republic act 9728 and its implementing rules and regulations.pdf

8/18/2019 Republic Act 9728 and its Implementing Rules and Regulations.pdf

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Table of Contents

SECTION 1. Short Title. ........................................................................................................................................................... 2

SECTION 2. Declaration of Policy. ......................................................................................................................................... 2

SECTION 3. Conversion of the Bataan Economic Zone (BEZ) into the Freeport Area of Bataan. ................................. 2

SECTION 4. Governing Principles. ........................................................................................................................................ 2

SECTION 5. Fiscal Incentives. ................................................................................................................................................. 3

SECTION 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. ................................................... 3

SECTION 7. Incentive to Investors. ........................................................................................................................................ 3

SECTION 8. Administration, Implementation and Monitoring of Incentives. ................................................................ 4

SECTION 9. Extension of Period of Availment. ................................................................................................................... 4

SECTION 10. Duration of Incentives. .................................................................................................................................... 4

SECTION 11. Creation of the Authority of the Freeport Area of Bataan (AFAB). ........................................................... 4

SECTION 12. Principal Office of the AFAB. ......................................................................................................................... 4

SECTION 13. Powers and Functions of the AFAB. .............................................................................................................. 4

SECTION 14. Board of Directors of the FAB. ........................................................................................................................ 6

SECTION 15. Powers and Duties of the Chairman‐Administrator. .................................................................................. 6

SECTION 16. Organization and Personnel. .......................................................................................................................... 7

SECTION 17. Labor Center. ..................................................................................................................................................... 7

SECTION 18.

Banking

Rules

and

Regulations.

.....................................................................................................................

7

SECTION 19. Remittances. ...................................................................................................................................................... 7

SECTION 20. Applicability Clause. ........................................................................................................................................ 7

SECTION 21. Capitalization. ................................................................................................................................................... 7

SECTION 22. Supervision and Control. ................................................................................................................................ 7

SECTION 23. Regional Development Council. ..................................................................................................................... 8

SECTION 24. Relationship with Local Government Units. ................................................................................................ 8

SECTION 25. Legal Counsel. ................................................................................................................................................... 8

SECTION 26. Interpretation/ Construction. .......................................................................................................................... 8

SECTION 27. Audit. ................................................................................................................................................................. 8

SECTION 28. Transitory Provisions. ...................................................................................................................................... 8

SECTION 29. Implementing Rules and Regulations. .......................................................................................................... 8

SECTION 30. Separability Clause. .......................................................................................................................................... 8

SECTION 31. Repealing Clause. ............................................................................................................................................. 8

SECTION 32. Effectivity Clause. ............................................................................................................................................. 8

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Republic of the Philippines

CONGRESS OF THE PHILIPPINES

Metro Manila

Fourteenth Congress

Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty seventh day of July, two thousand nine.

Republic Act No. 9728

AN ACT CONVERTING THE BATAAN ECONOMIC ZONE LOCATED IN THE MUNICIPALITY OF

MARIVELES, PROVINCE OF BATAAN, INTO THE FREEPORT AREA OF BATAAN (FAB), CREATING FOR

THIS PURPOSE THE AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB), APPROPRIATING

FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. ‐This Act shall be known as the ̋Freeport Area of Bataan (FAB) Act of 2009.

SECTION 2. Declaration of Policy. ‐ It is hereby declared the policy of the State to actively encourage, promote,

induce and accelerate a sound and balanced industrial, economic and social development of the country in order

to provide jobs to the people especially those in the rural areas, increase productivity and individual and family

income, and thereby improve the level and quality of living condition through the establishment, among others,

of special economic zones in suitable and strategic locations in the country and through measures that will attract

legitimate and productive foreign investments.

SECTION 3. Conversion of the Bataan Economic Zone (BEZ) into the Freeport Area of Bataan. ‐ The existing

Bataan Economic Zone located in the Municipality of Mariveles, Province of Bataan is hereby converted into a

special economic zone and Freeport to be known as the Freeport Area of Bataan (FAB). The FAB shall cover the

Municipality

of

Mariveles,

Province

of

Bataan.

SECTION 4. Governing Principles. ‐The FAB shall be managed and operated under the following principles:

(a) Within the framework and limitations of the Constitution and applicable provisions of the Local

Government Code, the FAB shall be developed into and operated as a decentralized, self‐reliant and self‐

sustaining industrial, commercial‐trading, agro‐industrial, tourist, banking, financial and investment

center with suitable residential areas;

(b) The FAB shall continue to be provided with transportation, telecommunications and other facilities

needed to attract legitimate and productive investments, generate linkage industries and employment

opportunities for the people of the Province of Bataan and its neighboring towns and cities;

(c) The FAB may establish mutually beneficial economic relations with other entities or enterprises within

the country or with foreign entities or enterprises;

(d) Foreign citizens and companies owned by non‐Filipinos in whatever proportion may set up

enterprises in the FAB either by themselves or in joint venture with Filipinos in any sector of industry,

international trade and commerce within the FAB;

(e) The FAB shall be managed and operated as a separate customs territory ensuring free flow or

movement of goods and capital within, into and out of its territory;

(f) The

FAB

shall

provide

incentives

such

as

tax

and

duty

‐free

importations

of

raw

materials,

capital

and

equipment to registered enterprises located therein. However, exportation or removal of goods from the

territory of the FAB to the other parts of the Philippine territory shall be subject to customs duties and

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taxes under the Tariff and Customs Code of the Philippines, as amended, and the National Internal

Revenue Code (NIRC) of 1997, as amended;

(g) The areas comprising the FAB may be expanded or reduced when necessary. For this purpose, the

FAB Authority which will be created under this Act, with the concurrence of the local government units

(LGUs), in accordance with existing laws and local ordinances shall have the power to acquire either by

purchase, negotiation or condemnation proceedings, any private lands within or adjacent to the FAB for

the following purposes: (1) consolidation of lands for FAB development; (2) acquisition of right of way to

the FAB; and (3) the protection of watershed areas and the maintenance and improvement of its water yield and natural assets valuable to the prosperity of the FAB, the management of solid and water waste

and its impact to adjacent areas within the local government concerned.

