FOURTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
S. B. No. 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
This bill seeks to convert the Bataan Economic Zone located in the 
Municipality of Mariveles, Province of Bataan, into the Bataan Special Economic Zone 
and Freeport. 
Mariveles lies in the shadow of the Mariveles Mountain on a fine harbor, 
Mariveles Bay. It is located in a cove at the southernmost tip of Bataan Peninsula, some 
173 kilometers overland from Manila. It is bounded in the east by Manila Bay and the 
North Channel, which separates the town from Corregidor, in the south and the west 
by China Sea, in the northwest by Bagac and in the north by Limay. Mariveles has a 
total land area of 15,920 has. (153 kms), which is 12% of the total land area of Bataan, 
and with a population of 85,779 (Based on the 2000 census on Population conducted by 
the National Statistics Office). It also boasts of the country's largest oil refinery and 
petro-chemical complex, the National Shipyard and Steel Corporation complex, a pulp 
and paper mill, copper smelter, electronic and assembly plants, garment factories, and 
an array of other companies. 
On June 21, 1969, by virtue of Republic Act No. 5490, Mariveles, Bataan, was 
made a Port of Entry thereby making it a Foreign Trade Zone. On the 20th of 
November, 1972, then President Ferdinand E. Marcos signed into law Presidential 
Decree No. 66, Creating the Export Processing Zone Authority and Revising Republic 
Act No. 5490. On February 24,1995, Republic Act No. 7916, entitled: "An Act Providing 
for the Legal Framework and Mechanisms for the Creation, Operation, Administration, 
and Coordination of Special Economic Zones in the Philippines, Creating for this 
Purpose, the Philippine Economic Zone Authority (PEZA), and for other Purposes", 
was passed thereby amending, modifying, superseding or repealing laws, acts, 
presidential decrees, executive orders which were consistent with the provisions of the 
Act. 
The presence of the Bataan Economic Zone helps in boosting the economic 
conditions not only of the town of Mariveles but the whole province of Bataan as well. 
In brief, the Bataan Economic Zone has a total land area of 1,733.37 hectares. It has 62 
locators engaged in manufacturing and importing of raw materials and exporting of 
finished products. 
It has a steady supply of power and water and has 
telecommunications systems, roads and buildings. Unfortunately, development of the 
economic zone is very slow due to several factors affecting the smooth operations inside 
the economic zone. Roads have to be repaired and maintained, buildings have to be 
restored and remodeled; and other infrastructure should be constructed to be able to fit 
and adapt to the needs of 
the changing times. 
Communications and 
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telecommunications systems must be developed and widened in scope. In addition, the 
economic zone is facing a tough competition with other economic zones with freeports 
especially those that are located nearby. 
There is, therefore, a necessity to convert the Bataan Economic Zone into the 
Bataan Special Economic Zone and Freeport. The addition of a free port to an already 
existing economic zone will surely help in addressing the government’s efforts of 
creating 2 million jobs per year to be able to neutralize the rate of unemployment in the 
country. With the proximity of Bataan to Metro Manila, surely more investors from 
other countries will be attracted to come in. Needless to say, Bataan is one province that 
has the potential of becoming a busy trade center in Asia once the economic zone is 
developed to its fullest and a port is successfully put in place that could service both 
local and international trade. It is strategically located, being adjacent to the Subic 
Freeport and situated very near the Clark Development Authority, both of which have 
experienced unprecedented development recently. 
In terms of tourism, more visitors will be encouraged to visit the country to see 
more of Bataan with its colorful history as one of the last stands of both American and 
Filipino soldiers’ bravery before they were overwhelmed by the Japanese forces in 
World War 11. Its pristine shoreline, beautiful beaches and forest reserves ideal for 
mountaineering and other activities are all tourist attractions just waiting to be 
appreciated. 
In view thereof, and considering that the conversion of the Bataan Economic 
Zone into Bataan Special Economic Zone and Freeport will redound to the benefit not 
only of the people of Bataan but of the whole Filipino people, immediate approval of 
this bill is earnestly sought. 
> 
2 


FOURTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
Introduced by Senator Loren Legarda 
AN ACT 
CONVERTING THE BATAAN ECONOMIC ZONE LOCATED IN THE 
MUNICIPALITY OF MARIVELES, PROVINCE OF BATAAN, INTO THE 
BATAAN SPECIAL ECONOMIC ZONE AND FREEPORT, CREATING FOR 
THIS PURPOSE THE BATAAN SPECIAL ECONOMIC ZONE AND FREE 
PORT AUTHORITY, APPROPRIATING FUNDS THEREFOR AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Bataan Special 
Economic Zone and Freeport Act of 2008.” 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the 
State to actively encourage, promote, induce and accelerate a sound and 
balanced industrial, economic and social development of the country in order to 
provide jobs to the people especially those in the rural areas, increase 
productivity and individual and family income, and thereby improve the level 
and quality of living condition through the establishment, among others, of 
special economic zones in suitable and strategic locations in the country and 
through measures that will attract legitimate and productive foreign 
investments. 
