CREATING THE EXPORT PROCESSING ZONE AUTHORITY AND REVISING REPUBLIC ACT NO. 5490

• Number: Presidential Decree No. 66
• Sections: 34

Preamble

WHEREAS, pending before Congress prior to the

promulgation of Proclamation No. 1081, dated September 21, 1972, was

House No. 4317, entitled "An Act to Revise the Charter of the Foreign

Trade Zone Authority Created Under Republic Act Numbered Five Thousand

Four Hundred and Ninety and For Other Purposes", which I have certified

as one of the urgent measures necessitating immediate enactment;

WHEREAS, it is imperative that this measure be

immediately made part of the law of the land in order to assure the

accelerated development and efficient operation of the export processing

zone in Mariveles, Bataan, and such other zones as may be established

in the country, and thereby hastening the realization of the objectives

of the Government to create a new social and economic order for the

national benefit;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of

the Philippines, by virtue of the powers in me vested by the

Constitution as Commander-in-Chief of all the Armed Forces of the

Philippines, and pursuant to Proclamation No. 1081, dated September 21,

1972, and General Order No. 1, dated September 22, 1972, as amended, do

hereby order and decree the following to be the .Revised Charter of the

Foreign Trade Zone Authority Created Under Republic Act No. 5490 and as

part of the law of the land:

Section 1 Declaration of Policy.

SECTION 1. Declaration of Policy. — It is

hereby declared to be the policy of the Government to encourage and

promote foreign commerce as a means of making the Philippines a center

of international trade, of strengthening our export trade and foreign

exchange position, of hastening industrialization, of reducing domestic

unemployment, and of accelerating the development of the country, by

establishing export processing zones in strategic locations in the

Philippines.

Section 2 Creation of an Export Processing Zone Authority.

SEC. 2. Creation of an Export Processing Zone

Authority. — To carry out the above policy, there is hereby created

a body corporate to be known as the Export Processing Zone Authority,

hereinafter referred to as Authority, which shall be under the direct

.supervision of the Office of the President. The functions of the

Authority are hereby declared governmental.

Section 3 Principal Office.

SEC. 3. Principal Office. — The Authority

shall maintain its principal office in the Greater Manila Area but it

may establish branches and agencies within the Philippines as may be

necessary for the proper conduct of its business.

Section 4 Purposes and Specific Powers.

SEC. 4. Purposes and Specific Powers. — The

purposes and specific powers of the Authority are as follows:

To operate, administer and manage the export

processing zone established in the Port of Mariveles, Bataan, and such

other export processing zones as may be established under this Decree;

to construct, acquire, own, lease, operate and maintain infrastructure

facilities, factory building, warehouses, dams, reservoir, water

distribution, electric light and power system, telecommunications and

transportation, or such other facilities and services necessary or

useful in the conduct of commerce or in the attainment of the purposes

and objectives of this Decree;

To take water from any public stream, river, creek, lake,

spring or waterfall in the Philippines as may be necessary for the

attainment of the purposes of this Decree; to alter, straighten,

obstruct or increase the flow of water in streams or in water channels

intersecting or connecting therewith or contiguous to its works or any

part thereof; and to undertake land reclamation;

To acquire and hold agricultural lands in excess of the areas

permitted to private corporations or associations by the Constitution;

To determine and regulate the enterprises to be established

within an export processing zone in order not to adversely affect the

operations of existing domestic industries outside said Zone; to operate

such Zone as a public utility wherein all the rates and charges for all

services or privileges therein shall be fair and reasonable as

determined solely by the Authority, and the Authority shall afford all

who may apply for the use of the Zone and its facilities and

appurtenances uniform treatment under like conditions subject to such

treaties or commercial conventions as are now enforced or may hereafter

be made by the Philippines with any foreign government from time to

time;

To grant the use or to rent, lease or let, for a consideration

and under such terms, arrangements and conditions it may deem reasonable

and proper, any and all port facilities, including stevedoring and port

terminal services, or any concession properly incident thereto or in

connection with the receipt, delivery, shipment and transfer in transit,

weighing, marking, tagging, fumigating, refrigerating, icing, storing

and handling of goods, wares and merchandise: Provided,

however, That where the port terminal facilities arc owned and operated

by private persons, the fees and charges to be levied shall not exceed

that being collected by the Government for similar services;

Upon application, to grant such franchise to operate and

maintain exclusively within the Zone electric light, heat or power

system, transportation, communication, warehousing, ice plant or cold

storage; and, under uniform and reasonable rates and regulations made

thereunder, permit to persons, firms, corporations or associations the

use of the Zone and its facilities, or the privilege to erect such

buildings and other structures within the Zone as will meet their

particular requirements: Provided, That such franchise or

permission shall not constitute a vested right as against the

Government, nor interfere with or complicate the revocation of the

grant: Provided, further, That such franchise or permit shall

not be granted on terms that conflict with the public use of the Zone,

as set forth in this Decree;

