QuestionsQuestions (PRESIDENTIAL DECREE NO. 66)
The policy is to encourage and promote foreign commerce by establishing export processing zones in strategic locations to strengthen export trade and foreign exchange position, hasten industrialization, reduce domestic unemployment, and accelerate national development.
PD No. 66 creates a body corporate called the Export Processing Zone Authority under the direct supervision of the Office of the President, and states that its functions are governmental.
Its principal office must be in the Greater Manila Area, but it may establish branches and agencies within the Philippines as necessary.
It may operate, administer, and manage export processing zones (including Port of Mariveles, Bataan and others); construct and operate needed infrastructure and services; regulate enterprises established in the zone to avoid adverse effects on domestic industries; operate the zone as a public utility with fair and reasonable rates; and exercise exclusive jurisdiction and sole police authority over areas owned or administered by the EPZA.
It may take water from public sources as needed, alter/straighten/obstruct/increase water flow in channels connected to its works, and undertake land reclamation.
Yes. Section 4 explicitly allows the EPZA to acquire and hold agricultural lands in excess of the areas permitted to private corporations or associations by the Constitution.
EPZA may grant exclusive franchises or permissions to operate certain utilities/services within the zone, but such grant does not constitute a vested right against the Government and does not interfere with revocation; further, it must not be granted on terms conflicting with the public use of the zone.
The Board has seven members: Deputy Governor of the Central Bank, Vice-Chairman of the Board of Investments, Undersecretary of Finance, and Undersecretary of the Department of Trade and Tourism as ex officio members; the remaining members are appointed by the President with consent of the Commission on Appointments. The President designates a Chairman from among the members who is also the Administrator of the Authority.
Board members must be Filipino citizens of good moral character and integrity and recognized competence. They may not engage in partisan political activities, practice professions or businesses dealing with or related to exercise of EPZA functions, or have financial interest in contracts entered into by the Authority.
Quorum is at least four members. Adoption of rules, resolutions, decisions, or other Board acts requires the vote of four members.
Officials and employees are selected based on merit and fitness through a comprehensive progressive merit system consistent with Civil Service rules; recruitment/transfer/promotion/dismissal are governed by that system. Personnel are exempt from Wage and Position Classification Office regulations.
Foreign enterprises are allowed to do business in the zone. Within five years from registration, a zone enterprise may employ foreign nationals in supervisory/technical/advisory positions not exceeding 5% of total personnel in each such category, but in no case beyond five years per employment arrangement. Beyond five years or excess proportion is governed by the relevant provisions of CA 613 (as amended).
Except as otherwise provided, foreign and domestic merchandise and inputs brought into the zone for permitted activities (storage, processing, manufacturing, etc.) are not subject to customs and internal revenue laws/regulations or local tax ordinances, subject to the Decree’s conditions.
If payment is made in US dollars or convertible foreign currency and the merchandise is subsequently brought into the zone, it is treated as exported, and the exporter may claim the benefits allowed by law for export transactions.
They include: Net Operating Loss carry over for losses incurred in any of the first five years; accelerated depreciation (up to specified multipliers or adjusted schedules); exemption from export tax/imposts/fees (including stabilization tax under RA 6111); foreign exchange assistance via priority in allocation and Central Bank resources; financial assistance at least equal to BOI-registered enterprises under specified laws; and exemption from local taxes and licenses (except real estate taxes under CA 470 and RA 5447, payable on real properties located in the municipality).
Total principal domestic indebtedness payable in Philippine currency cannot exceed ₱300,000,000 at any one time; total principal foreign indebtedness payable in foreign currency cannot exceed USD 100,000,000 (or equivalent in qualified currencies). Bonds and other instruments of indebtedness and income derived therefrom are exempt from all taxes including withholding taxes, except those contracted with private international banking/financial institutions.
For rights of way and property needed for zones or related projects, the EPZA may acquire by purchase/negotiation or by condemnation proceedings. If it chooses eminent domain, the condemnation case is maintained by and in the name of the EPZA, following the manner provided by law.