Legal basis and what Republic Act amends
- Republic Act No. 8748 amends the provisions of Republic Act No. 7916, specifically Chapter II, Section 11, Chapter II, Section 15, Chapter II, Section 16, Chapter III, Section 24, Chapter III, Section 25, Chapter III, Section 29, and Chapter VI, Section 50.
- Republic Act No. 8748 keeps Republic Act No. 7916 as the governing framework for the Special Economic Zone regime, with the stated amendments as the operative changes.
PEZA creation and board composition
- A body corporate known as the Philippine Economic Zone Authority (PEZA) is created and attached to the Department of Trade and Industry.
- PEZA is governed by a Board with a director general having the rank of department undersecretary, appointed by the President.
- The director general must be at least forty (40) years of age, of proven probity and integrity, and a degree holder in economics, business, public administration, law, management, or their equivalent, with at least ten (10) years relevant working experience preferably in management or public administration.
- The director general is assisted by three (3) deputy directors general for policy and planning, administration, and operations, appointed by the PEZA Board upon the director general’s recommendation.
- Each deputy director general must be at least thirty-five (35) years old, of proven probity and integrity, and a degree holder in economics, business, public administration, law, management, or their equivalent.
- The Board is composed of thirteen (13) members:
- the Secretary of the Department of Trade and Industry as Chairman;
- the Director General of PEZA as Vice Chairman;
- undersecretaries of the Department of Finance, Department of Labor and Employment, Department of the Interior and Local Government, Department of Environment and Natural Resources, Department of Agriculture, Department of Public Works and Highways, Department of Science and Technology, and Department of Energy;
- the Deputy Director General of the National Economic and Development Authority;
- one (1) representative from the labor sector; and
- one (1) representative from the investors/business sector in the ECOZONE.
- If the Secretary of the Department of Trade and Industry is unavailable for a particular board meeting, the Director General of PEZA acts as Chairman.
ECOZONE administration rules
- Except for privately-owned, managed or operated ECOZONES, each ECOZONE must be organized, administered, managed, and operated by an ECOZONE executive committee.
- The executive committee structure is governed by the amended rule that applies to non-privately owned, managed, or operated ECOZONES.
- Privately-owned ECOZONES retain autonomy and independence, but they are monitored by PEZA to ensure adherence to the law in the implementation of incentives and operations.
PEZA personnel, compensation, and conduct
- The PEZA Board of Directors provides the organization and staffing of PEZA.
- The Board, upon the director general’s recommendation and the approval of the Secretary of the Department of Trade and Industry, appoints and fixes remunerations and other emoluments.
- The Board has exclusive and final authority to promote, transfer, assign, or reassign PEZA officers, notwithstanding any provision of existing law to the contrary.
- The director general may carry out removal of such officers and employees.
- All positions in PEZA are governed by a compensation, position classification system, and qualification standards approved by the director general with the concurrence of the Board based on a comprehensive job analysis and audit of actual duties and responsibilities.
- The compensation plan must be comparable with prevailing compensation plans in the Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), Bases Conversion and Development Authority (BCDA), and the private sector.
- The compensation plan is subject to periodic review by the Board no more than once every two (2) years, without prejudice to yearly merit reviews or increases based on productivity and profitability.
- PEZA is exempt from existing laws, rules, and regulations on compensation, position classification, and qualification standards.
- PEZA must endeavor to make its system conform as closely as possible with the principles under Republic Act No. 6758.
- PEZA officers and employees, including all Members of the Board, must not engage directly or indirectly in partisan activities or take part in any election, except to vote.
- A PEZA officer or employee subject to Civil Service laws and regulations may be removed or suspended only for cause, as provided by law.
Tax treatment for ECOZONE businesses
- Except for real property taxes on land owned by developers, no taxes, local and national, are imposed on business establishments operating within an ECOZONE.
- In lieu of the foregoing taxes, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE must be paid and remitted in the following shares:
- Three percent (3%) to the National Government; and
- Two percent (2%) directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located.
- All persons and service establishments in the ECOZONE are subject to national and local taxes under the National Internal Revenue Code and the Local Government Code.
Eminent domain and displaced persons protections
- When a publicly-owned ECOZONE is established and persons occupying a parcel of land within the zone must be evicted, PEZA must provide proper disturbance compensation.
- Displaced agrarian reform beneficiaries are entitled to benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of Republic Act No. 3844, and they are also entitled to a homelot in the relocation site and preferential employment in the project being undertaken.
Non-applicability to zones under Republic Act No. 7227
- Republic Act No. 7916, as amended, does not apply 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 to those laws.
Separability and repealing
- No separability, repealing, or sunset clause is stated in Republic Act No. 8748.