The LGU and the FAB shall provide for a mechanism to address inappropriate exploitation of the natural

environment and disruptive land use within the jurisdiction of the FAB;

(h) Goods manufactured by the FAB enterprise shall be made available for immediate retail sale in the

domestic market, subject to the payment of corresponding taxes on raw materials and other regulations that

may be formulated by the FAB Authority, together with the Philippine Economic Zone Authority (PEZA), the

Bangko Sentral ng Pilipinas (BSP), the Department of Finance (DOF), the Bureau of Customs (BOC) and the

Department of

Trade

and

Industry

(DTI)

in

accordance

with

the

NIRC

of

1997,

as

amended,

and

the

Tariff

and

Customs Code of the Philippines, as amended. However, in order to protect the domestic industries, a

negative list of industries shall be drawn up and regularly updated by the PEZA. Enterprises engaged in

industries included in such negative list shall not be allowed to sell their products locally; and

(i) The defense of the FAB and the security of its perimeter fence shall be the responsibility of the National

Government in coordination with the FAB Authority and the LGUs.

SECTION 5. Fiscal Incentives. ‐ The registered enterprises operating within the FAB may be entitled to the

existing pertinent fiscal incentives as provided for under Republic Act No. 7916, as amended by Republic Act No.

8748, also known as the Special Economic Zone Act of 1995, or those provided under Executive Order No. 226, as

amended,

otherwise

known

as

the

Omnibus

Investment

Code

of

1987.

SECTION 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. ‐ No taxes, local and

national, shall be imposed on business establishments operating within the FAB. In lieu thereof, said business

establishments shall pay a five percent (5%) final tax on their gross income earned in the following percentages:

(a) One per centum (1%) to the National Government;

(b) One per centum (1%) to the Province of Bataan;

(c) One per centum (1%) to the treasurerʹs office of the Municipality of Mariveles; and

(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.

SECTION 7.

Incentive

to

Investors. ‐Any foreign national who invests an amount of One hundred fifty thousand

US dollars (US$150,000.00), either in cash and/or equipment, in a registered enterprise shall be entitled to an

investorʹs visa: Provided, That he has the following qualifications:

(a) He is at least eighteen (18) years of age;

(b) He has not been convicted of a crime involving moral turpitude;

(c) He is not afflicted with any loathsome, dangerous or contagious disease; and

(d) He has not been institutionalized for any mental disorder or disability.

As a holder of investorʹs visa, an alien shall be entitled to reside in the Philippines while his investment subsists.

For this purpose, he should submit an annual report, in the form duly prescribed for the purpose, to prove that he

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has maintained his investment in the country, should said alien withdraw his investments from the Philippines,

then the investorʹs visa issued to him shall automatically expire.

SECTION 8. Administration, Implementation and Monitoring of Incentives. ‐ For the proper administration,

implementation and monitoring of tax incentives provided under this law, the following are herein mandated:

(a) The AFAB shall be responsible for the administration and implementation of the incentives granted to

its respective registered enterprises. Among others, it shall adopt and implement systems and procedures

affecting trade and customs policies.

The BOC shall set up and establish a customʹs controlled area outside the gate of the FAB to facilitate

payment of taxes on goods entering the Philippine customs territory; and

(b) The AFAB shall likewise submit to the DOF its annual tax expenditures based on the tax incentives

granted to its registered enterprises. The DOF, for its part, shall create a single database of all incentives

provided by the governing authority. The DOF shall monitor the incentives granted, and submit all

annual report to the President.

SECTION 9. Extension of Period of Availment. ‐The availment period of the incentives provided herein may be

extended

by

AFAB,

in

the

event

that

the

registered

enterprise

has

suffered

operational

force

majeure

that

has

impaired its viability, equivalent thereto.

SECTION 10. Duration of Incentives. ‐ Enterprises registered with AFAB may enjoy the income tax holiday

(ITH) or the net operating loss carryover (NOLCO) granted by the authority prior to the availment of the five

percent (5%) gross income earned (GIE).

Fiscal incentives under this Act shall be terminated after a cumulative period of twenty (20) years from date of

registration or start of commercial operation, whichever is applicable, except that it could be extended with regard

to industries deemed indispensable to national development.

The industries exempted from this provision shall be determined by the AFAB.

SECTION 11. Creation of the Authority of the Freeport Area of Bataan (AFAB). ‐There is hereby created a body

corporate to be known as the Authority of the Freeport Area of Bataan (AFAB), hereafter referred to as the AFAB

which shall manage and operate the FAB, in accordance with the provisions of this Act.

SECTION 12. Principal Office of the AFAB. ‐ The AFAB shall maintain its principal office in the Municipality of

Mariveles, Province of Bataan, but it may establish liaison offices within the Philippines as may be necessary for

the proper conduct of its business.