To fix, assess and collect storage charges and fees, including

rentals for the lease, use or occupancy of lands, buildings, structure,

warehouses, facilities and other properties owned and administered by

the Authority; and to fix and collect the fees and charges for the

issuance of permits, licenses and the rendering of services not

enumerated herein, the provisions of law to the contrary

notwithstanding;

For the due and effective exercise o' the powers conferred by

law and to the extend requisite therefor, to exercise exclusive

jurisdiction and sole police authority over all areas owned or

administered by the Authority. For this purpose, the Authority shall

have supervision and control over the bringing in or taking out of the

Zone, including the movement therein, of all cargoes, wares, articles,

machineries, equipment, supplies or merchandise of every type and

description;

When essential to the proper administration of its corporate

affairs or when necessary for the proper transaction of its business or

for carrying out the purposes of this Decree, to contract indebtedness

and issue bonds, subject to the conditions set forth in Section 19

hereof;

To create and operate and/or contract to operate such agencies,

functional units, offices and departments of the Authority as it may

deem necessary or useful for the furtherance of any of the purposes of

this Decree;

To adopt, alter and use a corporate seal which shall be

judicially noticed; make contracts, lease, own or otherwise dispose of

personal and real property; sue and be sued; and otherwise do and

perform any and all things that may be necessary or proper to carry out

the purposes of the Authority.

Section 5 Capitalization.

SEC. 5. Capitalization. — The capital of

the Authority shall consist of (1) its existing assets and such other

properties as may be contributed to the Authority by the Government to

form part of capital, (2) all capitalized surplus, and (3) cash

contribution by the Government in the amount of two hundred million

pesos, which is hereby appropriated out of any fund, in the National

Treasury not otherwise appropriated, be they collection from any or all

taxes accruing to the general fund or proceeds from loans, the issue of

bonds, treasury bills or notes, or derived from any other sources of

income, by or of the National Government, which amount shall be

programmed and released by the Budget Commission in accordance with the

schedule of development and expenditure to be prepared and submitted by

the Authority: Provided, however, That any budgetary outlay

allocated and released in favor of the Export Processing Zone Authority

and/or Foreign Trade Zone Authority shall be correspondingly credited to

the authorized capitalization herein provided.

Section 6

SEC. 6. Board of Commissioners: — The

corporate powers of the Authority shall be vested in and exercised by

the Board of Commissioners, hereinafter referred to as the Board, to be

composed of seven members to wit: the Deputy Governor of the Central

Bank of the Philippines, the Vice-Chairman of the Board of Investments,

the Undersecretary of Finance and the Undersecretary of the Department

of Trade and Tourism, who shall be ex officio members, and the remaining

members shall be appointed by the President with the consent of the

Commission on Appointments. The President shall designate from among the

members of the Board its Chairman, who shall at the same time be the

Administrator of the Authority.

Section 7 Qualifications and Disqualifications of Commissioners.

SEC. 7. Qualifications and Disqualifications of

Commissioners. — No person shall be appointed as member of the

Board unless he is a citizen of the Philippines, of good moral character

and unquestionable integrity and responsibility and of recognized

competence in any of the fields of finance, economics, law, taxation,

commerce, industry, engineering, management or the like.

No member of the Board shall directly or indirectly engage in

partisan political activities or practice any profession or business

dealing with or related to the exercise of the Authority's functions and

powers; and be financially interested, directly or indirectly, in any

contract entered into by the Authority.

Section 8 Tenure of Office.

SEC. 8. Tenure of Office. — Except for the

ex officio members, the tenure of office of the other members shall be

six years: Provided, That the term of office of the first

appointees shall be fixed as follows: the Chairman shall be for six

years; one member shall be for four years, and the last member shall be

for two years: Provided, finally, That no vacancy shall be

filled except for the unexpired portion of any term.

The Chairman and the members of the Board may be suspended or removed

for cause by the President of the Philippines.

Section 9 Meetings and Quorum.

SEC. 9. Meetings and Quorum. — The Board

shall meet regularly once a month and as often as the exigencies of the

service demand. The presence of at least four members shall constitute a

quorum and the vote of four members shall be necessary for the adoption

of any rule, resolution or decision or any other act of the Board.

Section 10 Compensation of Chairman and Members of the Board.

SEC. 10. Compensation of Chairman and Members of

the Board. — The Chairman, who is also the Administrator of the

Authority, shall receive an annual salary of fifty thousand pesos and a

monthly commutable allowance of one thousand pesos. The members of the

Board shall receive a per diem of not to exceed two hundred

pesos for each board meeting actually attended by them: Provided,

That such per diems shall not exceed one thousand pesos during

any month for each member: Provided, further, That no other

allowances or any form of compensation shall be paid them, except actual

expenses in traveling to and from their residences to attend board

meetings.

