TableofContents

SECTION1.ShortTitle............................................................................................................................................................2
SECTION2.DeclarationofPolicy..........................................................................................................................................2
SECTION3.ConversionoftheBataanEconomicZone(BEZ)intotheFreeportAreaofBataan..................................2
SECTION4.GoverningPrinciples.........................................................................................................................................2
SECTION5.FiscalIncentives..................................................................................................................................................3
SECTION6.ImpositionofaTaxRateofFivePercent(5%)onGrossIncomeEarned....................................................3
SECTION7.IncentivetoInvestors.........................................................................................................................................3
SECTION8.Administration,ImplementationandMonitoringofIncentives.................................................................4
SECTION9.ExtensionofPeriodofAvailment....................................................................................................................4
SECTION10.DurationofIncentives.....................................................................................................................................4
SECTION11.CreationoftheAuthorityoftheFreeportAreaofBataan(AFAB)............................................................4
SECTION12.PrincipalOfficeoftheAFAB..........................................................................................................................4
SECTION13.PowersandFunctionsoftheAFAB...............................................................................................................4
SECTION14.BoardofDirectorsoftheFAB.........................................................................................................................6
SECTION15.PowersandDutiesoftheChairmanAdministrator...................................................................................6
SECTION16.OrganizationandPersonnel...........................................................................................................................7
SECTION17.LaborCenter......................................................................................................................................................7
SECTION18.BankingRulesandRegulations......................................................................................................................7
SECTION19.Remittances.......................................................................................................................................................7
SECTION20.ApplicabilityClause.........................................................................................................................................7
SECTION21.Capitalization....................................................................................................................................................7
SECTION22.SupervisionandControl.................................................................................................................................7
SECTION23.RegionalDevelopmentCouncil......................................................................................................................8
SECTION24.RelationshipwithLocalGovernmentUnits.................................................................................................8
SECTION25.LegalCounsel....................................................................................................................................................8
SECTION26.Interpretation/Construction...........................................................................................................................8
SECTION27.Audit..................................................................................................................................................................8
SECTION28.TransitoryProvisions.......................................................................................................................................8
SECTION29.ImplementingRulesandRegulations...........................................................................................................8
SECTION30.SeparabilityClause...........................................................................................................................................8
SECTION31.RepealingClause..............................................................................................................................................8
SECTION32.EffectivityClause..............................................................................................................................................8

1|RA9728

RepublicofthePhilippines
CONGRESSOFTHEPHILIPPINES
MetroManila
FourteenthCongress
ThirdRegularSession
BegunandheldinMetroManila,onMonday,thetwentyseventhdayofJuly,twothousandnine.

RepublicActNo.9728
ANACTCONVERTINGTHEBATAANECONOMICZONELOCATEDINTHEMUNICIPALITYOF
MARIVELES,PROVINCEOFBATAAN,INTOTHEFREEPORTAREAOFBATAAN(FAB),CREATINGFOR
THISPURPOSETHEAUTHORITYOFTHEFREEPORTAREAOFBATAAN(AFAB),APPROPRIATING
FUNDSTHEREFORANDFOROTHERPURPOSES
BeitenactedbytheSenateandHouseofRepresentativesofthePhilippinesinCongressassembled:
SECTION1.ShortTitle.ThisActshallbeknownastheFreeportAreaofBataan(FAB)Actof2009.
SECTION2.DeclarationofPolicy.ItisherebydeclaredthepolicyoftheStatetoactivelyencourage,promote,
induceandaccelerateasoundandbalancedindustrial,economicandsocialdevelopmentofthecountryinorder
toprovidejobstothepeopleespeciallythoseintheruralareas,increaseproductivityandindividualandfamily
income,andtherebyimprovethelevelandqualityoflivingconditionthroughtheestablishment,amongothers,
ofspecialeconomiczonesinsuitableandstrategiclocationsinthecountryandthroughmeasuresthatwillattract
legitimateandproductiveforeigninvestments.
SECTION3.ConversionoftheBataanEconomicZone(BEZ)intotheFreeportAreaofBataan.Theexisting
Bataan Economic Zone located in the Municipality of Mariveles, Province of Bataan is hereby converted into a
specialeconomiczoneandFreeporttobeknownastheFreeportAreaofBataan(FAB).TheFABshallcoverthe
MunicipalityofMariveles,ProvinceofBataan.
SECTION4.GoverningPrinciples.TheFABshallbemanagedandoperatedunderthefollowingprinciples:
(a) Within the framework and limitations of the Constitution and applicable provisions of the Local
GovernmentCode,theFABshallbedevelopedintoandoperatedasadecentralized,selfreliantandself
sustaining industrial, commercialtrading, agroindustrial, tourist, banking, financial and investment
centerwithsuitableresidentialareas;
(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
opportunitiesforthepeopleoftheProvinceofBataananditsneighboringtownsandcities;
(c)TheFABmayestablishmutuallybeneficialeconomicrelationswithotherentitiesorenterpriseswithin
thecountryorwithforeignentitiesorenterprises;
(d) Foreign citizens and companies owned by nonFilipinos in whatever proportion may set up
enterprises in the FAB either by themselves or in joint venture with Filipinos in any sector of industry,
internationaltradeandcommercewithintheFAB;
(e) The FAB shall be managed and operated as a separate customs territory ensuring free flow or
movementofgoodsandcapitalwithin,intoandoutofitsterritory;
(f)TheFABshallprovideincentivessuchastaxanddutyfreeimportationsofrawmaterials,capitaland
equipmenttoregisteredenterpriseslocatedtherein.However,exportationorremovalofgoodsfromthe
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
RevenueCode(NIRC)of1997,asamended;
(g) The areas comprising the FAB may be expanded or reduced when necessary. For this purpose, the
FABAuthoritywhichwillbecreatedunderthisAct,withtheconcurrenceofthelocalgovernmentunits
(LGUs),inaccordancewithexistinglawsandlocalordinancesshallhavethepowertoacquireeitherby
purchase,negotiationorcondemnationproceedings,anyprivatelandswithinoradjacenttotheFABfor
thefollowingpurposes:(1)consolidationoflandsforFABdevelopment;(2)acquisitionofrightofwayto
the FAB; and (3) the protection of watershed areas and the maintenance and improvement of its water
yieldandnaturalassetsvaluabletotheprosperityoftheFAB,themanagementofsolidandwaterwaste
anditsimpacttoadjacentareaswithinthelocalgovernmentconcerned.
TheLGUandtheFABshallprovideforamechanismtoaddressinappropriateexploitationofthenatural
environmentanddisruptivelandusewithinthejurisdictionoftheFAB;
(h) Goods manufactured by the FAB enterprise shall be made available for immediate retail sale in the
domesticmarket,subjecttothepaymentofcorrespondingtaxesonrawmaterialsandotherregulationsthat
maybeformulatedbytheFABAuthority,togetherwiththePhilippineEconomicZoneAuthority(PEZA),the
BangkoSentralngPilipinas(BSP),theDepartmentofFinance(DOF),theBureauofCustoms(BOC)andthe
DepartmentofTradeandIndustry(DTI)inaccordancewiththeNIRCof1997,asamended,andtheTariffand
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
industriesincludedinsuchnegativelistshallnotbeallowedtoselltheirproductslocally;and
(i)ThedefenseoftheFABandthesecurityofitsperimeterfenceshallbetheresponsibilityoftheNational
GovernmentincoordinationwiththeFABAuthorityandtheLGUs.
SECTION 5. Fiscal Incentives. The registered enterprises operating within the FAB may be entitled to the
existingpertinentfiscalincentivesasprovidedforunderRepublicActNo.7916,asamendedbyRepublicActNo.
8748,alsoknownastheSpecialEconomicZoneActof1995,orthoseprovidedunderExecutiveOrderNo.226,as
amended,otherwiseknownastheOmnibusInvestmentCodeof1987.
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
establishmentsshallpayafivepercent(5%)finaltaxontheirgrossincomeearnedinthefollowingpercentages:
(a)Onepercentum(1%)totheNationalGovernment;
(b)Onepercentum(1%)totheProvinceofBataan;
(c)Onepercentum(1%)tothetreasurersofficeoftheMunicipalityofMariveles;and
(d)Twopercentum(2%)totheAuthorityoftheFreeportofAreaofBataan.
SECTION7.IncentivetoInvestors.AnyforeignnationalwhoinvestsanamountofOnehundredfiftythousand
US dollars (US$150,000.00), either in cash and/or equipment, in a registered enterprise shall be entitled to an
investorsvisa:Provided,Thathehasthefollowingqualifications:
(a)Heisatleasteighteen(18)yearsofage;
(b)Hehasnotbeenconvictedofacrimeinvolvingmoralturpitude;
(c)Heisnotafflictedwithanyloathsome,dangerousorcontagiousdisease;and
(d)Hehasnotbeeninstitutionalizedforanymentaldisorderordisability.
Asaholderofinvestorsvisa,analienshallbeentitledtoresideinthePhilippineswhilehisinvestmentsubsists.
Forthispurpose,heshouldsubmitanannualreport,intheformdulyprescribedforthepurpose,toprovethathe

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hasmaintainedhisinvestmentinthecountry,shouldsaidalienwithdrawhisinvestmentsfromthePhilippines,
thentheinvestorsvisaissuedtohimshallautomaticallyexpire.
SECTION 8. Administration, Implementation and Monitoring of Incentives. For the proper administration,
implementationandmonitoringoftaxincentivesprovidedunderthislaw,thefollowingarehereinmandated:
(a)TheAFABshallberesponsiblefortheadministrationandimplementationoftheincentivesgrantedto
itsrespectiveregisteredenterprises.Amongothers,itshalladoptandimplementsystemsandprocedures
affectingtradeandcustomspolicies.
The BOC shall set up and establish a customs controlled area outside the gate of the FAB to facilitate
paymentoftaxesongoodsenteringthePhilippinecustomsterritory;and
(b) The AFAB shalllikewise submit to the DOF its annual tax expenditures based on the tax incentives
grantedtoitsregisteredenterprises.TheDOF,foritspart,shallcreateasingledatabaseofallincentives
provided by the governing authority. The DOF shall monitor the incentives granted, and submit all
annualreporttothePresident.
SECTION9.ExtensionofPeriodofAvailment.Theavailmentperiodoftheincentivesprovidedhereinmaybe
extended by AFAB, in the event that the registered enterprise has suffered operational force majeure that has
impaireditsviability,equivalentthereto.
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%)grossincomeearned(GIE).
Fiscal incentives under this Act shall be terminatedaftera cumulative periodof twenty (20) years fromdate of
registrationorstartofcommercialoperation,whicheverisapplicable,exceptthatitcouldbeextendedwithregard
toindustriesdeemedindispensabletonationaldevelopment.
TheindustriesexemptedfromthisprovisionshallbedeterminedbytheAFAB.
SECTION11.CreationoftheAuthorityoftheFreeportAreaofBataan(AFAB).Thereisherebycreatedabody
corporatetobeknownastheAuthorityoftheFreeportAreaofBataan(AFAB),hereafterreferredtoastheAFAB
whichshallmanageandoperatetheFAB,inaccordancewiththeprovisionsofthisAct.
SECTION12.PrincipalOfficeoftheAFAB.TheAFABshallmaintainitsprincipalofficeintheMunicipalityof
Mariveles,ProvinceofBataan,butitmayestablishliaisonofficeswithinthePhilippinesasmaybenecessaryfor
theproperconductofitsbusiness.
SECTION13.PowersandFunctionsoftheAFAB.TheAFABshallhavethefollowingfunctions:
(a)Toadopt,alter,useacorporateseal,tocontract,lease,buy,sell,acquire,ownanddisposepropertiesof
whatevernature;
(b)Tosueandbesuedinordertocarryoutitsduties,responsibilities,privileges,powersandfunctionsas
granted and provided for in this Act and to exercise the power of eminent domain for public use and
publicpurpose;
(c) To operate, administer, manage, develop, m accordance with Executive Order No.525,as amended,
theFABaccordingtotheprinciplesandprovisionssetforthinthisActandtocoordinatewiththeLGUs
forthedevelopmentplans,activitiesandoperationoftheFAB;
(d)TorecommendtothePresidenttheissuanceofaproclamationtofixanddelimitthesiteoftheFAB;

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(e)Toregister,regulateandsupervisetheenterprisesintheFABinanefficientanddecentralizedmanner,
subjecttoexistinglaws;
(f)TocoordinatewiththeLGUsandexercisegeneralsupervisionoverthedevelopmentplans,activities
andoperationsoftheFAB;
(g)Toauthorizeorundertake,onitsownorthroughothers,andtoregulatetheestablishment,
construction,operationandmaintenanceofpublicutilities,services,andinfrastructureintheFABsuchas
shipping,barging,stevedoring,cargo,handling,hauling,warehousing,storageofcargo,portservicesor
concessions,piers,wharves,bulkheads,bulkterminals,mooringareas,storageareas,roads,bridges,
reclamationprojects,terminals,conveyors,watersupplyandstorage,sewerage,drainage,airport
operationsincoordinationwiththeCivilAeronauticsBoard,andsuchotherservicesorconcessionsor
infrastructurenecessaryorincidentaltotheaccomplishmentoftheobjectivesofthisAct:Provided,
however,ThattheprivateinvestorsintheFABshallbegivenpriorityintheawardingofcontracts,
franchises,licenses,orpermitsfortheestablishment,operationandmaintenanceofutilities,servicesand
infrastructureintheFAB;
(h)Tolicense,setfees,regulateandundertaketheestablishment,operationandmaintenanceofutilities,
otherservices,educationalandmedicalinstitutionsandinfrastructureintheFABsuchas,butnotlimited
to, heat, light and power, water supply, telecommunications, mobile, internet and other data facilities,
transport,tollroadsandbridges,portservices,etc.,andtofixjust,reasonableandcompetitiverates,fares,
chargesandpricesthereof;
(i) To construct, acquire, own, lease, operate and maintain on its own or through contracts, franchises,
licenses, bulk purchase from the private sector and buildoperatetransfer scheme, or under a joint
venturewiththeprivatesectors,anyorallofthepublicutilitiesandinfrastructurerequiredorneededfor
the operation and development of the FAB, in coordination with appropriate national and local
governmentauthoritiesandinconformitywithapplicablelawsthereon;
(j)Tooperateonitsown,eitherdirectlyorthroughalicensetoothertourismrelatedactivities,including
games, amusements, recreational and sports facilities, subject to the approval and supervision of the
PhilippineAmusementandGamingCorporation(PAGCOR);
(k)Toraiseorborrow,withinthelimitationprovidedbylaw,adequateandnecessaryfundsfromlocalor
foreignsources,tofinanceitsprojectsandprogramsunderthisAct,andforthatpurpose,toissuebonds,
promissorynotes,andotherformsofsecurities,andtosecurethesamebyaguarantee,pledge,mortgage,
deedoftrust,oranassignmentofallorpartofitspropertyorassets;
(l) To provide security for the FAB in coordination with the national and local governments. For this
purpose,theAFABmayestablishandmaintainitssecurityforcesandfirefightingcapabilityorhireothers
toprovidethesame.Intheeventthatanassistanceofthemilitaryforceisnecessary,itshallnotinterfere
intheinternalaffairsoftheFABexcepttoprovidethenecessarysecurityanddefense,andtheirexpenses
shallbebornebytheNationalGovernment;
(m) To protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs, and
maintainecologicalbalancewithintheFAB.Forthispurpose,therulesandregulationsoftheDepartment
of Environment and Natural Resources (DENR) and other government agencies involved in the above
functionsshallbeimplementedbytheAFAB;
(n) To create, operate and/or contract to operate such functional units or offices of the AFAB as it may
deemnecessary;
(o)ToissuecertificatesoforiginforproductsmanufacturedorprocessedintheFAB;

5|RA9728

(p) To issue rules and regulations consistent with the provisions of this Act as may be necessary to
implementandaccomplishthepurposes,objectivesandpoliciesprovidedherein;
(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,
objectivesandpoliciesofthisAct;and
(r)Tobevestedwithotherpowersenjoyedorexercisedbyotherfreeportzoneauthorities.
SECTION 14. Board of Directors of the FAB. The powers of the AFAB shall be vested in and exercised by
aBoardofDirectors,hereinafterreferredtoastheBoard,whichshallbecomposedofthefollowing:
(a)Thechairmanwhoshall,atthesametime,betheadministratoroftheAFAB;
(b)AvicechairmanwhoshallcomefromamongthemembersoftheBoard;
(c)Membersconsistingof:
(1)Two(2)representativesfromtheNationalGovernment;
(2)One(1)representativefromtheProvinceofBataan;
(3)One(1)representativefromthedistrictcoveringthesiteoftheFAB;
(4)One(1)representativefromtheMunicipalityofMariveles,ProvinceofBataan;
(5)One(1)representativefromthedomesticinvestors;
(6)One(1)representativefromtheforeigninvestors;and
(7)One(1)representativefromtheworkersworkingintheFAB.
The chairman and the members of the Board, shall be appointed by the President of the Philippines to
serveforatermofsix(6)years,unlesssoonerseparatedfromserviceduetodeath,voluntaryresignation
orremovalforcause.Incaseofdeath,resignationorremovalforcause,thereplacementshallserveonly
theunusedportionoftheterm.
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,ofprovenprobityandintegrity,andadegreeholderinanyofthefollowingfields:economics,
business, public administration, law, management or their equivalent, and with at least ten (10) years
relevantworkingexperiencepreferablyinthefieldofmanagementorpublicadministration.
The members of the Board shall each receive per diem at rates to be determined by the Department of
BudgetandManagement(DBM)inaccordancewithexistingrulesandregulations:Provided,however,That
thetotalperdiemcollectedeachmonthshallnotexceedtheequivalentperdiemforfour(4)meetings.
SECTION15.PowersandDutiesoftheChairmanAdministrator.Thechairmanadministratorshallhavethe
followingpowersandduties:
(a)TodirectandmanagetheaffairsoftheAFABinaccordancewiththepoliciesoftheBoard;
(b)ToestablishtheinternalorganizationoftheAFABundersuchconditionsthattheBoardmay
prescribe;
(c)TosubmitanannualbudgetandnecessarysupplementalbudgettotheBoardforitsapproval;

6|RA9728

(d)Tosubmitwithinthirty(30)daysafterthecloseofeachfiscalyearanannualreporttotheBoard
andsuchotherreportsasmayberequired;
(e)TosubmittotheBoardforitsapprovalpolicies,systems,procedures,rulesandregulationsthat
areessentialtotheoperationoftheAFAB;
(f)Tocreateamechanismincoordinationwithrelevantagenciesforthepromotionofindustrialpeace,
theprotectionoftheenvironment,andtheadvancementofthequalityoflifeintheFAB;and
(g)ToperformsuchotherdutiesasmaybeassignedtohimbytheBoardorwhicharenecessary
orincidentaltohisoffice.
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
administratorandwiththeapprovaloftheSecretaryoftheDTI,theBoardshallappointandfixtheremuneration
and other emoluments of its officers and employees in accordance with existing laws on compensation and
positionclassification:Provided,ThattheBoardshallexerciseadministrativesupervisionontheiremployees.
The officers and employees of the AFAB, including all members of the Board, shall not engage directly or
indirectlyinpartisanactivitiesnortakepartinanyelection,excepttovote.
NoofficeroremployeeoftheAFAB,subjecttocivilservicelawsandregulations,shallberemovedorsuspended
exceptforcause,asprovidedbylaw.
SECTION17.LaborCenter.AlaborcentershallbeestablishedwithintheFAB.Thiscentershallberesponsible
for studying and amicably settling professional and labor relations and disputes, interpretation of employment
contracts,andmonitoringwork,hygieneandsafetystandardswithintheFAB.Thelaborcentershallcomprisea
laboroffice,anindustrialhealthandsafetyoffice,andaninspectionanddisputesoffice.
SECTION 18. Banking Rules and Regulations. Existing banking laws and rules/regulations of the BSP shall
applytobanksandfinancialinstitutionstobeestablishedintheFAB.
SECTION 19. Remittances. In the case of foreign investments, a registered enterprise in the Bataan Ecozone
shallhavetherighttoremitearningsfromtheinvestmentinthecurrencyinwhichtheinvestmentwasoriginally
made and at the exchange rate prevailing at the time of remittance, subject to the provisions of Section 74 of
RepublicActNo.265,asamended.
SECTION 20. Applicability Clause. The provisions of Sections 3041 of Republic Act No. 7916, otherwise
knownasTheSpecialEconomicZoneActof1995,asamended,shalllikewiseapplytotheFAB.
SECTION 21. Capitalization. The AFAB shall have an authorized capital stock of Two billion pesos
(Php2,000,000,000.00),withoptiontoincreasecapitalizationuponthediscretionoftheAFAB,dividedintotwenty
thousand(20,000)noparsharesfullysubscribedandpaidupbytheRepublicofthePhilippineswith:
(a)AlllandsembracedandcoveredbytheFAB,aswellaspermanentimprovementsandfixturesupon
properinventorynototherwisealienated,conveyed,ortransferredtoanothergovernmentagency;
(b)AllotherassetswhichthePresidentmaytransfertotheAFABaspartoftheequitycontributionofthe
government;and
(c)CashcontributionbythegovernmentintheamountofFivehundredmillionpesos(Php500,000,000.00)
ayearforthenextfive(5)years,whichisherebyappropriatedoutofanyfundintheNationalTreasury
nototherwiseappropriated.
SECTION22.SupervisionandControl.Forpurposesofpolicydirectionandcoordination,theAFABshallbe
underthedirectcontrolandsupervisionoftheOfficeofthePresidentofthePhilippines.

