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Republic of the Philippines le 730
HOUSE OF REPRESENTATIVES = fj YAIE: .
Quezon City "an a
\ 9, By
SEVENTEENTH CONGRESS 4
First Regular Session.

4106

House Bill No.

Introduced by Representative Jose E

ue S. iii

EXPLANATORY NOTE,

It is the Declared Principle and Policy of the State to develop a self-reliant and
independent national economy, effectively encourages private enterprise, and provides
incentives to needed investments with the determined purpose of equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and services
produced by the nation for the benefit of the people; and an expanding productivity as the
key to raising the quality of life for all, especially the underprivileged.

It is the policy of the state likewise to encourage and promote the establishment and
development of economic areas in the country as a means to achieve and enjoy genuine a
sound and balanced industrial, economic, and social development, so that territorial and
political subdivisions of the State can attain meaningful local autonomy to enable the local
governments to achieve their fullest development and growth as self-reliant communities
and make them more effective partners in the attainment of national goals.

This measure is an amendment to some of the existing provisions of the
"Freeport Area of Bataan Act" created under RA 9728 on 23 October 2009, since said period
much economic development has already become apparent and has made the mentioned law
less competitive with our neighboring ASEAN countries. Credible economic gains have
already been achieved and accomplished since the passage and approval of the RA 9728,
however, there is more room for improvement and there are more investors that can be
persuaded in investing in our Freeport Area.

Steadfast in our pursuit to provide a venue and attract more qualified domestic and
foreign investors with appropriate and appealing incentives, such as among others, by
providing the exceedingly globally competitive investment climate and facility, opportunities
for more investment portfolios, bolstering and boosting the powers and functions of the
authority to be more pro-active and responsive to the demands of the international business
market and increasing the financial capability of the designated authority.

‘This bill will highly intensify and greatly strengthen our economic capability and
viability with the international or global market and would put as closer or even at par with
our ASEAN neighbors in terms of investment areas.

‘The passage of this bill is earnestly sought.

laa
. GARCIA TIT
ct, Bataan

>.
2? ReCeElVED:

Y

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS
First Regular Session

House Bill No.__ 4106

Introduced by Representative Jose Enrique S. Garcia III

AN ACT FURTHER
STRENGTHENING THE POWERS AND FUNCTIONS OF THE
AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB),
AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 9728,
OTHERWISE KNOWN AS THE “FREEPORT AREA OF BATAAN (FAB)
ACT OF 2009”

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

SECTION 1. Section 3 of Republic Act No. 9728 is hereby amended to read

as follows:

“SEC. 3. Conversion of the Bataan Economic
Zone (BEZ) into the Freeport Area of Bataan. The existing
Bataan Economic Zone located in the Municipality of
Mariveles, Province of Bataan, is hereby converted into a
special economic zone and Freeport to be known as the
Freeport Area of Bataan (FAB). The FAB shall cover the
LAND AND WATER TERRITORIES in the Municipality
of Mariveles, Province of Bataan AND ALL OTHER
AREAS WHICH MAY BE DECLARED AS PART OF
FAB IN COMPLIANCE WITH SECTION 4(G) OF THE
ACT.”

SECTION 2. Section 4 of Republic Act No. 9728 is hereby amended to read
as follows:

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

“(a) Within the framework and limitations of the
Constitution and applicable provisions of the Local
Government Code, the FAB shall be developed into and
operated as a decentralized, self - reliant and self - sustaining
industrial, commercial - trading, agro - Industrial, tourist,


banking, financial and investment center with suitable
residential areas;

“(b) The FAB shall continue to be provided with
transportation, telecommunications and other facilities
needed to attract legitimate and productive investments,
generate linkage industries and employment opportunities
for the people of the Province of Bataan and its neighboring
towns and cities;

“(c) The FAB may establish mutually beneficial
economic relations with other entities or enterprises within
the country or with foreign entities or enterprises;

“(d) Foreign citizens and companies owned by non-
Filipinos may whatever proportion may set up enterprises in
the FAB either by themselves or in Joint venture with
Filipinos in any sector of industry, international trade, and
commerce within the FAB;

“() The FAB shall be managed and operated as a
separate customs territory ensuring free flow or movement
of goods and capital within, into and out of its territory.FOR
THIS PURPOSE, THE AFAB SHALL BE EXEMPT
FROM PAYMENT OF ALL NATIONAL AND LOCAL
TAXES;

