ChanRobles Virtual law Library
PHILIPPINE LAWS, STATUTES & CODES
A collection of Philippine laws, statutes and codes not included or cited in the main indices of the Chan Robles Virtual Law Library.
Republic Acts :
REPUBLIC ACTS
PLEASE CLICK HERE FOR THE LATEST ➔ PHILIPPINE LAWS, STATUTES & CODES
REPUBLIC ACT NO. 7916 - AN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE CREATION,
OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES
IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE PHILIPPINE ECONOMIC
ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES |
CHAPTER I SECTION 1. Title. — This Act shall be known and cited as "The Special Economic Zone Act of 1995." Sec. 2. Declaration of Policy. — It is the
declared policy of the government to translate into practical realities
the following State policies and mandates in the 1987 Constitution,
namely: Sec. 3. Purposes, Intents and Objectives. — It is
the purpose, intent and objective of this Act: Sec. 4. Definition of Terms. — For purposes of
this Act, the following definitions shall apply to the following terms: Sec. 5. Establishment of ECOZONES. — To ensure the
viability and geographic dispersal of ECOZONES through a system of
prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Sec. 6: Sec. 6. Criteria for the Establishment of Other
ECOZONES. — In addition to the ECOZONES identified in Sec. 5 of this
Act, other areas may be established as ECOZONES in a proclamation to be
issued by the President of the Philippines subject to the evaluation
and recommendation of the PEZA, based on a detailed feasibility and
engineering study which must conform to the following criteria: Sec. 7. ECOZONE to be a Decentralized
Agro-Industrial, Industrial, Commercial/Trading, Tourist, Investment
and Financial Community. — Within the framework of the Constitution,
the interest of national sovereignty and territorial integrity of the
Republic, the ECOZONE shall be developed, as much as possible, into a
decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and
investment center with minimum government intervention. Each
ECOZONE shall be provided with transportation, telecommunications, and
other facilities needed to generate linkage with industries and
employment opportunities for its own inhabitants and those of nearby
towns and cities. Sec. 8. ECOZONE to be Operated and Managed as
Separate Customs Territory. — The ECOZONES shall be managed and
operated by the PEZA as separate customs territory. Sec. 9. Defense and Security. — The defense of the
ECOZONE and the security of its perimeter fence shall be the
responsibility of the national government in coordination with the
PEZA. Military forces sent by the national government for the
purpose of defense shall not interfere in the internal affairs of any
of the ECOZONE and expenditure for these military forces shall be borne
by the national government. The PEZA may provide and establish the
ECOZONES' internal security and firefighting forces. CHAPTER II SECTION 11. The Philippine Economic Zone Authority (PEZA) Board. — There is hereby created a body corporate to be known as the Philippine Economic Zone Authority (PEZA) attached to the Department of Trade and Industry. The Board shall have a director general with the rank of a department undersecretary who shall be appointed by the President. The director general shall be at least forty (40) years of age, of proven probity and integrity, and with a degree in economics, business, public administration, law, management or its equivalent. The director general shall be assisted by three (3) deputy directors general each for policy and planning, administration and operations, who shall be appointed by the PEZA Board, upon the recommendation of the director general. The deputy directors general shall be at least thirty-five (35) years old, with proven probity and integrity and with a degree in economics, business, public administration, law, management or its equivalent. They must have career executive service eligibility. The Board shall be composed of the director general as ex officio chairman with eight (8) members as follows: the Secretaries or their representatives of the Department of Trade and Industry, the Department of Finance, the Department of Labor and Employment, the Department of the Interior and Local Government, the National Economic and Development Authority, and the Bangko Sentral ng Pilipinas, one (1) representative from the labor sector, and one (1) representative from the investors/business sector in the ECOZONE. The existing Export Processing Zone Authority (EPZA) created under Presidential Decree No. 66 shall evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for this purpose. Members of the Board shall receive a per diem of not 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 per diem collected per month does not exceed the equivalent of four (4) meetings. SECTION 12. Functions and Powers of PEZA Board. — The Philippine Economic Zone Authority (PEZA) Board shall have the following functions and powers: (a) Set the general policies on the establishment and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like; (b) Review proposals for the establishment of ECOZONES based on the set criteria under Sec. 6 and endorse to the President the establishment of the ECOZONES, industrial estates, export processing zones, free trade zones and the like. Thereafter, it shall facilitate