Section 11 Powers and Duties of the Board.

SEC. 11. Powers and Duties of the Board. —

The Board shall have the following powers and duties:

To promulgate policies and to prescribe such

rules and regulations as may be necessary to implement the intent and

provisions of this Decree, which rules and regulations shall take effect

thirty (30) days following their publication in two (2) newspapers of

general circulation in the Philippines;

To recommend the establishment of other export processing zones

as it may deem advisable, and to recommend to the President the

issuance of a proclamation to fix and delimit the site of the zone or

zones, which shall at all times remain to be owned by the Authority. The

site of the zone or zones, as proclaimed by the President, shall be

surveyed by the Bureau of Lands and conveyed thereafter in absolute

ownership to the Authority by the President of the Philippines for the

nominal sum of one peso for each parcel of land. Upon receipt of said

deed of conveyance, the proper Register of Deeds shall register the same

and issue the corresponding original certificate of title to the

Authority;

To approve the annual budget and such supplemental budgets

which may be submitted to it by the Chairman;

Upon the recommendation of the Administrator, to organize,

reorganize and determine the Authority's staffing pattern; to fix their

salaries and to define their powers and duties;

Notwithstanding the provisions of law, rules and regulations to

the contrary, to enter by itself into any contract or agreement as may

be necessary for the proper, efficient and stable administration of the

Authority and for the attainment of the purposes and objectives of this

Decree;

To recommend to the President the application of compulsory

arbitration in the settlement of any labor dispute affecting any

industry or business located inside the Zone. If in the opinion of the

President the labor dispute would seriously impair Zone operation, he

shall forthwith certify said labor dispute to the National Labor

Relations Commission or the Court of Industrial Relations for immediate

compulsory arbitration;

To recommend to the Commissioner of Immigration the entry into

the Philippines of foreign nationals for employment as authorized under

Section 12 Administrator and Deputy Administrators; Powers and Duties.

SEC. 12. Administrator and Deputy

Administrators; Powers and Duties. — The Chairman, who is also the

Administrator of the Authority, shall be assisted by two Deputy

Administrators to be chosen and may be removed by the Board upon the

recommendation of the Chairman. The Administrator and the Deputy

Administrators shall be required to work full time in the Authority.

Such deputies shall perform the duties, functions and responsibilities

as may be assigned to them by the Administrator. The annual salary of

each deputy shall be thirty thousand pesos with a monthly commutable

allowance of five hundred pesos.

The Chairman-Administrator shall have the following powers and

duties:

To direct and manage the affairs of the

Authority in accordance with the policies of the Board;

To assist registered Zone enterprises and prospective investors

to have their papers processed with dispatch by all ^government

offices, agencies, instrumentalities and financial and banking

institutions;

To prepare the agenda for the meeting of the Board and submit

for its consideration and approval the policies and measures which he

deems necessary and proper to carry out the provisions of this Decree;

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;

To submit an annual budget and necessary supplemental budgets

to the Board for its approval;

To establish the internal organization of the Authority under

such conditions that the Board may prescribe: Provided, That

any major reorganization shall be subject to the approval of the Board;

and

To perform such other duties as may be assigned to him by the

Board.

Section 13

SEC. 13. Non-applicability of the Civil Service

Law, and the Regulation of the Wage and Position Classification Office. —

All officials and employees of the Authority shall be selected and

appointed on the basis of merit and fitness based on a comprehensive and

progressive merit system to be established by the Authority immediately

upon its organization and consistent with Civil Service rules and

regulations. The recruitment, transfer, promotion, and dismissal of all

personnel of the Authority, including temporary workers, shall be

governed by such merit system.

Likewise, all personnel of the Authority shall be exempt from the

regulations of the Wage and Position Classification Office.

Section 14 Appointment by Board.

SEC. 14. Appointment by Board. — Department

heads and similar rank shall be appointed by the Board, upon the

recommendation of the Administrator.

Section 15 Appointment by Administrator.

SEC. 15. Appointment by Administrator. —

Employees and officials below the rank of department heads shall be

appointed to positions in the approved budget by the Administrator upon

written recommendation of the department head concerned using as guide

the standards set forth in the Authority's merit system: Provided,

That the Administrator shall submit a quarterly report to the Board

regarding personnel recruitment, placement and training.

Section 16

Section 16 of this Decree;

To render annual reports to the President and such special

reports as may be requested; and

Generally, to exercise all the powers necessary or incidental

to attain the purposes of this Decree.

Section 17 Tax Treatment of Merchandise in the Zone.