“(O) The FAB shall provide incentives such as tax and
duty free importations of raw materials, capital and
equipment to registered enterprises located therein,
However, exportation or removal of goods from the territory
of the FAB to the other parts of the Philippine territory’ shail
be subject to customs duties and taxes under the Tariff and
Customs Code of the Philippines, as amended, and the
National Internal Revenue Code (NIRC) of 1997, as
amended;

“(g) The areas comprising the FAB may be expanded
or reduced when necessary. For this purpose, the FAB
Authority which will be created under this Act, with the
concurrence of the APPROPRIATE AND AFFECTED
local government units (LGUs) AND APPROVAL OF THE
BOARD, in accordance AND IN COMPLIANCE with
existing laws and local ordinances shall have the power to
equire, PROCURE, AND/OR INCREASE, EXPAND
either by purchase, negotiation or _ condemnation
proceedings, any private OR PUBLIC LANDS AND/OR
THEIR RESPECTIVE WATER TERRITORIES, IF
ANY for the following purposes: (1) consolidation of lands
for FAB development; (2) acquisition of right of way to the
FAB; and (3) the protection, AND SAFEGUARD of
watershed areas and the maintenance and improvement of

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SECTION. 3. Section 13 of Republic Act No. 9728 is hereby amended to read

as follows:

its water yield and natural assets valuable to the prosperity
of the FAB AND THE LGU, the EFFECTIVE management
of solid and water waste IN COMPLIANCE WITH
EXISTING NATIONAL LAWS AND _ LOCAL
ORDINANCES, and its impact to adjacent areas within the
local government concerned. THE MUNICIPAL WATERS.
OF UP TO 15 KILOMETERS FROM THE LOW
WATER MARK AREA OF THE MUNICIPALITIES
CONCERNED SHALL BE DEEMED INCLUDED IN
‘THE TERRITORIAL WATERS OF THE FAB.

The LGU and the FAB shall provide for AN
IMMEDIATE AND RESPONSIVE MECHANISM TO
UNDERTAKE BEST MANAGEMENT PRACTICE
THROUGH COASTAL ZONE MANAGEMENT
PROGRAM to address THE ABUSE AND inappropriate
exploitation of the natural environment and disruptive land
use within the jurisdiction of the FAB;

“(h) Goods manufactured by the FAB enterprise shall
be made available for immediate retail sale in the domestic
market, subject to the payment of corresponding taxes on
raw materials and other regulations that may be formulated
by the FAB Authority, together with the Philippine Economic
Zone Authority (PEZA), the Bangko Sentral ng Pilipinas
(BSP), the Department of Finance (DOF), the Bureau of
Customs (BOC) and the Department of Trade and Industry
(DTD in accordance with the NIRC of 1997, as amended, and
the Tariff and Customs Code of the Philippines, as amended,
However, in order to protect the domestic Industries, a
negative list of industries shall be drawn up and regularly
updated by the PEZA. Enterprises engaged in industries
included in such negative list shall not be allowed to sell their
products locally; and

“(i) The defense of the FAB and the security of its
perimeter fence shall be the responsibility of the National
Government in coordination with the FAB Authority and the
LGUs.”

“SEC. 13. Powers and Fu
shall have the following function:

ns of AFAB. The AFAB

“(a) To adopt, alter, use a corporate seal, to contract,
lease, buy, sell, acquire, own and dispose properties of
whatever nature;



“(b) To sue and be sued in order to carry out its duties,
responsibilities, privileges, powers and functions as granted
and provided for in this Act and to exercise the power of
eminent domain for public use and public purpose;

“(c) To operate, administer, manage, AND develop in
accordance with Executive Order No. 525, as amended, the
FAB according to the principles and provisions set forth in
this Act and to coordinate with the LGUs for the
development plans, activities and operation of the FAB;

“{(&)] (a) To register, regulate and supervise the
enterprises in the FAB in an efficient and decentralized
manner, subject to existing laws;

“{(6)] (e) To coordinate with the LGUs and exercise
general supervision over the development plans, activities
and operations of the FAB;

