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a. Act refers to Republic Act No. 7227, otherwise known as the Bases k. Board refers to the Board of Directors of the SBMA.
Conversion and Development act of 1992. l. Domestic Articles refers to articles which are the growth, product or
b. Rules refers to these Implementing Rules and Regulations. manufacture of the Philippines and upon which all national internal revenue
taxes have been paid, if subject thereto, and upon which no drawback or
c. SBF is the Subic Bay Freeport referred to as the Special Economic and bounty has been allowed; and articles to foreign origin on which all duties and
Freeport Zone in Section 12 of the Act , a separate customs territory taxes have been paid and upon which no drawback or bounty has been
consisting of the City of Olongapo and the municipality of Subic, Province of allowed, of which have previously been entered into customs territory free of
Zambales, the lands occupied by the Subic Naval Base and its contiguous duties and taxes.
extensions as embraced, covered and defined by the 1947 PhilippineU.S.
Military Base Agreement as amended and within the territorial jurisdiction of m. Foreign Articles refers to articles of foreign origin on which duties and taxes
Morong and Hermosa, Province of Bataan, the metes and bounds which shall have not been paid, or upon which drawback or bounty has been allowed, or
2
which have not been previously entered into customs territory; or articles a. All trade and business, immigration, corporation, banking and
which are the growth, product or manufacture of the Philippines on which not quarantine laws shall be subordinated to and/or liberally construed in
all national internal revenue taxes have been paid, if subject thereto, or upon favor of the SBF to enhance and promote the policies of the special
which drawback or bounty has been allowed. economic and Freeport system within the boundaries established by
law and these Rules.
n. Customs Territory refers to the portion of the Philippines outside the SBF
where the Tariff and Customs Code of the Philippines and other national tariff b. In case of conflict between national and local laws and tax
and customs laws are in force and effect. exemption privileges in the SBF, the same shall be resolved in favor
of the latter.
o. Articles for purposes of these Rules, and when used with reference to
importations or exportations, the term includes raw materials, supplies, c. In case of conflict between the SBMA and the local government
equipment, machinery, packaging materials, goods, wares, merchandise and units concerned on matters affecting the SBF other than the defense
in general, anything that may, under the Rules of the SBMA, be made the security of the said local government units, the decision of the
subject of importation into or exportation from the Zone. SBMA shall prevail.
p. Transshipment refers to transshipment of articles discharged at ports or d. The provisions of existing laws, rules and regulations to the contrary
airports of entry located in Customs Territory destined for delivery to the SBF, notwithstanding, the SBMA shall exercise administrative powers,
and articles coming from the SBF intended for export through a Philippine rulemaking and disbursements of funds over the SBF.
Customs port/airport of entry which may be transported under bond, upon
examination and consigned to the Collector at the port of destination/export Sec. 5 Boundaries of the Subic Bay Freeport. The boundaries of the SBF shall
who will allow the consignor or consignee, as the case may be, to make entry comprise the area described in Section 12 of the Act, the metes and bounds of
for exportation. which will be further delineated through Presidential Proclamation. Pending the
establishment of secure perimeters around the SBF, the SBMA shall adopt and
q. Foreign Exchange refers to any currency other than the Philippine Peso implement the gradual and phased operationalization of areas within the SBF to
acceptable for payment by the Central Bank of the Philippines. ensure strict compliance with the Act, these Rules and other Philippine laws.
s. Foreign National refers to a natural person who is not a citizen of the CHAPTER II. THE SUBIC BAY METROPOLITAN AUTHORITY (SBMA)
Philippines.
A. Composition and Operation of the
t. Offshore Banking Unit (OBU) refers to an offshore bank licensed and Board of Directors
registered under the laws of the Philippines.