SEC. 17. Tax Treatment of Merchandise in the

Zone. —

Except as otherwise provided in this Decree, foreign and

domestic merchandise, raw materials, supplies, articles, equipment,

machineries, spare parts and wares of every description, except those

prohibited by law, brought into the Zone to be sold, stored, broken up,

repacked, assembled, installed, sorted, cleaned, graded, or otherwise

processed, manipulated, manufactured, mixed with foreign or domestic

merchandise or used whether directly or indirectly in such activity,

shall not be subject to customs and internal revenue laws and

regulations nor to local tax ordinances, the provisions of law to the

contrary notwithstanding.

Merchandise purchased by a registered zone enterprise from

the customs territory, if paid for in United States dollar or in any

convertible foreign currency and subsequently brought into the zone,

shall be considered as exported, and the exporter thereof shall be

entitled to the benefits allowed by law for such transaction.

Domestic merchandise sent from the zone to the customs

territory shall, whether or not combined with or made part of other

articles likewise the growth, product or manufacture of the Philippines

while in the zone, be subject to internal revenue laws of the

Philippines as domestic goods sold, transferred or disposed of for local

consumption.

Merchandise sent from the zone to the customs territory shall,

whether or not combined with or made part of other articles while in

the zone, be subject to laws and regulations governing imported

merchandise. The duties and taxes shall be assessed on the value of

imported materials (except when the final product is exempt) and the

internal revenue taxes on the value added.

Domestic merchandise on which all internal revenue taxes have

been paid, if subject thereto, and foreign merchandise previously

imported on which duty or tax has been paid, or which have been admitted

free of duty and tax, may be taken into the zone from the customs

territory of the Philippines and be brought back thereto free of quotas,

duty or tax.

Subject to such regulations respecting identity and the

safeguarding of the revenue as the Authority may deem necessary when the

identity of an article entered into the zone has been lost, such

article when removed from the zone and taken to the customs territory

shall be treated as foreign merchandise entering the country for the

first time, under the provisions of the Tariff and Customs Code.

Articles produced or manufactured in the zone and exported

therefrom shall, on subsequent importation into the customs territory,

be subject to the import laws applicable to like articles manufactured

in a foreign country.

Unless the contrary is shown, merchandise taken out of the

zone shall be considered for tax purposes to have been sent to customs

territory.

Section 18 Additional Incentives.

SEC. 18. Additional Incentives. — A zone

registered enterprise shall also enjoy the following incentive benefits:

Net-Operating Loss Carry Over. — A

net-operating loss incurred in any of the first five years of operation

inside the zone may be carried over as a deduction from taxable income

derived in such zone during the five years immediately following the

year of such loss. The entire amount of the loss and any portion of such

loss which exceeds the taxable income of such first year shall be

deducted in like manner from the taxable income of the next remaining

four years. The net-operating loss shall be computed in accordance with

the provisions of the National Internal Revenue Code, any provision of

this Decree to the contrary notwithstanding, except that income not

taxable either in whole or in part under this Decree or other laws shall

be included in gross income

Accelerated Depreciation. — Fixed assets may be (1)

depreciated to the extent of not more than twice the normal rate of

depreciation or depreciated at the normal rate of depreciation if the

expected life is ten years or less; or (2) depreciated over any number

of years between five years and expected life if the latter is more than

ten years; and the depreciation thereon allowed as a deduction from

taxable income: Provided, That the taxpayer notifies the Bureau

of Internal Revenue at the beginning of the depreciation period which

depreciation rate allowed by this subsection will be used by it.

Exemption from Export Tax. — The provisions of law to

the contrary notwithstanding, foreign merchandise transhipped through

the zone or any article which has been processed, manufactured or

manipulated in said zone and exported therefrom, shall be exempt from

any export tax, imposts or fee, including the stabilization tax imposed

by Republic Act Numbered Sixty-one hundred twenty-five.

Foreign Exchange Assistance. — The Central Bank of the

Philippines or any or its authorized agent banks shall extend to zone

registered enterprises, priority in the allocation of foreign exchange

and in the availment of the assistance and resources of the Central Bank

in a manner that would encourage and accelerate investment in the zone.

Financial Assistance. — Notwithstanding any provisions

of law to the contrary, zone registered enterprises shall be entitled

to at least the same privileges accorded to enterprises approved by and

registered with the Board of Investments under Republic Act Numbered

Four thousand eight hundred sixty, as amended by Republic Act Numbered

Six thousand one hundred forty-two, or under any existing, law,

executive order, rule or regulation or which may hereafter be enacted or

promulgated, insofar as obtaining financial assistance by way of loans,

credits, guarantees or other forms of financial accommodations from

government financial institutions, whether directly or indirectly

through the medium of private banking or non-banking financial

institutions: Provided, That the proceeds derived from or

through such financial assistance shall be used in undertaking projects

approved by the Authority: Provided, further, That in order to

facilitate the payment of the foreign loans, credits and indebtedness

contracted by zone registered enterprises for such projects approved by

the Authority, the Central Bank shall, under such rules and regulations

as it may promulgate upon recommendation of the Authority, allow the

deduction of such portion of the foreign exchange earnings of said

enterprises sufficient to meet the foreign exchange requirements for

servicing foreign indebtedness incurred by them.