“{(g)] () To authorize or undertake, on its own or
through others, and to regulate the establishment,
construction, operation and maintenance of public utilities,
services, and infrastructure in the FAB such as shipping,
barging, stevedoring, cargo, handling, hauling, warehousing,
storage of cargo, port services or concessions, piers, wharves,
bulkheads, bulk terminals, mooring areas, storage areas,
roads, bridges, reclamation projects, terminals, conveyors,
water supply and. storage sewerage, drainage, airport
operations in coordination with the Civil Aeronautics Board,
and such other services or concessions or infrastructure
necessary or incidental to the accomplishment of the
objectives of this Act. Provided, however, That the private
investors in the FAB shall be given priority in the awarding
of contracts, franchises, licenses, or permits for the
establishment, operation and maintenance of utilities,
services and infrastructure in the FAB;

“[(1)] (g) To license, set fees, regulate and undertake
the establishment, operation and maintenance of utilities,
other services, educational and medical institutions and
infrastructure in the FAB such as, but not limited to, heat,
light and power, water supply, telecommunications, mobile,
internet and other data facilities, transport, toll roads and
bridges, port services, ete. and to fix just, reasonable and
competitive rates, fares, charges and prices thereof;

“{G)] (h) To construct, acquire, own, lease, operate
and maintain on its own or through contracts, franchises,
licenses, bulk purchase from the private sector and build-
operate-transfer scheme or under a Joint Venture with the
private sectors, any or all of the public utilities and
infrastructure required or needed for the operation and

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development of the FAB, in coordination with appropriate
national and local government authorities and in conformity
with applicable laws thereon;

“{@)]_(@_To operate on its own, either directly or
through a SUBSIDIARY OR PRIVATE ENTITY, OR
CONCESSION, OR license to other, tourism-related
activities, including BUT NOT LIMITED TO games,
amusements AND NATURE PARKS, recreational and
sports facilities, SUCH AS OFFSHORE ONLINE
GAMING FACILITIES AND OTHER RELATED
ACTIVITIES UNDER THE PRIORITIES AND
STANDARDS SET BY THE AFAB.

“{(4)] G) To raise, or borrow, within the limitation
provided by law, adequate and necessary funds from local or
foreign sources, to finance its projects and programs under
this Act, and for that purpose, to issue bonds, promissory
notes, and other forms of securities, and to secure the same
by a guarantee, pledge, mortgage, deed of trust, or an
assignment of all or part of its property or assets;

“(k)_ TO EXCLUSIVELY ENFORCE AND
ADMINISTER THE PROVISIONS OF THE
NATIONAL BUILDING CODE OF THE PHILIPPINES
AND THE FIRE CODE OF THE PHILIPPINES
WITHIN THE TERRITORIAL JURISDICTION OF
THE FAB. FOR THIS PURPOSE, THE AFAB
CHAIRMAN AND ADMINISTRATOR, OR HIS
OFFICIAL DESIGNATE, SHALL FUNCTION AS THE
AFAB BUILDING OFFICIAL, WHO SHALL ISSUE
ALL BUILDING PERMITS AND OTHER RELATED
PERMITS SUBJECT TO THE COLLECTION BY AFAB
OF THE CORRESPONDING PERMIT FEES;
PROVIDED, THAT THE AFAB BUILDING OFFICIAL
SHALL ALSO BE AUTHORIZED to require owners of
houses, buildings, or other structures constructed without
the necessary AFAB permit/s, OR CONDEMNED
AND/OR ABATED BY THE AUTHORITY IN
ACCORDANCE WITH THE CONDITIONS SET
FORTH IN THE NATIONAL BUILDING CODE or
CIVIL CODE, as the case may be, whether OWNED BY
or constructed on public or ite lands, to remove or
demolish such houses, buildings, structures within fifteen
(15) days FROM notice. Upon lure of such owner to
remove or demolish such house, building, or structure within
such period, THE AUTHORITY may summarily cause its
removal or demolition at the expense of the owner AND
THE OCCUPANTS. FOR THIS PURPOSE, THE
AUTHORITY MAY SUMMARILY EVICT ANY
PERSON WHO REFUSES TO VACATE SUCH
PREMISES WITHOUT NEED OF ANY COURT

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RES cwmraauasen—

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ORDER PROVIDED THAT THERE IS A
TEMPORARY OR PERMANENT RELOCATION SITE
MADE AVAILABLE FOR QUALIFIED INDIVIDUALS
OR FAMILIES;