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SECTION23.RegionalDevelopmentCouncil.TheAFABshalldeterminethedevelopmentgoalsfortheFAB
withintheframeworkofnationaldevelopmentplans,policiesandgoals.Theadministratorshall,uponapproval
by the Board, submit the FAB plans, programsandprojects to the Regional Development Councilforinclusion
andinputstotheoverallregionaldevelopmentplan.
SECTION 24. Relationship with Local Government Units. Except as herein provided, the Municipality of
MarivelesintheProvinceofBataanshalloperateandfunctioninaccordancewiththeLocalGovernmentCodeof
1991. In case of any conflict between the AFAB and the local government units (LGUs) and the National
Government(NG)onmattersaffectingtheFABotherthandefenseandsecuritymatters,thedecisionoftheAFAB
shallprevail.
SECTION25.LegalCounsel.TheAFABshallhaveitsowninternallegalcounselunderthesupervisionofthe
Government Corporate Counsel. When the exigencies of its businesses and operations demand, the AFAB may
engagetheservicesofanoutsidecounseleitheronacasetocaseoronafixedretainerbasis.
SECTION26.Interpretation/Construction.Thepowers,authoritiesandfunctionsthatarevestedintheAFAB
areintendedtoestablishdecentralizationofgovernmentalfunctionsandauthorityandpromoteanefficientand
effectiveworkingrelationshipbetweentheAFAB,theNationalGovernmentandtheLGU.
SECTION 27. Audit. The Commission on Audit shall appoint a fulltime auditor in the AFAB or may assign
suchnumberofpersonnelasmaybenecessaryintheperformanceoftheirfunctions.
SECTION28.TransitoryProvisions.Allproperties,assets,funds,rights,obligations,andliabilitiesarehereby
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,managementanddevelopmentoftheFAB.
TheAFABshalleffectthetransferhereinprovidedinamannerthatwillensuretheleastdisruptionofongoing
programsoftheBEZ.ThequalifiedandnecessarypersonneloftheBEZshallbetransferredtoandabsorbedby
theAFAB:Provided,Thatthetenure,rank,salariesandprivilegesofsuchpersonnelarenotreducedoradversely
affected. The personnel whose services are not retained by the AFAB shall be granted separation pay and
retirementandotherbenefitstheyareentitledtounderexistinglawsbutinnocaseshalltheseparationpaybe
lessthanone(1)monthforeveryyearofservice.
IntheperiodpriortotheactualassumptionofdutiesbytheAFAB,allofficersandemployeesoftheBEZshall
continue to exercise their functions and discharge their duties and responsibilities. The BEZ shall be deemed
abolishedupontheorganizationoftheAFAB.
SECTION29. Implementing Rules and Regulations. The DTI, the DOF, the LGU and the Department of the
InteriorandLocalGovernmentshallformulatetheimplementingrulesandregulationsofthisActwithinninety
(90)daysafteritsapproval.Suchrulesandregulationsshalltakeeffectfifteen(15)daysaftertheirpublicationina
newspaperofgeneralcirculationinthePhilippines.
SECTION 30. Separability Clause. If any provision of this Act shall be held unconstitutional or invalid, the
otherprovisionsnototherwiseaffectedshallremainmfullforceandeffect.
SECTION31.RepealingClause.RepublicActNo.5490andPresidentialDecreeNo.66areherebyamended.All
laws, executive orders or issuances or any part thereof which are inconsistent herewith are hereby repealed or
amendedaccordingly.
SECTION32.EffectivityClause.ThisActshalltakeeffectuponitspublicationinatleastone(1)newspaperof
generalcirculation.

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9|RA9728

TableofContents

CHAPTERI:PRELIMINARYPROVISIONS............................................................................................................................................17
SECTION1.Scope...................................................................................................................................................................................17
SECTION2.DeclarationofPolicy.........................................................................................................................................................17
SECTION3.Definitions..........................................................................................................................................................................17
SECTION4.RulesofInterpretation......................................................................................................................................................18
SECTION5.BoundariesoftheFreeportAreaofBataan....................................................................................................................18
CHAPTERII:AUTHORITYOFTHEFREEPORTAREAOFBATAAN(AFAB)................................................................................19
SECTION6.PowersandFunctions.......................................................................................................................................................19
SECTION7.ResponsibilitiesoftheAFAB............................................................................................................................................21
SECTION8.BestUseofAFABProperties............................................................................................................................................21
SECTION9.EstablishmentofSecurePerimeters,PointsofEntryandDutyandTaxFreeAreasoftheFAB............................21
SECTION10.GeneralLandUsePlan...................................................................................................................................................22
SECTION11.AnnualReports................................................................................................................................................................22
SECTION12.BoardofDirectors............................................................................................................................................................22
SECTION13.Composition.....................................................................................................................................................................22
SECTION14.Chairman/Administrator................................................................................................................................................22
SECTION15.ByLaws............................................................................................................................................................................23
CHAPTERIII:PROCEDURESFORREGISTRATIONOFFREEPORTAREAOFBATAANENTERPRISES&RESIDENTS......24
SECTION16.RegistrationOffice...........................................................................................................................................................24
SECTION17.WhoareEligible...............................................................................................................................................................24
SECTION18.ConditionforRegistration..............................................................................................................................................24
SECTION19.CriteriaforIssuanceofCertificates...............................................................................................................................24
SECTION20.PeriodforIssuanceofCertificate...................................................................................................................................24
SECTION21.EffectofIssuanceofCertificates........................................................................................................................................24
SECTION22.SimultaneousIssuanceofCertificatesofRegistrationandResidency.....................................................................24
SECTION23.Validity..............................................................................................................................................................................24
SECTION24.IdentificationCardSystem.............................................................................................................................................24
SECTION25.Fees....................................................................................................................................................................................25
SECTION26.Withdrawal,SuspensionorCessationofOperations.................................................................................................25

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SECTION27.Revocation,SuspensionorCancellationofCertificatesofRegistrationorResidency...........................................25
SECTION28.EligibilityforRegistration..............................................................................................................................................25
SECTION29.RequirementsforRegistrationofExistingEnterprises...............................................................................................25
SECTION30.EffectofnotAcquiringRegistration.............................................................................................................................25
SECTION31.RequirementforRegistrationofExistingFilipinoResidents.....................................................................................25
SECTION32.ForeignNationals............................................................................................................................................................26
SECTION33.CertificateofResidency..................................................................................................................................................26
SECTION34.FilingofApplication.......................................................................................................................................................26
SECTION35.FilingofApplication.......................................................................................................................................................26
SECTION36.IssuanceofCertificate.....................................................................................................................................................26
SECTION37.CertificatesofResidencyofNewFABFilipinoResidents.........................................................................................27
SECTION38.ForeignNationalsResidingOutsidetheFAB..............................................................................................................27
CHAPTERIV:RIGHTSANDOBLIGATIONSOFFREEPORTAREAOFBATAANENTERPRISESANDRESIDENTS............28
SECTION39.RightsandObligations...................................................................................................................................................28
SECTION40.RightsandObligationsofFABFacilitiesOperators...................................................................................................28
SECTION41.RightsofFABResidents.................................................................................................................................................28
SECTION42.ObligationsofFABResidents........................................................................................................................................28
CHAPTERV:FREEPORTAREAOFBATAANTAXATIONANDTRADEREGIME......................................................................29
SECTION43.FiscalIncentives...............................................................................................................................................................29
SECTION44.PercentageofIncomeAllowablefromSourcesWithintheCustomsTerritory..........................................................29
SECTION45.TaxandDutyExemption................................................................................................................................................29
SECTION46.ImportationbyFABResidents.......................................................................................................................................29
SECTION47.ArticlesRemovedorWithdrawnfromtheFAB..........................................................................................................29
SECTION48.ArticlesAdmittedintotheFABfromtheCustomsTerritory....................................................................................29
SECTION49.ForeignArticlesUsedasRawMaterials.......................................................................................................................29
SECTION50.ForeignArticlesSoldtoFABResidents........................................................................................................................29
SECTION51.LimitofPurchaseofForeignArticles...........................................................................................................................30
SECTION52.SeizureofForeignArticles.............................................................................................................................................30
SECTION53.TransitofArticlesbyCarriers........................................................................................................................................30
SECTION54.ArticlesExportedtoForeignCountriesandReExportedintotheCustomsTerritory..........................................30
SECTION55.ResponsibilityforForeignArticles;PresumptiononMissingArticles....................................................................30

12|RA9728IRR

SECTION56.CustomsManualofOperations.....................................................................................................................................30
SECTION57.ObligationsandLiabilities..............................................................................................................................................30
SECTION58.ReturnsandPaymentofTax..........................................................................................................................................31
SECTION59.BookkeepingandReportorialRequirements...............................................................................................................32
SECTION60.Search,Arrest,andSeizurebyCustomsOfficials.......................................................................................................32
SECTION61.TaxCreditsforForeignCorporations...........................................................................................................................32
CHAPTERVI:FREEPORTAREAOFBATAANIMMIGRATIONREGULATIONS.........................................................................33
SECTION62.GeneralProvisions...........................................................................................................................................................33
SECTION63.ResponsibilityandAuthority.........................................................................................................................................33
SECTION64.RighttoAllowNoVisaEntrytoCertainForeignNationals.....................................................................................33
SECTION65.ApplicationOutsideFreeportAreaofBataan.............................................................................................................33
SECTION66.TemporaryWorkandResidencyVisas........................................................................................................................33
SECTION67.RevocationofTemporaryWorkVisa............................................................................................................................34
SECTION68.TemporaryResidencyVisas...........................................................................................................................................34
SECTION69.ReportorialRequirements..............................................................................................................................................34
SECTION70.PermanentResidencyVisas...........................................................................................................................................34
SECTION71.PermanentResidencyVisasforInvestors....................................................................................................................34
SECTION72.RevocationorTerminationofPermanentResidencyVisaofInvestor.....................................................................34
SECTION73.PermanentResidencyVisaforRetirees........................................................................................................................34
SECTION74.RevocationorTerminationofPermanentResidencyVisaofRetiree.......................................................................35
SECTION75.ReportorialRequirements..............................................................................................................................................35
CHAPTERVII:FREEPORTAREAOFBATAANQUARANTINEREGULATIONS.........................................................................36
SECTION76.ApplicabilityofPhilippineLawsRegardingAnimalandPlantHealth...................................................................36
SECTION77.ApplicabilityofPhilippineLawsRegardingHumanQuarantine&DiseasesofPublicHealthConcerns.........36
SECTION78.PersonsResponsibleforImplementation.....................................................................................................................36
CHAPTERVIII:FREEPORTAREAOFBATAANFOREIGNEXCHANGEANDBANKINGREGIME........................................37
SECTION79.ForeignExchangeAccounts...........................................................................................................................................37
SECTION80.PhilippineCurrencyAccounts.......................................................................................................................................37
SECTION81.PurchaseofForeignExchange.......................................................................................................................................37
SECTION82.ForeignExchangeinBusinessTransactions.................................................................................................................37
SECTION83.UseofForeignExchange................................................................................................................................................37

13|RA9728IRR

SECTION84.RulesonForeign/ForeignCurrencyLoansandInvestments....................................................................................37
SECTION85.PhilippineCurrencyTransactions.................................................................................................................................37
SECTION86.ApplicabilityofCentralBankCircular1353................................................................................................................38
SECTION87.InGeneral.........................................................................................................................................................................38
SECTION88.OffshoreBankingUnits..................................................................................................................................................38
SECTION89.ForeignCurrencyDepositoryUnits..............................................................................................................................38
SECTION90.BanksLicensedinthePhilippines.................................................................................................................................38
SECTION91.OBUAffiliates..................................................................................................................................................................38
SECTION92.TaxExemptionPrivilegesofFABRegisteredBanksandAffiliates..........................................................................38
SECTION93.TaxLiabilityofFABRegisteredBanksandAffiliates.................................................................................................38
SECTION94.EffectofExistingBangkoSentralngPilipinasRegulationsofFABRegisteredOBUs..........................................38
CHAPTERIX:ENVIRONMENTALREGULATIONS............................................................................................................................39
SECTION95.Principles..........................................................................................................................................................................39
SECTION96.Administration/EnvironmentalManagementCenter................................................................................................39
SECTION97.ApplicationofPhilippineEnvironmentalLaws..........................................................................................................39
SECTION98.Coverage...........................................................................................................................................................................39
SECTION99.PermitsandClearances...................................................................................................................................................39
SECTION100.NaturalResourcesProtectionAreas...........................................................................................................................40
SECTION101.AirQuality......................................................................................................................................................................40
SECTION102.WaterQuality.................................................................................................................................................................41
SECTION103.WasteManagement.......................................................................................................................................................41
SECTION104.WaterResourcesPlanning............................................................................................................................................42
SECTION105.SubmissionofIntegratedWaterResourceManagementPlan................................................................................42
SECTION106.ConservationAreas.......................................................................................................................................................42
SECTION107.EmergencyandContingencyPlanning......................................................................................................................42
CHAPTERX:OTHERPROVISIONS.........................................................................................................................................................43
SECTION108.PowerofEminentDomain...........................................................................................................................................43
SECTION109.EffectofExpropriationonLeaseAgreements...........................................................................................................43
SECTION110.FunctionofAFABPoliceForce....................................................................................................................................43
SECTION111.ResponsibilityforSecurityofFAB..............................................................................................................................43
SECTION112.RequestforAssistance..................................................................................................................................................43

14|RA9728IRR

SECTION113.SearchandInspectionofPersonsandVehicles.........................................................................................................43
SECTION114.ObjectivesandPolicy....................................................................................................................................................43
SECTION115.ApplicabilityofLaborLaws.........................................................................................................................................43
SECTION116.LaborCenter...................................................................................................................................................................43
SECTION117.RequirementsforAllPersonsSeekingEmploymentWithintheFAB....................................................................44
SECTION118.LaborDisputes...............................................................................................................................................................44
SECTION119.LaborSkillsInventory;IdentificationCard................................................................................................................44
SECTION120.EmploymentofForeignNationals..............................................................................................................................44
SECTION121.TrainingProgramforUnderstudies............................................................................................................................44
SECTION122.DurationofPeriodofEmployment.............................................................................................................................44
SECTION123.SpousesandDependentsofForeignNationals.........................................................................................................44
SECTION124.RegistrationwiththeAFAB.........................................................................................................................................45
SECTION125.ApprenticeshipProgram..............................................................................................................................................45
SECTION126.QuarterlyReports..........................................................................................................................................................45
SECTION127.InGeneral.......................................................................................................................................................................45
SECTION128.Fees..................................................................................................................................................................................45
SECTION129.FinesandPenalties........................................................................................................................................................45
SECTION130.EstablishmentofPrivateInstitutions..........................................................................................................................45
SECTION131.ApplicabilityofNationalLaws....................................................................................................................................45
SECTION132.BuildingandConstructionPlans.................................................................................................................................45
SECTION133.NeedtoSecureEnvironmentalComplianceCertificate...........................................................................................45
SECTION134.ApplicabilityofNationalLaws....................................................................................................................................45
SECTION135.RegistrationofNonResidentHeadquarters..............................................................................................................46
SECTION136.TaxPrivilegesofNonResidentHeadquarters..........................................................................................................46
SECTION137.ObligationsofNonResidentHeadquarters...............................................................................................................46
SECTION138.WhoareEligibletoOrganize.......................................................................................................................................46
SECTION139.ModeofOrganization...................................................................................................................................................46
SECTION140.AmicableSettlement......................................................................................................................................................46
SECTION141.ArbitrationorLitigation...............................................................................................................................................46
SECTION142.BankruptcyorLiquidation...........................................................................................................................................46
SECTION143.LienonPropertyofFABEnterprise............................................................................................................................46

15|RA9728IRR

SECTION144.LiabilityforDamages....................................................................................................................................................46
SECTION145.GeneralAuthoritytoDisposeofAbandoned,Foreclosed,ForfeitedorUnclaimedArticles..............................46
SECTION146.EffectofBoardActiononVestedRights....................................................................................................................46
SECTION147.RulesofProcedureforInvestigations.........................................................................................................................47
SECTION148.Inventory.........................................................................................................................................................................47
SECTION149.TransferofProperty......................................................................................................................................................47
SECTION150.ManagementandFinancialAudit...............................................................................................................................47
SECTION151.SupervisionandControl...............................................................................................................................................47
SECTION152.RegionalDevelopmentCouncil...................................................................................................................................47
SECTION153.RelationshipwithLocalGovernmentUnits...............................................................................................................47
SECTION154.LegalCounsel.................................................................................................................................................................47
SECTION155.ExistingEmployeesatBEZ...........................................................................................................................................47
SECTION156.Benefits............................................................................................................................................................................47
SECTION157.AutomaticRecognitionofPEZAregistrations...............................................................................................................47
SECTION158.RecognitionandAdoptionofPEZAForms...............................................................................................................48
SECTION159.TransitionPeriod...........................................................................................................................................................48
SECTION160.PowertoAmendRules.................................................................................................................................................48
SECTION161.SeparabilityClause........................................................................................................................................................48
SECTION162.EffectivityClause...........................................................................................................................................................48