Exemption from Local Taxes and Licenses. —

Notwithstanding the provisions of law to the contrary, any business

enterprise engaged in the production, processing, packaging, or

manipulation of export products shall, to the extent of their

construction, operation or production inside the zone, be exempt From

the payment of any and all local government imposts, fees, licenses or

taxes, except real estate taxes imposed under Commonwealth Act Numbered

Four Hundred seventy and Republic Act Numbered Fifty-four hundred

forty-seven: Provided, That said business enterprise shall pay

in the municipality where the zone is located real estate taxes on all

its real properties located therein.

Section 19 Power to Issue Bonds or Incur Indebtedness.

SEC. 19. Power to Issue Bonds or Incur

Indebtedness. — Whenever the Board may deem it advisable and

necessary for the Authority to contract loans, credits and other

indebtedness, or lo issue bonds, notes, debentures, securities and other

instruments of indebtedness for the development and/or operation of the

Zone, it shall by resolution so manifest and declare stating the

purpose for which the indebtedness is to be applied and citing the

project study devised for the purpose. In order for such resolution to

be valid, it shall be passed by the affirmative vote of at least four

members of such Board and approved by the President of the Philippines

upon the recommendation of the Secretary of Finance, after consultation

with the National Economic Development Authority and the Monetary Board

of the Central Bank.

The total principal domestic indebtedness of the Authority payable in

Philippine currency shall not at any one time exceed three hundred

million pesos, while the total principal indebtedness of the Authority

payable in foreign currency shall not at any one time exceed one hundred

million United States dollars or the equivalent thereof in other

foreign currencies qualified to form part of the international reserves

of the Central Bank: Provided, That such foreign indebtedness

may be contracted from foreign governments or any public or private

international banking and financial institution or fund sources. The

bonds and other instruments of indebtedness which the Authority is

authorized to issue under this section and any income derived therefrom

shall, except those contracted with private international banking and

financial institution, be exempt from the payment of all taxes of

whatever kind and nature including withholding taxes imposed by the

Republic of the Philippines, its agencies, instrumentalities or

political subdivisions, which fact may be expressed on the ace thereof,

and shall be eligible as collateral in any transaction with the national

or any local government, its agencies and instrumentalities, including

government-owned or controlled corporations and government banking and

financial institutions, in which collateral is required. Any or all

loans or instruments of indebtedness which the Authority is authorized

to contract or issue under this section shall be unconditionally

guaranteed both as to principal and interest by the Government of the

Republic of the Philippines whenever the President of the Philippines,

by himself or through his duly authorized representative, may deem such

guarantee by the Government of the Republic of the Philippines to be

advisable and necessary, in which case, the President of the Philippines

or his duly authorized representative is hereby authorized to execute

and deliver said guarantee of the Government of the Republic of the

Philippines.

The Central Bank of the Philippines or any of its authorized agent

banks shall extend to the Authority priority in the allocation of

foreign exchange and in the availment of the assistance and resources of

the Central Bank in a manner that shall facilitate the contracting or

issuance by the Authority of the loans or instruments of indebtedness

which the Authority is authorized to contract or issue under this

section or the repayment thereof. In any case, where the Authority is

required to surrender or sell to the Central Bank foreign currencies

qualified to form part of its international reserves, the Authority is

hereby given the right to repurchase any or all of said foreign

currencies as is necessary to meet all items of debt service arising out

of any and all loans and instruments of indebtedness payable in foreign

currency contracted or issued by it pursuant to this section at the

same rate or rates at which said foreign currencies were respectively

sold to the latter, subject to the payment of foreign exchange premium

or fees as the Central Bank may deem reasonable.

In the negotiation, contracting and issuance of any loan, credit and

evidence of indebtedness under, this section, the President of the

Philippines may, if deemed by him upon recommendation of the Authority,

to be necessary or justified and when made a condition by the foreign

creditor to the issuance of such loans, credits, or instruments or

indebtedness, agree to waive the application of any law granting

preference or imposing restrictions on international competitive

bidding, such as, but not limited to, Act Numbered Forty-two hundred

thirty-nine, Commonwealth Act Numbered One hundred thirty-eight,

Commonwealth Act Numbered Five Hundred forty-one, Republic Act Numbered

Nine Hundred twelve, Republic Act Numbered Fifty-one hundred

eighty-three: Provided, however, That in every case where

competitive bidding is agreed upon in the purchase of machineries,

equipment, materials and supplies financed out of proceeds of such

loans, credits and instruments of indebtedness, preference may be

granted in favor of such machineries, equipment, materials and supplies

produced, processed or manufactured in the Philippines at such rate and

in such manner as may be agreed upon from time to time with the entity

or institution providing financing for the project.