SECTION 13. Powers and Functions of the AFAB. ‐The AFAB shall have the following functions:

(a) To

adopt,

alter,

use

a corporate

seal,

to

contract,

lease,

buy,

sell,

acquire,

own

and

dispose

properties

of

whatever nature;

(b) To sue and be sued in order to carry out its duties, responsibilities, privileges, powers and functions as

granted and provided for in this Act and to exercise the power of eminent domain for public use and

public purpose;

(c) To operate, administer, manage, develop, m accordance with Executive Order No. 525, as amended,

the FAB according to the principles and provisions set forth in this Act and to coordinate with the LGUs

for the development plans, activities and operation of the FAB;

(d) To recommend to the President the issuance of a proclamation to fix and delimit the site of the FAB;

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(e) To register, regulate and supervise the enterprises in the FAB in an efficient and decentralized manner,

subject to existing laws;

(f) To coordinate with the LGUs and exercise general supervision over the development plans, activities

and operations of the FAB;

(g) To authorize or undertake, on its own or through others, and to regulate the establishment,

construction, operation and maintenance of public utilities, services, and infrastructure in the FAB such as

shipping, barging, stevedoring, cargo, handling, hauling, warehousing, storage of cargo, port services or

concessions, piers, wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges,

reclamation projects, terminals, conveyors, water supply and storage, sewerage, drainage, airport

operations in coordination with the Civil Aeronautics Board, and such other services or concessions or

infrastructure necessary or incidental to the accomplishment of the objectives of this Act: Provided,

however, That the private investors in the FAB shall be given priority in the awarding of contracts,

franchises, licenses, or permits for the establishment, operation and maintenance of utilities, services and

infrastructure in the FAB;

(h) To license, set fees, regulate and undertake the establishment, operation and maintenance of utilities,

other services, educational and medical institutions and infrastructure in the FAB such as, but not limited

to, heat, light and power, water supply, telecommunications, mobile, internet and other data facilities,

transport, toll roads and bridges, port services, etc., and to fix just, reasonable and competitive rates, fares,

charges and prices thereof;

(i) To construct, acquire, own, lease, operate and maintain on its own or through contracts, franchises,

licenses, bulk purchase from the private sector and build‐operate‐transfer scheme, or under a joint

venture with the private sectors, any or all of the public utilities and infrastructure required or needed for

the operation and development of the FAB, in coordination with appropriate national and local

government authorities and in conformity with applicable laws thereon;

(j) To operate on its own, either directly or through a license to other tourism‐related activities, including games, amusements, recreational and sports facilities, subject to the approval and supervision of the

Philippine Amusement and Gaming Corporation (PAGCOR);

(k) To raise or borrow, within the limitation provided by law, adequate and necessary funds from local or

foreign sources, to finance its projects and programs under this Act, and for that purpose, to issue bonds,

promissory notes, and other forms of securities, and to secure the same by a guarantee, pledge, mortgage,

deed of trust, or an assignment of all or part of its property or assets;

(l) To provide security for the FAB in coordination with the national and local governments. For this

purpose, the AFAB may establish and maintain its security forces and firefighting capability or hire others

to provide

the

same.

In

the

event

that

an

assistance

of

the

military

force

is

necessary,

it

shall

not

interfere

in the internal affairs of the FAB except to provide the necessary security and defense, and their expenses

shall be borne by the National Government;

(m) To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs, and

maintain ecological balance within the FAB. For this purpose, the rules and regulations of the Department

of Environment and Natural Resources (DENR) and other government agencies involved in the above

functions shall be implemented by the AFAB;

(n) To create, operate and/or contract to operate such functional units or offices of the AFAB as it may

deem necessary;

(o) To issue certificates of origin for products manufactured or processed in the FAB;

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(p) To issue rules and regulations consistent with the provisions of this Act as may be necessary to

implement and accomplish the purposes, objectives and policies provided herein;

(q) To exercise such powers as may be essential, necessary or incidental to the powers granted to it

hereunder as well as those that shall enable it to carry out, implement and accomplish the purposes,

objectives and policies of this Act; and

(r) To be vested with other powers enjoyed or exercised by other free port zone authorities.

SECTION 14. Board of Directors of the FAB. ‐ The powers of the AFAB shall be vested in and exercised by

a Board of Directors, hereinafter referred to as the Board, which shall be composed of the following:

(a) The chairman who shall, at the same time, be the administrator of the AFAB;

(b) A vice chairman who shall come from among the members of the Board;

(c) Members consisting of:

(1) Two (2) representatives from the National Government;

(2) One (1) representative from the Province of Bataan;

(3) One (1) representative from the district covering the site of the FAB;

(4) One (1) representative from the Municipality of Mariveles, Province of Bataan;

(5) One (1) representative from the domestic investors;

(6) One (1) representative from the foreign investors; and

(7) One (1) representative from the workers working in the FAB.

The chairman and the members of the Board, shall be appointed by the President of the Philippines to

serve for a term of six (6) years, unless sooner separated from service due to death, voluntary resignation

or removal for cause. In case of death, resignation or removal for cause, the replacement shall serve only

the unused portion of the term.

Except for the representatives of the business and labor sectors, no person shall be appointed by the

President of the Philippines as a member of the Board unless he is a Filipino citizen, of good moral

character, of proven probity and integrity, and a degree holder in any of the following fields: economics,

business, public administration, law, management or their equivalent, and with at least ten (10) years

relevant working experience preferably in the field of management or public administration.

The members of the Board shall each receive per diem at rates to be determined by the Department of

Budget and Management (DBM) in accordance with existing rules and regulations: Provided, however, That

the total per diem collected each month shall not exceed the equivalent per diem for four (4) meetings.

SECTION 15. Powers and Duties of the Chairman‐Administrator. ‐The chairman‐administrator shall have the

following powers and duties:

(a) To direct and manage the affairs of the AFAB in accordance with the policies of the Board;

(b) To establish the internal organization of the AFAB under such conditions that the Board may

prescribe;

(c) To submit an annual budget and necessary supplemental budget to the Board for its approval;

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(d) 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;

(e) To submit to the Board for its approval policies, systems, procedures, rules and regulations that

are essential to the operation of the AFAB;

(f) To create a mechanism in coordination with relevant agencies for the promotion of industrial peace,

the protection of the environment, and the advancement of the quality of life in the FAB; and

(g) To perform such other duties as may be assigned to him by the Board or which are necessary

or incidental to his office.

SECTION 16. Organization and Personnel. ‐ The AFAB Board of Directors shall provide for an organizational

structure and appoint employees, subject to the civil service law. Upon the recommendation of the chairman‐

administrator and with the approval of the Secretary of the DTI, the Board shall appoint and fix the remuneration

and other emoluments of its officers and employees in accordance with existing laws on compensation and

position classification: Provided, That the Board shall exercise administrative supervision on their employees.