16|RA9728IRR

CHAPTERI
PRELIMINARYPROVISIONS

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
RepublicActNo.9728,otherwiseknownastheFreeportAreaofBataanActof2009,andotherrelatedlaws.
SECTION2.DeclarationofPolicy.WithintheframeworkandsubjecttothemandateoftheConstitutionand
the pertinent provisions of the Local Government Code, it is hereby declared the policy of the State and the
AuthorityoftheFreeportAreaofBataan(AFAB)toactivelyencourage,promote,induceandaccelerateasound
andbalancedindustrial,economic,andsocialdevelopmentofthecountryinordertoprovidejobstothepeople,
especiallythoseintheruralareas,increaseproductivityandindividualandfamilyincome,andtherebyimprove
thelevelandqualityoflivingconditionsthroughtheestablishment,amongothers,ofspecialeconomiczonesin
suitable andstrategic locationsin the countryand through measures that will attractlegitimateand productive
foreigninvestments..
ItisalsodeclaredthepolicyoftheStateandAFABtooperateandmanagetheFreeportAreaofBataan(FAB)asa
separatecustomsterritoryensuringfreeflowormovementofgoodsandcapitalwithin,into,andexportedoutof
the FAB, as well as provide incentives such as tax and duty free importations of raw materials, capital, and
equipment.
SECTION3.Definitions.ForpurposesoftheseRules,thesetermsshallbeunderstoodtohavethefollowing
meanings:
a. ActreferstoRepublicActNo.9728,otherwiseknownastheFreeportAreaofBataanActof2009.
b. RulesreferstotheseImplementingRulesandRegulations.
c. FABistheFreeportAreaofBataanreferredtoinSection3oftheAct,andisaseparatecustomsterritory
consisting of the existing Bataan Economic Zone in Mariveles, Bataan, and the entire municipality of
Mariveles,Bataan;theFABshallrefertotheareademarcatedbytheexistingBataanExportZone(BEZ)
andareasasestablishedanddemarcatedbytheAFABwithsecuredperimeterwalls;ProvidedthattheFAB
canbeexpandedinaccordancewithSection4(g)oftheAct.
d. AFABreferstotheAuthorityoftheFreeportAreaofBataancreatedunderSection11oftheAct.
e. PointofEntryreferstoanyplacedesignatedbytheAFABwherearticlesmaybelawfullyintroducedinto
orremovedfromtheFABoranypartthereindesignatedbytheAFAB.
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
enterprisesthatwerepreviouslyregisteredwiththeBataanEconomicZone.
g. CertificateofRegistrationreferstothecertificateissuedbytheAFABrepresentingtheregistrationofthe
businessentityasaFABEnterprise.
h. Certificate of Residency refers to the certificateissued by the AFAB representing the registration of an
individualasaFABResident.
i. FABFacilitiesOperatorreferstoaFABEnterprisewhichoperatesfacilitiesorserviceswithintheFAB,
includingthesubleasingoflandorotherpropertytootherFABEnterprises.
j. BoardreferstotheBoardofDirectorsoftheAFAB.
k. DomesticArticlesreferstoarticleswhicharethegrowth,productormanufactureofthePhilippinesand
upon which all national internal revenue taxes have been paid, if subject thereto, and upon which no
drawbackorbountyhasbeenallowed;andarticlesofforeignoriginonwhichalldutiesandtaxeshavebeen
paidanduponwhichnodrawbackorbountyhasbeenallowed,orwhichhavepreviouslybeenenteredinto
customsterritoryfreeofdutiesortaxes.
l. ForeignArticlesreferstoarticlesofforeignoriginonwhichdutiesandtaxeshavenotbeenpaid,orupon
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
nationalinternalrevenuetaxeshavebeenpaid,ifsubjectthereto,oruponwhichdrawbackorbountyhas
beenallowed.

17|RA9728IRR

m. CustomsTerritoryreferstotheportionofthePhilippinesoutsidetheFABwheretheTariffandCustoms
CodeofthePhilippinesandothernationaltariffandcustomslawsareinforceandeffect.
n. ArticlesforpurposesoftheseRules,andwhenusedwithreferencetoimportationsorexportations,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
importationintoorexportationfromtheZone.
o. Transit refers to transshipment of articles discharged at ports or airports of entry located in Customs
TerritorydestinedfordeliverytotheFAB,andarticlescomingfromtheFABintendedforexportthrougha
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
consignororconsignee,asthecasemaybe,tomakeentryforexportation.
p. ForeignExchangereferstoanycurrencyotherthanthePhilippinePesoacceptableforpaymentbythe
BangkoSentralngPilipinas.
q. NationalGovernmentreferstotheGovernmentofthePhilippines.
r. ForeignNationalreferstoanaturalpersonwhoisnotacitizenofthePhilippines.
s. OffshoreBankingUnit(OBU)referstoabranch,subsidiary,oraffiliateofaforeignbankingcorporation
which is duly authorized by the Bangko Sentral ng Pilipinas to transact offshore banking business in the
Philippines.
t. FABResidentreferstoindividualswhoqualifyandcomplywiththeregulationssetforthunderChapter
III of these Rules. The AFAB Chairman and Administrator as well as members of the Board of Directors
shallautomaticallybeconsideredFABResidentsforthedurationoftheirrespectiveterms.
u. AuthorizedAgentBanksshallrefertoallcategoriesofbanks(exceptOBUs)dulylicensedbytheBangko
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. AuthorizedAgentBanksubsidiary/affiliateforeignexchangecorporationswhetherornotnamedas
such,shallrefertoAuthorizedAgentBanksubsidiary/affiliateforeignexchangecorporationswhose
businessincludebuyingandsellingofforeignexchange.
SECTION4.RulesofInterpretation.PursuanttothedeclaredpoliciesoftheStateontheFAB,thefollowing
rules of interpretation shall be observed in the implementation of the provisions of the Act, as well as the
provisionsoftheseRules:
Alltradeandbusiness,immigration,corporation,bankingandquarantinelawsshallbesubordinatedtoand/or
liberallyconstruedinfavoroftheFABtoenhanceandpromotethepoliciesofthespecialeconomicandfreeport
systemwithintheboundariesestablishedbylawandtheseRules.
a.

Thepowers,authoritiesandfunctionsthatarevestedintheAFABareintendedtoestablishdecentralization
of governmental functions and authority and promote an efficient and effective working relationship
betweentheAFAB,theNationalGovernmentandtheLGU.Forthispurpose,
1. In case of conflict between national and local laws and tax exemption privileges in the FAB, the
sameshallberesolvedinfavorofthelatter;and
2. IncaseofconflictbetweenAFABandthelocalgovernmentunitsconcernedonmattersaffectingthe
FAB other than the defense and security of the said local government units, the decision of the
AFABshallprevail.
b. The provisions of existing laws, rules and regulations to the contrary notwithstanding, the AFAB shall
exerciseadministrativepowers,rulemakinganddisbursementsoffundsovertheFAB.
c. TheAFABshallbevestedwithotherpowersenjoyedorexercisedbyotherfreeportzoneauthorities.

SECTION5.BoundariesoftheFreeportAreaofBataan.TheboundariesoftheFABshallcomprisethearea
describedinSection3oftheAct,themetesandboundsofwhichwillbefurtherdelineatedthroughPresidential
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
Section4(g)oftheAct.

18|RA9728IRR

CHAPTERII
AUTHORITYOFTHEFREEPORTAREAOFBATAAN(AFAB)

SECTION6.PowersandFunctions.TheAFABshallhavethefollowingpowersandfunctions:
a. Toadopt,alteranduseacorporateseal;
b. Tosueandbesuedinordertocarryoutitsduties,responsibilities,privileges,powersandfunctionsasgranted
andprovidedforinthisActandtoexercisethepowerofeminentdomainforpublicuseandpublicpurpose;
c. Tocontract,lease,buy,sell,acquire,ownanddisposeofpropertiesofwhatevernature;
a. dTooperate,administer,manage,develop,inaccordancewithExecutiveOrderNo.525,asamended,the
FABaccordingtotheprinciplesandprovisionssetforthinthisActandtocoordinatewiththeLGUsforthe
developmentplans,activitiesandoperationoftheFAB;
d. TorecommendtothePresidenttheissuanceofaproclamationtofixanddelimitthesiteoftheFAB;
e. To register, regulate and supervise the enterprises in the FAB in an efficient and decentralized manner,
subjecttoexistinglaws;
f. TocoordinatewiththeLGUsandexercisegeneralsupervisionoverthedevelopmentplans,activitiesand
operationsoftheFAB;
g. To approve,accept, accredit andallow anylocal orforeign business,enterprise or investment in the FAB
subjecttoexistinglaws,rules,andregulationsincludingthosepromulgatedbytheAFABfromtimetotime
inconformitywiththeprovisionsandpoliciesoftheAct;
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 petroleum storage, refueling and processing
facilities,airportoperationsincoordinationwiththeCivilAeronauticsBoard,andtofixjustandreasonable
rates, fares, charges and other prices therefore, 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
permitsfortheestablishment,operationandmaintenanceofutilities,servicesandinfrastructureintheFAB;
i. To license, set fees, regulate and undertake the establishment, operation and maintenance of utilities, other
services,educationalandmedicalinstitutionsandinfrastructureintheFABsuchas,butnotlimitedto,heat,light
andpower,watersupply,telecommunications,mobile,internetandotherdatafacilities,transport,tollroadsand
bridges,portservices,etc.,andtofixjust,reasonableandcompetitiverates,fares,chargesandpricesthereof;
j. Toconstruct,acquire,own,lease,operateandmaintainonitsownorthroughcontracts,franchises,licenses,
bulkpurchasefromtheprivatesectorandbuildoperatetransferscheme,orunderajointventurewiththe
privatesectors,anyorallofthepublicutilitiesandinfrastructurerequiredorneededfortheoperationand
developmentoftheFAB,incoordinationwithappropriatenationalandlocalgovernmentauthoritiesandin
conformitywithapplicablelawsthereon;
k. To operate on its own, either directly or through a license to other tourismrelated activities, including
games, amusements, gambling casinos, horse racing and dog racing, recreational and sports facilities,
subjecttotheapprovalandsupervisionofthePhilippineAmusementandGamingCorporation(PAGCOR),
whichapprovalmustnotbeunreasonablywithheld;
l. Toraiseorborrow,withinthelimitationprovidedbylawandinaccordancewiththeprovisionsofexistinglaws
andpoliciesonsuchborrowingsincludingregulationsissuedbytheBangkoSentralngPilipinas,adequateand
necessaryfundsfromlocalorforeignsources,tofinanceitsprojectsandprogramsunderthisAct,andforthat
purpose,toissuebonds,promissorynotes,andotherformsofsecurities,andtosecurethesamebyaguarantee,
pledge,mortgage,deedoftrust,oranassignmentofallorpartofitspropertyorassets;
m. ToprovidesecurityfortheFABincoordinationwiththenationalandlocalgovernments.Forthispurpose,
theAFABmayestablishandmaintainitssecurityforcesandfirefightingcapabilityorhireotherstoprovide
the same. In the event that an assistance of the military forces is necessary, it shall not interfere in the
internalaffairsoftheFABexcepttoprovidethenecessarysecurityanddefense,andtheirexpensesshallbe
bornebytheNationalGovernment;

19|RA9728IRR

n. Toprotect,preserve,maintainanddevelopthevirginforests,beaches,coralandcoralreefs,andmaintain
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
functionsshallbeimplementedbytheAFAB;
o. Tocreate,operateand/orcontracttooperatesuchfunctionalunitsorofficesoftheAFABasitmaydeem
necessary;
p. ToissuecertificatesoforiginforproductsmanufacturedorprocessedintheFAB;
q. Toadopt,implementandenforcemeasuresandstandardsforenvironmentalpollutioncontrolofallareas
withinitsterritory,including,butnotlimitedtoallbodiesofwater.Forthispurpose,theAFABshallcreate
anEnvironmentalManagementCenter;
r. Toraiserevenuesfromamong,butnotlimitedto,thefollowing:
(1) periodic license fees and/or application, filing and registration and administrative/regulatory fees
fromFABEnterprises;
(2) leaseofland,facilitiesorotherpropertiesintheformerBataanEconomicZonearea,aswellasother
areasintheFAB;
(3) sale of land, facilities or other properties owned by AFAB to private entities, provided, that the
territorialandregulatoryjurisdictionandcontroloverthesameshallremainvestedintheAFAB;
(4) management and administrative service fees for processing, handling and escorting of
importations,exportationsandlocalsalesorpurchases;
(5) capitalorothercontributionsfromthenationalgovernment;
(6) serviceandutilitycharges;
(7) voluntarycontributions;
(8) resourcesfromexternal,technicalandfinancialassistanceagencies;
(9) grantsfromtheNationalGovernment,localgovernmentunits,andlocalandforeignstateowned
andprivatelyownedentitiesandinternationalorganizations.
(10) donationsandcontributionsofallkinds;
(11) fundsfromloansand/orothersecuritiesobtainedasauthorizedbytheBoardofDirectors;
(12) proceedsfromadministrativefines,andpenalties;
(13) proceedsfromdepositaccounts,timedeposits,moneymarket,bondsandotherinvestments;and
(14) the AFAB shall determine whether revenues raised from the imposition of such fees, charges,
contributionsanddonationsshallberetainedbyiteitherinwholeorinpart.
s. To sellandlease out land, facilities and other propertiesin the FAB, by negotiated contract or otherwise,
givingdueconsiderationtothedeclaredpoliciesoftheAct;and
t. To form, establish, organize and maintain subsidiary corporations, as its business and operations may
require,whetherunderthelawsofthePhilippinesorelsewhere;
u. ToissuerulesandregulationsconsistentwiththeprovisionsoftheActasmaybenecessarytoimplement
andaccomplishthepurposes,objectivesandpoliciesprovidedherein;
v. Toexercisesuchpowersasmaybeessential,necessaryorincidentaltothepowersgrantedtoithereunder
aswellastocarryoutthepoliciesandobjectivesoftheAct;
w. To appoint and fix the remuneration and other emoluments of its officers and employees in accordance
with existing laws on compensation and position classification, upon recommendation of the Chairman
AdministratorandwiththeapprovaloftheSecretaryoftheDepartmentofTradeandIndustry;
x. Toimposeandcollectappropriaterawwaterfeesfortheuseofsurfaceandgroundwaterforindustrialor
domestic purposes. This shall be applicable to utilities operated by public or private sector proponents,
includingthoseusedforandbyindustrialandrecreationalfacilities,medicalandeducationalinstitutions,
commercialandbusinessestablishments,residentialestates,townshipsandthelike;
y. Toimposeandcollectappropriatefeesandchargesfortheissuanceofpermits,licensesorconcessionsfor
theexploitationofmineralresourcessuchasbutnotlimitedtominingorquarrying,mineralprocessingand
mining operations, Provided, however, That the grant or issuance thereof shall be in accordance with the
provisionsofRepublicActNo.7942,otherwiseknownasthePhilippineMiningActof1995;and
z. To be vested with other powers enjoyed or exercised by other special economic zones and freeport
authorities.

20|RA9728IRR

SECTION 7. Responsibilities of the AFAB. Other than the powers and functions prescribed in Section 6 of
theseRules,theAFABshallhavethefollowingresponsibilities:
a. TheAFABshallexerciseauthorityandjurisdictionoveralleconomicactivitywithintheFAB;
b. TheAFABshallprovideandestablishitsowninternalsecurityforceandfirefightingforces.However,the
defenseoftheFABandthesecurityofitsperimetersshallbetheresponsibilityoftheNationalGovernment
incoordinationwiththeAFAB;
c. TheAFABshallcoordinatetheprovisionsofsecurity,police,andmunicipalserviceswithintheoverallarea
oftheFABwiththeexistinglocalgovernmentunits;
d. TheAFABshallhavetheauthoritytoexcludefromtheFABanyarticle,substance,merchandise,operation,
activityorprocessitconsiderstobeinconsistentwiththepoliciesandpurposesoftheActandtheseRules,
ordetrimentaltothepublicinterest,andtoestablishproceduresforsuchexclusions;
e. The AFAB may require FAB Enterprises or Residents to secure the necessary permits for any article,
substance,merchandise,transaction,activity,oroperationintheFAB,specifyconditionsunderwhichsuch
permitswillbeissued,andestablishproceduresforissuingandrevokingsuchpermits;and
f. ConsistentwiththeConstitution,theAFABshallhavethefollowingpowerstoenforcethelawandthese
RulesintheFAB:
(1) toauditandinspecttherecordsofanyFABEnterprise;
(2) to inspect and search the premises of any FAB Enterprise or Resident, or any vehicle, aircraft,
vessel,orpersonintheFABtodetectanyviolationofthelawortheseRules.
(3) to conduct investigations of any suspected violation of the law or these Rules, provided that the
investigationofanyviolationofthecriminallawsofthePhilippinesoccurringintheFABshallnot
beconductedbytheAFAB,butratherbythepoliceorthepertinentNationalGovernmentagency
havingjurisdictionintheareawheretheviolationoccurred;
(4) to seize, substances, merchandise and records considered to be in violation of the Act and these
Rules,orconsideredtobenecessaryforconductofaninvestigationofanyviolationofthelawand
these Rules, and to provide for their return to the enterprise or person from whom they were
seized,ortheirforfeituretotheAFAB;
(5) toissuesubpoenaeducestecumandadtestificanduminthecourseofitsinvestigations;
(6) toarrestpersonsintheFABforanyviolationofthelawsofthePhilippines;
(7) toassessandcollectadministrativefeesorimposeadministrativefinesorothermonetarypenalties
forviolationsoftheseRules;
(8) toissue,alter,modify,suspendorrevokeforcause,anypermit,certificate,license,visaorprivilege
allowedundertheActortheseRules;
(9) toregulateingresstoandegressfromtheFAB;
(10) to regulate traffic within the FAB and to impose administrative fines and penalties for traffic
violations,includingchargesfortowingandimpounding;and
(11) topromulgatesuchotherrules,regulationsandcircularsasmaybenecessary,properorincidental
tocarryoutthepoliciesandobjectivesoftheAct,theseRules,aswellasthepowersanddutiesof
theAFABthereunder.
SECTION8.BestUseofAFABProperties.TheAFABshalltakeallmeasuresnecessarytosecurethebestuse
ofitspropertieswithintheFAB.TheAFABmayleasetheaforesaidpropertiestoprivatefacilitiesoperatorswho
may thereafter, under conditions approved by the AFAB, sublease the facilities or otherwise provide services
basedthereontootherFABEnterprises.
SECTION9.EstablishmentofSecurePerimeters,PointsofEntryandDutyandTaxFreeAreasoftheFAB.
Pending the establishment of secure perimeters around the entire FAB, the AFAB shall have the authority to
establishanddemarcateareasoftheFABwithsecureperimeterswithinwhicharticlesandmerchandisefreeof
dutiesandinternalrevenuetaxesmaybelimited,withoutprejudicetotheavailmentofotherbenefitsconferred
by the Act and these Rules in the FAB outside such areas. The AFAB shall furthermore have the authority to
establish,regulateandmaintainpointsofentrytotheFABortoanylimiteddutyandtaxfreeareasoftheFAB.
TheBOCshallsetupandestablishacustomscontrolledareaoutsidethegateoftheFABtofacilitatepaymentof
taxesongoodsenteringthePhilippinecustomsterritory.