Section 20 Sinking Fund.

SEC. 20. Sinking Fund. — The Authority is

hereby authorized to pay out of its appropriations, operating income,

proceeds from its borrowings or issuance of bonds and other instruments

of indebtedness, and from all other sources of funds, the amounts

necessary to meet its maturing obligations on the loans, credits or

indebtedness contracted by the Authority or on the bonds, notes, or

other instruments of indebtedness issued by it. For this purpose, a

sinking fund may be established out of said sources of funds of the

Authority in the Central Bank of the Philippines in such manner that the

total thereof at each due date of the bonds and other instruments of

indebtedness and the loans, credits or indebtedness contracted by the

Authority shall be equal to the aggregate maturing obligations or

amortization as of that date. Said fund shall be under the custody of

the Central Bank of the Philippines under a special a count, which shall

invest the same in such manner as the Monetary Board may approve,

charging all expenses of such investments to said sinking fund and

crediting the same with interest on investments and other income

belonging to it. A standing appropriation is hereby made out of any

general fund in the National Treasury not otherwise appropriated, of

such sum as may be necessary to meet all obligations of the Government

of the Republic of the Philippines under all guarantees which may be

executed by it pursuant to this Decree, in case such sinking fund shall

be insufficient to fully pay the indebtedness of the Authority

guaranteed by the Government of the Republic of the Philippines or the

Authority fails to fully pay the same by some other means.

Section 21 Non-profit Character of the Authority; Exemption from Taxes.

SEC. 21. Non-profit Character of the Authority;

Exemption from Taxes. — The Authority shall be non-profit and shall

devote and use all its returns from its capital investment, as well as

excess revenues from its operations, for the development, improvement

and maintenance and other related expenditures of the Authority to pay

its indebtedness and obligations and in furtherance and effective

implementation of the policy enunciated in Section 1 of this Decree. In

consonance therewith, the Authority is hereby declared exempt:

From the payment of all taxes, duties, fees,

imposts, charges, costs and service lees in any court or administrative

proceedings in which it may be a party, to the Republic of the

Philippines, its provinces, cities, municipalities and other government

agencies and instrumentalities;

From all income taxes, franchise taxes, realty taxes and all

other^ kinds of taxes and licenses to be-paid to the National

Government, its provinces, cities, municipalities and other government

agencies and instrumentalities; and

From all tariff and customs duties, and advance sales tax, on

import of capital goods required for its operations.

The foregoing exemptions may however be entirely or partially lifted

by the President of the Philippines upon recommendation of he Secretary

of Finance, not earlier than five years from the approval of this

Decree, if the President shall find the Authority to be self-sustaining

and financially capable by then to pay such taxes, customs duties, fees

and other charges, after providing for debt service requirements of the

Authority and its projected capital and operating expenditures.

Section 22 Road Networks in the Zone.

SEC. 22. Road Networks in the Zone. — The

road network within the export processing zone are hereby declared to be

national roads and shall be eligible for allocation of monies coming

from the Highway Special Fund to be used in the construction, repair or

maintenance of such roads therein, the provisions of law, executive

orders, rules and regulations to the contrary notwithstanding.

Section 23 Eminent Domain.

SEC. 23. Eminent Domain. — For the

acquisition of rights of way, or of any property for the establishment

of export processing zones, or of low-cost housing projects for the

employees working in such zones, or for the protection of watershed

areas, or for the construction of dams, reservoirs, wharves, piers,

docks, quays, warehouses and other terminal facilities, structures and

approaches thereto, the Authority shall have the right and power to

acquire the same by purchase, by negotiation, or by condemnation

proceedings. Should the Authority elect to exercise the right of eminent

domain, condemnation proceedings shall be maintained by and in the name

of the Authority and it may proceed in the manner provided for

by law.

Section 24 Title to Real Property.

SEC. 24. Title to Real Property. —The

public lands fixed and delimited as the site of the foreign trade zone

under Proclamation No. 629, series of 1969, Proclamation Nos. 899 and

939, both series of 1971, of the President of the Philippines shall be

surveyed by the Bureau of Lands and conveyed thereafter in absolute

ownership to the Authority by the President of the Philippines for the

nominal sum of one peso for each parcel of land being conveyed under

this section. Upon receipt of said deed of conveyance the proper

Register of Deeds shall register the same and issue the corresponding

original certificate of title to the Authority. Likewise, the public

land fixed and delimited as the site of a low-cost housing project for

workers in the Zone under Proclamation No. 740, series of 1970, as

amended by Proclamation No. 900, series of 1971, of the President of the

Philippines, shall be surveyed by the Bureau of Lands and conveyed in

absolute ownership by the President of the Philippines to the Authority,

the Government Service Insurance System and/or Social Security System

and in the manner hereinafter provided. Upon receipt of the

deed of conveyance, the proper Register of Deeds shall forthwith

register the same and issue the corresponding original certificate of

title thereof.