The officers and employees of the AFAB, including all members of the Board, shall not engage directly or

indirectly

in

partisan

activities

nor

take

part

in

any

election,

except

to

vote.

No officer or employee of the AFAB, subject to civil service laws and regulations, shall be removed or suspended

except for cause, as provided by law.

SECTION 17. Labor Center. ‐A labor center shall be established within the FAB. This center shall be responsible

for studying and amicably settling professional and labor relations and disputes, interpretation of employment

contracts, and monitoring work, hygiene and safety standards within the FAB. The labor center shall comprise a

labor office, an industrial health and safety office, and an inspection and disputes office.

SECTION 18. Banking Rules and Regulations. ‐ Existing banking laws and rules/regulations of the BSP shall

apply to banks and financial institutions to be established in the FAB.

SECTION 19. Remittances. ‐ In the case of foreign investments, a registered enterprise in the Bataan Ecozone

shall have the right to remit earnings from the investment in the currency in which the investment was originally

made and at the exchange rate prevailing at the time of remittance, subject to the provisions of Section 74 of

Republic Act No. 265, as amended.

SECTION 20. Applicability Clause. ‐ The provisions of Sections 30‐41 of Republic Act No. 7916, otherwise

known as T̋he Special Economic Zone Act of 1995 ̋, as amended, shall likewise apply to the FAB.

SECTION 21. Capitalization. ‐ The AFAB shall have an authorized capital stock of Two billion pesos

(Php2,000,000,000.00), with option to increase capitalization upon the discretion of the AFAB, divided into twenty

thousand (20,000) no‐par shares fully subscribed and paid up by the Republic of the Philippines with:

(a) All lands embraced and covered by the FAB, as well as permanent improvements and fixtures upon

proper inventory not otherwise alienated, conveyed, or transferred to another government agency;

(b) All other assets which the President may transfer to the AFAB as part of the equity contribution of the

government; and

(c) Cash contribution by the government in the amount of Five hundred million pesos (Php500,000,000.00)

a year for the next five (5) years, which is hereby appropriated out of any fund in the National Treasury

not otherwise appropriated.

SECTION 22. Supervision and Control. ‐ For purposes of policy direction and coordination, the AFAB shall be

under the direct control and supervision of the Office of the President of the Philippines.

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SECTION 23. Regional Development Council. ‐ The AFAB shall determine the development goals for the FAB

within the framework of national development plans, policies and goals. The administrator shall, upon approval

by the Board, submit the FAB plans, programs and projects to the Regional Development Council for inclusion

and inputs to the overall regional development plan.

SECTION 24. Relationship with Local Government Units. ‐ Except as herein provided, the Municipality of

Mariveles in the Province of Bataan shall operate and function in accordance with the Local Government Code of

1991. In case of any conflict between the AFAB and the local government units (LGUs) and the National

Government (NG) on matters affecting the FAB other than defense and security matters, the decision of the AFAB shall prevail.

SECTION 25. Legal Counsel. ‐The AFAB shall have its own internal legal counsel under the supervision of the

Government Corporate Counsel. When the exigencies of its businesses and operations demand, the AFAB may

engage the services of an outside counsel either on a case‐to‐case or on a fixed retainer basis.

SECTION 26. Interpretation/ Construction. ‐The powers, authorities and functions that are vested in the AFAB

are intended to establish decentralization of governmental functions and authority and promote an efficient and

effective working relationship between the AFAB, the National Government and the LGU.

SECTION

27.

Audit. ‐The

Commission

on

Audit

shall

appoint

a full

‐time

auditor

in

the

AFAB

or

may

assign

such number of personnel as may be necessary in the performance of their functions.

SECTION 28. Transitory Provisions. ‐All properties, assets, funds, rights, obligations, and liabilities are hereby

transferred to the AFAB except for the liabilities that are not properly accounted for as per the reports coming

from the Commission on Audit, which shall be retained by the PEZA. The AFAB shall be responsible for the

operations, administration, management and development of the FAB.

The AFAB shall effect the transfer herein provided in a manner that will ensure the least disruption of ongoing

programs of the BEZ. The qualified and necessary personnel of the BEZ shall be transferred to and absorbed by

the AFAB: Provided, That the tenure, rank, salaries and privileges of such personnel are not reduced or adversely

affected. The personnel whose services are not retained by the AFAB shall be granted separation pay and

retirement and other benefits they are entitled to under existing laws but in no case shall the separation pay be

less than one (1) month for every year of service.

In the period prior to the actual assumption of duties by the AFAB, all officers and employees of the BEZ shall

continue to exercise their functions and discharge their duties and responsibilities. The BEZ shall be deemed

abolished upon the organization of the AF AB.

SECTION 29. Implementing Rules and Regulations. ‐ The DTI, the DOF, the LGU and the Department of the

Interior and Local Government 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.

SECTION 30. Separability Clause. ‐ If any provision of this Act shall be held unconstitutional or invalid, the

other provisions not otherwise affected shall remain m full force and effect.

SECTION 31. Repealing Clause. ‐Republic Act No. 5490 and Presidential Decree No. 66 are hereby amended. All

laws, executive orders or issuances or any part thereof which are inconsistent herewith are hereby repealed or

amended accordingly.

SECTION 32. Effectivity Clause. ‐This Act shall take effect upon its publication in at least one (1) newspaper of

general circulation.

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Table of Contents

CHAPTER I: PRELIMINARY PROVISIONS ............................................................................................................................................ 17

SECTION 1. Scope. .................................................................................................................................................................................. 17

SECTION

2.

Declaration

of

Policy.

........................................................................................................................................................