and assist in the organization of said entities; (c) Regulate and undertake the establishment, operation and maintenance of utilities, other services and infrastructure in the ECOZONE, such as heat, light and power, water supply, telecommunications, transport, toll roads and bridges, port services, etc., and to fix just, reasonable and competitive rates, fares, charges and fees therefore; (d) Approve the annual budget of the PEZA and the ECOZONE development plans; (e) Issue rules and regulations to implement the provisions of this Act insofar as its powers and functions are concerned; (f) Exercise its powers and functions as provided for in this Act; and (g) Render annual reports to the President and the Congress. SECTION 13. General Powers and Functions of the Authority. — The PEZA shall have the following powers and functions: (a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this Act; (b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner; (c) To coordinate with local government units and exercise general supervision over the development, plans, activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like; (d) In coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as light and power systems, water supply and distribution systems, telecommunications and transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities for the operation and development of the ECOZONE; (e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may deem necessary; (f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act; (g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above; (h) To coordinate with the National Economic and Development Authority (NEDA), the Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), and the local government units and appropriate government agencies for policy and program formulation and implementation; and (i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure required or to be made available for said entities. SECTION 14. Powers and Functions of the Director General. — The director general shall be the overall coordinator of the policies, plans and programs of the ECOZONES. As such, he shall provide overall supervision over and general direction to the development and operations of these ECOZONES. He shall determine the structure and the staffing pattern and personnel complement of the PEZA and establish regional offices, when necessary, subject to the approval of the PEZA Board. In addition, he shall have the following specific powers and responsibilities: (a) To safeguard all the lands, buildings, records, monies, credits and other properties and rights of the ECOZONE; (b) To ensure that all revenues of the ECOZONE are collected and applied in accordance with its budget; (c) To ensure that the investors/firms and employees of the ECOZONES are properly discharging their respective duties; (d) To give such information and recommend such measures to the Board, as he shall deem advantageous to the ECOZONE; (e) To submit to the Board, the ongoing and proposed projects, work and financial program, annual budget of receipts, and expenditures of the ECOZONE; (f) To represent the ECOZONE in all its business matters and sign on its behalf after approval of the Board, all its bonds, borrowings, contracts, agreements and obligations made in accordance with this Act; (g) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and claims of the residents and enterprises in the ECOZONE concerning administrative matters; (h) To recommend to the Board the grant, approval, refusal, amendment or termination of the ECOZONE franchises, licenses, permits, contracts, and agreements in accordance with the policies set by the Board; (i) To require owners of houses, buildings or other structures constructed without the necessary permit whether constructed on public or private lands, to remove or demolish such houses, buildings, structures within sixty (60) days after notice and upon failure of such owner to remove or demolish such house, building or structure within said period, the director general or his authorized representative may summarily cause its removal or demolition at the expense of the owner, any existing law, decree, executive order and other issuances or part thereof to the contrary notwithstanding; (j) To take such emergency measures as may be necessary to avoid fires, floods and mitigate the effects of storms and other natural or public calamities; (k) To prepare and make out plans for the physical and economic development of the ECOZONE, including zoning and land subdivision, and issue such rules and regulations which shall be submitted to the Board for its approval; and (l) To perform such other duties and exercise such powers as may be prescribed by the Board, and to implement the policies, rules and regulations set by the PEZA. SECTION 15. Administration of Each ECOZONE. — Each ECOZONE shall be organized, administered, managed and operated by the ECOZONE executive committee composed of the following: (a) The administrator who shall be appointed by the PEZA Board upon recommendation of the director general; and (b) One (1) deputy administrator to be appointed by the Board upon recommendation of the director general. An ECOZONE advisory body shall be created with the following members: (1) The president of the association of investors in the ECOZONE; (2) The governor of the province where the ECOZONE is located; (3) The