEL CORPORATION LOCATED
AT BARANGAY SUAREZ, ILIGAN CITY, LANAO DEL NORTE, CREATING FOR
THIS PURPOSE THE ILIGAN SPECIAL ECONOMIC ZONE AUTHORITY (ISEZA),
AND APPROPRIATING FUNDS THEREFOR,

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

SEC. 1. Short Title. - This Act shall be known as the “ILIGAN
SPECIAL ECONOMIC ZONE ACT”

SEC. 2. Declaration of Policy. - It is hereby declared the
policy of the State to actively encourage, promote, and
accelerate the sound and balanced industrial, economic and
social development in the country. The establishment of special
economic zones will attract legitimate and productive foreign
investments in strategic locations in the country. It shall
generate employment and increase productivity and individual, as
well as family incomes, thereby enhancing the quality of life of
the Filipino people.

SEC. 3. Creation of the ILIGAN SPECIAL ECONOMIC ZONE. - In
consonance with the foregoing declared policy, a Special Economic
Zone is hereby created and hereinafter referred to Iligan Special
Economic Zone that will cover the area then occupied by the
defunct National Steel Corporation located at Barangay Suarez,
Iligan City, Lanao del Norte. The specific metes and bounds of
the Iligan Special Economic Zone shall be more particularly
defined in the Act that will be created for this purpose.


Provided, That the lands embraced therein shall be public lands
and contiguous to one another.

SEC. 4. Creation of the ILIGAN SPECIAL ECONOMIC ZONE AUTHORITY
OR ISEZA. - There is hereby created a body corporate to be known
as the “ILIGAN SPECIAL ECONOMIC ZONE AUTHORITY" herein after
referred to as “the ISEZA” which shall manage and operate the
ILIGAN SPECIAL ECONOMIC ZONE, 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. ISEZA shall be
organized with one hundred eighty (180) days after the
effectivity of this Act.

SEC. 5. Governing Principles. - The Iligan Special Economic Zone
shall be managed and operated by the ISEZA under the following
principles, as follows:

a. Within the framework and limitations of the Constitution and
applicable provisions of the Local Government Code, the Iligan
Special Economic Zone shall be developed into and operated as a
decentralized self-sustaining industrial, commercial/trading,
agro-industrial, tourist, banking, financial and investment
center.

b. The Iligan Special Economic Zone 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 Iligan
City and the neighboring places.

c. The Iligan Special Economic Zone 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 (DTI), with foreign entities or enterprises.

d. Foreign citizens and/or companies owned by non-Filipinos, in
whatever proportion, may set up enterprises in the Tligan
Special Economic Zone, either by themselves or in a joint
Venture with Filipinos in any sector of industry, international
trade and commerce with in the defined area.


e. the Iligan Special Economic Zone 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 provide incentives such as
tax and duty-free importations of raw materials, capital, and
equipment to registered enterprises located therein.

£. The area composing the Iligan Special Economic Zone may be
expanded or reduced when necessary. For this purpose, the ISEZA
shall have the power to acquire either by purchase, negotiation
or condemnation proceedings, any private land within or adjacent
to the Iligan Special Economic Zone for the following purposes:

1. Consolidation of lands for zone development;
2. Acquisition of right of way to the Iligan Special
Economic Zone; and,

3. The protection of watershed areas and natural assets
valuable to the prosperity of the Iligan Special Economic
Zone.

g. Goods manufactured by the Iligan Special Economic Zone
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 ISEZA 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 PEZA. Enterprises engaged in
industries included in such Negative List shall not be allowed
to sell their products locally.

h. The security of the Iligan Special Economic Zone shall be the
responsibility of the national government in coordination with
the ISEZA.

SEC. 6. Capitalization. - The ISEZA shall have an authorized
capital stock of FIVE BILLION (5,000,000,000) PESOS, with minimum
issue of One Hundred (P100.00) each, the majority shares of which
shall be subscribed and paid for by the National Government.