SEC. 3. 
Conversion of the Bataan Economic Zone into the Bataan 
Special Economic Zone and Freeport. - 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 Bataan Special 
Economic Zone and Freeport (BSEZFP). The BSEZFP shall cover portions of 
barangays Maligaya, Malaya, Alas-asin, Baseco and Sisiman, all in the 
Municipality of Mariveles, Province of Bataan. 
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SEC. 4. Governing Principles. - The BSEZFP shall be managed and 
(a) Within the framework and limitations of the Constitution and applicable 
provisions of the Local Government Code, the Bataan ECOZONE 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 suitabIe residential areas; 
operated under the following principles: 
(b) The BSEZFP 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 BSEZFP may establish mutually beneficial economic relations with 
other entities or enterprises within the country or, subject to the administrative 
guidance of the Department of Foreign Affairs (DFA), the Philippine Economic 
Zone Authority (PEZA) and the Department of Trade and Industry (DTI), with 
foreign entities or enterprises; 
(d) Foreign citizens and companies owned by non-Filipinos in whatever 
proportion may set up enterprises in the BSEZFP, either by themselves or in joint 
venture with Filipinos in any sector of industry, international trade and 
commerce within the BSEZFP. 
(e) The BSEZFP shall be managed and operated as a separate customs 
territory ensuring free flow or movement of goods and capital within, into and 
out of its territory; 
(f) The BSEZFP may 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 BSEZFP to the other parts of the Philippine territory shall 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 BSEZFP may be expanded or reduced when 
necessary. For this purpose, the BSEZFP Authority, which will be created under 
this Act, in consultation with the local government units (LGUs), shall have the 
power to acquire either by purchase, negotiation or condemnation proceedings, 
any private lands within or adjacent to the BSEZFP for the following purposes: 
(1) consolidation of lands for BSEZFP development; (2) acquisition of right of 
way to the BSEZFP; and (3) the protection of watershed areas and natural assets 
valuable to the prosperity of the BSEZFP. 
2 


(h) Goods manufactured by the BSEZFP 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 BSEZFP Authority, together with the PEZA, the Bangko 
Sentral ng Pilipinas (BSP), the Department of Finance (DOF), the Bureau of 
Customs (BoC) and the DTI in accordance with the NIRC of 1997, as amended, 
and the Tariff and Customs Code of the Philippines, as amended. However, in 
order to protect the domestic industries, a negative list of industries shall be 
drawn up and regularly updated by 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 BSEZFP and the security of its perimeter fence shall 
be the responsibility of the national government in coordination with the 
BSEZFP Authority and the LGUs. 
Sec. 5. Incentives To Registered Enterprises. - The Bataan Special 
Economic Zone and Free Port Authority (BSEZFPA) shall provide the following 
incentives to the registered enterprises located therein as follows: 
(A) Income Tax Holiday (ITH) - Registered enterprises shall be entitled to 
an income tax holiday from the start of their commercial operations to the extent 
of their activity under the following categories: 
(1) Category A - Registered domestic enterprise located in highly 
developed areas, as determined by the Board of Investments (BOI), shall be 
entitled to four-year ITH. 
(2) 
Category B - Registered domestic enterprise on the following shall 
be entitled to six-year ITH. 
(a) 
Located in less developed areas as defined by the BOI, or 
(b) 
backward or forward linkages. 
Producing new products or rendering services or having strong 
(3) Category C - Registered export enterprise shall be entitled to six- 
year ITH: Provided, honievev, That if the export enterprise complies with the 
following: (1) Large capital investments or sizeable employment generation, or 
3 


(2) Use technology of high level, or (3) Located outside Metro-Manila, it shall be 
entitled to eight-year ITH. 
Registered enterprises embarking on new investments that are listed in 
the current Investment Priority Plan (1") 
shall be entitled to incentives provided 
herein pertaining to the new investments and subject to such terms and 
conditions as the BO1 may determine. 
Additional investments in the project shall be entitled to the ITH 
corresponding to such investments as may be determined by the BOI. 
Additional ITH may be granted for as long as the investment is made on the 
same project: Puovided, That the project is listed in the IPP at the same time the 
additional investment in the project is made: 
Provided, further, That the 
entitlement period for additional investments shall not exceed three times the 
period provided under this subsection: Provided, finally, That the total ITH 
period for an export enterprise availing of an eight-year ITH shall not exceed 
twenty (20) years. Any unused incentives shall therefore be deemed forfeited if 
not used during the incentive period. 
Enterprises registered with BSEZFPA are required to share in the special 
development fund of the BO1 for investment promotion projects of the 
government equivalent to one percent (1%) of the ITH granted for every 
application. 