“(1) To provide security for the FAB in coordination
with the national and local governments. The AFAB may
ablish and maintain its security forces and firefighting
apability or hire others to provide the same. In the event
that an assistance of the m ry force is necessary, it shall
not interfere in the internal affairs of the FAB except to
provide the necessary security and defense, and their
expenses shall be borne by the National Government. FOR
THIS PURPOSE, THE 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
INVESTIGATIONS, ARREST, SEARCH AND
SEIZURES FOR VIOLATIONS OF PENAL LAWS
AND TARIFF AND CUSTOMS LAWS INSIDE THE
FAB. THE AFAB SHALL ALSO BE AUTHORIZED TO
INSTALL CONTROL GATES AT STRATEGIC POINTS
OF THE NATIONAL ROADS WITHIN THE FAB,
THROUGH WHICH ACCESS INTO AND
DEPARTURE FROM THE FAB SHALL BE FULLY
CONTROLLED BY THE AFAB POLICE AGENTS;

“(m) To protect, preserve, maintain and develop the
virgin forests, beaches, coral and coral reefs, and maintain
ecological balance within the FAB. For this purpose, the rules
and regulations of the Department of Environment and
Natural Resources (DENR) and other government agencies
involved in the above functions shall be implemented by the
AFAB. THE ISSUANCE, ENFORCEMENT AND
MONITORING OF ECCs, TREE CUTTING PERMIT,
FORESHORE LEASE AND ALL OTHER RELATED
PERMITS AND CLEARANCES CURRENTLY BEING
ISSUED BY THE DENR AND OTHER
GOVERNMENT AGENCIES SHALL BE UNDER THE
EXCLUSIVE CONTROL AND JURISDICTION OF
THE AFAB.

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

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

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

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mplish the purposes, objectives and policies provided
herein;

“(q) To exercise such powers as may be essential,
necessary or incidental to the powers granted to it hereunder
as well as those that shall enable it to carry out, implement
and accomplish the purposes, objectives and policies of this
Act; and”

“(r) TO ISSUE EXEMPTIONS FROM THE
REQUIREMENTS PROVIDED UNDER
PRESIDENTIAL DECREE NO. 442 (P.D. 442) OR
THE LABOR CODE OF THE PHILIPPINES, AND ITS
IMPLEMENTING RULES AND REGULATIONS
(IRR), FOR THE ISSUANCE OF ALIEN
PERMIT AND/OR WORKING VISA,
KOR ALIENS PLOYED = WITH, — OR
CONSULTANTS OF, FAB-DULY REGISTERED
ENTERPRISES, SUBJECT TO SUCH RULES AND
REGULATIONS _ A‘ MAY THEREAFTER BE
ESTABLISHED BY THE AFAB;

“(s) TO ACT AS AN OFFSHORE FINANCIAL
TRE TO ENGAGE IN, OR ALLOW, ANY OR ALL
INTERNATIONAL FINANCIAL AND BUSINESS
SERVICES, INCLUDING BUT NOT LIM
BANKING, OFFSH
COLLECTIVE INVESTMENT Si
THE NECESSARY and PERTINENT FISCAL
INCENTIVES AS PROVIDED RR UNDER
REPUBLIC ACT NO. 7916, AS AMENDED BY
REPUBLIC ACT NO. 8748, ALSO KNOWN AS THE
SPECIAL ECONOMIC ZONE ACT OF 1995, AND/OR
THOSE PROVIDED UNDER EXECUTIVE ORDER
NO. 226, AS AMENDED, OTHERWISE KNOWN AS
THE OMNIBUS INVESTMENT CODE OF 1987, AND
SHALL BE SUBJECT TO EXISTING APPLICABLE
LAWS CONSISTENT WITH PURPOSES OF FAB,
AND SUCH OTHER LAWS AS MAY BE REQUIRED
INCLUDING WITHOUT LIMITATION TO THE
FOREGOING."

“(t) TO ESTABLISH AND INSTITUTE A
MUTUALLY SUPPORTIVE AND ALL-INCLUSIVE
INTERNATIONAL ECONOMIC RELATIONS TO.
ALLOW THE ESTABLISHMENT AND OPERATION
OF REGIONAL OR AREA HEADQUARTERS,
REGIONAL OPERATING HEADQUARTERS AND
REGIONAL WAREHOUSES OF MULTINATIONAL,
COMPANIES WITHIN THE TERRITORIAL
JURISDICTION OF FAB,AS PROVIDED FOR
IN REPUBLIC ACT NO. 8756;

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“[@)] (w) To be vested with other powers enjoyed or
exercised by other free port zone authorities.