21|RA9728IRR

SECTION 10. General Land Use Plan. The AFAB shall draw up and publish a general land use plan
specifyingthegeneralusesandeconomicactivitiestobepromotedfordifferentareasoftheFABandshallenforce
saidplansubjecttosuchrevisionsastheAFABmaydeemnecessaryorappropriatetoaccomplishthepoliciesand
objectivesoftheAct.
SECTION11.AnnualReports.TheAFABshallrenderandpublishannualreportsontheeconomicactivities
undertakenintheFAB.
B.CompositionandOperationoftheBoardofDirectors
SECTION 12. Board of Directors. The powers of the AFAB shall be vested in and exercised by a Board of
Directors.
SECTION 13. Composition. The Board shall be composed of nine (9) members to be appointed by the
PresidentofthePhilippines,asfollows:
a.

Thechairmanwhoshall,atthesametime,betheadministratoroftheAFAB;

b. AvicechairmanwhoshallcomefromamongthemembersoftheBoard;
c.

Membersconsistingof:
(1) Two(2)representativesfromtheNationalGovernment;
(2) One(1)representativefromtheProvinceofBataan;
(3) One(1)representativefromtheCongressionalDistrictcoveringthesiteoftheFAB;
(4) One(1)representativefromtheMunicipalityofMariveles,ProvinceofBataan;
(5) One(1)representativefromthedomesticinvestorsoperatingwithintheFAB;
(6) One(1)representativefromtheforeigninvestorsoperatingwithintheFAB;and
(7) One(1)representativefromtheworkersworkingwithintheFAB.

d. The representative from the Province of Bataan shall be nominated by a majority of the members of the
Provincial Board, and the representative from the Municipality of Mariveles, Province of Bataan shall be
nominatedbyamajorityofthemembersoftheMunicipalCouncil.
e.

The representative to the Board from the Congressional District covering the site of the FAB shall be
nominated by the duly elected Representative thereof with the concurrence of the Municipal or City
Councilfromthelocalgovernmentunitwherethenomineeresides.

f.

TheChairmanandthemembersoftheBoardshallbeappointedbythePresidentofthePhilippinestoserve
for a term of six (6) years, unless sooner separated from service due to death, voluntary resignation or
removalforcause.Incaseofdeath,resignationorremovalforcause,thereplacementshallserveonlythe
unusedportionoftheterm.

g. 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 degreeholder in any of the following fields: economics,
business, public administration, law, management or their equivalent, and with at least ten (10) years
relevantworkingexperiencepreferablyinthefieldofmanagementorpublicadministration.
h. ThemembersoftheBoardshalleachreceiveperdiematratestobedeterminedbytheDepartmentofBudget
andManagement(DBM)inaccordancewithexistingrulesandregulations:Provided,however,thatthetotal
perdiemcollectedeachmonthshallnotexceedtheequivalentperdiemforfour(4)meetings.
SECTION14.Chairman/Administrator.ThePresidentshallappointaprofessionalmanagerasadministrator
oftheAFABwhoshallbetheexofficiochairmanoftheBoardandwhoshallserveasthechiefexecutiveofficerof
theAFABwiththefollowingdutiesandresponsibilities:
a.

ToexecuteandadministerthepoliciesandmeasuresapprovedbytheAFABBoardofDirectorsandtake
responsibilityfortheefficientandeffectivedischargeofmanagementfunctions;

b. To direct and supervise the operation and internal administration of AFAB; and for this purpose, may
delegatesomeoranyofhisadministrativeresponsibilitiesanddutiestootherAFABofficers;
c.

Subject to the guidelines and policies set up by the AFAB Board of Directors, to appoint subordinate
officials and employees of AFAB and for a cause, to remove, suspend or otherwise discipline any
subordinateemployeesofAFAB;

22|RA9728IRR

d. TooverseethepreparationoftheAFABBudget;
e.

TosubmitanannualreporttotheAFABBoardofDirectorsontheactivitiesandachievementsofAFABat
thecloseofeachfiscalyearanduponapprovalthereof,submitacopytothePresidentofthePhilippines
andtosuchotheragenciesasmayberequiredbylawandundertheseRules;

f.

To represent AFAB in all dealings and transactions with other offices, agencies and instrumentalities of the
NationalGovernmentandwithallpersonsandotherentities,privateorpublic,domesticorforeign;and

g. ToexercisesuchotherpowersanddutiesasmaybevestedinhimbytheAFABBoardofDirectorsfrom
timetotime.

SECTION 15. ByLaws. The Board of Directors shall adopt a set of bylaws that shall govern the AFABs
internalbusinessandoperations.

23|RA9728IRR

CHAPTERIII
PROCEDURESFORREGISTRATIONOFFREEPORTAREAOFBATAAN
ENTERPRISES&RESIDENTS

A.GeneralProvisions
SECTION16.RegistrationOffice.TheAFABshallestablishtwoofficestoregisterallbusinessenterprisesor
concernsapplyingtobeFABEnterprises,aswellasnaturalpersonsapplyingtobeFABResidents.Theseoffices
shallbetheFABEnterpriseDepartmentandtheFABResidentsDepartment,whichshallinturnconsistoftwo(2)
divisionseach,towit:theEvaluationDivisionandtheFollowupDivision.
Theabovedepartmentsshallissuestandardapplicationformsandrequiresubmissionofpertinentdocumentsto
the proper department which shall act thereon in the most expeditious manner possible. If warranted, the
Registration Office shall approve the application and register qualified enterprises and residents, after which it
shallissuecertificatesattestingtotheirregistrationandresidency,respectively.Afterissuanceofthecertificates,
theRegistrationOfficeshallperiodicallymonitorthestatusofallFABEnterprisesandResidents.
SECTION 17. Who are Eligible. Application for FAB registration shall be open to nationals and business
enterprises of any country in any area of economic activity, except only as is specifically limited by the
ConstitutionofthePhilippines.
SECTION 18. Condition for Registration. A FAB Enterprise shall be a constituted business enterprise
organizedordomiciledinthePhilippinesoranyforeigncountry.Theenterprisemustnamearepresentativeor
agentwhoisalegalresidentoftheFAB.IfaffiliatedwithanexistingenterpriseinthePhilippinesoutsideofthe
FAB,theFABEnterprisemustestablishaseparatebusinessorganizationtoconductbusinessexclusivelywithin
theFABwhichshallbeaseparatetaxableentity.
SECTION 19. Criteria for Issuance of Certificates. The AFAB shall issue the Certificates of Registration or
ResidencytoaFABEnterpriseorResident,respectively,ifqualifiedandifintheAFABsdiscretionsuchissuance
willpromotethepoliciessetforthintheActandtheseRules.
SECTION 20. Period for Issuance of Certificate. Should the application(s) merit approval, the AFAB shall
issuethecertificatesappliedfornolaterthanthirty(30)daysfollowingreceiptofthecompletedapplicationand
allrequiredsupportingdocuments.
SECTION21.EffectofIssuanceofCertificates.IssuanceoftheCertificateofRegistrationorResidencytoaFAB
EnterpriseorResident,respectively,shallentitleandsubjectthebusinessenterpriseorresidenttoallthebenefitsand
obligationsundertheActandtheseRules,andotherregulationsthatmaybepromulgatedbytheAFAB.
SECTION 22. Simultaneous Issuance of Certificates of Registration and Residency. Issuance of the
Certificate of Registration shall be accompanied by the issuance of a Certificate(s) of Residency to qualified
enterprisesandresidents,respectively,whenallrequiredsupportingdocumentsareincludedintheapplications.
SECTION 23. Validity. All certificates issued by the AFAB shall be valid for a period of one (1) year from
issuanceandshallbedeemedautomaticallyrenewedeveryyear(i)uponpaymentoftheprescribedfeesatleast
ten(10)dayspriortotheexpirationofthesaidone(1)yearperiodfortheparticularyearinvolved,and(ii)foras
longastheFABEnterpriseorResidentremainsqualifiedtocontinueitsbusinessoperationsorresidewithinthe
FABundersimilartermsandconditionsforwhichtheoriginalcertificate(s)was/wereissued.
SECTION24.IdentificationCardSystem.AllFABResidentsmustsecureFABIdentificationCardsfromthe
AFAB,underanidentificationcardsystemthattheAFABwillenforceandimplement,whichwillcontainsuch
information as the AFAB may deem necessary, including, but not limited to, the name, age, gender, address,
bloodtypeandskillsoftheFABResident.
IdentificationcardsmayalsoberequiredofdomestictouristsandvisitorstotheFAB.Thesecardswillconstitute,
among others, the domestic tourists or visitors permit to enter the FAB and/or to purchase dutyfree items
therefrom.

24|RA9728IRR

SECTION 25. Fees. The AFAB may charge reasonable fees for the acceptance, processing, issuance and
renewalofallapplications,certificatesandothersimilardocumentsthatmayberequiredundertheseRules.
SECTION 26. Withdrawal, Suspension or Cessation of Operations. Whenever a FAB Enterprise decides to
withdraw,suspend,orceaseitsregisteredactivityoroperations,writtennoticethereofshallbesenttotheAFAB
one (1) month prior to implementation of the action. Subject to provisions of pertinent laws and the rights of
mortgage creditors, the withdrawal or cessation from business operations for a continuous period of two (2)
months,unlessextendeduponwrittenrequestoftheenterpriseandapprovaloftheAFAB,shallhavetheeffectof
automaticallycancellingtheCertificateofRegistrationwithouttheneedofBoardaction.Uponsuchwithdrawal
orcessationfromoperations,theFABEnterpriseshallceasetobeentitledtotheincentivesprovidedforintheAct
andtheseregulations.
SECTION27.Revocation,SuspensionorCancellationofCertificatesofRegistrationorResidency.Without
prejudicetotheimpositionofpenaltiesprescribedunderthepertinentprovisionsoftheTariffandCustomsCode
of the Philippines and the National Internal Revenue Code of the Philippines, the Certificates of Registration
issued by the AFAB to any FAB Enterprise orResident may be revoked, suspended or cancelled forany of the
followinggrounds:
a. FailuretomaintainthequalificationsforregistrationorlicenseasrequiredbytheAct;
b. ViolationofanyprovisionofPhilippinelaw,theActand/ortheseRules;
c. Violationofthecorrespondingimplementingmemorandaorcircularsoranyofthegeneralandspecific
termsoftheregistrationorlicenseagreementbetweentheAFABandtheFABEnterprise.
Provided, that, the AFAB may prescribe and impose administrative penalties, fines and sanctions in lieu of the
revocation, cancellation or suspension of the Certificates of Registration or Residency for minor violations. The
AFABmayalsograduatethepenalties,finesorsanctionstobeimposedbasedonthegravityandfrequencyofthe
violationconcerned.
B.RegistrationofExistingEnterprisesandResidents
SECTION28.EligibilityforRegistration.AnybusinessenterprisecurrentlyoperatingentirelywithintheBEZ
shallbeeligibletoregisterasaFABEnterprise.
SECTION29.RequirementsforRegistrationofExistingEnterprises.Inordertoqualifyforregistration,the
prospective FAB Enterprise must submit an application in the form prescribed by the AFAB, as well as the
following:
a.

copiesofrelevantdocumentationofthelegalstatusofthebusinessenterprise(suchas,butnotlimitedto
thearticlesofincorporation,partnershipagreement,ByLaws,SECregistration,andsimilardocuments)
showing,amongothers,beneficialownership;
b. ifacorporation,partnershiporotherbusinessenterpriseorganizedorconstitutedoutsidethePhilippines,
thenameandaddressofthelegalagentfortheenterpriseintheFABaccompaniedwithswornproofof
consentoftheagenttoserveassuch;
c. evidenceofthephysicallocationofthebusinessenterpriseswithintheFAB,suchascertificateoftitle,tax
declaration,propertydeed,leaseagreement,andsimilardocuments;
d. ifpreviouslypartofalargerbusinessenterprisedoingbusinesselsewhereinthePhilippines,evidenceof
restructuringtoexcludeallbusinessoperationstakingplaceoutsidetheboundariesoftheFAB;
e. listofassetsandotherpropertiesownedbythebusinessenterprise;and
f. suchotherdocumentsthattheAFABmayrequire.
SECTION30.EffectofnotAcquiringRegistration.AnyexistingenterpriselocatedwithintheFABmayelect
not to register as a FAB Enterprise. In doing so, the enterprise shall not benefit from tax and other advantages
accorded FAB Enterprises, with the exception of tax and duty free importation of goods which will remain
pursuanttothefreeportcharacteroftheFAB.Notwithstandinganysuchelection,anyenterpriselocatedwithin
theFABshallstillbesubjecttootherregulationsandproceduresapplicabletotheFAB.
SECTION31.RequirementforRegistrationofExistingFilipinoResidents.CurrentFilipinoresidentsofthe
FAB may apply for a Certificate of Residency upon submission of an application in the form prescribed by the
AFABandpresentationofthefollowing.

25|RA9728IRR

a.
b.
c.
d.
e.

documentationofresidencewithintheFAB,i.e.residencecertificate.
evidenceofnationality;
evidenceofemploymentorotherbusinessoperationswithintheFAB;
ifaspouseorchildbelow21yearsofageofaFABResident,evidenceofsuchrelationshipi.e.marriage
license,birthcertificate,etc.,accompaniedbyanaffidavitofsupportbytheFABResident;and
suchotherdocumentsthattheAFABmayrequire.

For purposes of these Rules, current Filipino residents of the FAB refer to all persons Filipino citizens residing
within the FAB continuously for at least a period of two (2) years as of the date of the promulgation of these
Rules. This two (2) year requirement may be waived for AFAB personnel who may apply for a special written
exceptionfromtheofficeoftheChairmanandAdministratorofAFAB.
SECTION 32. Foreign Nationals. Foreign nationals currently residing in the FAB continuously for at least a
periodoftwo(2)yearsasofthedateofthepromulgationoftheseRules,andwhohavebeenaccordedpermanent
residency status in the Philippines may apply for a Certificate of Residency in the FAB upon presentation of
sufficient proof of such residency status. Foreign nationals currently residing in the FAB who have not yet been
accordedresidencystatusshallbeeligiblethereforsubjecttoImmigrationlawsandotherprovisionsoftheseRules.
SECTION33.CertificateofResidency.TheAFABshallissueaCertificateofResidencytoallqualifiedcurrent
residents of the FAB within thirty (30) days from receipt of the required application, information and
documentation. This certificate shall attest to the residency of the person within the FAB, and shall entitle and
subjecttheresidenttothe benefitsandobligationsasdefinedintheAct,theseRulesandotherregulationsthat
maybepromulgatedbytheAFAB.
C.RegistrationofNewIndustrial,CommercialandServiceEnterprises
SECTION 34. Filing of Application. Industrial, commercial and service enterprises applying to be a FAB
EnterpriseshallfileanapplicationintheformprescribedbytheAFABtobesupportedbythefollowing:
a.

copies of relevant documentation of the legal status of the business enterprise (articles of incorporation,
partnership agreement, SEC Registration, and similar documents) showing, among others, beneficial
ownership;
b. ifthereisforeignownership,proofofinwardremittanceofforeignexchangeand/orassetsintothecountry;
c. evidence of the intended physical location of the enterprise within the FAB (such as certificate of title,
deedofsale,leaseagreement,commitmentletter,andothersimilardocuments)andthemannerbywhich
such location was secured (i.e., whether it was secured directly with AFAB, from licensed facilities
operator,orotherpropertyowner);
d. ifpartofalargerbusinessenterprisedoingbusinesselsewhereinthePhilippines,evidenceofcorporate
restructuring which excludes from the FAB Enterprise all business operations taking place outside the
boundariesoftheFAB;
e. listofassetscomprisingtheinvestmenttobemade;and
f. suchotherdocumentsthattheAFABmayrequire.

D.RegistrationofBanksandAffiliates
SECTION 35. Filing of Application. Application for licensing of Commercial and Offshore Banks or their
branches or affiliates to be located with the FAB shall be filed with the AFAB. AFAB shall forward the
applicationstotheBangkoSentralngPilipinas,whichifwarrantedshalldirectlyissuealicenseandotherrequired
documentation,inaccordancewiththeprovisionsofChapterVIIIoftheseRules.
Should the applicants license not be issued by the Bangko Sentral ng Pilipinas within thirty (30) days from the
complete submission of all requirements, the AFAB shall forthwith inform the bank concerned and extend the
periodfortheissuanceofthebanksCertificateofRegistration.
SECTION 36. Issuance of Certificate. Upon approval of the application and its proper endorsement by the
BangkoSentralngPilipinastotheAFAB,thelattershallissuethenecessaryCertificateofRegistrationtothebank
underChaptersIIIandVIIIoftheseRules.

26|RA9728IRR

E.RegistrationofNewFreeportAreaofBataanResidents
SECTION 37. Certificates of Residency of New FAB Filipino Residents. A Certificate of Residency duly
issuedbytheAFABshallberequiredforallnewFilipinoresidentsoftheFAB.Subjecttotheconditionsofthese
Rules,suchcertificateshallbeavailabletoanyFilipinoactuallyresidingwithintheFABwhoisanemployeeor
owner of a FAB Enterprise, or is otherwise a resident within the FAB by virtue of leasing or otherwise
acquiring/securinglivingquarterstherein.CertificatesofResidencymayalsobeissuedtotheimmediatemembers
ofthefamilyofsuchemployeeorowner,orotherresidentorwhohasleasedorotherwiseacquired/securedliving
quartersinFAB.
SECTION38.ForeignNationalsResidingOutsidetheFAB.Foreignnationalsaccordedpermanentresidency
statusinthePhilippinesmayapplyforaCertificateofResidencyintheFABuponpresentationofsufficientproof
ofsuchpermanentresidencystatusandemploymentorinvestmentintheFAB.Foreignnationalswithoutprior
permanentresidencystatusinthePhilippinesshallbesubjecttoImmigrationlawsandotherpertinentprovisions
oftheseRules.

27|RA9728IRR

CHAPTERIV
RIGHTSANDOBLIGATIONSOFFREEPORTAREAOFBATAAN
ENTERPRISESANDRESIDENTS

A. FreeportAreaofBataanEnterprises
SECTION39.RightsandObligations.FABEnterprisesshallhavethefollowingrightsandobligations:
a.