mayor/s of the municipality/ies or city/ies where the ECOZONE is located; (4) The president of an accredited labor union in the ECOZONE; (5) The representative of the business sector in the periphery of the ECOZONE; and (6) The representative of the PEZA. The ECOZONE advisory shall have the following functions: (i) Advise the ECOZONE management on matters pertaining to policy initiatives; and (ii) Assist the ECOZONE management in settling problems arising between labor and any enterprise in the ECOZONE. SECTION 16. Salary and Other Emoluments. — The salary of the director general shall be in accordance with the revised compensation and position classification system. SECTION 17. Investigation and Inquiries. — Upon a written formal complaint made under oath, which on its face provides reasonable basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator of the ECOZONE concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE and to conduct investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production of books, papers, and other evidences: provided, that to arrive at the truth, the investigator(s) may grant immunity from prosecution to any person whose testimony or whose possessions of documents or other evidence is necessary or convenient to determine the truth in any investigation conducted by him or under the authority of the PEZA or the administrator of the ECOZONE concerned. SECTION 18. Prohibition Against Holding Any Other Office. — The director general, deputy directors general, administrators, officials and staff or assistants of the PEZA shall not hold any other office or employment within or outside the PEZA during their tenure. They shall not, during their tenure, directly or indirectly, practice any profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the PEZA or national government, or any subdivision, agency, or instrumentality thereof, including any government-owned or -controlled corporation, or its subsidiary. SECTION 19. Disbursement of Funds. — No money shall be paid out of the funds of any ECOZONE except in pursuance of the budget as formulated and approved by the PEZA. Sec. 20. Full Disclosure of Financial and Business
Interests. — Every member of the Board of the PEZA, the director
general, the deputy directors general, and their staff shall, upon
assumption of office, make full disclosure of their financial and
business interests. CHAPTER III Sec. 21. Development Strategy of the ECOZONE. — The strategy and priority of development of each ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and Industry and the National Economic and Development Authority: provided, that such development strategy is consistent with the priorities of the national government as outlined in the medium-term Philippine development plan. It shall be the policy of the government and the PEZA to encourage and provide incentives and facilitate private sector participation in the construction and operation of the public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law). Sec. 22. Survey of Resources. — The PEZA shall, in coordination with appropriate authorities and neighboring cities and municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas under its jurisdiction. Sec. 23. Fiscal Incentives. — Business
establishments operating within the ECOZONES shall be entitled to the
fiscal incentives as provided for under Presidential Decree No. 66, the
law creating the Export Processing Zone Authority, or those provided
under Book VI of Executive Order No. 226, otherwise known as the
Omnibus Investment Code of 1987. Sec. 24. Exemption from Taxes Under the National
Internal Revenue Code. — Any provision of existing laws, rules and
regulations to the contrary notwithstanding, no taxes, local and
national, shall be imposed on business establishments operating within
the ECOZONE. In lieu of paying taxes, five percent (5%) of the
gross income earned by all businesses and enterprises within the
ECOZONE shall be remitted to the national government. This five
percent (5%) shall be shared and distributed as follows: Sec. 25. Applicable National Taxes. — All income derived by persons and all service establishments in the ECOZONE shall be subject to taxes under the National Internal Revenue Code. Sec. 26. Domestic Sales. — Goods manufactured by
an ECOZONE enterprise shall be made available for immediate retail
sales in the domestic market, subject to payment of corresponding taxes
on the raw materials and other regulations that may be adopted by the
Board of the PEZA. Sec. 27. Applicability of Banking Laws and Regulations. — Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply to banks and financial institutions to be established in the ECOZONE and to other ECOZONE-registered enterprises. Among other pertinent regulations, these include those governing 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. Sec. 28. After Tax Profits. — Without prior Bangko Sentral approval, after tax profits and other earnings of foreign investments in enterprises in the ECOZONE may be remitted outward in the equivalent foreign exchange through any of the banks licensed by the Bangko Sentral ng Pilipinas in the ECOZONE: provided, however, that such foreign investments in said enterprises have been previously registered with the Bangko Sentral. Sec. 29. Eminent Domain. — The areas comprising an
ECOZONE may be expanded or reduced when necessary. For this