The Bureau of Internal Revenue (BIR) shall require a registered 
enterprise availing of ITH or net operating loss carryover (NOLCO) to secure a 
certificate of eligibility from the BSEZFPA before submitting its income tax 
return (ITR) with the BSEZFPA for validation. 
Failure to secure certification or to file the ITH or the NOLCO availment 
for validation by the BSEZFPA within forty-five (45) days from the last day of 
statutory filing date for ITR shall cause the forfeiture of the availment for the 
taxable period. 
(B) Net Operating Loss Carryover (NOLCO) - Net operating loss of the 
business or enterprise during the first three years from start of commercial 
operations which have not been previously offset as deduction from gross 
income shall be carried over as a deduction from gross income for the next five 
4 


consecutive years immediately following the year of such loss: Puovided, hou~ever, 
That operating loss resulting from the availment of incentives provided in this 
Code shall not be entitled to the NOLCO. 
Registered enterprises availing of the ITH as herein provided shall not be 
entitled to avail of the NOLCO. 
(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned 
(GIE) - Except for real property tax on land, no local and national taxes as 
prescribed under Republic Act No. 8424, also known as the “Tax Reform Act of 
1997”, such as the iincome tax, the excise tax and the franchise taxes shall be 
imposed on business establishments operating within BSEZFP. In lieu thereof, 
five percent (5%) of the gross income shall be paid as follows: 
(1) Two percent (2%) to the national government; 
(2) One percent (1%) 
to the Province of Bataan 
(3) One percent (1%) 
shall be remitted by the business establishments to 
the treasurer’s office of the municipality or city where the enterprise 
is located; and 
(4) One percent (1%) 
to the Bataan Special Economic Zone and Free Port 
Authority. 
All persons and service establishments in the BSEZFP shall be subject to 
national and local taxes under the National Internal Revenue Code of 1997, as 
amended, and the Local Government Code of 1991. 
(D) Accelerated Depreciation - Accelerated depreciation of plant, 
machinery, and equipment that are reasonably needed and actually used for the 
production and transport of goods and services may be allowed using a rate not 
exceeding twice the rate which would have been used had the annual allowance 
been computed in accordance with the rules and regulations prescribed by the 
Secretary of Finance and the provisions of the NIRC of 1997, as amended, and the 
Local Government Code of 1991. 
(E) Capital Equipment Incentives - 
(1) Importations of capital 
equipment, spare parts, tools and dye, or those required for pollution abatement 
5 


and control, cleaner production and waste reduction including consignment 
thereof by registered enterprises upon the effectivity of this law, shall be 
exempted to the extent of one hundred percent (100%) of the taxes and customs 
duties: Provided, That the importation thereof shall be used exclusively by the 
registered enterprise in its registered activity: 
Provided, further, That the 
importation of machinery and equipment and accompanying parts shall comply 
with the following conditions: 
(a) 
comparable quality and at reasonable prices; 
These are not manufactured domestically in sufficient quantity, of 
(b) 
These are reasonably needed and will be used exclusively by the 
registered enterprise in the manufacture of its products, unless prior 
approval of the BSEZFPA is secured for the part time utilization of said 
equipment in a non-registered activity to maximize usage thereof or the 
proportionate taxes and duties are paid on a specific equipment and 
machinery being permanently used for non-registered activities; and 
(c) 
Approval of the BSEZFPA was obtained by the registered 
enterprise for the importation of such machinery, equipment and spare 
parts. 
Approval of the BSEZFPA must be secured before any sale, transfer or 
disposition of the imported capital equipment, machinery or spare parts is made: 
Provided, That if such sale, transfer or disposition is made within the first five 
years from date of importation, any of the following conditions must be present: 
1) 
The same is made to another enterprise enjoying tax and 
duty exemption on imported capital equipment; 
2) 
The same is made to another enterprise, upon payment of the 
taxes and duties on the net book value of the capital 
equipment to be sold; 
3) The exportation of the capital equipment, machinery, spare 
parts or source documents or those required for pollution 
abatement and control; and 
6 


4) 
Proven technical obsolescence of the said equiptment, 
machinery or spare parts.. 
When the aforementioned sale, transfer or disposition is made under any 
of the conditions provided for in the foregoing paragraphs other than paragraph 
2, the registered firm shall not pay the taxes and duties waived on such items: 
Pvovided, firfher, That if the registered enterprises sell, transfer or dispose the 
aforementioned imported items without prior approval within five years from 
the date of importation, the registered enterprise and the vendee, transferee, or 
assignee shall be solidarily liable to pay twice the amount of the tax and duty 
exemption given it: Provided, finally, That even if the sale, transfer or disposition 
of the capital equipment, machinery or spare parts is approved after five years 
from date of importation, the registered enterprise is still liable to pay the taxes 
and duties based on the net book value of the capital equipment, machinery or 
spare parts if it has violated any of its registration terms and conditions. 