To freely engage in any business, trade, manufacturing, financial or service activity, and to import and
exportfreelyalltypesofgoodsintoandoutoftheFAB,subjecttotheprovisionsoftheAct,theseRules
andotherregulationsthatmaybepromulgatedbytheAFAB;
b. To employ foreign nationals subject to submission of a sworn statement as to the unavailability of
comparablyskilledFilipinoswithinthePhilippinesandcompliancewithotherpertinentrequirementsof
theseRulesfortheemploymentofforeignnationals;
c. TofaithfullycomplywiththeAct,theseRulesandotherregulationsthatmaybepromulgatedbytheAFAB;
d. ToreportperiodicallytotheAFABanyinformationonbusinessactivitywhichthelattermayreasonably
require;and
e. TofileperiodicallyanyinformationnormallyrequiredbytheBureauofInternalRevenue.
SECTION 40. Rights and Obligations of FAB Facilities Operators. FAB facilities operators shall have the
rightsandresponsibilitiesofotherFABEnterprises,plusthefollowing:
a. tomanagefacilitiesonrealpropertyitowns,hasacquiredorhasleasedwithintheFAB;
b. toleaseoutrealpropertyitownsorhasleasedwithintheFAB,andtoacquireandleaselandandsellor
lease out facilities to FAB Enterprises, subject to overall property management guidelines approved by
theAFABandtotheprovisionsofSection12hereof;
c. to make improvements on, construct and maintain buildings, warehouses, factory shells, office and
commercial buildings and other facilities, and develop all other infrastructure necessary or desirable to
enhanceFABsefficientoperations,orgrantcontractsorconcessionstootherprivateorpublicpartiesfor
theconstructionorprovisionofanyofthesaidfacilities,subjecttotheapprovaloftheAFABandother
concernedagenciesofthelatter;
d. toprovidepublicorotherservicessuchaswater,lightandpower,telecommunications,sewerageandany
other public utilities or to contract or grant concessions to other individuals for the provision of such
servicestoFABEnterprises,subjecttotheapprovaloftheAFAB;
e. to install adequate environmental protection facilities and pollution control systems as the AFAB may
deem necessary to protect the environment or otherwise conform to or observe all environmental and
pollutioncontrolstandardsoftheAFAB;
f. tomaintainadequatesecuritymeasuresincludingadequatefencing,enclosures,lighting,alarmsystems,
firefightingequipmentandothersimilardevicestosecurethefacility,subjecttoAFABapprovalandin
cooperationwiththeAFABSecurityForce;
g. tochargeandmodifyfeesforanyservicesorfacilitiesitprovideswithintheFAB,directlytothosewho
usesuchservicesorfacilities;and
h. to adopt internal rules and regulations to promote the safe, efficient, and successful operation of the
facilityconsistentwiththeprovisionsoftheseRulesandsubjecttotheapprovaloftheAFAB.
B.FreeportAreaofBataanResidents
SECTION41.RightsofFABResidents.FABResidentsshallhavethefollowingrightswithintheFAB:
a. toimportdirectly,freeofCustomsdutiesandcontrol,foreignarticlesforpersonaluseand/orinnoncommercial
quantitiessubjecttotheseRulesandotherregulationsthatmaybepromulgatedbytheAFAB;and
b. topurchase,lease,orotherwiseacquirearticlesfromotherFABResidentsorEnterprises,andmaintain,utilize
orotherwiseconsumesuchgoodswithintheFABfreeofnationalinternalrevenuetaxesandcustomduties.
SECTION42.ObligationsofFABResidents.ExceptasexpresslyprovidedforbyexceptionsintheseRules
andotherregulationsoftheAFAB,FABResidentsshallhavethefollowingobligations:
a. toobeyandobservealllawsofthePhilippines;and
b. topayincomeandothertaxesleviedonindividualsinthePhilippines.

28|RA9728IRR

CHAPTERV
FREEPORTAREAOFBATAANTAXATION
ANDTRADEREGIME

A.IncentivesandExemptions
SECTION43.FiscalIncentives.TheregisteredenterprisesoperatingwithintheFAB,mayattheiroption,avail
ofexistingpertinentfiscalincentivesasprovidedforunderRepublicActNo.7916,asamendedbyRepublicAct
No. 8748, also known as the Special Economic Zone Act of 1995,or those provided under Executive Order No.
226,asamended,otherwiseknownastheOmnibusInvestmentCodeof1987.
TheprovisionsofRepublicActNo.7916,asamended,orExecutiveOrderNo.226,asamended,andtheirrespective
implementingrulesandregulationsshallbecompliedwithtoavailofthefiscalincentivesgrantedtherein.
AllapplicationsforavailmentofincentivesundertheseRulesshallbefiledwiththeAFAB.
SECTION44.PercentageofIncomeAllowablefromSourcesWithintheCustomsTerritory.FABEnterprises
maygenerateincomefromsourceswithintheCustomsTerritoryofuptoThirtyPercent(30%)ofitstotalincome
fromallsources;provided,thatshouldaFABEnterprisesincomefromsourceswithintheCustomsTerritoryexceed
ThirtyPercent(30%)ofitstotalincomefromallsources,thenallofitsincomewhetherfromtheZoneortheCustoms
Territory shall be subject to the income tax laws of the Customs Territory; provided, further, that in any case,
customsdutiesandtaxesmustbepaidwithrespecttoincomefromsalesofarticlestotheCustomsTerritory.
SECTION45.TaxandDutyExemption.Ingeneral,allarticlesmaybeimportedbyFABEnterprisesintothe
FABfreeofcustomsandimportdutiesandnationalinternalrevenuetaxes,subjecttopertinentlaws,rulesand
regulations.
SECTION46.ImportationbyFABResidents.ArticlesmaybeimportedbyFABResidentsfreeofcustomsand
importdutiesandnationalinternalrevenuetaxes,subjecttopertinentlaws,rulesandregulations;provided,that
sucharticlesarelimitedonlyforpersonalorhouseholduseorconsumptionwithintheFAB.
B. TransactionswiththeCustomsTerritory
SECTION47.ArticlesRemovedorWithdrawnfromtheFAB.Notwithstandingtheabovementionedtaxand
dutyexemptions,foreignarticlesremoved,withdrawnorotherwisedisposedoffromtheFABintotheCustoms
Territory,shallbesubjecttothepaymentofcustomsdutiesandinternalrevenuetaxesasordinaryimportationsin
accordancewiththeprovisionsoftheTariffandCustomsCodeofthePhilippines,asamended,andtheNational
InternalRevenueCodeandotherapplicablelaws.
ArticlesenteredorintroducedfromtheFABintotheCustomsTerritorywillbepresumedtobeforeignunlessthere
issufficientevidencepresentedtosatisfycustomsofficialsthattheyaredomesticarticlesasdefinedintheseRules.
SECTION48.ArticlesAdmittedintotheFABfromtheCustomsTerritory.Articleswhichareadmittedtothe
FABfromtheCustomsTerritoryunderproperpermitand/orsoldtoFABEnterprisesorFABResidents,aswellas
services provided to the AFAB, FAB Enterprises or AFAB Residents by entities operating from and within the
CustomsTerritory,shallbeconsideredexportedforpurposesofthelawsandregulationsofthePhilippines,and
shall be considered to be zerorated for VAT purposes and thereby become eligible for drawback, relief from
duties and taxes, and any other tax or duty benefit conferred by reason of exportation; However, the VAT
registeredenterprisewithintheCustomsTerritoryshallapplyforeffectivezeroratingoftheirsalesandservices
to FAB enterprises pursuant to existing rules and regulations. Articles which are returned to the Customs
TerritoryfromtheFABshallbeconsideredimportedforpurposesofthelawsandregulationsofthePhilippines.
SECTION 49. Foreign Articles Used as Raw Materials. Foreign articles to be used in the production,
manufacture,processingoffinishedproductsmaybebroughtfromtheFABtodesignatedfreeportareas,special
economic zones, export processing zones, and bonded warehouses in the Customs Territory by accredited sub
contractors, under bond acceptable to the AFAB and the Bureau of Customs to guarantee the return of the
finishedgoodstotheFAB,forexportorforsalewithintheFAB.
SECTION 50. Foreign Articles Sold to FAB Residents. Foreign articles sold by FAB Enterprises to FAB
Residents, or to travelers, tourists, and/or investors shall be exempt from duties and taxes; provided, that such
articlesareactuallyexportedtoaforeigncountryupontheirdeparture,orareactuallyconsumedwithintheFAB.
29|RA9728IRR

SECTION51.LimitofPurchaseofForeignArticles.Subjecttothehigherlimitsallowedforbalikbayansand
returningresidentsasprovidedforunderexistinglaws,rulesandregulations,foreignarticlespurchasedwithin
the FAB and brought out of the FAB and entered into the Customs Territory for personal use or consumption
shallnotbesubjecttocustomsdutiesandtaxesasordinaryimportations;provided,thatthevalueofsucharticles
purchasedshallnotexceedTWOHUNDREDDOLLARS(U.S.$200.00)perindividual;provided,further,thatthis
privilegeshallbeavailedofonlyonceamonth.
SECTION 52. Seizure of Foreign Articles. Foreign articles withdrawn, transported, or taken in commercial
quantitiesfromtheFABtotheCustomsTerritorywithoutpaymentofdutiesandtaxes,shallbesubjecttoseizure
andforfeitureproceedingspursuanttothepertinentprovisionsoftheTariffandCustomsCodeandtheNational
Internal Revenue Code of the Philippines, without prejudice to any criminal and/or administrative actions that
maybeinstitutedagainsttheperson/personsliable/responsibletherefore.
SECTION 53. Transit of Articles by Carriers. Carriers that undertake to transship articles from the FAB to
designated freeport areas, special economic zones, export processing zones and bonded warehouses within the
Customs Territory shall be bonded in an amount to be determined by the AFAB which in no case shall be less
thanFIFTYTHOUSANDPESOS(P50,000.00),Philippinecurrency,conditionedthatthecarriershalltransportand
deliver the articles, without delay, and in accordance with applicable rules and regulations, to the Collector of
Customsattheportofdestinationorexport.TheprovisionsoftheTariffandCustomsCode,asamended,andits
implementingregulations,inrespectoftransshipmentofarticlesfromtheportsintheCustomsTerritorytothe
FABshallgoverncasesoftransshipment.
SECTION54.ArticlesExportedtoForeignCountriesandReExportedintotheCustomsTerritory.Articles
which are manufactured in the FAB and exported there from to a foreign country shall, upon subsequent
importationintotheCustomsTerritory,besubjecttotheimportlawsapplicabletolikearticlesmanufacturedina
foreigncountry.
SECTION55.ResponsibilityforForeignArticles;PresumptiononMissingArticles.
a. FABEnterprisesshallberesponsibleforthesafekeepingandaccountingofallarticlesreceivedbythemin
theFAB,andshallberelievedfromresponsibilityforthearticlesuponremovalunderproperpermitfrom
theFAB,transfertoanotherFABEnterpriseorResident,destructionintheFAB,orabandonmenttothe
AFABintheFAB.
b. Articles which are missing or cannot be accounted for in the FAB shall be presumed to have been
transferredtotheCustomsTerritorywithoutpermit.ArticleswhicharefoundintheFABbutcannotbe
accounted for in the records of a FAB Enterprise shall be treated as having been received in the FAB
withoutpermit.
SECTION 56. Customs Manual of Operations. The AFAB may issue or promulgate Customs or any other
operations manual(s), compliance of the provisions of which shall be the responsibility of FAB Enterprises and
Residents.
C. TaxesandFiscalObligations
SECTION57.ObligationsandLiabilities.
a.

PursuanttoSection6oftheAct,FABEnterprisesnotenjoyingIncomeTaxHolidayorNetOperatingLoss
Carryover,shall,inlieuofpayinglocalandnationaltaxes,payafive(5%)percentfinaltaxontheirgross
incomeearnedinthefollowingpercentages:
1)
2)
3)
4)

TotheNationalGovernment1%
TotheProvinceofBataan1%
TotheTreasurersOfficeoftheMunicipalityofMariveles1%
TotheAuthorityoftheFreeportAreaofBataan2%

b. GrossIncomeEarnedforpurposesoftheseRulesreferstogrosssalesorgrossrevenuesderivedfrom
anyregisteredbusinessactivitywithintheFAB,netofsalesreturns,salesdiscountsandallowances,less
costs of sales, cost of production or direct costs of services (depending on the nature of business) but
beforeanydeductionforadministrative,marketing,sellingand/oroperatingexpensesorincidentallosses
duringagiventaxableperiod.Forfinancialenterprises,grossincomeshallincludeinterestincome,gains
fromsales,andotherincome,netofcostsoffunds.

30|RA9728IRR

Inarrivingatthebaseforwhichthefive(5%)percentfinaltaxstatedintheproceedingsectionshallbeapplied,
thefollowingdeductionsshallbeallowable/unallowable:

1. ForTradingEnterprises:
AllowableDeductions
Cost of Sales (Cost of Sales which is equal to inventory, beginning plus purchases minus
endinginventoryofgoods)
2.

ForManufacturing,Enterprises:
AllowableDeductions
Directsalaries,wagesorlaborexpense
Productionsupervisionsalaries
Rawmaterialsusedinthemanufactureofproducts
DecreaseinGoodsinProcessAccount(Intermediategoods)
DecreaseinFinishedGoodsAccount
Suppliesandfuelsusedinproduction
Depreciation of machinery and equipment used in production, and of that portion of the building
ownedorconstructedbytheregisteredenterprisethatisusedexclusivelyintheproductionofgoods
Financingchargesassociatedwithfixedassetsusedinproduction,theamountofwhichwerenot
previouslycapitalized
Rentandutilitychargesassociatedwithbuildings,equipmentandwarehousesusedinproduction

3.

ForServicesEnterprises
AllowableDeductions
Directsalaries,wagesorlaborexpense
Servicessupervisionsalaries
Directmaterials,suppliesused
Depreciation of machineries and equipment used in the rendition of registered services, and of
thatportionofthebuildingownedorconstructedthatisusedexclusivelyintherenditionofthe
registeredservice
Financingchargesassociatedwithfixedassetsusedintherenditionofregisteredservicebusiness
theamountofwhichwerenotpreviouslycapitalized
Rentandutilitychargesforbuildingsandcapitalequipmentusedintherenditionofregistered
services

4.

FinancialInstitutionsNone

SECTION58.ReturnsandPaymentofTax.
a.

Requirements. All FAB Enterprises subject to the 5% final tax on gross income earned prescribed in
Section6oftheActshallrenderinduplicateatrueandaccuratequarterlyreturnandfinaloradjustment
return in accordance with the provisions of Sections 68 and 69, Chapter IX of the National Internal
RevenueCode,asamended.ThereturnshallbefiledbythePresident,VicePresidentorotherprincipal
officeroftheFABEnterpriseandshallbesworntobytheTreasurerorAssistantTreasurer.
b. Place of Filing. The quarterly return and the final or adjustment return required in the preceding
paragraphshallbefiledwiththeRevenueDistrictOfficerorthecollectionagent/accreditedbankinthe
AFABjurisdiction,withacopythereoftobefurnishedtotheAFAB.
c. PaymentoftheTax.
(1) The amount representing the five percent (5%) final tax of the gross income earned by the FAB
EnterpriseshallbepaidatthesametimethereturnisfiledwiththeRevenueDistrictOfficerorthe
collectingagent/accreditedbankintheAFABjurisdiction.
(2) TimeforFilingtheReturns/PaymentoftheTax.TheprovisionsofSections63and69oftheNational
InternalRevenueCode,asamended,andexistingregulationsregardingthetimeforfilingquarterly
andfinaloradjustmentreturnsandpaymentsofthetaximposedherein,aswellastherequirementof
withholdingandremittancesofthetaxundertheseRulesshallapplytoallFABEnterprises.

31|RA9728IRR

SECTION 59. Bookkeeping and Reportorial Requirements. All FAB Enterprises shall keep regular and
accuraterecordsoftheirtransactions,andmaintainbooksofaccountsandallieddocumentsinaccordancewith
the bookkeeping rules and regulations prescribed by the Bureau of Internal Revenue and/or the AFAB, which
shall be open to inspection and verification by authorized officers of the AFAB or of the Bureau of Internal
Revenue and the Bureau of Customs, upon prior notification and coordination with the AFAB, subject to the
pertinent provisions of the National Internal Revenue Code, as amended. For this purpose, the AFAB at its
instance,orjointlywiththeBureauofInternalRevenueand/ortheBureauofCustoms,isauthorizedtoconductat
any time during office hours any audit, check, or inventory count for the verification and reconciliation of the
recordswiththeinventoryofarticlesintheFAB.
TheAFABshallsubmittotheDOFitsannualtaxexpenditures,infour(4)quarterlyreportsforanygivenyear,
notlaterthantheendofthemonthfollowingthecloseofaparticularquarter,inwhichthetaxincentiveswere
granted,whichshallincludethefollowinginformation:
1.
2.
3.
4.
5.
6.
7.

Nameoftheregisteredfirmwithandwithouttaxexemption;
Dateofregistrationoftheenterprise;
Typeofregisteredactivity;
Typeoftaxincentivesgranted,ifany;
Grossrevenues/grosssalesforthequarter;
Grossincomeforthequarter;
5%taxpaidandnetincomederivedfromtheregisteredactivityoramountofincometaxholiday
availedofforthequarter,Provided,that,ifthe5%taxispaid,therespectiveamountsremittedto
theNationalGovernmentandLGUsmustalsobestated;
8. Amount and description of importations, and estimated amount of duties and taxes waived (if
necessary)onsaidimportation;
9. Amountofsalestodomesticmarketandaspercentageofgrossrevenues;
10. Amountoftaxesanddutiespaidondomesticsales;and
11. Amount of export sales, whether direct or constructive exports, and as percentage of gross
revenues.
12. Suchotherinformation/dataasmayberequiredbytheSecretaryofFinancepursuanttorulesand
regulationsasmaybehereinafterbeissued.

For proper monitoring, the DOF shall review and create a single database of all incentives provided by all
IncentivesAdministrationAuthorities.TheDOFshalllikewisesubmitanannualreporttothePresident.

SECTION60.Search,Arrest,andSeizurebyCustomsOfficials.
a.

Persons, baggage, vehicles, and cargo entering or leaving the FAB are subject to search by Customs
officials as a condition to enter or leave the FAB. Customs officials are authorized to examine any
merchandiseheldbyFABEnterprisesduringtheregularbusinesshours.
b. CustomsofficersmayseizeanyarticlefoundduringaCustomssearchuponenteringorleavingtheFAB
tobeinviolationofanyprovisionofanycustomslawsforwhichaseizureisauthorized,andsuchseizure
shall bedisposed of according to the customs laws. Articles which are prohibited or excluded from the
FABundertherulesandregulationsoftheAFABwhicharefoundbyCustomsofficialsduringanaudit,
examinationorcheckwithintheFABmaybeseizedbythemandturnedovertotheAFABfordisposition.
c. TheAFABmaysecuretheassistanceofand/orcoordinatewithCustomsofficerstoarrestpersonsinthe
FABforviolationsofthecustomslawsforwhicharrestisauthorizedconcerningarticlesintheCustoms
Territory destined to the FAB or articles which have been removed from the FAB to the Customs
Territory.
d. For the orderly administration and implementation of customs laws, regulations and procedures, the
officeoftheCustomsofficialsandpersonnelshallbesituatedoutsidethegateandotheraccesspointsof
theFABprovidingingressandegressthereto.
SECTION 61. Tax Credits for Foreign Corporations. The taxes paid herein by foreign corporations that are
registeredasFABEnterprisesshallbeconsideredasincometaxesforpurposesofapplicationfortaxcreditsby
saidforeigncorporationsintheirrespectivecountries.

