Creating The Export Processing Zone Authority And Revising Republic Act No. 5490
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Creating The Export Processing Zone Authority And Revising Republic Act No. 5490
Presidential Decree No. 66
November 20, 1972
Case Overview and Summary
Summary of Presidential Decree No. 66Declaration of Policy (Section 1):
- Encourage and promote foreign commerce to make the Philippines a center of international trade, strengthen export trade and foreign exchange position, hasten industrialization, reduce unemployment, and accelerate development.
- Establish export processing zones in strategic locations.
Creation of Export Processing Zone Authority (Sections 2-10):
- Create the Export Processing Zone Authority (Authority) under the Office of the President.
- Purposes and powers of the Authority (Section 4):
- Operate, administer, and manage export processing zones.
- Construct and maintain infrastructure facilities.
- Acquire and hold agricultural lands.
- Determine and regulate enterprises in the zones.
- Grant franchises and permits for businesses in the zones.
- Fix and collect fees, charges, and rentals.
- Exercise exclusive jurisdiction and police authority over areas owned or administered by the Authority.
- Contract indebtedness and issue bonds (subject to conditions in Section 19).
- Create agencies, offices, and departments.
- Adopt corporate seal, make contracts, own property, sue and be sued.
- Capitalization of P200 million from the National Treasury (Section 5).
- Board of Commissioners with 7 members, including ex-officio members and Presidential appointees (Sections 6-10).
Powers and Duties of the Board (Section 11):
- Promulgate policies and rules.
- Recommend establishment of new export processing zones.
- Approve budgets.
- Organize staffing pattern and fix salaries.
- Enter into contracts.
- Recommend compulsory arbitration for labor disputes affecting zone operations.
- Recommend entry of foreign nationals for employment in the zones.
- Render annual and special reports to the President.
Administrator and Deputy Administrators (Section 12):
- Chairman is also the Administrator, assisted by two Deputy Administrators.
- Powers and duties of the Administrator.
Personnel and Merit System (Sections 13-15):
- Exempt from Civil Service Law and Wage and Position Classification Office regulations.
- Establish a comprehensive merit system for recruitment, transfer, promotion, and dismissal of personnel.
- Appointment of department heads and officials below by the Board and Administrator, respectively.
Foreign Enterprises (Section 16):
- Allow foreign businesses and foreign nationals to work in the zones under certain conditions.
- Foreign nationals can be employed in supervisory, technical, or advisory positions up to 5% of total personnel in each category for 5 years from registration.
- After 5 years or exceeding the 5% limit, subject to Commonwealth Act No. 613.
- Foreign nationals can hold top positions like president, treasurer, and general manager if majority foreign-owned.
Tax Treatment of Merchandise in the Zone (Section 17):
- Exemption from customs and internal revenue laws for merchandise brought into the zone for processing, manufacturing, or other activities.
- Domestic merchandise sent from the zone to customs territory subject to internal revenue taxes.
- Merchandise sent from the zone to customs territory subject to import laws and duties.
- Articles produced in the zone and exported, then subsequently imported, subject to import laws.
Additional Incentives (Section 18):
- Net operating loss carry over for 5 years.
- Accelerated depreciation of fixed assets.
- Exemption from export tax.
- Priority in foreign exchange allocation and Central Bank assistance.
- Financial assistance from government financial institutions.
- Exemption from local taxes, fees, and licenses (except real estate taxes).
Power to Issue Bonds or Incur Indebtedness (Section 19):
- Authority can contract loans, credits, and indebtedness or issue bonds, subject to conditions.
- Total principal domestic indebtedness not exceeding P300 million.
- Total principal foreign indebtedness not exceeding $100 million or equivalent.
- Bonds and instruments of indebtedness exempt from taxes.
- Government guarantee on loans and instruments of indebtedness.
- Priority in foreign exchange allocation and Central Bank assistance.
Sinking Fund (Section 20):
- Establish a sinking fund in the Central Bank to meet maturing obligations.
- Standing appropriation from the National Treasury to meet government guarantees if sinking fund is insufficient.
Non-profit Character and Tax Exemptions (Section 21):
- Authority is non-profit and exempt from:
- All taxes, duties, fees, imports, charges, and costs in court or administrative proceedings.
- Income taxes, franchise taxes, realty taxes, and all other taxes and licenses.
- Tariff and customs duties, and advance sales tax on import of capital goods.
- Exemptions may be lifted by the President after 5 years if the Authority is self-sustaining.
Road Networks and Eminent Domain (Sections 22-23):
- Road networks within the zone declared as national roads eligible for highway fund allocation.
- Authority has the right of eminent domain for acquiring property for the zones, housing projects, watershed protection, and infrastructure.
Title to Real Property (Section 24):
- Public lands for the zone and housing project conveyed to the Authority and GSIS/SSS.
- Housing units to be sold to residents of Barrio Nassco and Camaya, and qualified workers in the zone.
Relocation of Residents (Section 25):
- Residents of Barrio Nassco and Camaya to be relocated to the low-cost housing area.
- Compensation for residential houses and buildings in Barrio Nassco constructed as of April 15, 1972.
Supplies and Services Procurement (Section 26):
- Purchases and contracts for services (except personal services) through competitive public bidding.
- Exceptions for emergencies and small purchases not exceeding P10,000.
- Emergency purchases not exceeding P50,000 per month.
Auditing (Section 27):
- Auditor General in charge of auditing the Authority.
- Auditor General to appoint a representative as the auditor of the Authority.
- Semestral reports on financial condition and operations to the Auditor General and the Board.
- Annual report to the President and Congress.
Penalties (Section 28):
- Violation of the Decree or rules and regulations: 5-10 years imprisonment and P5,000-P10,000 fine, revocation of privileges.
- For corporations, penalties imposed on guilty officers, and deportation of alien officers.
- Government officers conniving or failing to report violations: same penalties and perpetual disqualification from public office.
- Forfeiture of foreign-made articles and physical plants if taxes and duties are not paid.
Transitory Provisions (Section 29):
- Properties, assets, rights, obligations, liabilities, records, and contracts of the Foreign Trade Zone Authority transferred to the Export Processing Zone Authority.
- Absorption of permanent personnel of the Foreign Trade Zone Authority.
- Separation benefits for employees not absorbed.
Repealing Clause (Section 30):
- Repeals Republic Act No. 5490 and other inconsistent laws, orders, and regulations.
Separability Clause (Section 31):
- Provisions are separable, and the validity of other provisions shall not be affected if any provision is held unconstitutional.
Effectivity (Section 32):
- The Decree takes effect upon approval.
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Creating The Export Processing Zone Authority And Revising Republic Act No. 5490
Presidential Decree No. 66
•November 20, 1972
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 66 November 20, 1972
CREATING THE EXPORT PROCESSING ZONE AUTHORITY AND REVISING REPUBLIC ACT NO. 5490
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 operations 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 vested in me by the...
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