purpose, the government shall have the power to acquire, either by
purchase, negotiation or condemnation proceedings, any private lands
within or adjacent to the ECOZONE for: Sec. 30. Leases of Lands and Buildings. — Lands and buildings in each ECOZONE may be leased to foreign investors for a period not exceeding fifty (50) years, renewable once for a period of not more than twenty-five (25) years, as provided for under Republic Act No. 7652, otherwise known as the Investors' Lease Act. The leasehold right acquired under long-term contracts may be sold, transferred or assigned, subject to the conditions set forth under Republic Act No. 7652. Sec. 31. Land Conversion. — Agricultural lands may be converted for residential, commercial, industrial and other non-agricultural purposes, subject to the conditions set forth under Republic Act No. 6657 and other existing laws. Sec. 32. Shipping and Shipping Register. — Private
shipping and related business including private container terminals may
operate freely in the ECOZONE, subject only to such minimum reasonable
regulations of local application which the PEZA may prescribe. Sec. 33. Protection of Environment. — The PEZA, in coordination with the appropriate agencies, shall take concrete and appropriate steps and enact the proper measures for the protection of the local environment. Sec. 34. Termination of Business. — Investors in the ECOZONE who desire to terminate business or operations shall comply with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of debts. The assets of the closed enterprises can be transferred and the funds can be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA. Sec. 35. Registration of Business Enterprises. — Business enterprises within a designated ECOZONE shall register with the PEZA to avail of all incentives and benefits provided for in this Act. Sec. 36. One Stop Shop Center. — The PEZA shall
establish a one stop shop center for the purpose of facilitating the
registration of new enterprises in the ECOZONE. Thus, all
appropriate government agencies that are involved in registering,
licensing or issuing permits to investors shall assign their
representatives to the ECOZONE to attend to investors' requirements. CHAPTER IV Sec. 37. Labor and Management Relations. — Except as otherwise provided in this Act, labor and management relations in the ECOZONE shall be governed by the existing Labor Code of the Philippines. Employees and personnel in the ECOZONE enterprises shall receive salaries and benefits and shall enjoy working conditions not less than those provided under the Philippine Labor Code and other relevant laws, issuances, rules and regulations of the Philippine government and the Department of Labor and Employment. Sec. 38. Promotion of Industrial Peace. — In the pursuit of industrial harmony in the ECOZONE, a tripartite body composed of one (1) representative each from the Department of Labor and Employment, labor sector and business and industry sectors shall be created in order to formulate a mechanism under a social pact for the enhancement and preservation of industrial peace in the ECOZONE within thirty (30) days after the effectivity of this Act. Sec. 39. Master Employment Contracts. — The PEZA, in coordination with the Department of Labor and Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of which provide salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended, and other relevant issuances of the national government. Sec. 40. Percentage of Foreign Nationals. — Employment of foreign nationals hired by ECOZONE enterprises in a supervisory, technical or advisory capacity shall not exceed five percent (5%) of its workforce without the express authorization of the Secretary of Labor and Employment. Sec. 41. Migrant Worker. — The PEZA, in coordination with the Department of Labor and Employment, shall promulgate appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local governments of nearby areas meet the needs of the migrant workers. Sec. 42. Incentive Scheme. — An additional
deduction equivalent to one-half (1/2) of the value of training
expenses incurred in developing skilled or unskilled labor or for
managerial or other management development programs incurred by
enterprises in the ECOZONE can be deducted from the national
government's share of three percent (3%) as provided in Sec. 24. CHAPTER V Sec. 43. Relationship with the Regional Development Council. — The PEZA shall determine the development goals for the ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon approval by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council for inclusion in and as inputs to the overall regional development plan. Sec. 44. Relationship with the Local Government Units. — Except as herein provided, the local government units comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed by their respective charters and the municipalities shall operate and function in accordance with Republic Act No. 7160, otherwise known as the Local Government Code of 1991. Sec. 45. Relationship of PEZA to Privately-Owned Industrial Estates. — Privately-owned industrial estates shall retain their autonomy and independence and shall be monitored by the PEZA for the implementation of incentives. Sec. 46. Transfer of Resources. — The relevant
functions of the Board of Investments over industrial estates and
agri-export processing estates shall be transferred to the PEZA.