SECTION. 4. Section 16 of R.A. 9728 is likewise amended to read as follows:

bi “SEC. 16. Organization and Personnel. The AFAB
6 Board of Directors shall provide for an organizational
7 structure and appoint employees, subject to the civil service
8 law. Upon the recommendation of the chairman-
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administrator and with the approval of the Secretary of the
DTI, the Board shall appoint and fix the remuneration and
i other emoluments of its officers and employees in
rdance with existing laws on compensation and position

13 ion. Provided, that the Board shall exercise
14 administrative supervision on their employees. AFTER
15 FIVE (5) YEARS FROM PASSAGE OF THIS ACT,
16 THE REMUNERATION AND OTHER EMOLUMENTS
17 OF ITS OFFICERS AND EMPLOYEES SHALL BE
18 EXEMPTED FROM THE SALARY
19 STANDARDIZATION LAW. THE AUTHORITY
20 THROUGH ITS BOARD, MAY DETERMINE AND
21 FIX THE AMOUNTS THEREOF AT ITS
22 DISCRETION; SUBJECT TO, AND PROVIDED,
23 THAT THE SAID EMOLUMENTS,
24 REMUNERATION, BONUSES, AND — ANY
25 INCREASES, IF ANY, SHALL BE SUBJECT TO THE
26 PRIOR APPROVAL OF THE DBM; AND, THE SAME
27 SHALL IN NO CASE BE LOWER THAN THE PAY
28 GRADES OF THE SALARY STANDARDIZATION
29 LAW FOR POSITIONS OF SIMILAR NATURE AND
30 FUNCTIONS; PROVIDED FURTHER, HOWEVER,
31 THAT BEFORE ANY SUCH INCREASE MAY BE
32 IMPLEMENTED AND GRANTED, THE SAME
33 SHOULD BE IN ACCORDANCE WITH, AND
34 JUSTIFIED BY AN EXCESS IN REVENUES
35 GENERATED; PROVIDED, FINALLY, THAT ANY
36 INCREASE HEREUNDER SHALL BE EXERCISED
37 ONCE ONLY EVERY THREE (3) YEARS
38 THEREAFTER.

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40 The officers and employees of the AFAB, including all
41 members of the Board shall not engage directly or indirectly
42 in partisan activities nor take part in any election, except to
43 vote.

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45 No officer or employee of the AFAB, subject to civil
46 service laws and regulations, shall be removed or suspended
47 except for cause, as provided by law.”

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Caeraueun

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SECTION. 5. Section 21 of R.A. 9728 is hereby amended to read as follows:

21. Capitalization. The [AFAB shall have an
authorized] capital [stock of] TO BE CONTRIBUTED BY
THE GOVERNMENT SHALL BE Two billion FIVE
HUNDRED MILLION pesos (Php 2,500,000,000.00), with
option to increase capitalization upon the discretion of the
AFAB, [divided into twenty thousand (20,000) no — par
shares fully subscribed and paid up by the Republic of the
Philippines with] CONSISTING OF: (a) All lands
embraced and covered by the FAB, INCLUDING THOSE
PROPERTIES CONVEYED TO THE GSIS AND/OR
SSS UNDER PROCLAMATION NO. 740, AS
AMENDED BY PROCLAMATION 900, as well as
permanent improvements and fixtures upon proper
inventory not otherwise alienated, conveyed, or transferred
to another government agency; (b) All other assets which the
President may transfer to the AFAB as part of the equity
contribution of the government; and (c) Cash contribution
by the government in the amount of Five hundred million
pesos (Php 500,000,000) a year for the next five (5) years,
which is hereby appropriated out of any fund in the National
Treasury not otherwise appropriated.”

SECTION 6. Non Impairment of Contract/Permits/Licenses. — All
existing contracts, permits and licenses DULY granted by the AFAB BEFORE THE
date of Effectivity of this Act, shall remain valid, and shall not be impaired, shall be
cured, and shalll be recognized by the Government.

SECTION 7. Retroactivity Clause. - This Act shall have retroactive effect
insofar as it does not prejudice or impair vested or acquired rights.

SECTION 8. Repealing Clause. - All laws, decrees, executive orders, rules
and regulations or parts thereof, inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SECTION 9. Separability Clause. Any portion or provision of this Act that
may be declared unconstitutional shall not have the effect of nullifying other portions
or provisions hereof as such remaining provisions can still subsist and be given
effect.

SECTION 10. Effectivity. — This Act shall take effect after fifteen (15) days
following its complete publication in the Official Gazette or in two (2) newspapers of
general circulation whichever is earlier.

Approved.