17

SECTION 3. Definitions. ......................................................................................................................................................................... 17

SECTION 4. Rules of Interpretation. ..................................................................................................................................................... 18

SECTION 5. Boundaries of the Freeport Area of Bataan. ................................................................................................................... 18

CHAPTER II: AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB) ................................................................................ 19

SECTION 6. Powers and Functions. ...................................................................................................................................................... 19

SECTION 7. Responsibilities of the AFAB. ........................................................................................................................................... 21

SECTION 8. Best Use of AFAB Properties. ........................................................................................................................................... 21

SECTION 9. Establishment of Secure Perimeters, Points of Entry and Duty and Tax Free Areas of the FAB. ........................... 21

SECTION 10. General Land Use Plan. .................................................................................................................................................. 22

SECTION 11. Annual Reports. ............................................................................................................................................................... 22

SECTION 12. Board of Directors. ........................................................................................................................................................... 22

SECTION 13. Composition. .................................................................................................................................................................... 22

SECTION 14. Chairman/Administrator. ............................................................................................................................................... 22

SECTION 15. By‐Laws. ........................................................................................................................................................................... 23

CHAPTER III: PROCEDURES FOR REGISTRATION OF FREEPORT AREA OF BATAAN ENTERPRISES & RESIDENTS ...... 24

SECTION 16. Registration Office. .......................................................................................................................................................... 24

SECTION 17. Who are Eligible. .............................................................................................................................................................. 24

SECTION 18. Condition for Registration. ............................................................................................................................................. 24

SECTION 19. Criteria for Issuance of Certificates. .............................................................................................................................. 24

SECTION 20. Period for Issuance of Certificate. .................................................................................................................................. 24

SECTION 21. Effect of Issuance of Certificates. ....................................................................................................................................... 24

SECTION 22. Simultaneous Issuance of Certificates of Registration and Residency. .................................................................... 24

SECTION 23. Validity. ............................................................................................................................................................................. 24

SECTION 24. Identification Card System. ............................................................................................................................................ 24

SECTION 25.

Fees.

...................................................................................................................................................................................

25

SECTION 26. Withdrawal, Suspension or Cessation of Operations. ................................................................................................ 25

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SECTION 27. Revocation, Suspension or Cancellation of Certificates of Registration or Residency. .......................................... 25

SECTION 28. Eligibility for Registration. ............................................................................................................................................. 25

SECTION 29. Requirements for Registration of Existing Enterprises. .............................................................................................. 25

SECTION 30. Effect of not Acquiring Registration. ............................................................................................................................ 25

SECTION 31. Requirement for Registration of Existing Filipino Residents. .................................................................................... 25

SECTION 32. Foreign Nationals. ........................................................................................................................................................... 26

SECTION 33. Certificate of Residency. ................................................................................................................................................. 26

SECTION 34. Filing of Application. ...................................................................................................................................................... 26

SECTION 35. Filing of Application. ...................................................................................................................................................... 26

SECTION 36. Issuance of Certificate. .................................................................................................................................................... 26

SECTION 37. Certificates of Residency of New FAB Filipino Residents. ........................................................................................ 27

SECTION 38. Foreign Nationals Residing Outside the FAB. ............................................................................................................. 27

CHAPTER IV: RIGHTS AND OBLIGATIONS OF FREEPORT AREA OF BATAAN ENTERPRISES AND RESIDENTS ............ 28

SECTION 39. Rights and Obligations. .................................................................................................................................................. 28

SECTION 40. Rights and Obligations of FAB Facilities Operators. .................................................................................................. 28

SECTION 41. Rights of FAB Residents. ................................................................................................................................................ 28

SECTION 42. Obligations of FAB Residents. ....................................................................................................................................... 28

CHAPTER V:

FREEPORT

AREA

OF

BATAAN

TAXATION

AND

TRADE

REGIME

......................................................................

29

SECTION 43. Fiscal Incentives. .............................................................................................................................................................. 29

SECTION 44. Percentage of Income Allowable from Sources Within the Customs Territory. ......................................................... 29

SECTION 45. Tax and Duty Exemption. ............................................................................................................................................... 29

SECTION 46. Importation by FAB Residents. ...................................................................................................................................... 29

SECTION 47. Articles Removed or Withdrawn from the FAB. ......................................................................................................... 29

SECTION 48.

Articles

Admitted

into

the

FAB

from

the

Customs

Territory.

...................................................................................

29

SECTION 49. Foreign Articles Used as Raw Materials. ...................................................................................................................... 29

SECTION 50. Foreign Articles Sold to FAB Residents. ....................................................................................................................... 29

SECTION 51. Limit of Purchase of Foreign Articles. .......................................................................................................................... 30

SECTION 52. Seizure of Foreign Articles. ............................................................................................................................................ 30

SECTION 53. Transit of Articles by Carriers. ....................................................................................................................................... 30

SECTION 54. Articles Exported to Foreign Countries and Re‐Exported into the Customs Territory. ......................................... 30

SECTION 55. Responsibility for Foreign Articles; Presumption on Missing Articles. ................................................................... 30

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SECTION 56. Customs Manual of Operations. .................................................................................................................................... 30

SECTION 57. Obligations and Liabilities. ............................................................................................................................................. 30

SECTION 58. Returns and Payment of Tax. ......................................................................................................................................... 31

SECTION 59. Bookkeeping and Reportorial Requirements. .............................................................................................................. 32

SECTION 60. Search, Arrest, and Seizure by Customs Officials. ...................................................................................................... 32

SECTION 61. Tax Credits for Foreign Corporations. .......................................................................................................................... 32

CHAPTER VI: FREEPORT AREA OF BATAAN IMMIGRATION REGULATIONS ......................................................................... 33

SECTION 62. General Provisions........................................................................................................................................................... 33

SECTION 63. Responsibility and Authority. ........................................................................................................................................ 33

SECTION 64. Right to Allow No‐Visa Entry to Certain Foreign Nationals. .................................................................................... 33

SECTION 65. Application Outside Freeport Area of Bataan. ............................................................................................................ 33

SECTION 66. Temporary Work and Residency Visas. ....................................................................................................................... 33

SECTION 67. Revocation of Temporary Work Visa. ........................................................................................................................... 34

SECTION 68. Temporary Residency Visas. .......................................................................................................................................... 34

SECTION 69. Reportorial Requirements. ............................................................................................................................................. 34

SECTION 70. Permanent Residency Visas. .......................................................................................................................................... 34

SECTION 71. Permanent Residency Visas for Investors. ................................................................................................................... 34

SECTION 72.