Otherwise, it shall no longer be subject to the payment of the taxes and duties 
waived thereon. 
The purchase of machinery and capital equipment and raw materials, 
supplies, parts and semi-finished products, used in the fabrication of machinery 
and capital equipment by a registered export-oriented enterprise from a 
domestic manufacturer shall be subject to zero percent (0%) value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit 
equivalent to the amount of duties that would have been waived on the 
machinery; capital equipment; and raw materials, supplies, parts and semi- 
finished products used in the fabrication of machinery and capital equipment, 
had these items been imported, upon its submission to the DOF of the bill of 
materials evidencing the transaction value of such and other pertinent 
documents, for verification and proper endorsement. 
The availment by a registered export enterprise of the incentive provided 
under the immediately preceding two paragraphs shall be subject to the 
following conditions: (i) that said capital equipment, machinery and spare parts 
will be used exclusively by the registered enterprise in its registered activity; (ii) 
that the capital equipment or machinery where the raw materials, supplies, parts 
and semi-finished products were used would have qualified for tax and duty- 


free importation; and (iii) that the approval of the BSEZFPA is obtained by the 
registered enterprise. If the registered enterprise sells, transfers or disposes of 
these machineries, capital equipment and spare parts, the provision in the 
preceding paragraphs €or such disposition shall apply. 
This incentive shall be deemed waived if application for tax credit under 
this subsection was not filed within one year from date of delivery. 
(F) The importation of source documents by information technology 
registered enterprises shall be eligible for tax-and-duty-free importation. 
(G.) Raw Materials Incentives - Every registered export-oriented 
enterprise shall enjoy a tax credit equivalent to the internal revenue taxes and 
customs duties paid on the supplies, raw materials and semi-manufactured 
products: Provided, That the same are not sufficient in quantity, quality or are not 
competitively priced which are used in the manufacture, processing or 
production of its export products forming part thereof, exported directly and 
indirectly by the registered export-oriented enterprise, based on the actual taxes 
and duties paid for such materials/supplies/semi-manufactured products by the 
registered enterprise; 
This incentive shall be deemed waived if application for tax credit under 
this subsection was not filed within one year from date of exportation of the final 
product. 
(H.) Incentives on Breeding Stocks and Genetic Materials. - Importation 
of breeding stocks and genetic materials within ten (10) years from the date of 
registration of commercial operation of the enterprise shall be exempt from all 
taxes and duties: Provided, That such breeding stocks and genetic materials are 
reasonably needed in the registered activity and approved by the BSEZFPA. 
The availment of the incentives by a registered enterprise shall be subject 
to the following: (i) that said breeding stocks and genetic materials would have 
been qualified for tax-and-duty-free importation under the preceding paragraph; 
(ii) that the breeding stocks and genetic materials are reasonably needed in the 
registered activity; (iii) that the approval of the BSEZFPA has been obtained by 
the registered enterprise; and (iv) that the purchase is made within ten (10) years 
from the date of registration of commercial operation of the registered enterprise. 
8 


This incentive shall be deemed waived if application for tax credit under 
this subsection was not filed within one year from date of delivery; 
(I.) Exemption from Wharfage Dues. - The provisions of law to the 
contrary notwithstanding, exports by a registered enterprise shall be exempted 
from wharfage dues; 
(J.) Deferred Imposition of the Minimum Corporate Income Tax. - The 
Minimum Corporate Income Tax (MCIT) of two percent (2%) of the gross income 
as of the end of the taxable year shall be imposed when the MCIT is greater than 
the income tax computed under the NIRC of 1997, as amended, for the taxable 
year: 
Provided, kon~ever, That said MCIT shall be imposed only after the 
enterprise’ entitlement period to the income tax-based incentives; 
(K) (1) Tax treatment of merchandise in the BSEZFP - 
0) 
Except as otherwise provided in this Act, foreign and 
domestic merchandise, raw materials, supplies, articles, equipment, 
machineries, spare parts and wares of every description, except those 
prohibited by law, brought into the zone to be sold, stored, broken 
up, repacked, assembled, installed, sorted, cleaned, graded, or 
otherwise processed, manufactured, mixed with foreign or domestic 
merchandise whether directly or indirectly related in such activity, 
shall not be subject to customs and internal revenue laws and 
regulations nor to local tax ordinances, any provision of law to the 
contrary notwithstanding; 
(ii) 
Merchandise purchased by a registered BSEZFP enterprise, 
from the customs territory and subsequently brought into the export 
processing zone, shall be considered as export sales and exportation 
thereof shall be entitled to the benefits allowed by law for such 
transaction; 
(iii) 
Domestic merchandise sent from the BSEZFP to the customs 
territory shall, whether or not combined with or made part of other 
articles likewise of local origin or manufactured in the Philippines 