The Board of Directors of the ISEZA may, with the written


concurrence of the Secretary of Finance, sell shares,
representing not more than 33% of the capital stock of the ISEZA
to the general public under such policy as the Board and
Secretary of Finance may determine, provided that, at no given
time that National Government shall own less than 67% of the
total issued and outstanding capital stock of ISEZA. The amount
necessary to subscribe and pay for the shares of the National
Government to the capital stock of the ISEZA shall be included in
the annual General Appropriations Act.

SEC. 7. Principal Office of the ISEZA. - The ISEZA shall maintain
its principal office in Iligan City but it may establish branches
within the Philippines as may be necessary for the proper conduct
of its business.

SEC. 8. Powers and Functions of the ISEZA, - The ISEZA shall have
the following powers and functions:

1}. To operate, administer, manage and develop the Iligan
Special Economic Zone in accordance with the principles, and
provisions set forth in this Act;

2}. To register, regulate and supervise enterprises in the Iligan
Special Economic Zone in an efficient and decentralized manner,
subject to existing laws;

3}. To coordinate with government agencies and exercise general
jurisdiction over the development plans, activities and
operations of the Iligan Special Economic Zone;

4}. To regulate and undertake the establishment, construction,
operation, and maintenance of public utilities, other services
and infrastructure in the Iligan Special Economic Zone such as
lights and power, shipping, barging, stevedoring, cargo handling,
hauling, warehousing, storage of cargo, port services or
concessions, piers, wharves, bulkheads, bulk terminals, mooring
areas, storage areas, roads, telecommunications, transport,
bridges, terminals, conveyors, water supply and storage,
sewerage, drainage, airport operations in coordination with the
Civil Aviation Authority of the Philippines (CAAP), and such
other services or concessions or infrastructure necessary or
incidental to the accomplishment of the objectives of this Act;

5}. 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
facilities and infrastructure required or needed for the
operation and development of the Iligan Special Economic Zone, in
coordination with appropriate national agencies/authorities and
in conformity with applicable laws thereon;

6}. To approve plans, programs and projects of the Iligan
Special Economic Zone to be submitted to the Regional Development
Council for its consideration and inclusion to the over-all
regional development plan;

7}. To raise or borrow, within the limitation provided by law
and subject to the approval or opinion of the Monetary Board of
the Bangko Sentral ng Pilipinas (BSP), as the case may be,
adequate and necessary funds from local or foreign sources, to
finance its projects and programs under this Act and for this
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;

8}. To protect, preserve, maintain and develop the forests,
beaches, coral and coral reefs, and maintain ecological balance
within Iligan Special Economic Zone. Notwithstanding the
authority of the ISEZA to create rules for such purpose, the
rules and regulations of the Department of Environment and
Natural Resources (DENR) and other government agencies involved
in the above functions shall be implemented by the ISEZA;

9}. To create, operate, and/or contract to operate such
functional units or offices of the ISEZA, as it may be necessary;

10}. To 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;

11}. To issue certificates of origin for products manufactures or
processed in the Iligan Special Economic Zone in accordance with
prevailing rules of origin and the applicable regulations of the


PEZA, DTI and/or DOF;

12}. 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
ease of doing business within the Iligan Special Economic Zone in
coordination with the government agencies having jurisdiction
over activities therein. Provided, That all government agencies
are required to provide and extend utmost and full cooperation to
the Iligan Special Economic Zone in the establishment of such
one-stop shops;

13}. To provide internal security to Iligan Special Economic Zone
in coordination with the National Government/Agencies. For this
purpose, the ISEZA shall provide and establish its own internal
security and firefighting forces or engage external entity to
provide the same;

14}. 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, objectives and policies of this Act;
and,

15}. 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. - The powers of the ISEZA shall be
vested with, and shall be exercised by, Board of Directors,
hereinafter referred to as the Board, which shall be composed of
the following:

1}. The Chairperson who shall, at the same time, be the
Administrator of the ISEZA;

2}. The Representative of the Lone District of Iligan City;

3}. A designate-representative from Iligan LGU;

4}. One (1) representative from the investors group; and

5}. One (1) representative from the workers in the ecozone, to be
chosen by the general membership in a meeting called for the


purpose.

A Vice-Chairperson shall be selected from among members of the
Board.