Revocation

or

Termination

of

Permanent

Residency

Visa

of

Investor.

....................................................................

34

SECTION 73. Permanent Residency Visa for Retirees. ....................................................................................................................... 34

SECTION 74. Revocation or Termination of Permanent Residency Visa of Retiree. ...................................................................... 35

SECTION 75. Reportorial Requirements. ............................................................................................................................................. 35

CHAPTER VII: FREEPORT AREA OF BATAAN QUARANTINE REGULATIONS ......................................................................... 36

SECTION 76. Applicability of Philippine Laws Regarding Animal and Plant Health. .................................................................. 36

SECTION 77.

Applicability

of

Philippine

Laws

Regarding

Human

Quarantine

&

Diseases

of

Public

Health

Concerns.

........

36

SECTION 78. Persons Responsible for Implementation. .................................................................................................................... 36

CHAPTER VIII: FREEPORT AREA OF BATAAN FOREIGN EXCHANGE AND BANKING REGIME ........................................ 37

SECTION 79. Foreign Exchange Accounts. .......................................................................................................................................... 37

SECTION 80. Philippine Currency Accounts. ...................................................................................................................................... 37

SECTION 81. Purchase of Foreign Exchange. ...................................................................................................................................... 37

SECTION 82. Foreign Exchange in Business Transactions. ................................................................................................................ 37

SECTION 83. Use of Foreign Exchange. ............................................................................................................................................... 37

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SECTION 84. Rules on Foreign/Foreign Currency Loans and Investments. ................................................................................... 37

SECTION 85. Philippine Currency Transactions. ................................................................................................................................ 37

SECTION 86. Applicability of Central Bank Circular 1353. ............................................................................................................... 38

SECTION 87. In General. ........................................................................................................................................................................ 38

SECTION 88. Offshore Banking Units. ................................................................................................................................................. 38

SECTION 89. Foreign Currency Depository Units. ............................................................................................................................. 38

SECTION 90. Banks Licensed in the Philippines. ................................................................................................................................ 38

SECTION 91. OBU Affiliates. ................................................................................................................................................................. 38

SECTION 92. Tax Exemption Privileges of FAB Registered Banks and Affiliates. ......................................................................... 38

SECTION 93. Tax Liability of FAB Registered Banks and Affiliates. ................................................................................................ 38

SECTION 94. Effect of Existing Bangko Sentral ng Pilipinas Regulations of FAB Registered OBU’s. ......................................... 38

CHAPTER IX: ENVIRONMENTAL REGULATIONS ............................................................................................................................ 39

SECTION 95. Principles. ......................................................................................................................................................................... 39

SECTION 96. Administration/Environmental Management Center. ............................................................................................... 39

SECTION 97. Application of Philippine Environmental Laws. ......................................................................................................... 39

SECTION 98. Coverage. .......................................................................................................................................................................... 39

SECTION 99. Permits and Clearances. .................................................................................................................................................. 39

SECTION 100.

Natural

Resources

Protection

Areas.

..........................................................................................................................

40

SECTION 101. Air Quality. ..................................................................................................................................................................... 40

SECTION 102. Water Quality. ................................................................................................................................................................ 41

SECTION 103. Waste Management. ...................................................................................................................................................... 41

SECTION 104. Water Resources Planning. ........................................................................................................................................... 42

SECTION 105. Submission of Integrated Water Resource Management Plan. ............................................................................... 42

SECTION 106.

Conservation

Areas.

......................................................................................................................................................

42

SECTION 107. Emergency and Contingency Planning. ..................................................................................................................... 42

CHAPTER X: OTHER PROVISIONS ......................................................................................................................................................... 43

SECTION 108. Power of Eminent Domain. .......................................................................................................................................... 43

SECTION 109. Effect of Expropriation on Lease Agreements. .......................................................................................................... 43

SECTION 110. Function of AFAB Police Force. ................................................................................................................................... 43

SECTION 111. Responsibility for Security of FAB. ............................................................................................................................. 43

SECTION 112. Request for Assistance. ................................................................................................................................................. 43

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SECTION 113. Search and Inspection of Persons and Vehicles. ........................................................................................................ 43

SECTION 114. Objectives and Policy. ................................................................................................................................................... 43

SECTION 115. Applicability of Labor Laws. ........................................................................................................................................ 43

SECTION 116. Labor Center. .................................................................................................................................................................. 43

SECTION 117. Requirements for All Persons Seeking Employment Within the FAB. ................................................................... 44

SECTION 118. Labor Disputes. .............................................................................................................................................................. 44

SECTION 119. Labor Skills Inventory; Identification Card. ............................................................................................................... 44

SECTION 120. Employment of Foreign Nationals. ............................................................................................................................. 44

SECTION 121. Training Program for Understudies. ........................................................................................................................... 44

SECTION 122. Duration of Period of Employment. ............................................................................................................................ 44

SECTION 123. Spouses and Dependents of Foreign Nationals. ........................................................................................................ 44

SECTION 124. Registration with the AFAB. ........................................................................................................................................ 45

SECTION 125. Apprenticeship Program. ............................................................................................................................................. 45

SECTION 126. Quarterly Reports. ......................................................................................................................................................... 45

SECTION 127. In General. ...................................................................................................................................................................... 45

SECTION 128. Fees .................................................................................................................................................................................. 45

SECTION 129. Fines and Penalties. ....................................................................................................................................................... 45

SECTION 130.

Establishment

of

Private

Institutions.