while in the export processing zone, be subject to internal revenue 
9 


laws of the Philippines as domestic goods sold, transferred or 
disposed of for local consumption; 
(iv) 
Merchandise sent from the BSEZFP to the customs territory 
shall, whether or not combined with or made part of other articles 
while in the zone, be subject to rules and regulations governing 
imported merchandise. The duties and taxes shall be based on the 
value of said imported materials except when the final product is 
exempt; 
(v) 
Domestic merchandise on which all internal revenue taxes 
have been paid, if subject thereto, and foreign merchandise 
previously imported on which has been paid, or which have been 
admitted free of duty and tax, may be taken into the BSEZFP from 
the customs territory of the Philippines and be brought back thereto 
free of quotas, duty or tax; 
(vi) 
Subject to such regulations respecting identity and 
safeguarding of the revenue as the BSEZFPA may deem necessary 
when the identity of an article entered into the export processing 
zone under the immediately preceding paragraph has been lost, such 
article when removed from the zone and taken to the customs 
territory shall be treated as foreign merchandise entering the country 
for the first time, under the provisions of the Tariff and Customs 
Code of the Philippines, as amended; 
(vii) Articles produced or manufactured in the BSEZFP and 
exported therefrom shall, on subsequent importation into the 
customs territory, be subject to the import laws applicable to like 
articles manufactured in a foreign country; 
(viii) Unless the contrary is shown, merchandise taken out of the 
export processing zone shall be considered for tax purposes to have 
been sent to customs territory. 
(2). Tax treatment merchandise in free trade/free port zone. 
The BSEZFP shall be operated and managed as a separate customs territory 
ensuring free flow or movement of goods within, into and exported out of the 
10 


free trade/free port zone. Importations of raw materials and capital equipment 
are tax and duty free. However, exportations or removal of goods from the free 
trade/free port zones to the other parts of the Philippines territory shall be 
subject to customs and internal revenue regulations. 
(3). Tax treatment of services in the BSEZFP - 
(i) 
Sale of service by an entity from the customs territory to a 
registered ecozone or free trade enterprise, or by a registered ecozone 
or freeport enterprise to another ecozone or freeport enterprise shall 
be treated as indirect export, and hence, entitled to the benefits 
allowed by law for such transaction. 
(ii) 
Sale or service by a registered ecozone or freeport enterprise 
to the customs territory shall be subject to applicable internal revenue 
laws and regulations. 
(L) 
Registered export oriented enterprise shall have access to the 
utilization of the bonded warehousing system in accordance with the rules and 
regulations of the Bureau of Customs; 
(M) 
Employment of Foreign Nationals. - Subject to the provisions of 
Section 29 of Commonwealth Act No. 613, as amended, a registered enterprise 
may employ foreign nationals in supervisory or technical positions for a period 
not exceeding ten (10) years from its registration: Provided, That when the 
majority of the capital stock of a registered enterprise is owned by foreign 
investors, the positions of the president, treasurer and general manager or their 
equivalents may be retained by foreign nationals beyond the period set forth 
herein and such officer is the owner or a stockholder owning at least ten percent 
(10%) of the outstanding capital stock of the registered enterprise and he remains 
the owner or maintains his stockholdings therein. 
Foreign nationals under employment contract within the purview of this 
incentive, their spouses and unmarried children under twenty-one (21) years of 
age, who are not excluded by Section 29 of Commonwealth Act No. 613, as 
amended, shall be permitted to enter and reside in the Philippines during the 
period of employment of such foreign nationals. They shall be issued a multiple- 
entry visa, valid for a period of three years, to enter and leave the Philippines 
11 


without further documentary requirements other than valid passports or other 
travel documents in the nature of passports. The validity of the multiple-entry 
visa shall be extendible yearly. 
The foreign national admitted herein, as well as their respective spouses 
and dependents shall be exempt from: 
(i) Obtaining Alien Certificate of 
Registration and Emigration Clearance Certificates; and (ii) Securing the Alien 
Employment Permit (AEP) and all types of clearances, permits, licenses or their 
equivalents required by any government department or agency. 
Sec. 6. Incentive to Investors. - Any foreign national covered under 
subsection (M) of Section 5 of this Act, who invests an amount of One Hundred 
Fifty Thousand US dollars (US$150,000.00), either in cash and/or equipment, in a 
registered enterprise shall be entitled to an investor’s visa: Provided, That he has 
the following qualifications: 
(1) He is at least eighteen (18) years of age; 
(2) He has not been convicted of a crime involving moral 
turpitude; 
(3) He is not afflicted with any loathsome, dangerous or contagious 
disease; and 
(4) He has not been institutionalized for any mental disorder or 
disability. 
Puovided, further, That in securing the investor’s visa, the alien-applicant 
shall be entitled to the same privileges provided for under section 5 (M) hereof. 