32|RA9728IRR

CHAPTERVI
FREEPORTAREAOFBATAAN
IMMIGRATIONREGULATIONS

SECTION62.GeneralProvisions.ExceptasprovidedintheAct,theseRulesandotherrulesoftheAFAB,all
lawsofthePhilippinesconcerningtheentryandimmigrationofpersonsintothePhilippinesandtheirdeparture
and emigration therefrom shall beapplicablein the FAB to persons arrivingdirectly in the FABfroma foreign
countryordepartingdirectlyfromtheFABtoaforeigncountry.
SECTION63.ResponsibilityandAuthority.AlllawsofthePhilippines,includingtheAct,theseRules,and
otherrulesoftheAFABconcerningtheentry,immigration,departure,orimmigrationofpersons,includingtheir
arrival directly in or departure directly from the FAB, shall be carried out within the FAB by personnel of the
BureauofImmigrationincoordinationwiththeAFAB.
SECTION64.RighttoAllowNoVisaEntrytoCertainForeignNationals.Notwithstandingtheimmediately
precedingprovisions,theAFABmayallowtheentryofforeignnationals,particularlytocitizensornationalsof
member states of the Association of South East Asian Nations (ASEAN), Hong Kong British (SAR) Passport
holdersorCertificatesofIdentityandTaiwanesenationalswithRepublicofChinaPassports,withtheexception
of foreign nationals barred from entering the Philippines, into the FAB without visas for a maximum period of
fourteen (14) days, unless extended by the National Government; provided, that such entry will be limited to
tourismandbusinesspurposesonly;provided,further,thatshouldtheforeignnationaldesiretoextendhis/her
visitortoentertheCustomsTerritory,he/shemustsecurethenecessaryauthorizationorvisafromtheBureauof
ImmigrationortheDepartmentofForeignAffairs,asthecasemaybe.
SECTION65.ApplicationOutsideFreeportAreaofBataan.Theissuanceofvisasto,andcontrolofthearrival
or departure of, persons who seek to work and reside in the FAB under the Act and these Rules shall be
administeredbytheBureauofImmigrationortheDepartmentofForeignAffairsto:
a.

PersonsarrivinginthePhilippinesfromaforeigncountrydestinedfortheFAB;

b. PersonsarrivingintheCustomsTerritoryfromtheFABdestinedtoforeigncountries;
c.

PersonsintheCustomsTerritoryandwhoseworkorresidencyvisaswereconferredbytheAFABunder
theauthorityoftheAct,theseRulesandotherrulesoftheAFAB;

d. PersonsoutsidethePhilippineswhoareseekingworkorresidencyvisasintheFAB;and
e.

Spousesandminorchildrenoftheforegoing.

SECTION66.TemporaryWorkandResidencyVisas.TheAFABisauthorizedtoissuetemporaryworkand
residency visas to foreign nationals under the conditions and provisions of these Rules. Upon application by a
FAB Enterprise/s, the AFAB may issue work visas which are valid for and renewable every two (2) years to
foreign nationals who possess executive or highlytechnical skills which no Filipino citizen within the FAB
possesses,ascertifiedbytheDepartmentofLaborandEmployment.TheFABEnterpriseshallapplytotheAFAB
forrenewalnotlessthanthirty(30)daysbeforethescheduledexpirationdateoftheworkvisas,andshallinform
the AFAB whenever any foreign nationals employment is terminated by reason of contract expiration or
termination,firing,redundancy,orotherremoval.
Thetemporaryworkvisaswillbeautomaticallyterminatedupon:
a.

Nonrenewal of the visa, whether by reason of failure of the FAB Enterprise to apply for renewal or
determinationmadebytheAFAB;

b. Expirationofthecontractunderwhichtheforeignnationalisworking;
c.

DischargeorothermannerofterminationoftheforeignnationalbytheFABEnterprise;

d. DissolutionoftheemployingfirmorrevocationofitsFABregistration;

33|RA9728IRR

e.

AcceptanceofworkforcompensationoutsidetheFABwithouttheapprovaloftheAFAB;

f.

Deathoftheforeignnational;

g.

Conviction,byacompetentcourt,ofanyoffensedefinedbytheRevisedPenalCodeorspecialorotherlaws;

h. Commissionofactsinimicaltonationalsecurity,publicinterest,health,welfareandmorals;or
i.

Determination by the AFAB of any other reason or circumstance by which the work of the foreign
nationalisnolongerneededintheFAB.

SECTION 67. Revocation of Temporary Work Visa. The AFAB may, after appropriate hearing, revoke a
temporaryworkvisaforanyviolationbytheforeignnationalorhisorherdependent(s)of(i)anyPhilippinelaw
orregulation,includingtheAct,theseRulesandotherregulationsoftheAFAB,or(ii)thetermsandconditions
fortheissuanceofthevisa.
SECTION 68. Temporary Residency Visas. Temporary residency visas may be issued by the AFAB to any
foreignnationaltowhomaworkvisahasbeenissuedandtohisorherspouseanddependentchildrenunder21
yearsofage.Thetemporaryresidencyvisasoftheforeignnational,spouse,andchildrenarevalidforresidence
either inside the FAB or the Customs Territory during the period of validity of the work visa. The temporary
residency visas shall be deemed terminated upon the termination or revocation of the work visa of the foreign
nationalinaccordancewithSections66and67oftheseRules.
SECTION69.ReportorialRequirements.Thenamesofforeignnationalswhoaregrantedtemporaryworkor
residencyvisas,orwhoseworkorresidencyvisasareterminatedorrevoked,shallbereportedbytheAFABtothe
BureauofImmigrationwithinthirty(30)daysafterissuance,terminationorrevocation.
SECTION 70. Permanent Residency Visas. The AFAB is authorized to issue permanent residency visas to
foreignnationalsundertheconditionsandprovisionsoftheseRules.
SECTION 71. Permanent Residency Visas for Investors. The AFAB may issue a permanent residency visa
withintheFABtoanyforeigninvestorwhohasmadeandcontinuestomaintainaninvestmentofnotlessthan
ONE HUNDRED AND FIFTY THOUSAND DOLLARS (US$150,000.00) within the FAB. This privilege may
extend to the investors spouse and dependent children under 21 years of age. The visa will be provided upon
application by the investor with evidence of the investment, made in conformity with the FABsland use plan,
whichmaybeintheformof:
a.

EstablishmentofaFABEnterpriseorotherdirectinvestmentwithintheFAB;

b. AcashgrantorinterestfreeloantotheAFABortoaFABEnterpriseforthepurposeofmakingcapital
improvementsbytherecipientintheFAB;
c.

ApurchaseofrealestateintheFABorofaFABEnterpriseforthepurposeofrenovation,construction,or
expansionofbuildings,equipment,structures,orappurtenancesforcapitalimprovementpurposes;or

d. AdonationinkindtotheAFABoraFABEnterpriseofequipmentormaterialsforcapitalimprovement
purposes.
SECTION 72. Revocation or Termination of Permanent Residency Visa of Investor. The permanent
residency visas of the investor, spouse, and children automatically terminates when the investor, his spouse,
childrenoranyotherindividualorentityactinginhisbehalf,takestheinvestmentoutoftheFABthroughsaleor
receiving payment, in cash or in kind, for grants, donations, or interestfree loans other than the return of
principal.TheAFABmayalsorevokesummarilyorafterhearingthepermanentresidencyvisaofanyinvestor,
spouse,orchildforthesamegroundsenumeratedinSections66and67oftheseRules,asmaybeapplicable.
SECTION73.PermanentResidencyVisaforRetirees.TheAFABmayissuepermanentresidencyvisastoany
foreignnationalwhoisaretiredpersonandhisorherspouseanddependentchildrenunder21yearsofagefor
residence in the FAB. A retired person is a person (i) over 60 years of age who can demonstrate to the
satisfaction of the AFAB that he or she is of good moral character; (ii) has not been convicted of any crime
involvingmoralturpitude;(iii)nolongeremployedorselfemployed;and(iv)whoreceivesapensionorpassive
income that is payable in the FAB that exceeds FIFTY THOUSAND DOLLARS (US$50,000.00) per annum. No
longer employed or selfemployed means the applicant for the visa has worked for compensation fewer than
sevenhundredandfifty(750)hoursduringtheyearprecedingtheapplicationforthevisa.

34|RA9728IRR

SECTION74.RevocationorTerminationofPermanentResidencyVisaofRetiree.Thepermanentresidency
visaoftheretireeautomaticallyterminatesuponthetakingofresidencebytheretiredpersonoutsidetheFAB,or
the acceptance by the retired person or his or her spouse of work for compensation within the FAB or the
CustomsTerritorywithouttheapprovaloftheAFAB.
Theresidencyvisaofthespouseoftheretireeautomaticallyterminatesuponthedeathofthepersontowhomthe
residencyvisawasgranted,orupontheirdivorce,unlessheorshemakesapplicationforandreceivesaresidency
visafromtheAFAB.
TheAFABmaysummarilyorafterhearingrevoketheresidencyvisaofanyretiree,his/herspouseorchildforthe
samegroundsenumeratedinSections66and67oftheseRules,asmaybeapplicable.
SECTION 75. Reportorial Requirements. The names of foreign nationals who are granted permanent
residencyvisas,orwhosepermanentresidencyvisasareterminatedorrevokedbytheAFABshallbereportedby
the AFAB to the Bureau of Immigration within thirty (30) days after issuance, termination or revocation. The
residencyvisaisvalidonlyfortheFABandnotfortheCustomsTerritory.However,personswithresidencyvisas
mayenterandleavetheFABwithoutanyspecialauthorizationoftheBureauofImmigration.

35|RA9728IRR

CHAPTERVII
FREEPORTAREAOFBATAAN
QUARANTINEREGULATIONS

SECTION76.ApplicabilityofPhilippineLawsRegardingAnimalandPlantHealth.Thelawsofthe
Philippinesconcerninganimalandplanthealthandquarantineandtheprotectionofanimalsandplantsfrom
diseaseandpestilence,shallbeappliedintheFAB,aswellastopersons,baggage,carriers,andmerchandise
containingpossibleanimalorplantdiseasecarryingvectorsarrivingintheFABdirectlyfromforeigncountries.
SECTION 77. Applicability of Philippine Laws Regarding Human Quarantine & Diseases of Public Health
Concerns.ThelawsofthePhilippinesconcerninghumanquarantine;protectionagainstthespreadofdiseases,
public health emergencies of international concern, infectious diseases, diseases subject to International Health
RegulationsoftheWorldHealthOrganizationshallbeappliedintheFAB.
Quarantine inspection of vessels and aircraft, the necessary health surveillance over their cargoes, passengers,
crew and all personnel effects including those of the army and navy shall be vested upon the Philippine
Government Agency responsible for administrating those laws and regulations. Quarantine inspection shall be
donebeforeimmigrationandcustomsclearance.
SECTION 78. Persons Responsible for Implementation. The laws of the Philippines concerning human,
animal,andplanthealthandquarantineshallbecarriedoutintheFABbypersonnelofPhilippineGovernment
agenciesresponsibleforadministeringthoselawsandregulationsworkingincoordinationwiththeAFAB.The
AFABincoordinationwithconcernedPhilippineGovernmentAgenciesshallestablishtherulesandprocedures
necessarytocarryouthuman,animal,planthealthandquarantinelawsandregulationswithintheFAB.

36|RA9728IRR

CHAPTERVIII
FREEPORTAREAOFBATAAN
FOREIGNEXCHANGEANDBANKINGREGIME

A.FreeportAreaofBataanRulesonForeignExchange
SECTION79.ForeignExchangeAccounts.AllFABEnterprisesandResidentsshallbefreetomaintainforeign
exchangeaccountswithanyAuthorizedAgentBankdulylicensedbytheBangkoSentralngPilipinas.
SECTION 80. Philippine Currency Accounts. All FAB Enterprises and Residents shall be free to maintain
accountsinthecurrencyofthePhilippineswithanyAuthorizedAgentBanksdulylicensedbytheBangkoSentral
ngPilipinastoholddepositsinthecurrencyofthePhilippines.
SECTION81.PurchaseofForeignExchange.AllFABEnterprisesandResidentsshallbefreetobuyandsell
foreign exchange from/to entities other than Authorized Agent Banks and Authorized Agent Bank
subsidiary/affiliateforeignexchangecorporations.
SECTION82.ForeignExchangeinBusinessTransactions.AllFABEnterprisesandResidentsshallbefreeto
engage in business transactions the valuation and/or payments for which may be effected in foreign exchange,
provided that transactions between residents may not be funded with foreign exchange purchased from
AuthorizedAgentBanksandAuthorizedAgentBanksubsidiary/affiliateforeignexchangecorporations.Foreign
exchangereceipts,acquisitionsforearningsmaybedepositedinforeignexchangeaccountsinthePhilippinesor
abroad,orbroughtoutofthePhilippines.Suchreceiptsshallinclude,butnotbelimitedto:
a.
b.
c.
d.
e.
f.

salesofgoods;
receiptsforservicesrendered;
contractingofloans
incomeorproceedsfrominvestments;
transferofcapitaltotheFABEnterprise;and
anyothertransactionrepresentingincomeoranincreaseincapitalorassetstotheFABEnterprise.

Provided that, for item c above, the transaction should comply with existing Bangko Sentral ng Pilipinas
regulations.
SECTION83.UseofForeignExchange.ForeignExchangemaybefreelyusedforanypurposenotexpressly
forbiddenbylaw,includingbutnotlimitedtothefollowing:
a.
b.
c.
d.
e.
f.

purchaseofgoods;
paymentforservicesrendered;
repaymentofloans;
transferofprofitsearnedbytheFABEnterprise;
repatriationofcapitalresultingfromliquidationorsaleofassets;
anyothertransactionrepresentingexpensesoradecreaseincapitalorassetstotheenterprise.

Provided that, for repayments of foreign currency loans to be funded with foreign exchange sourced from
Authorized Agent Banks and Authorized Agent Banksubsidiary/affiliate foreign exchange corporations, the
transactionshouldcomplywithexistingBangkoSentralngPilipinasregulationsonforeignloans.
SECTION84.RulesonForeign/ForeignCurrencyLoansandInvestments.Theapprovalregistrationprocessof
the Bangko Sentral ng Pilipinas for loans and investments provided under the Manual of Regulations on Foreign
ExchangeTransactions,BangkoSentralngPilipinasCircularNo.645datedFebruary13,2009,shallbecompliedwith.
SECTION85.PhilippineCurrencyTransactions.AllFABEnterprisesandResidentsshallbefreetoengagein
businesstransactionsthevaluationand/orpaymentsforwhichmaybeaffectedinthecurrencyofthePhilippines
according to regulations in force issued by the Bangko Sentral ng Pilipinas or other authorities of the National
Government.

37|RA9728IRR

SECTION 86. Applicability of Central Bank Circular 1353. Unless specifically provided for in subsequent
laws,theseRulesandotherAFABregulations,theprovisionsoftheManualofRegulationsonForeignExchange
Transactionsissued underBangkoSentralngPilipinasCircularNo.645datedFebruary13,2009,shallapply to
FAB Enterprises and Residents; provided, however, that for the foreign exchange proceeds of foreign loans,
includingloanscontractedinthePhilippinesinforeignexchange,conversionintothecurrencyofthePhilippines
approvalandregistrationwiththeBangkoSentralngPilipinasshallnotberequired,if(1)itwillnotbe:guaranteed
by government corporations and/or government financial institutions, covered by foreign exchange guarantees
issuedbyAuthorizedAgentBanks,andtobegrantedbyforeigncurrencydepositunits(FCDUs)andexpanded
FCDUsandspecificallyordirectlyfundedfrom,orcollateralizedbyoffshoreloansordeposits,and(2)thereisno
intention in the future to service such loans by foreign exchange procured from Authorized Agent Banks and
Authorized Agent Banksubsidiary/affiliate foreign exchange corporations, provided, further that in the case of
foreign investments, the foreign exchange required for capital repatriation and remittance of dividends/profits
shall not be sourced from Authorized Agent Banks and Authorized Agent Banksubsidiary/affiliate foreign
exchangecorporations.
B.FreeportAreaofBataanRulesonBankingandOtherFinancialInstitutions
SECTION87.InGeneral.AnybankorfinancialinstitutionintendingtooperatewithintheFABmustfirstbe
clearedbytheBangkoSentralngPilipinas.
SECTION88.OffshoreBankingUnits.AnyforeignbankregisteredasanOffshoreBankingUnit(OBU)may
acceptdeposits,makeloans,andotherwiseprovidefinancialservicesinforeignexchangetoFABEnterprisesand
Residents,inaccordancewithBangkoSentralngPilipinasregulationsgoverningOBUs.
SECTION 89. Foreign Currency Depository Units. Any bank registered as a Foreign Currency Depository
Unit (FCDU) may accept deposits, make loans, and otherwise provide financial services in foreign exchange to
FABEnterprisesandResidents,inaccordancewithBangkoSentralngPilipinasregulationsgoverningFCDUs.
SECTION90.BanksLicensedinthePhilippines.BankslicensedinthePhilippinesmayfreelyopenbranches
withintheFAB.Minimumbidsshallnotberequired,andthenumberofbanksopeningbrancheswithintheFAB
shall not be restricted. Banks applying to open branches shall be registered with the Bangko Sentral ng Pilipinas
providedthatthebankhasnotviolatedBangkoSentralngPilipinasconditionsgoverningsafeandsoundbanking
practices.SuchbranchesmayelecttoberegisteredasFABEnterpriseswiththeAFAB,andshallberestrictedto
providingservicesoreffectingtransactionswithFABEnterprisesandResidents.Ifsuchbranchesdonotelectto
be registered as FABEnterprises, theyshall not enjoy the rights and privileges under theseRules including the
preferential tax treatment accorded FAB Enterprises as set forth in Chapter V of these Rules, and shall not be
restrictedtotransactionswithFABEnterprisesorResidents.
SECTION91.OBUAffiliates.AnyforeignbankmayapplywiththeBangkoSentralngPilipinastoestablish(a)
anextensionoffice/branchofitsexistingOBU,ifithasanexistingOBUlicensedtodobusinessinthePhilippines,
or(b)anOBUwithintheFAB,ifithasnoexistingOBUlicense,whichshallexclusivelyengageinservicestoFAB
EnterprisesandnonresidentsofthePhilippines.
TheBangkoSentralngPilipinasshallregistersuchbranchorFABOBUsaslicensedtooperateexclusivelyinthe
FAB. Such branch or OBUs shall also be registered as a FAB Enterprise. If the foreign bank applies to operate
within the FAB through a local affiliate bank, then such application shall be subject to prevailing laws on
nationalityofownershipofbankinginstitutions.
SECTION92.TaxExemptionPrivilegesofFABRegisteredBanksandAffiliates.FABOBUs,bankbranches
andaffiliateswhichareregisteredasFABEnterprisesshallenjoyprivilegesandexemptionsunderexistinglaws,
rulesandregulations.
SECTION93.TaxLiabilityofFABRegisteredBanksandAffiliates.Inlieuofalllocalandnationaltaxes,FAB
OBUsandFABbankaffiliatesandbranchesshallpayfive(5%)percentfinaltaxofgrossincomeearnedannuallytothe
BureauofInternalRevenue,asprovidedforinSection57,andsubjecttotheprovisionsoftheseRules.
SECTION94.EffectofExistingBangkoSentralngPilipinasRegulationsofFABRegisteredOBUs.Existing
regulationsgoverningOBUsshallapplytoFABOBUs,exceptasspecificallyprovidedintheseRulesandother
regulationsoftheAFAB.FABOBUsshallpayannualregistrationoflicensefeesnormallyrequireddirectlytothe
BangkoSentralngPilipinas.