.........................................................................................................................

45

SECTION 131. Applicability of National Laws. ................................................................................................................................... 45

SECTION 132. Building and Construction Plans. ................................................................................................................................ 45

SECTION 133. Need to Secure Environmental Compliance Certificate. .......................................................................................... 45

SECTION 134. Applicability of National Laws. ................................................................................................................................... 45

SECTION 135. Registration of Non‐Resident Headquarters .............................................................................................................. 46

SECTION 136.

Tax

Privileges

of

Non

‐Resident

Headquarters.

.........................................................................................................

46

SECTION 137. Obligations of Non‐Resident Headquarters. .............................................................................................................. 46

SECTION 138. Who are Eligible to Organize. ...................................................................................................................................... 46

SECTION 139. Mode of Organization. .................................................................................................................................................. 46

SECTION 140. Amicable Settlement. ..................................................................................................................................................... 46

SECTION 141. Arbitration or Litigation. .............................................................................................................................................. 46

SECTION 142. Bankruptcy or Liquidation. .......................................................................................................................................... 46

SECTION 143. Lien on Property of FAB Enterprise. ........................................................................................................................... 46

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SECTION 144. Liability for Damages. ................................................................................................................................................... 46

SECTION 145. General Authority to Dispose of Abandoned, Foreclosed, Forfeited or Unclaimed Articles. ............................. 46

SECTION 146. Effect of Board Action on Vested Rights. ................................................................................................................... 46

SECTION 147. Rules of Procedure for Investigations. ........................................................................................................................ 47

SECTION 148. Inventory. ........................................................................................................................................................................ 47

SECTION 149. Transfer of Property. ..................................................................................................................................................... 47

SECTION 150. Management and Financial Audit. .............................................................................................................................. 47

SECTION 151. Supervision and Control. .............................................................................................................................................. 47

SECTION 152. Regional Development Council. .................................................................................................................................. 47

SECTION 153. Relationship with Local Government Units. .............................................................................................................. 47

SECTION 154. Legal Counsel. ................................................................................................................................................................ 47

SECTION 155. Existing Employees at BEZ. .......................................................................................................................................... 47

SECTION 156. Benefits. ........................................................................................................................................................................... 47

SECTION 157. Automatic Recognition of PEZA registrations. .............................................................................................................. 47

SECTION 158. Recognition and Adoption of PEZA Forms. .............................................................................................................. 48

SECTION 159. Transition Period. .......................................................................................................................................................... 48

SECTION 160. Power to Amend Rules. ................................................................................................................................................ 48

SECTION 161.

Separability

Clause.

.......................................................................................................................................................

48

SECTION 162. Effectivity Clause. .......................................................................................................................................................... 48

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CHAPTER I

PRELIMINARY PROVISIONS

SECTION 1. Scope. — These Rules and Regulations are hereby promulgated to implement the provisions

governing the Freeport Area of Bataan, and the Authority of the Freeport Area of Bataan, as created under

Republic Act No. 9728, otherwise known as the Freeport Area of Bataan Act of 2009, and other related laws.

SECTION 2. Declaration of Policy. — Within the framework and subject to the mandate of the Constitution and

the pertinent

provisions

of

the

Local

Government

Code,

it

is

hereby

declared

the

policy

of

the

State

and

the

Authority of the Freeport Area of Bataan (AFAB) to actively encourage, promote, induce and accelerate a sound

and balanced industrial, economic, and social development of the country in order to provide jobs to the people,

especially those in the rural areas, increase productivity and individual and family income, and thereby improve

the level and quality of living conditions through the establishment, among others, of special economic zones in

suitable and strategic locations in the country and through measures that will attract legitimate and productive

foreign investments..

It is also declared the policy of the State and AFAB to operate and manage the Freeport Area of Bataan (FAB) as a

separate customs territory ensuring free flow or movement of goods and capital within, into, and exported out of

the FAB, as well as provide incentives such as tax and duty free importations of raw materials, capital, and

equipment.

SECTION 3. Definitions. — For purposes of these Rules, these terms shall be understood to have the following

meanings:

a. Act — refers to Republic Act No. 9728, otherwise known as the Freeport Area of Bataan Act of 2009.

b. Rules — refers to these Implementing Rules and Regulations.

c. FAB — is the Freeport Area of Bataan referred to in Section 3 of the Act, and is a separate customs territory

consisting of the existing Bataan Economic Zone in Mariveles, Bataan, and the entire municipality of

Mariveles, Bataan; the FAB shall refer to the area demarcated by the existing Bataan Export Zone (“BEZ”)

and areas as established and demarcated by the AFAB with secured perimeter walls; Provided that the FAB

can be expanded in accordance with Section 4 (g) of the Act.

d.

AFAB

—

refers

to

the

Authority

of

the

Freeport

Area

of

Bataan

created

under

Section

11

of

the

Act.

e. Point of Entry — refers to any place designated by the AFAB where articles may be lawfully introduced into

or removed from the FAB or any part therein designated by the AFAB.

f. FAB Enterprise — refers to any business entity or concern within the FAB duly registered with and/or

licensed by the AFAB to operate any lawful economic activity within the FAB, including existing

enterprises that were previously registered with the Bataan Economic Zone.

g. Certificate of Registration — refers to the certificate issued by the AFAB representing the registration of the

business entity as a FAB Enterprise.

h. Certificate of Residency — refers to the certificate issued by the AFAB representing the registration of an

individual as a FAB Resident.

i. FAB Facilities Operator — refers to a FAB Enterprise which operates facilities or services within the FAB,

including the

subleasing

of

land

or

other

property

to

other

FAB

Enterprises.

j. Board — refers to the Board of Directors of the AFAB.

k. Domestic Articles — refers to articles which are the growth, product or manufacture of the Philippines and

upon which all national internal revenue taxes have been paid, if subject thereto, and upon which no

drawback or bounty has been allowed; and articles of foreign origin on which all duties and taxes have been

paid and upon which no drawback or bounty has been allowed, or which have previously been entered into

customs territory free of duties or taxes.

l. Foreign Articles — refers to articles of foreign origin on which duties and taxes have not been paid, or upon

which drawback or bounty has been allowed, or which have not been previously entered into customs

territory; or articles which are the growth, product or manufacture of the Philippines on which not all

national

internal

revenue

taxes

have

been

paid,

if

subject

thereto,

or

upon

which

drawback

or

bounty

has

been allowed.