As a holder of investor’s visa, an alien shall be entitled to reside in the 
Philippines while his investment subsists. For this purpose, he should submit an 
annual report, in the form duly prescribed for the purpose, to prove that he has 
maintained his investment in the country, Should said alien withdraw his 
investments from the Philippines, then the investor’s visa issued to him shall 
automatically expire. 
Sec. 7. Administration, Implementation and Monitoring of Incentives. - 
The BSEZFPA shall be responsible for the administration and implementation of 
12 


the incentives granted to its respective registered enterprises: Provided, That any 
incentive administration policy adopted by the BO1 for registered enterprises 
shall be uniformly applied by BSEZFPA. 
The following are the duties and responsibilities of the BSEZFPA in the 
administration of incentives: 
(A) To adopt consistent procedures of administering incentives in 
accordance with the guidelines established by the BOI; 
(B) 
To adopt and implement systems and procedures affecting trade 
and customs policies in accordance with the requirements 
established by the DOF and the BOI; 
(C) To submit data and information to the DOF and the BO1 as required 
by any of these agencies to ascertain consistency of investment 
policies and incentives, including their implementation as provided 
in Subsection (A), and to ensure proper implementation of systems 
and procedures affecting trade and customs policies as provided in 
Subsection (B); and 
(D) 
To perform all other duties and responsibilities as may be required 
by the President. 
For proper monitoring, the BO1 shall create a single database of all 
incentives provided by all incentives granting agencies, including BSEZFPA, and 
all information thereto. Double entry accounting shall be done by the BOI in 
recording all incentives granted by the government for transparency purposes. 
Sec. 8. Extension of Period Of Availment. - The availment period of the 
incentives provided herein may be extended by BSEZFPA, in the event that the 
registered enterprise has suffered operational force majeure that has impaired its 
viability, equivalent thereto. 
Sec. 9. Duration of Incentives. - Enterprises registered with BSEZFPA 
may enjoy the ITH or the NOLCO granted by the authority prior to the 
availment of the five percent (5%) GIE. 
Fiscal incentives under this Act shall be terminated after a cumulative 
13 


period of twenty (20) years from date of registration or start of commercial 
operation, whichever is applicable, except that it could be extended with regard 
to industries deemed indispensable to national development: 
The industries exempted from this provision shall be recommended 
by BOI, with the concurrence of the Secretaries of the DOF and DTI. 
SEC. 10. Creation of the Bataan Special Economic Zone and Free Port 
Authority (BSEZFPA). - There is hereby created a body corporate to be known 
as the Bataan Special Economic Zone and Free Port Authority, herein referred to 
as the BSEZFPA, which shall manage and operate the BSEZFP, in accordance 
with the provisions of this Act. This corporate franchise shall expire in fifty (50) 
years counted from the first year after the effectivity of this Act, unless otherwise 
extended by Congress. It shall be organized within one hundred eighty (180) 
days after the effectivity of this Act. 
SEC. 11. Principal Office of the BSEZFPA. - The BSEZFPA shall 
maintain its principal office in the Municipality of Mariveles, Province of Bataan, 
but it may establish branches within the Philippines as may be necessary for the 
proper conduct of its business. 
SEC. 12. Powers and Functions of the BSEZFPA. - The BSEZFPA shall 
have the following functions: 
(a) To adopt, alter, use a Corporate seal; to contract, lease, buy, sell, 
acquire, own and dispose properties of whatever nature; 
(b) To sue and be sued in order to carry out its duties, responsibilities, 
privileges, powers and functions as granted and provided for in this Act and to 
exercise the power of eminent domain for public use and public purpose; 
(c) To operate, administer, manage and develop the BSEZFP 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 BSEZFP; 
(d) To recommend to the President the issuance of a proclamation to 
fix and delimit the site of the BSEZFP; 
(e) To register, regulate and supervise the enterprises in the BSEZFP in 
an efficient and decentralized manner, subject to existing laws; 
To regulate and undertake the establishment, operation and 
maintenance of utilities, other services and infrastructure in the BSEZFP such as, 
but not limited to, heat, light and power, water supply, telecommunications, 
transport, toll roads and bridges, port services, etc. and to fix just, reasonable and 
competitive rates, fares, charges and prices thereof; 
(f) 
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(g) To construct, acquire, own, lease, operate and maintain on its own or 
through contracts, franchises, licenses, bulk purchase from the private sector or 
permits under any of the schemes allowed in Republic Act No. 6957 (the Build- 
Operate-Transfer Law, as amended by Republic Act No. 7718), or under a joint 
venture with the private sectors, any or all of the public utilities and 
infrastructure required or needed for the operation and development of the 
BSEZFP, in coordination with appropriate national and local government 
authorities and in conformity with applicable laws thereon; 
(h) To operate on its own, either directly or through a. license to other 
tourism-related activities, including games, amusements, recreational and sports 
facilities; 
(i) To raise or borrow, within the limitation provided by law, adequate 
and necessary funds from local or foreign sources, subject to the approval of the 
President and the Monetary Board of the BSP upon the recoinniendation of the 
DOF, 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; 
(j) 
To provide security for the BSEZFP in coordination with the 
national and local governments. For this purpose, the BSEZFPA may establish 
and maintain its security forces and firefighting capability or hire others to 
provide the same. In the event that an assistance of the military force is 
necessary, it shall not interfere in the internal affairs of the BSEZFP except to 
provide the necessary security and defense, and their expenses shall be borne by 
the national government; 
(k) To protect, preserve, maintain and develop the virgin forests, 
beaches, coral and coral reefs, and maintain ecological balance within the 
BSEZFP. 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 BSEZFPA; 
(1) 
To create, operate and/or contract to operate such functional units 
or offices of the BSEZFPA as it may deem necessary; 
(m) To issue certificates of origin for products manufactured or 
processed in the BSEZFP in accordance with prevailing rules of origin, and the 
pertinent regulations of the DTI or the DoF; 
(n) To issue rules and regulations consistent with the provisions of this 
Act as may be necessary to implement and accomplish the purposes, objectives 
and policies provided herein; and 
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(0) 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. 