38|RA9728IRR

CHAPTERIX
ENVIRONMENTALREGULATIONS

SECTION 95. Principles. AFAB recognizes the importance of maintaining a high degree of environmental
quality as a precursor to the sustainable economic development of the areas both under and adjacent to its
jurisdiction.SpecificregulationstoprotectandconserveenvironmentalqualityasmaybepromulgatedbyAFAB
shall conform to and not contradict environmental policies and regulations established by the National
Government.
Recognizing that the Department of Environment and Natural Resources and its predecessor agencies have
established environmental quality and emission and effluent, standards for air and water quality, the AFAB
adopts those standards and incorporates them into the environmental quality standards the regulations to be
adoptedbytheAFAB.
SECTION96.Administration/EnvironmentalManagementCenter.ThereisherebycreatedanEnvironmental
Management Center that shall have responsibility for the protection of the environment and natural resources
withintheFABand/orjurisdictionoftheAFAB.TheEnvironmentalManagementCentershallhaveresponsibility
fortheimplementationandprotectionprogramsadoptedorassumedbytheAFABasanaturalcorporationand
asagovernmentalentity.
The Environmental Management Center shall undertake the normal functions associated with environmental
management, including, but not limited to, enforcement, monitoring, permitting, training and education, and
contingencyandemergencyplanning.
TheEnvironmentalManagementCentershallseektoprivatizeservicesandinfrastructurerelatedtoenvironment
managementtotheextentthatitshalldeemappropriate.Thisshallincludesuchenvironmentalservicesaswater
supply, wastewater treatment facilities, integrated water resource management, waste management facilities,
wastetransportationservices,andenvironmentalmonitoringservicesascanbecontractedtotheprivatesector.
SECTION 97. Application of Philippine Environmental Laws. All Philippine environmental laws,
particularly Presidential Decrees Nos. 984, 1151, 1152 and 1586, as well as Republic Acts Nos. 6969 and 7586,
including the rules and regulations of the Department of Environment and Natural Resources and other
government agencies concerning environmental pollution and pollution control insofar as these rules and
regulationsarenotinconsistentwiththeseRules,areherebyadopted.
SECTION98.Coverage.Theregulationsforenvironmentalandnaturalresourcesconservationandprotection
shall be applicable to all areas within the FAB and/or under the jurisdiction of the AFAB. All facilities existing
outside the boundaries of the FAB and/or the jurisdiction of the AFAB shall be considered for the purposes of
theseRulestobeexistingfacilities.AllfacilitiestobeintroducedwithintheconfinesoftheFABorthejurisdiction
oftheAFABshallbeconsiderednewfacilitiesforpurposesoftheseRules.
TheAFABshallintroduceasystemofregulationsthatshallbeapplicabletoallexistingandnewfacilitieswithin
its jurisdiction and/or the FAB. This system of regulations shall incorporate existing DENR policies and
regulationsandshallprovideforthepermittingofallsuchfacilitiesbytheAFAB.
AllfacilitieswithintheFABand/orthejurisdictionoftheAFABshallpossessaPermittoOperateissuedbythe
AFAB.AnyfacilitydeemedtobecoveredundertheseRulesfoundtobewithoutanappropriatepermitshallbe
subjecttoimmediateclosureandotherpenaltiesthatmaybeimposedbytheAFAB.
SECTION99.PermitsandClearances.TheAFABshallbetheentityresponsiblefortheissuanceofallpermits
andclearancesrelatedtoenvironmentalprotectionandconservationwithintheFAB,suchpermitsandclearances
to include, but not limited to Environmental Compliance Certificates, Authorities to Construct, Permits to
Operate,andWaterUsePermits.TheAFABmay,atitsdiscretion,amendtherequirementsassociatedwithsuch
permitsat any timeandmayintroduce such otherpermits or clearances that it deems necessary to protect and
conservetheenvironment.

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EnvironmentalComplianceCertificates.UnlessotherwiseexemptedfromdoingsobytheAFAB,no
businessenterpriseshallberegisteredasaFABEnterpriseandallowedtodobusinessorundertakeany
activity within the FAB unless it secures an Environmental Compliance Certificate from the AFAB. No
FABEnterpriseshallbeallowedtoengageinanybuildingand/orconstructionactivityunlessitsimilarly
secures an Environmental Compliance Certificate. All business enterprises seeking registration as FAB
Enterprises under theseRules shall submit an EnvironmentalReport to the AFAB.Such Environmental
Reports shall detail and describe the proposed undertaking, the short and long term environmental
consequencesoftheirbusiness,establishment,constructionproject,orotheractivity;measuresproposed
tomitigateadverseenvironmentalimpacts;and,unavoidableadverseimpacts.DecisionsbytheAFABon
theissuanceoftheEnvironmentalComplianceCertificatefortheproposedundertakingshallbebasedon
theEnvironmentalReportsubmittedforitsconsideration.
All public agencies or corporations seeking to build or construct any structure or infrastructure for
business or public purposes shall secure an Environmental Compliance Certificate prior to undertaking
suchactivity.
Authority to Construct. Following the issuance of the Environmental Compliance Certificate, any
proponent intending to engage in the construction of any structure or infrastructure shall secure an
Authority to Construct. Such Authority shall be based on the building and/or construction plans
mentionedinSection132oftheseImplementingRules.
Permit to Operate. FAB Enterprises shall obtain Permits to Operate prior to the initiation of any
operation of any activity subject to the requirement to obtain an Environmental Compliance Certificate
and the determination that such activity may result in discharge to the environment. The Permit to
OperateshallestablishthemonitoringandreportingrequirementsapplicabletotheFABEnterprisesand
shallberenewedonanannual,biannualorquarterlybasisdependingontheindustryconcernedasmay
bedeterminedbytheAFAB.SuchFABEnterprisesshalldesignateaPollutionControlOfficerwhoshall
serveasthepersonresponsibleforensuringcompliancewithmonitoringandreportingrequirementsand
for the environmental integrity of the enterprise and compliance with these Rules and such other
regulations promulgated or to be promulgated by the AFAB, including but not limited to, effluent
dischargeandemissionstandards,wastemanagement,andemergencyandcontingencyplans.
SECTION100.NaturalResourcesProtectionAreas.TheAFABshall,incooperationwiththeDENR,causeto
protecttheforestedareadefinedbyDENRandshallmanagethatareainaccordancewithpracticesacceptableto
DENR.Thisshallincludetheprovisionofforestguards,asdefinedbyDENR,toensurethatthenaturalresources
oftheareaareprovidedsufficientprotectiontoinsuretheirlongevity.
The Natural Resource Protection Area agreed upon between AFAB and DENR shall include such area as
necessary to provide for the protection of the watershed upon which AFAB is dependent for its water supply.
ThisareashallincludebothvirginandresidualforestsasagreeduponwithDENR.
SECTION101.AirQuality.TheAFABshallnotpermitairqualitytodeterioratewithinitsjurisdictionand/or
theFABasaresultofindustrialdevelopment.Todeterminetheexistingairqualityoftheregion,theAFABshall
implementaregionalairqualitymonitoringprogramwithinitsjurisdiction.Allstationarysourcesofairpollution
within the FAB and/or the jurisdiction of AFAB shall be subject to regulation and shall be required to obtain a
PermittoOperateasaconditionoftheiroccupancyintheFABand/ortheregulatoryareaofAFAB.Allsourcesof
air pollution must comply with the relevant regulations and standards applicable to air emission sources. As a
condition of the Permit to Operate, owners/operator of stationary air pollution sources shall be required to
conductmonitoringoftheemissionsfromthosesourcesandreporttheresultsofthatmonitoringtotheAFAB.
ThefrequencyofmonitoringandreportingshallbeestablishedbytheAFABinthePermittoOperatebutshallbe
notlessthanannually.
AirqualityintheFABorthejurisdictionoftheAFABshallbemaintainedsoastoachievethenationalambientair
qualitystandards.Thesestandardsarethosedeemednecessarytoprotectpublichealthandwelfareandtoreduce
potentialdamagetoproperty.Toachievethesestandards,theAFABshallformulateanairqualitymanagement
strategy for limiting emissions from both mobile and stationary sources. The maximum limit of emissions
establishedbythesestandardsmaynotbeexceededmorethanonceperyear.

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SECTION102.WaterQuality.TheAFABshallnotpermitwaterqualitytodeterioratewithinitsjurisdiction
and/ortheFABasaresultofindustrialdevelopment.Todeterminetheexistingwaterqualityoftheregion,the
AFABshallimplementaregionalwaterqualitymonitoringprogramwithinitsjurisdiction.Allsourcesofwater
pollutionwithintheFABand/orthejurisdictionoftheAFABshallbesubjecttoregulationandshallberequired
toobtainaPermittoOperateasaconditionoftheiroccupancyintheregulatoryareaoftheAFAB.Allsourcesof
waterpollutionmustcomplywiththerelevantregulationsandstandardsapplicabletowatereffluentsources.
WaterqualityintheFABand/orthejurisdictionoftheAFABshallbemaintainedsoastomeetnationalstandards
applicable for the highest and best use of the waterbody as established and determined by the AFAB in
coordinationwiththeDENR.Ingeneral,thisisintendedtopromoteandmaintainwaterqualitythatissuitable
for contract water recreation. All surface and groundwater bodies, including marine and fresh waters, shall be
includedinthisprovision.
To protect the waters within the FAB and/or the jurisdiction of the AFAB, the AFAB shall not allow the direct
dischargeofanywastewater,eitherindustrialordomestic,thatdoesnotmeettheeffluencedischargestandards
asestablishedbytheDENRandadoptedbytheAFAB.Inthecaseofdischargetowastewatertreatmentfacilities
byeitherindustrialordomesticdischarges,theacceptablestandardforacceptanceofthosewastewatersshallbe
determinedbytheowner/operatorofthosefacilities.Dischargesofeffluencefromwastewatertreatmentfacilities
shallmeettheapplicabledischargestandards.Compliancewithsuchstandardsshallbetheresponsibility,ofthe
owner/operatorofthefacility.
As a condition for the continued validity of the Permit to Operate, the owner/operator of the facilities shall
conductmonitoringoftheeffluenceofallwastewaterdischarges,inrelationtothewaterqualityofthereceiving
water and shall report the results of that monitoring to the AFAB. The monitoring and reporting to the AFAB
shall be conducted on an annual, biannual or quarterly basis depending on the industry concerned as may be
determinedbytheAFAB.
SECTION103.WasteManagement.Allsolidandtoxicandhazardouswastesshallbemanagedinthemanner
deemed appropriate by the AFAB. The AFAB shall define solid and hazardous and toxic wastes in a manner
consistent with the definitions developed by the DENR under Republic Act 6969 and shall define the
requirementsforwastegenerators,transporters,andowners/operatorsofwastemanagementfacilities.
Solid Waste. All FAB Enterprises shall dispose of solid wastes in a manner approved by the AFAB.
Suchapprovalshallincludetheuseofapprovedwastetransportersandapproveddisposalfacilities.
WasteGenerators.AnyFABEnterprisedeemedbytheAFABtobeawastegeneratorshallberequired
to report the type, quantity and disposition of such wastes every quarter. Every firm deemed to be a
generatorofhazardousandtoxicwastesshalldevelopaplanforthepropermanagementofthosewastes
and also develop an emergency and contingency plan for accidental releases of those wastes to the
environment. Waste generators shall maintain a manifest inventory of the wastes generated and the
dispositionofsuchwastes.
WasteManagement.Anyfirm(s)intendingtoengageinwastetransportwithintheFABshallobtain
approval by the AFAB to engage in such activity. Such approval shall be predicated upon the
demonstrationofthefirm(s)capabilityandcompetencetoengageinsuchactivityinasafemanner.Waste
transporters shall maintain a manifest of the waste materials handled and/or transported by them and
presentsuchmanifestuponthedemandoftheAFAB.Nowastetransportershalldisposeof,ordeliver,
wastesinanymannernotapprovedorauthorizedbytheAFABtoacceptsuchmaterials.
Waste Management Facilities. All waste management facilities shall be subject to the approval and
authorizationoftheAFABpriortocommencingoperations.Suchfacilitiesshallbeopentoinspectionby
the AFAB at any time and shall maintain sufficient record as to allow the AFAB to determine the
competence of their operation. No waste management facility may accept any waste delivered by the
AFAB to engage in such activity. Waste management facilities shall include, but not be limited to,
landfills,incinerators,physicochemicaltreatmentfacilities,andotherfacilitiesprocessing,recovering,or
disposing of wastes. Enterprises engaged in the operation of waste management facilities on their
premises shall be included in these Rules and other regulations promulgated and adopted, or to be
promulgatedandadopted,bytheAFABtoregulatesuchfacilities.

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Toxic and Hazardous Waste Management. All toxic and hazardous wastes used by any and all
persons,businessesorotherentitieswithintheFABand/orthejurisdictionoftheAFABshallcomplywith
theprovisionsofRepublicAct6969andtheseRules,aswellasotherregulationspromulgated,ortobe
promulgated, by the AFAB with respect to the management of those materials. This shall include the
registrationofchemicalsemployed,importedorotherwiseutilizedatanytimeinanymanner.
SECTION 104. Water Resources Planning. The AFAB shall issue policies and objectives relative on water
resourcesthatwillseektoensurethesourcesofwatersupplywiththeFABand/orthejurisdictionoftheAFAB
shallbeprotectedandconserved,includingmarinewaters,surfacewaters,andgroundwater.Whilesuchpolicies
andobjectivesshallbeconsistentwiththoseestablishedbytheNationalGovernment,thepoliciesandobjectives
shallrecognizethedevelopmentalgoalsandobjectivesestablishedfortheFABand/orjurisdictionoftheAFAB,
and be consonant with the availability of water resources. As such, the AFAB shall formulate a groundwater
protectionprogramtoensurethecontinuedviabilityofgroundwaterresources.TheAFABshallalsorequirenew
waterresourcedevelopmentstoobtainaWaterUsePermitpriortothedevelopmentofanygroundwaterwellor
surfacewaterabstraction.SuchpermitshallbereviewedandapprovedbytheAFAB.ApplicantsforaWaterUse
PermitshallprovidesuchinformationastheAFABdeemsnecessarytoevaluatethedevelopmentproposal.Water
Use Permits issued by the AFAB shall specify the allowable rate and quantity of water withdrawal. Permittees
shallreporttotheAFABthewaterconsumptionandqualityonaquarterlybasis.
SECTION 105. Submission of Integrated Water Resource Management Plan. To insure the preservation,
maintenanceandsustainabledevelopmentofallwaterresourceswithintheFAB,allitsenterprisesandlocators
must submitan Integrated WaterResource Management Plan(IWRMPlan) that specifies the manner bywhich
the surfaceand groundwater qualityand supply will be maintained. The IWRMPlan shall be approved by the
Administration/Environmental Management Center in coordination with the National Water Resources Board
andtheconcernedofficesorbureausoftheDepartmentofEnvironmentandNaturalResources.Furthermore,for
future compliance purposes, the IWRMPlan shall be subject to periodic review and assessment by the
Administration/EnvironmentalManagementCenter.
SECTION106.ConservationAreas.Recognizingthatahealthyenvironmentisessentialtotheattainmentof
thedevelopmentgoalsoftheAFABjurisdictionandthattherearecompetingusesoftheenvironment,theAFAB
shalldesignatesuchareasthatitdeemsappropriateasConservationAreas.TheseAreasmayincludethoseareas
necessaryfortheprotectionofwatersupplies(suchasgroundwateraquiferrechargezones),orareasimportantto
the protection and preservation of biodiversity (such as marine conservation and sanctuary areas and natural
forestareas),ordevelopmentthatwillbeallowedinthoseareas,includingthedesignationofareasasexcluded
from development. Those areas designated as Conservation Areas shall be included in any land use plant or
zoningordinanceadoptedbytheAFAB.
SECTION 107. Emergency and Contingency Planning. All entities operating within the FAB and/or the
jurisdiction of the AFAB having potential to discharge oil, petroleum products, or other deleterious substances
(includingchemicalsortheirbyproducts)shallprepareaplanforpreventingsuchdischargeontheenvironment
(includingtheaquatic,marineorlandenvironments)anddetailingthemeasurestobeemployedintheeventthat
suchdischargesoccur.ThisplanshallbesubmittedtotheAFABandshallincludetheprocedurestobefollowed
inthehandlingofsuchmaterials,andtheprocedurestobefollowedintheeventoftheirdischarge.Suchplansare
to be prepared in conformity with the requirements of the Philippine Coast Guard and with the standards of
practiceoftheindustry.