The Representative of the Lone District of Iligan City, and the
designate-representative of Iligan LGU shall serve as ex-officio
members of the Board, the term corresponds to the term of the
elected official and/or appointment period of the representative
which shall not be more than the term of the appointing officer.

Except for ex-officio members, the Chairperson-Administrator and
the members of the Board 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, their replacements shall serve only the
unexpired portion of the respective terms.

The Chairperson-Administrator must be 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 to be
determined by the DBM in accordance with existing rules and
regulations: Provided, however, That the total per diem collected
each month shall not exceed the equivalent of per diem for four
(4) meetings. Unless and until the President of the Philippines
has fixed a higher amount of per diem, the members of the Board
shall receive per diem of not more than Ten Thousand Pesos (PHP
10,000) for every Board meeting.

SEC 10. Organization and Personnel. - The Board of Directors of
the ISEZA 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 the existing laws
on compensation and position classification. The Board shall have
exclusive and final authority to promote, transfer, assign,
reassign, or remove officers of the ISEZA, any provision of


existing law to the contrary notwithstanding. The Chairperson-
Administrator shall carry out the decisions of the Board.

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

SEC 11. Powers and Duties of the Chairperson-Administrator. - The
Chairperson Administrator shall exercise the following powers and
duties:

1}. To direct and manage the affairs of the Iligan Special
Economic Zone in accordance with the policies established by the
Board;

2}. To establish the internal organization of the ISEZA under
such conditions that the Board may prescribe;

3}. To submit an annual budget and necessary supplemental budget
to the Board for its approval;

4}. 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;

5}. To submit to the Board for its approval policies, systems,
procedures, rules and regulations that are essential to the
operation of the Iligan Special Economic Zone;

6}. To recommend to the Board the remuneration and other
emoluments of its officers and employees in accordance with
existing laws on compensation and position classification;

7}. 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
Iligan Special Economic Zone, and

8}. To perform such other duties as may be assigned by the Board
or which are necessary or incidental to his office.

SEC. 12. Legal Counsel. - The ISEZA shall have its own internal


legal counsel under the supervision of the Office of the
Government Corporate Counsel. When the exigencies of its
businesses and operations demand it, it may engage the services
of an outside counsel either on a case to case or on fixed
retainer basis.

SEC. 13. Investor's Visa. - Any foreign national who invests an
amount of Two Hundred Thousand US Dollars (US$2¢0,00@) either in
cash and/or equipment, in a registered enterprise shall be
entitled to an investor's visa: Provided, That the foreign
national has the following qualifications:

1}. Must be at least eighteen (18) years of age;

2}. Must not have been convicted by final judgment of a crime
involving moral turpitude;

3}. Must not be disqualified by the applicable laws and rules &
regulations;

4}. Must possess financial capability and capacity through
verifiable and credible evidence.

A foreign national may reside in the Philippines while the
investment herein required subsists.

Should said investments be withdrawn from the Philippines, the
investor's visa issued to said foreign national shall be revoked
automatically without the need of any pronouncements by any
government agencies.

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 Bl and DOLE
shall implement measures to expedite the processing of such visas
and permits for workers of Iligan Special Economic Zone.

SEC. 14. Fiscal Incentives. - Registered enterprises operating
within the Iligan Special Economic Zone may be entitled to the
existing fiscal incentives as provided under existing laws and
regulations and/or those that may be further granted as the need
and necessity arises by the appropriate government department,
agency, or office: Provided, That in the administration,


implementation, and monitoring of incentives, the ISEZA may
impose its own conditions in accordance with existing and
applicable laws and by this Act.

SEC. 15. Imposition of a Tax Rate of Five Percent (5%) on Gross
Income Earned. - No taxes, local and national, shall be imposed
on business establishments operating within the Iligan Special
Economic Zone, including income tax, withholding tax, donor's
tax, percentage tax, and documentary stamp tax. In lieu thereof,
and subject to Section 17 of this Act, said business
establishments shall pay a five percent (5%) final tax on gross
income earned: Provided, That the proceeds from such final tax
shall be shared by instrumentalities of the government in
accordance with the following schedule.

1}. Three per centum (3%) to the National Government;

2}. Two per centum (2%) shall be directly remitted by the
business establishments to the treasurer's office of the
municipality or city where the enterprise is located.