SEC. 13. Board of Directors of the BSEZFP. - The powers of the 
BSEZFPA shall be vested in and exercised by a Board of Directors, hereinafter 
referred to as the Board, which shall be composed of the following: 
(a) The chairman who shall, at the same time be the administrator of the 
BSEZFP A; 
(b) A vice chairman who shall come from among the members of the Board; 
(c) Members consisting of 
(1) 
(2) 
The Governor of the Province of Bataan 
The Congressional Representative of the district covering the 
site of the BSEZFP; 
The Mayor of the Municipality of Mariveles, Province of 
(3) 
Bataan; 
(4) 
(5) 
(6) 
BSEZFP. 
One (1) representative from the domestic investors; 
One (1) representative from the foreign investors; and 
One (1) representative from the workers working in the 
The Chairman of the Board shall sit as the Administrator of the BSEZFPA. 
The governor, the congressional representative and the mayor of the 
Municipality of Mariveles, Province of Bataan, shall serve as ex oflcio members of 
the Board, whose term in the Board corresponds to their terms as elected 
officials. 
The Chairman and the members of the Board, except the ex officio members, 
shall be appointed by the President of the Philippines to serve for a term of six (6) 
years, unless sooner separated from service due to death, voluntary resignation 
or removal for cause. In case of death, resignation or removal for cause, the 
replacement shall serve only the unused portion of the term. 
Except for the representatives of the business and labor sectors, no person 
shall be appointed by the President of the Philippines as a member of the Board 
unless he is a Filipino citizen, of good moral character, oi proven probity and 
integrity, and a degree-holder in any of the following fields: economics, business, 
public administration, law, management or their equivalent, and with at least ten 
(10) years relevant working experience preferably in the field of management or 
public administration. 
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The members of the Board shall each receive per diem at rates to be 
determined by the Department of Budget and Management (DBM) in accordance 
with existing rules and regulations: Provided, however, That the total per diem 
collected each month shall not exceed the equivalent per diem for four (4) 
meetings. 
SEC. 14. 
Powers and Duties of the Chairman-Administrator. - The 
chairman-administrator shall have the following powers and duties: 
policies of the Board; 
(a) To direct and manage the affairs of the BSEZFPA in accordance with the 
(b) To establish the internal organization of the BSEZFPA under such 
(c) To submit an annual budget and necessary supplemental budget to the 
conditions that the Board may prescribe; 
Board for its approval; 
(d) To submit within thirty (30) days after the close of each fiscal year an 
annual report to the Board and such other reports as may be required; 
(e) To submit to the Board for its approval policies, systems, procedures, 
rules and regulations that are essential to the operation of the BSEZFPA; 
(f) To create a mechanism in coordination with relevant agencies for the 
promotion of industrial peace, the protection of the environment, and the 
advancement of the quality of life in the BSEZFP; and 
(g) To perform such other duties as may be assigned to him by the Board or 
which are necessary or incidental to his office. 
SEC. 15. Organization and Personnel. - The BSEZFPA Board of Directors 
shall provide for an organizational structure and appoint employees, subject to 
the civil service law. Upon the recommendation of the chairman-administrator 
and with the approval of the Secretary of the DTI, the Board shall appoint and fix 
the remuneration and other emoluments of its officers and employees in 
accordance with existing laws on compensation and position classification: 
Provided, That the Board shall exercise administrative supervision on their 
employees. 
The officers and employees of the BSEZFPA, including all members of the 
Board, shall not engage directly or indirectly in partisan activities nor take part in 
any election, except to vote. 