The resources of government-owned industrial estates and similar
bodies, except the Bases Conversion Development Authority and those
areas identified under Republic Act No. 7227, are hereby transferred to
the PEZA as the holding agency. They are hereby detached from
their mother agencies and attached to the PEZA for policy, program and
operational supervision. CHAPTER VI Sec. 47. Appropriation. — Upon the effectivity of this Act, all funds of the former Export Processing Zone Authority (EPZA) shall be transferred to the newly-created Philippine Economic Zone Authority. Thereafter, any sum as may be necessary to augment its capital outlay shall be included in the General Appropriations Act to be treated as an equity of the national government. Additional funding shall come from the following: (a) The annual subsidies, appropriations and/or other assets of the exports processing zone, and the industrial estates and other economic areas that have been absorbed/transferred to the PEZA as mandated in this Act; (b) The proceeds from the rent of lands, buildings, and other properties of the ECOZONES concerned; (c) The proceeds from fees, charges and other revenue-generating instruments which the PEZA is authorized to impose and collect under this Act; (d) The proceeds from bonds which the PEZA is authorized to float both domestic and abroad; and (e) The advance rentals, license fees, and other charges which the PEZA is authorized to impose under this Act and which an investor is willing to advance payment for. Sec. 48. Applicability of National Laws. — National laws shall prevail vis-a-vis ECOZONE rules, regulations and standards, unless there is a clear intent in this Act or other Acts of Congress to vest the ECOZONE specific powers and privileges not otherwise allowed under existing laws. Sec. 49. Authority of the President to Advance Initial Funding. — Subject to existing laws, the President of the Philippines is hereby authorized to advance out of the savings of the Office of the President such funds as may be necessary to effect the organization of an ECOZONE which shall be reimbursed by the PEZA at reasonable terms and conditions. Sec. 50. Non-applicability on Areas Covered by
Republic Act No. 7227. — This Act shall not be applicable to economic
zones and areas already created or to be created under Republic Act No.
7227 or other special laws, governed by authorities constituted
pursuant thereto. Sec. 51. Ipso-Facto Clause. — All privileges, benefits, advantages or exemptions granted to special economic zones under Republic Act No. 7227, shall ipso facto be accorded to special economic zones already created or to be created under this Act. The free port status shall not be vested upon the new special economic zones. Sec. 52. Separability Clause. — The provisions of this Act are hereby declared separable, and in the event one or more of such provisions or part thereof are declared unconstitutional, such declaration of unconstitutionality shall not affect the validity of the other provisions thereof. Sec. 53. Interpretation/Construction. — The powers, authorities and functions that are vested in the Philippine Economic Zone Authority (PEZA) and the ECOZONES concerned are intended to establish decentralization of governmental functions and authority as well as an efficient and effective working relationship between the ECOZONE, the central government and the local government units. Sec. 54. Repealing Clause. — All laws, acts, presidential decrees, executive orders, proclamations and/or administrative regulations which are inconsistent with the provisions of this Act, are hereby amended, modified, superseded or repealed accordingly. Sec. 55. Implementing Rules and Regulations. — The Department of Trade and Industry, the National Economic and Development Authority, the Department of Finance, the Bureau of Customs, the Department of Agrarian Reform, the Department of the Interior and Local Government, the Philippine Economic Zone Authority, and the representatives from the technical staff of the Committee on Economic Affairs of both Houses of Congress shall formulate the implementing rules and regulations of this Act within ninety (90) days after its approval. Such rules and regulations shall take effect fifteen (15) days after their publication in a newspaper of general circulation in the Philippines. Sec. 56. Transitory Provision. — Prior to the effectivity of the implementing rules and regulations of this Act, the provisions of Presidential Decree No. 66, amended, and its implementing rules and regulations shall remain in force. Sec. 57. Effectivity. — This Act shall take effect
upon its approval. Approved: February 24, 1995 |
chanroblesvirtuallawlibrary