The public land mentioned herein shall be disposed of as follows:

sixty hectares to the Authority upon payment to the Government the

nominal sum of one peso, and the balance to the Government Service

Insurance System and/or Social Security System, in consideration for the

development of a portion thereof by the GSIS and/or SSS as may be

necessary to accommodate the construction of standard housing units,

and/or condominium houses, which the GSIS and/or SSS shall sell and

convey, together with the title or interest over the land as it may

appear upon conveyance thereof to the bona fide residents of Barrio

Nassco and Barrio Camaya, both in the Municipality of Mariveles, Bataan,

as certified by the Authority: Provided, That the price at

which said housing units may be sold to the aforementioned bona fide

residents of Barrio Nassco and Barrio Camaya shall not include the site

development cost thereof: Provided, further, that the GSIS

and/or SSS shall undertake the complete development of the residual

area, including the area alloted to the Authority, into modern

communities, always taking into account the policy of low-cost housing

as herein enunciated: Provided, furthermore, That the land

and/or housing units constructed therein shall be sold to the regular

workers in the Zone who shall have worked therein continuously for a

period of at least five years, as certified by the Authority: Provided,

moreover, That where there are no persons qualified to own said

land and/or housing units, the GSIS and/or SSS may hold on to said

properties for as long as they are not sold or disposed of,

notwithstanding the provisions of law to the contrary: Provided,

finally, That the Authority shall, in coordination with the GSIS

and/or SSS, administer, manage and operate the housing project, and

shall issue such rules and regulations as may be necessary For the

proper management and operation thereof, including the utilization and

disposition of the land and/or housing units.

Section 25 Relocation of Residents of Barrio Nassco in the Municipality of Mariveles.

SEC. 25. Relocation of Residents of Barrio

Nassco in the Municipality of Mariveles. — The residents of Barrio

Nassco and Barrio Camaya in the Municipality of Mariveles, which is

within the export processing zone, shall be relocated in the low-cost

housing area mentioned in Section twenty-four hereof: Provided,

That only those residential houses and buildings located within Barrio

Nassco, which are constructed as of April 15, 1972, shall be entitled to

compensation based on their fair market value at such time, less

recoverable value, if any.

Section 26 Supplies and Services other than Personnel.

SEC. 26. Supplies and Services other than

Personnel. — All purchases of supplies or contracts for services,

except for personal services, entered into by the Authority, shall be

done through competitive public bidding: Provided, That bidding

shall not be required when (1) an emergency, as certified by the

Chairman, requires immediate delivery of the supplies or performance of

the services, and (2) the aggregate amount involved in any one purchase

of supplies or procurement of services does not exceed ten thousand

pesos, in which case, such purchase or procurement may be made in the

usual, course of business: Provided, further, That the

Authority's emergency purchase of supplies and services shall not exceed

the amount of fifty thousand pesos for any one month: Provided,

finally, That in comparing bids and in making awards, the Authority

shall consider such factors as the cost and relative quality and

adaptability of supplies or services: the bidder's financial

responsibility, skill, experience, integrity, and ability to furnish

repairs and maintenance services; the time of delivery or performance

offered; and the bidder's compliance with the specifications desired.

Section 27 Auditing.

SEC. 27. Auditing. — The Auditor General

shall be ex officio auditor in charge of the auditing office of the

Authority. He shall appoint a representative who shall be the auditor

thereof. The Auditor General shall, upon recommendation of the

Authority, appoint or remove personnel of said auditing office in

accordance with law. The operating expenses of this office and the

salaries and traveling expenses of the officials and employees thereof

shall be fixed by the Board and paid by the Authority. Such

representative shall render a semestral report on the financial

condition and operations of the Authority to the Auditor General and the

Board. The Auditor General shall submit to the President and the

Congress an annual report covering the financial condition and

operations of the Authority.

These auditing reports shall contain a statement of the resources and

liabilities including earnings and expenses, reserves and profits, as

well as losses, bad debts and such other facts which, under the auditing

rules and regulations, are considered necessary to accurately describe

the financial condition and operations of the Authority: Provided,

That before such reports are made, the Authority shall be given

reasonable opportunity to examine the reports and make exceptions to any

criticisms of the Auditor of the Authority or the Auditor General, as

the case may be, to point out, explain or answer any inaccuracies

therein, if any, and to file a statement which shall be appended by the

Auditor of the Authority and the Auditor General in their respective

reports.

Section 28 Penalties.