No officer or employee of the BSEZFPA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by law. 
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SEC. 16. 
Resolution of Labor Disputes. - The right of labor to form 
unions or associations shall be observed. However, strikes and lockouts shall be 
prohibited within the economic and Freeport zone, notwithstanding the 
provisions of the Labor Code and other pertinent laws. Labor disputes shall be 
resolved through mediation, conciliation and such other modes of dispute 
resolution authorized by law. 
SEC. 17. 
Exemptions. - The BSEZFPA is hereby exempted from the 
payment of all taxes, duties, fees, imposts, charges, costs and service fees in any 
court or administrative proceedings in which it may be a party. 
The foregoing exemptions may, however, be wholly or partially lifted by 
the President of the Philippines upon the recommendation of the Secretary of 
Finance, not earlier than five (5) years from the effectivity of this Act, upon 
reasonable assessment that the BSEZFPA is financially stable to pay such taxes, 
customs duties, fees and other charges after satisfying debt service requirements 
of the BSEZFPA and of its projected capital and operating expenditures. 
SEC. 18. Banking Rules and Regulations. - Existing banking laws and 
rules/regulations of the BSP shall apply to banks and financial institutions to be 
established in the BSEZFP. 
SEC. 19. Remittances. - In the case of foreign investments, a registered 
enterprise in the Bataan ECOZONE shall have the right to remit earnings from 
the investment in the currency in which the investment was originally made and 
at the exchange rate prevailing at the time of remittance, subject to the provisions 
of Section 74 of Republic Act No. 265, as amended. 
SEC. 20. Applicability Clause. - The provisions of Sections 30-41 of 
Republic Act No. 7916, otherwise known as "The Special Economic Zone Act of 
1995", as amended, shall likewise apply to the BSEZFP. 
SEC. 21. Capitalization. - The BSEZFPA shall have an authorized capital 
stock of two billion (2,000,000,000) no par-shares with a minimum issue of Ten 
pesos (P10.00) each, the majority shares of which shall be subscribed and paid for 
by the national government and the local government unit (LGU) embracing the 
BSEZFP. The Board of BSEZFPA with the written concurrence of the Secretary of 
the DOF may sell shares, representing not more than forty per centurn (40%) of 
the capital stock of the BSEZFPA to the general public under such policy as the 
Board and the Secretary of the DOF may determine. The national government 
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and the LGU shall, in no case, own less than sixty per centurn (60%) of the total 
issued and outstanding capital of the BSEZFPA. 
The amount necessary to subscribe and pay for the shares of the national 
government to the capital stock of the BSEZFPA shall be included in the annual 
General Appropriations Act. For LGU, the funds shall be taken from its internal 
revenue allotment and other local funds. 
SEC. 22. Supervision and Control. - For purposes of policy direction and 
coordination, the BSEZFPA shall be under the direct control and supervision of 
the Office of the President of the Philippines. 
SEC. 23. Regional Development Council. - The BSEZFPA shall determine 
the development goals for the BSEZFP within the framework of national 
development plans, policies and goals. The Administrator shall, upon approval 
by the Board, submit the BSEZFP plans, programs and projects to the Regional 
Development Council for inclusion and inputs to the overall regional 
development plan. 
SEC. 24. Relationship with Local Government Units. - Except as herein 
provided, the Municipality of Mariveles in the Province of Bataan shall operate 
and function in accordance with the Local Government Code of 1991. In case of 
any conflict between the BSEZFPA and the Municipality of Mariveles on matters 
affecting the BSEZFP other than defense and security matters, the decision of the 
BSEZFPA shall prevail. 
SEC. 25. 
Interpretation/Construction. - The powers, authorities and 
functions that are vested in the BSEZFPA are intended to establish 
decentralization of governmental functions and authority and promote an 
efficient and effective working relationship between the BSEZFPA, the national 
government and the LGU. 
SEC. 26. Audit. - The Commission on Audit shall appoint a full time 
auditor in the BSEZFPA or may assign such number of personnel as may be 
necessary in the performance of their functions. 
SEC. 27. Implementing Rules and Regulations. - The DTI, the DOF, and 
the LGU and the Department of the Interior and Local Government shall 
formulate the implementing rules and regulations of this Act within ninety (90) 
days after its approval. Such rules and regulations shall take effect fifteen (15) 
19 


days after their publication in a newspaper of general circulation in the 
Philippines. 
SEC. 28. Separability Clause. - If any provisions of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall 
remain in full force and effect. 
SEC. 29. 
Repealing Clause. - Republic Act No. 5490 and Presidential 
Decree No. 66 are hereby amended. All laws, executive orders or issuances or 
any part thereof which are inconsistent herewith are hereby repealed or 
amended accordingly. 
SEC. 30. Effectivity Clause. - This Act shall take effect upon its publication 
in at least one (1) newspaper of general circulation. 
Approved, 
20