Subject to the provisions of this Act, and of RA no. 10708, ISEZA
shall have the authority to grant income tax holiday (ITH).

SEC. 16. Administration, implementation and Monitoring of
incentives. - For transparency in the management and accounting
of tax incentives in the Iligan Special Economic Zone, the ISEZA
shall comply with the provisions of Republic Act No. 10708,
otherwise known as "The Tax Incentives Management and
Transparency Act (TIMTA)" and its implementing rules and
regulations for the proper administration, management,
enforcement, implementation and monitoring of tax incentives
provided under this law.

The BOC shall set up, and establish a customs-controlled area
outside the gate of the Iligan Special Economic Zone to
facilitate payment of taxes on goods entering the Philippines
customs territory: Provided, That notwithstanding the limitations
in this Act, the ISEZA and BOC may coordinate and jointly
implement measures on border protection


SEC. 17. Duration of incentives. - Fiscal incentives under this
Act shall be terminated after a cumulative period of twenty (20)
years from date of registration or start of commercial operation,
whichever is applicable, except that it could be extended with
regard to industries deemed indispensable to national development
and interest. The industries exempted from this provision shall
be determined by ISEZA, in consultation with other government
agencies.

SEC. 18. Sequential Availment of Incentives. - Registered
enterprises may enjoy the ITH granted by ISEZA prior to the
availment of the 5% final tax on gross income earned incentive:
Provided, That in the event a registered enterprise elects to
avail of the final tax incentive, such registered enterprise
shall be barred from availing the ITH incentive.

SEC. 19. Extension of Period of Availment. - The ISEZA may
extend the period of validity of the incentives extended to a
registered enterprise in the event that it suffers, due to force
majeure, a cessation or suspension of operations that impairs it
viability or profitability.

SEC. 20. Banking Rules and Regulations. - Banks and Financial
Institutions to be established in the Iligan Special Economic
Zone shall be under the supervision of the BSP and subject to
existing banking laws, rules and regulations.

SEC. 21. Remittances. - In the case of foreign investments, a
duly registered entity or enterprise within the Iligan Special
Economic Zone may 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 Republic Act No. 7653, otherwise known as the
"New Central Bank Act".

SEC. 22. Supervision and Control. - For purposes of policy
direction and coordination, the ISEZA shall be under the direct
control and supervision of the Office of the President.


SEC. 23. Development Goals of the ILigan Special Economic Zone.
- The ISEZA shall determine the development goals for the Iligan
Special Economic Zone within the framework of national
development plans, policies, and goals. The Chairperson-
Administrator shall, upon approval by the Board, submit the
plans, programs, and projects of the Iligan Special Economic
Zone to the Regional Development Council for inclusion and
inputs to the overall Regional Development Plan.

Except for security matter/s affecting the state, in case of
conflict between ISEZA, Iligan-LGUs and/or the National
Government on matters affecting the Iligan Special Economic Zone,
the decision of the ISEZA shall prevail.

SEC 24. Audit. - The Commission on Audit shall appoint a full-
time auditor in the ISEZA or may assign such number of personnel
as may be necessary in the performance of their functions.

SEC 25. Applicability Clause. - Insofar as they are consistent
with the provisions of this Act, Sections 3@ to 41 of Republic
Act No. 7916, otherwise known as “The Special Economic Zone Act
of 1995", as amended shall likewise apply to the Iligan Special
Economic Zone.

SEC 26. Implementing Rules and Regulations. - The NEDA, in
coordination with the DTI and DOF, shall formulate the
implementing rules and regulations of this Act within ninety (90)
days after its approval.

SEC. 27. Separability Clause -- If any provision of this act is
declared invalid or unconstitutional, other provisions not
affected thereby shall continue to be in full force and effect.

SEC. 30. Repealing clause -- All laws, rule, regulation,
proclamations, executive orders, local ordinance/s contrary to or
inconsistent with this Act are hereby modified, repealed or
amended accordingly.


SEC. 31. Effectivity Clause -- This Act shall take effect fifteen
(15) days after its publication in the Official Gazette or

newspaper of general circulation.

Approved,