SEC. 28. Penalties. — Any person violating

any provision of this Decree or any of the rules and regulations

promulgated under Sections four and eleven hereof, shall suffer the

penalty of imprisonment of not less than five years nor more than ten

years and a fine of not less than five thousand pesos nor more than ten

thousand pesos and in addition, such violations shall ipso facto

constitute a valid ground for the revocation of all privileges, permits

and authorization granted to such person under this Decree: Provided,

however, That it the offender is a corporation, firm, partnership

or association, the penalty shall be imposed upon the guilty officer or

officers, as the case may be, of the corporation, firm or association,

and if such guilty officer or officers be an alien or aliens, in

addition to the penalties herein prescribed, he or they shall be

deported without further proceedings on the part of the Deportation

Board.

Any officer or employee of the Government who, by himself or through

his agent, acting under his discretion and authority, shall connive,

abet, or tolerate the violation of the provisions of this Decree or any

rules and regulations promulgated under Section four and eleven hereof

or who fails to report within thirty days any violation thereof to the

Authority shall suffer the penalties prescribed in the preceding

paragraph including perpetual disqualification to hold public office.

The foregoing penalties shall be without prejudice to the assessment

and collection of such taxes and duties as may be due on the

foreign-made articles or merchandise which have been landed in the Zone

and have not been reshipped to a foreign port at the time of the

revocation of the authority of the offender to operate within the Zone,

In the event such taxes and duties shall not, for any reason, be paid

upon demand by the collector of the district Wherein the Zone is

located, the foreign-made articles or merchandise of the offender

remaining within such Zone at the time of revocation of its authority to

operate therein, including its physical plants, machinery and equipment

therein, shall, after due notice and hearing, be forfeited in favor of

the Government and may be disposed of by the Government in the manner

and for such purposes as it may so desire.

Section 29 Transitory Provisions.

SEC. 29. Transitory Provisions. — The

properties, monies, assets, rights, choses in action, obligations,

liabilities, records and contracts of the Foreign Trade Zone Authority

under Republic Act Numbered fifty-four hundred ninety shall continue to

be vested in and assumed by the Export Processing Zone Authority, as a

government corporation, pursuant to this Decree.

Likewise, all personnel of the Foreign Trade Zone Authority who are

occupying permanent positions shall be absorbed by the Export Processing

Zone Authority and shall remain in their respective positions without

demotion in rank nor reduction in salary: Provided, That

employees who shall be separated from the service shall be given by the

Authority at least one month gratuity for every year of service but in

no case more than twenty-four months salary, in addition to all benefits

to which they may be entitled under existing laws and regulations,

Section 30 Repealing Clause.

SEC. 30. Repealing Clause. — The provisions

of Republic Act Numbered Fifty-four hundred ninety and all other acts,

executive orders, proclamations, administrative orders, rules and

regulations or parts thereof which are inconsistent with the provisions

of this Decree are either repealed or modified accordingly.

Section 31 Separability Clause.

SEC. 31. Separability Clause. — The

provisions of this Decree are hereby declared to be separable, and in

the event any one or more of such provisions are held unconstitutional,

the validity of other provisions shall not be affected.

Section 32 Effectivity.

SEC. 32. Effectivity. — This Decree shall

take effect upon its approval.

Done in the City of Manila, this 20th day of November, in the year of

Our Lord, nineteen hundred and seventy-two.

(Sgd.) FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.) ALEJANDRO MELCHOR

Executive Secretary

Section 16 Foreign Enterprises.

SEC. 16. Foreign Enterprises. — The

provisions of law to the contrary notwithstanding, the Authority may

authorize an alien or an association, partnership, corporation or any

other form of business organization formed, organized, chartered or

existing under any law other than those of the Philippines, or which is

not a Philippine national, or the working capital of which is fully

owned or controlled by aliens to do business or engage in an industry

inside the Zone.

Subject to the provisions of Section twenty-nine of Commonwealth Act

Numbered Six hundred thirteen, as amended, a zone enterprise whether

domestic or foreign may within five years from registration, employ

foreign nationals in supervisory, technical or advisory positions not in

excess of five per centum of its total personnel in each such

category: Provided, That in no case shall each employment

exceed five years. The employment of foreign nationals after five years

from registration, or within such five years but in excess of the

proportion herein provided, shall be governed by Section twenty

of Commonwealth Act Numbered Six hundred thirteen, as amended: Provided,

furthermore, That when the majority of the capital stock of the

enterprise is owned by foreign investors, the positions of president,

treasurer and general manager, or their equivalents, may be retained by

foreign nationals. In exceptional cases, the Board may allow employment

of foreign nationals in other positions that cannot be filled by

Philippine nationals, but subject to the limitations as herein provided.

Foreign nationals under employment contract within the purview of

this Decree, their spouses and unmarried children under twenty-one years

of age, who arc not excluded by Section twenty-nine of Commonwealth Act

Numbered Six hundred thirteen, shall be permitted to enter and reside

in the Philippines during the period of employment of such foreign

nationals.