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m. Customs Territory — refers to the portion of the Philippines outside the FAB where the Tariff and Customs

Code of the Philippines and other national tariff and customs laws are in force and effect.

n. Articles — for purposes of these Rules, and when used with reference to importations or exportations, the

term includes raw materials, supplies, equipment, machinery, packaging materials, goods, wares,

merchandise and in general, anything that may, under the Rules of the AFAB, be made the subject of

importation into or exportation from the Zone.

o. Transit — refers to transshipment of articles discharged at ports or airports of entry located in Customs

Territory destined for delivery to the FAB, and articles coming from the FAB intended for export through a

Philippine Customs port/airport of entry which may be transported under guard, upon examination, and consigned to the officially designated collector at the port of destination/export who will allow the

consignor or consignee, as the case may be, to make entry for exportation.

p. Foreign Exchange — refers to any currency other than the Philippine Peso acceptable for payment by the

Bangko Sentral ng Pilipinas.

q. National Government — refers to the Government of the Philippines.

r. Foreign National — refers to a natural person who is not a citizen of the Philippines.

s. Offshore Banking Unit (OBU) — refers to a branch, subsidiary, or affiliate of a foreign banking corporation

which is duly authorized by the Bangko Sentral ng Pilipinas to transact offshore banking business in the

Philippines.

t.

FAB Resident

—

refers

to

individuals

who

qualify

and

comply

with

the

regulations

set

forth

under

Chapter

III of these Rules. The AFAB Chairman and Administrator as well as members of the Board of Directors

shall automatically be considered FAB Residents for the duration of their respective terms.

u. Authorized Agent Banks — shall refer to all categories of banks (except OBUs) duly licensed by the Bangko

Sentral

ng

Pilipinas. It is understood that each category of bank shall function within the operational

parameters defined by existing laws/regulations for the speficic bank category to which it respectively

belongs.

v. Authorized Agent Bank‐subsidiary/affiliate foreign exchange corporations — whether or not named as

such, shall refer to Authorized Agent Bank subsidiary/affiliate foreign exchange corporations whose

business include buying and selling of foreign exchange.

SECTION 4. Rules of Interpretation. — Pursuant to the declared policies of the State on the FAB, the following

rules of interpretation shall be observed in the implementation of the provisions of the Act, as well as the

provisions of these Rules:

All trade and business, immigration, corporation, banking and quarantine laws shall be subordinated to and/or

liberally construed in favor of the FAB to enhance and promote the policies of the special economic and freeport

system within the boundaries established by law and these Rules.

a. The powers, authorities and functions that are vested in the AFAB are intended to establish decentralization

of governmental functions and authority and promote an efficient and effective working relationship

between the AFAB, the National Government and the LGU. For this purpose,

1. In case of conflict between national and local laws and tax exemption privileges in the FAB, the

same shall be resolved in favor of the latter; and

2.

In case

of

conflict

between

AFAB

and

the

local

government

units

concerned

on

matters

affecting

the

FAB other than the defense and security of the said local government units, the decision of the

AFAB shall prevail.

b. The provisions of existing laws, rules and regulations to the contrary notwithstanding, the AFAB shall

exercise administrative powers, rulemaking and disbursements of funds over the FAB.

c. The AFAB shall be vested with other powers enjoyed or exercised by other freeport zone authorities.

SECTION 5. Boundaries of the Freeport Area of Bataan. — The boundaries of the FAB shall comprise the area

described in Section 3 of the Act, the metes and bounds of which will be further delineated through Presidential

Proclamation. Pending the establishment of secure perimeters around the FAB, the AFAB shall adopt and

implement the gradual and phased operationalization of areas within the FAB to ensure strict compliance with

the

Act,

these

Rules

and

other

Philippine

laws;

Provided

that

the

FAB

may

be

expanded

in

accordance

with

Section 4 (g) of the Act.

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CHAPTER II

AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB)

SECTION 6. Powers and Functions. — The AFAB shall have the following powers and functions:

a. To adopt, alter and use a corporate seal;

b. To sue and be sued in order to carry out its duties, responsibilities, privileges, powers and functions as granted

and provided for in this Act and to exercise the power of eminent domain for public use and public purpose;

c.

To contract,

lease,

buy,

sell,

acquire,

own

and

dispose

of

properties

of

whatever

nature;

a. d To operate, administer, manage, develop, in accordance with Executive Order No. 525, as amended, the

FAB according to the principles and provisions set forth in this Act and to coordinate with the LGUs for the

development plans, activities and operation of the FAB;

d. To recommend to the President the issuance of a proclamation to fix and delimit the site of the FAB;

e. To register, regulate and supervise the enterprises in the FAB in an efficient and decentralized manner,

subject to existing laws;

f. To coordinate with the LGUs and exercise general supervision over the development plans, activities and

operations of the FAB;

g. To approve, accept, accredit and allow any local or foreign business, enterprise or investment in the FAB

subject to existing laws, rules, and regulations including those promulgated by the AFAB from time to time

in conformity

with

the

provisions

and

policies

of

the

Act;

h. To authorize or undertake, on its own or through others, and regulate the establishment, operation and

maintenance of public utilities, services and infrastructure in the FAB such as shipping, barging,

stevedoring, cargo handling, hauling, warehousing, storage of cargo, port services or concessions, piers,

wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges, terminals, conveyors,

water supply and storage, sewerage, drainage, oil and

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