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CHAPTERX
OTHERPROVISIONS

A.Expropriation
SECTION 108. Power of Eminent Domain. The AFAB may exercise its power of eminent domain over any
privatelyownedpropertylocatedwithintheFABsubjecttotherequirementsoftheConstitutionandexistinglaw.
SECTION 109. Effect of Expropriation on Lease Agreements. All cancellation or early termination of a
leaseagreementbetweentheAFABandalesseeasaresultofexpropriationshallbegovernedbythetermsofthat
leaseagreement.
B.Security
SECTION 110. Function of AFAB Police Force. AFAB Police Force agents shall have police authority and
maintain law and order within the boundaries of the FAB, including but not limited to conducting police
investigationsofviolationsofpenallawsinsidetheFAB.AccessintoanddeparturefromtheFABshallbefully
controlledbyAFABPoliceagents.
SECTION111.ResponsibilityforSecurityofFAB.ThesecurityoftheFABandthemaintenanceofpeaceand
orderthereinshallbetheresponsibilityoftheAFAB.
LicensetoCarryFirearms:TheAFABenvisionstheFABtobeafirearmsfreezone.
FABFacilitiesOperatorsand/orEnterprisesshallprovideandberesponsibleforthesecurityoftheirrespectivefacilities
andextendsupportandcooperationtotheAFABPoliceForce/agentsintheperformanceofthelattersduties.
Thesesecurityforcesmaybelicensedtocarryfirearmswithinthepremisesoftheparticularenterprises,subjectto
approvalfromAFABandcompliancewiththeseRules.
SECTION112.RequestforAssistance.TheFABFacilitiesOperatorofEnterprisemay,asnecessary,request
assistancefromAFABPoliceForces/agentstoenforcesecurityfortheirfacilities.Suchsecurityagentsshallactin
cooperation with the AFAB Police Forces and shall adhere to such rules and regulations as AFAB may
promulgate.
SECTION 113. Search and Inspection of Persons and Vehicles. All persons and vehicles entering in and
exiting from the FAB shall be subject to search and inspection. They shall be required to register and/or secure
appropriateFABpasses/clearancesorpermitsfromtheAFAB.TheirmovementsinsidetheFABshallbegoverned
by the security rules of the AFAB.No inspection or control initiated by other governmental agencies shall take
place within the FAB Enterprise without prior coordination with the AFAB. Lawful warrants should first be
presentedtotheadministrativeofficeoftheFABpriortoenteringtheFABandactualserviceofthewarrant.
C.LaborRelations
SECTION 114. Objectives and Policy. One of the principal objectives of the AFAB is to create jobs through
vibranteconomicactivityinordertoaddresstheneedsofthepeopleoftheMunicipalityofMariveles,Provinceof
Bataan.
The AFAB adopts a policy of industrial peace, harmony and productivity within the FAB giving due
consideration to the new concept of the freeport in order to establish a business and commercial atmosphere
whichencouragesinvestmentsandsimultaneouslypromotesandenhancesthelivesanddignityofallworkers.
SECTION115.ApplicabilityofLaborLaws.Unlessotherwiseprovidedbylaw,allPhilippinelaborandsocial
security laws shallapplywithin the FAB. Pursuant to the abovestated policy, alllaws onstrikes and lockouts
willbestrictlyenforced.
SECTION 116. Labor Center. A Labor Center shall be established within the AFAB. This Center shall be
responsible for studying and amicably settling professional and labor relations and disputes, interpreting of
employment contracts, and monitoring work, hygiene and safety standards within the FAB. The Labor Center
shallcompriseaLaborOffice;anIndustrialHealthandSafetyOffice;andanInspectionandDisputesOffice.

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SECTION 117. Requirements for All Persons Seeking Employment Within the FAB. All persons seeking
employmentwithintheFABmustfirstregisterandsecureclearancefromtheAFAB,throughtheLaborOfficeof
the Labor Center. For this purpose, the applicant must provide the AFAB information on his/her
educational/vocational background and/or work experience and skills, as well as other information as may be
required by the AFAB. The applicant must likewise be generally aware of the policy objectives of the FAB as
providedundertheActandtheseRules,andproclamationsoftheNationalGovernmentandtheAFAB.
SECTION118.LaborDisputes.Subjecttoexistinglaborlawsorasmaybespecifiedinemploymentcontracts
orcollectivebargainingagreements,alllabordisputesmustbebroughtbeforetheInspectionandDisputesOffice
of the Labor Center which will attempt to amicably settle the case. In case the AFAB cannot settle the dispute
amicably, it will certify the dispute for mediation or arbitration before the proper office of the Department of
LaborandEmploymentortheSecretaryofLaborandEmploymentforcompulsoryarbitrationorassumptionof
jurisdiction.
SECTION 119. Labor Skills Inventory; Identification Card. The Labor Office shall maintain a Labor Skills
InventoryoftheFABwhichshallcontainalistofemployeesalreadyworkingintheFAB,aswellasamanpower
poolofjobapplicantsincludingthosetrainedbytheTechnicalandSkillsDevelopmentAuthority(TESDA).All
things being considered equal, the Labor Office shall give priority to those residing in the Municipality of
MarivelesandothermunicipalitiesintheprovinceofBataanandCentralLuzon.
AllemployeesworkingintheFABmustsecureidentificationcardsfromtheAFABpursuanttoSection24hereof
whichwillcontain,amongothers,thespecificskill(s),tradeoroccupationoftheemployeeconcerned.
SECTION120.EmploymentofForeignNationals.FABEnterprisesdesiringtoemployforeignnationalsmust
secure the prior approval of the AFAB which shall see to it that relevant Philippine laws and regulations are
compliedwith.
SECTION 121. Training Program for Understudies. A FAB Enterprise employing foreign supervisory,
technicaland/oradvisorypersonnelshallprovideatrainingprogramforFilipinostobeconductedbysaidforeign
nationalseachinhisownspecializedfield;provided,thateveryforeignnationalshallhaveatleastone(1)Filipino
understudy, and such training shall be done regularly during office hours; provided, further, that the FAB
Enterpriseshallsubmititstrainingprogramwithinthirty(30)calendardaysfromarrivaloftheforeignnationalor
fromthedayhereportsfordutyorfromthedateofregistrationincasetheforeignnationalwasemployedbefore
registration;and,provided,finally,thatitshallsubmitanannualprogressreporttotheAFABonsuchtraining
programwithinthemonthofJuneofeveryyearcontainingthefollowingdata:
a.

Nameoftheforeignnationalandhisfieldofspecializationasprescribedintheprogram;

b. NamesandaddressesoftheFilipinounderstudiesunderhim/her;
c.

Numberofhoursofactualtrainingforeachunderstudyandspecificsubject(s)covered;and

d. Reasons why the Filipino understudies cannot yet take over the work of the foreign national,
ifsuchbethecase.
SECTION 122. Duration of Period of Employment. Every foreign national employed by authority of the
AFABshallbegrantedaperiodofnotexceedingfive(5)yearsandextendiblefromyeartoyeardependingupon
theneedsoftheFABEnterprise;provided,thatnoextensiontostayhereinshallberecommendedbytheAFABto
the Bureau of Immigration (and Deportation) unless the training program required has been complied with
satisfactorily;provided,further,thattherequestforextensionshallbefiledwiththeAFABatleastthirty(30)days
beforetheexpirydateoftheauthorizedstay.
SECTION123. Spousesand Dependents of Foreign Nationals. The spouses and unmarried children under
twentyone(21)yearsofageoftheforeignnationalemployedundertheprecedingsectionsshallbepermittedto
enterasdependentsoftheforeignnationalemployeeandresideintheFABduringtheperiodofemploymentof
suchforeignnationalintheFABEnterprise.

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SECTION 124. Registration with the AFAB. Every foreign national employed under the preceding sections
shallregisterwiththeAFABwhichshallissuetothemCertificatesofResidencyinaccordancewiththepertinent
provisionsoftheseRules.
SECTION125.ApprenticeshipProgram.TheAFABshallestablishanapprenticeshipprogramsimilartothe
apprenticeshipprograminstitutedandimplementedbyotherFreeportauthorities.
SECTION126.QuarterlyReports.TheLaborOfficeoftheAFABshallpublishquarterlyreportsonthelabor
situationintheFAB.
D.Sanitation,GarbageandSewage
SECTION 127. In General. The AFAB shall, in coordination with the local government units that have
concurredtobepartoftheFAB,provideforasystemofsanitation,garbagecollectionanddisposalandsewage.
SECTION128.Fees.TheAFABmayimposeandcollectreasonablefeesfromFABEnterpriseandResidentsfor
the implementation of a sanitation system, the collection and disposal of garbage and/or the installation and
maintenanceofasewagesystem.
SECTION 129. Fines and Penalties. The AFAB may impose administrative fines and penalties against any
FABEnterpriseorResidentforanyviolationofsanitation,garbageorsewagerulesandregulationsthattheAFAB
mayenactorpromulgate.
E.EducationalandMedicalInstitutions
SECTION130.EstablishmentofPrivateInstitutions.TheAFABmayauthorizetheestablishmentofprivate
educational and medical institutions. These private educational and medical institutions may, if they so desire,
applytobecomeFABEnterprises,inwhichcase,thepertinentprovisionsoftheseRulesshallapply.
SECTION131.ApplicabilityofNationalLaws.TheAFABshalladoptandimplementrulesandregulationsto
governeducationalandmedicalinstitutionstobeestablishedwithintheFAB.Pendingtheissuanceofsuchrules
and regulations, all laws on educational and medical institutions, as well as the rules and regulations of the
Department of Education, Sports and Culture and the Department of Health and other government agencies
concerningeducationalandmedicalinstitutionsareherebyadopted.
F.BuildingandConstruction
SECTION 132. Building and Construction Plans. All private and public business enterprises or agencies
desiringtobuildand/orconstructanybuilding,house,warehouse,silo,privateroadorbridgeandothersimilar
structuresandinfrastructureswithintheFABmustsubmittheirbuilding,internalandexternaldesignsshowing
the outside features of the structure, including proposed signages of whatever style or material, and/or
constructionplansforaestheticconsiderationandapprovalbytheAFAB.Theseplansmaybeincludedandmade
apartoftheEnvironmentalReportmentionedinSection99oftheseRules.
SECTION 133. Need to Secure Environmental Compliance Certificate. No building and/or construction
projectcanbecommencedunlesstheFABEnterpriseconcernedsecuresanEnvironmentalComplianceCertificate
fromtheAFABasprovidedforinSection99oftheseRules.
SECTION134.ApplicabilityofNationalLaws.TheAFABshalladoptandimplementrulesandregulationsto
governbuildingand/orconstructionofallstructuresandinfrastructureswithintheFAB.Pendingtheissuanceof
such rules and regulations, all laws on building and construction, as well as the rules and regulations of the
DepartmentofPublicWorksandHighwaysandothergovernmentagenciesconcerningbuildingandconstruction
areherebyadopted.

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G.FreeportAreaofBataanHeadquartersCompanies
SECTION 135. Registration of NonResident Headquarters. Companies qualifying as nonresident
headquarters companies may be domiciled in the FAB and registered with the AFAB. Such headquarters
companiesmustmeettherequirementsoftheBureauofInternalRevenue.
SECTION 136. Tax Privileges of NonResident Headquarters. Nonresident headquarters companies
domiciled in the FAB shall continue to be governed by provisions of the headquarters companies laws which
extendacompleteexemptiononincometaxforqualifyingcompanies.
SECTION137.ObligationsofNonResidentHeadquarters.Nonresidentheadquarterscompaniesdomiciled
withintheFABmustmeetallrequirementsandobligationsforsuchcompaniesasestablishedinlaw,decrees,and
otherapplicablerulesandregulations.
H.FreeportAreaofBataanFinancialandCommoditiesMarkets
SECTION 138. Who are Eligible to Organize. Organized markets, exchanges, clearing houses and other
arrangements for effecting transactions in standardized financial instruments may be organized by FAB
Enterprises, FAB OBUs, bank branches or their affiliates. Such markets may include transactions in securities,
bonds,debtinstruments,foreigncurrencies,commodities,preciousmetals,futurescontract,oranyotherfinancial
instrumentsasmaybefreelytradedamongparties.
SECTION139.ModeofOrganization.Suchfinancialmarketsshallbeorganizedinaccordancewithprinciples
and procedures established and agreed upon by the member firms of each market or exchange, and registered
withtheAFAB.
I.DisputesandLitigation
SECTION140.AmicableSettlement.IncaseofdisputesbetweenoramongFABEnterprises,thepartiesshall
promptly meet and exert best efforts towards amicable settlement of the dispute in good faith. The AFAB may
conciliateormediatethedisputesuponrequestoftheparties.
SECTION 141. Arbitration or Litigation. Any dispute which is not amicably settled may be resolved by
arbitrationorjudicialactionbeforecompetentcourtsinthePhilippineshavingjurisdictionoversuchdispute.
J.MiscellaneousandTransitoryProvisions
SECTION142.BankruptcyorLiquidation.ThebankruptcyorliquidationofFABEnterprisesshallbecarried
outinaccordancewiththelawsandregulationsrelatingtoliquidationinforceinthePhilippines.
SECTION143.LienonPropertyofFABEnterprise.AnyunpaidsumsofmoneyowedbyFABEnterprisesto
the AFAB, or any unpaid duties, taxes, penalties or charges owed to the Bureau of Internal Revenue, or the
BureauofCustomsshallconstitutealienagainstthepropertyoftheFABEnterprisesconcerned.
SECTION144.LiabilityforDamages.FABEnterprisesorResidentsshallbeliablefordamagesarisingfrom
violationsoftheAct,theseRulesandotherregulationsoftheAFAB.
SECTION 145. General Authority to Dispose of Abandoned, Foreclosed, Forfeited or Unclaimed Articles.
TheAFABhastheauthority,consistentwiththeConstitutionandexistinglaws,tosell,destroy,orconverttoits
ownusearticlesandmerchandisethathavebeenabandoned,leftunclaimed,foreclosed,orforfeitedtotheAFAB
intheFAB,andtoestablishproceduresforthesale,destruction,orconversionthereof.
SECTION 146. Effect of Board Action on Vested Rights. In no case shall any Board action impair the
obligation of contracts or vested rights that may have arisen by virtue of the contractual obligations of FAB
Enterprises.

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SECTION 147. Rules of Procedure for Investigations. The AFAB shall promulgate rules of procedure
governingtheconductofinvestigationsandhearingsinvolvingviolationsoftheprovisionsoftheActandthese
Rules,thecorrespondingimplementingmemorandaorcircularsandthetermsandconditionsoftheregistration
agreementbetweentheAFABandtheFABEnterprises.Pendingthepromulgationofsaidrulesofprocedure,the
AFAB may continue to conduct said investigations and hearings provided that the basic requirements of due
processoflawaremet.
SECTION148.Inventory.TheAFAB shallconductaninventoryofallrealandpersonalpropertiesownedand
administered by the Bataan Economic Zone (BEZ) and Philippine Economic Zone Authority (PEZA) prior to the
turnoverofthesametoAFAB.AllassetsinventoriedshallthereuponbelongtoAFAB.Forthispurpose,PEZAshall
submittoAFABalistofallrealandpersonalpropertiesandanyotherassetstobetransferredfromBEZtoAFAB.
SECTION149.TransferofProperty.Alltitlestotheassetsreferredtointheimmediateprecedingsectionshall
betransferredimmediatelytotheAFABbytheBEZandPEZA.
SECTION 150. Management and Financial Audit. The AFAB shall, by itself or through a third party service
provider,conductamanagementandfinancialauditoftheBEZtodeterminetheprecisefinancialandoperational
situationofBEZ.
SECTION151.SupervisionandControl.Forpurposesofpolicydirectionandcoordination,theAFABshallbe
underthedirectcontrolandsupervisionoftheOfficeofthePresident;
SECTION152.RegionalDevelopmentCouncil.TheAFABshalldeterminethedevelopmentgoalsfortheFAB
withintheframeworkofnationaldevelopmentplans,policiesandgoals.Theadministratorshall,uponapproval
by the Board, submit the FAB plans, programs andprojects to the Regional Development Councilforinclusion
andinputstotheoverallregionaldevelopmentplan;
SECTION153.RelationshipwithLocalGovernmentUnits.ExceptasprovidedintheAct,theMunicipalityof
MarivelesintheProvinceofBataanshalloperateandfunctioninaccordancewiththeLocalGovernmentCodeof
1991. In case of any conflict between the AFAB and the local government units (LGUs) and the National
Government(NG)onmattersaffectingtheFABotherthandefenseandsecuritymatters,thedecisionoftheAFAB
shallprevail;
SECTION154.LegalCounsel.TheAFABshallhaveitsowninternallegalcounselunderthesupervisionofthe
Government Corporate Counsel. When the exigencies of its businesses and operations demand, the AFAB may
engagetheservicesofanoutsidecounseleitheronacasetocaseoronafixedretainerbasis.
SECTION155.ExistingEmployeesatBEZ.TheAFABshall,totheextentpossible,retaintheexistingemployee
complementoftheBEZ;Provided,that,thetenure,rank,salariesandprivilegesofsuchpersonnelarenotreduced
oradverselyaffected.ThepersonnelwhoseservicesarenotretainedbytheAFABshallbegrantedseparationpay
andretirementandotherbenefitstheyareentitledtounderexistinglawsbutinnocaseshalltheseparationpay
belessthanone(1)monthforeveryyearofservice;Providedthattheseparatedemployeehasrenderedatleast
one(1)yearofserviceatthetimeoftheeffectivityoftheAct.
Funds necessary to cover the separation pay and retirement and other benefits under this section shall
be provided by the PEZA. The AFAB shall not be liable for payment of the separation pay and retirement and
otherbenefits.
SECTION156.Benefits.ForexistingcompaniesoperatingwithintheBEZthatarecurrentlyenjoyingincometax
holiday,theyshallhavetheoptiontocontinueavailingofsuchincentiveuptoitsexpirationorbesubjecttothe
5%preferentialtaxrate.
The implementation of this Act shall in no case result in a diminution of fiscal incentives to existing business
enterprisescurrentlyoperatingwithintheBEZ.
SECTION 157. Automatic Recognition of PEZA registrations. All current BEZ locators shall have their PEZA
registrationsautomaticallyacceptedasAFABregistrationsuntil theend of the calendaryearof the AFAB takeover.
TheywillberequiredtocomplywithreregistrationtoAFABbythefirstworkingdayofthefollowingyear.

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SECTION 158. Recognition and Adoption of PEZA Forms. All current PEZA forms, including registration
forms,shallberecognizedasAFABformsupontheimprintingorstampingoftheAFABnameand/orseal,until
suchtimethattheNationalPrintingOfficeisabletodelivertheofficialprintedformsoftheAFAB.
All conflicts in the provisions between the aforementioned PEZA forms and these implementing rules and
regulationsshallberesolvedinfavorofthelatter.
SECTION 159. Transition Period. There shall be a 30day transition period, reckoned from the date of
effectivityoftheseRules,whereintheBEZemployeesshallcontinuetheperformanceoftheirdutiesandfunctions
while AFAB determines the qualified and necessary personnel among them, subject to the pertinent rules and
regulations of the CivilService Commission. The organization of the AFAB shall be deemed to take effect after
thistransitionperiod.
K.Amendments,SeparabilityandEffectivity
SECTION160.PowertoAmendRules.TheAFABmayamend,alter,supplement,suspend,modifyorrevoke
theseRulesoranyportionthereofasmaybenecessary,provided,however,thatFABEnterprisesandResidents
directlyaffectedtherebyshallhavebeenproperlynotifiedandgiventheopportunitytopresenttheirviewsina
publichearingcalledforthepurpose.
SECTION161.SeparabilityClause.Ifanyclause,sentence,provisionorsectionoftheseRules,includingany
appendices thereto, shall be held invalid or unconstitutional, the remaining parts thereof shall not be affected
thereby.
SECTION 162. Effectivity Clause. These Rules shall take effect fifteen (15) days after its publication in a
newspaperofgeneralcirculation.

APPROVED by the Board of Directors of the Authority of the Freeport Area of Bataan at its Board Meeting on
June09,2010.

DEOGRACIASCUSTODIO
ChairpersonandAdministrator

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