Sec. 6. Board of Directors. The powers of the SBMA shall be vested in and
Sec. 4 Rules of Interpretation. Pursuant to the declared policies of the State on exercised by a Board of Directors.
the SBF, the following rules of interpretation shall be observed in the
implementation of Sections 12, 13 and 14, and other related provisions fo the Act, Sec. 7. Composition. The Board shall be composed of fifteen (15) members to
as well as the provisions of these Rules: be appointed by the President of the Philippines, as follows:
3
a. Representatives of all local government units that concur to be part terminal services or concessions incidental thereto and airport
of the SBF; operations in coordination with the Civil Aeronautics Board, and to
fix just and reasonable rates, fares, charges and other prices
b. Two (2) representatives from the National Government; therefor;
c. Five (5) representatives from the private sector coming from the
present naval air station, public works center, ship repair facility, d. To construct, acquire, own, lease, operate and maintain on its own
naval supply depot, and naval station; or through contract, franchise, license, permits, bulk purchase form
the private sector and buildoperatetransfer scheme or joint venture,
d. The remaining balance to complete the Board membership shall be the required utilities and infrastructure in coordination with local
composed of representatives from the business and investment government units conformity with existing applicable laws therefor;
sectors.
e. To adopt, alter and use a corporate seal; to contract, lease, sell,
Sec. 8. Chairman/Administrator. The president shall appoint a professional dispose, acquire and own properties; to sue and be sued in order to
manager as administrator of the SBMA with a compensation to be determined by carry out its duties and functions as provided for in the Act; and to
the Board subject to the approval of the Secretary of Budget, who shall be the ex exercise the power of eminent domain for public use and public
officio chairman of the Board and who shall serve as the chief executive officer of purpose;
the SBMA; Provided, however, that for the first year of its operations form the
effectivity of the act, the Mayor of the City of Olongapo shall be appointed as the f. Within the limitation provided by law, to raise and/or borrow the
chairman and executive officer of the SBMA. necessary funds from local and international financial institutions
and to issue bonds, promissory notes and other securities for that
Sec. 9. ByLaws. The Board of Directors shall adopt a set of bylaws that shall purpose and to secure the same by guarantee, pledge, mortgage,
govern the SBMA’s internal business and operations. deed of trust, or assignment of its properties held by the SBMA for
the purpose of financing its projects and programs within the
B. Powers and Functions of the SBMA framework and limitations of the Act;
g. To operate directly or indirectly or license tourismrelated activities
Sec. 10. Powers and Functions. The SBMA shall have the following powers and subject to priorities and standards set by the SBMA including games
functions: and amusements, except horse racing, dog racing and casino
gambling which shall continue to be licensed by the Philippine
a. To operate, administer, manage and develop the ship repair and Amusement and Gaming Corporation (PAGCOR) upon
ship building facility, container port, oil storage and refueling facility recommendation of the Conversion Authority; to maintain and
and Cubi Air Base within the SBF as a free market in accordance preserve the forested areas as a national park;
with the policies set forth in Section 12 of the Act;
h. To authorize the establishment of appropriated educational and
b. To accept any local or foreign investment, business or enterprise, medical institutions;
subject only to these Rules and in conformity with the policies of the
act, the SBMA and the Conversion Authority; i. To protect, maintain and develop the virgin forests within the
baselands which will be proclaimed as a national park and subject to
c. To undertake and regulate the establishment, operation and a permanent total log ban, and for this purpose, the rules and
maintenance of utilities, other services and infrastructure in the SBF regulations of the Department of Environment and Natural
including shipping and related business, stevedoring and port
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Resources and other government agencies directly involved in the
above functions shall be implemented by the SBMA; l. To lease out land, facilities and other properties in the SBF, by
negotiated contract or otherwise, giving due consideration to the
j. To adopt and implement measures and standards for environment declared policies of the Act; and
pollution control of all areas within its territory, including, but not m. To exercise such powers as may be essential, necessary or
limited to all bodies of water and to enforce the same. For the incidental to the powers granted to it hereunder as well as to carry
purpose, the SBMA shall create an Ecology Centre; and out the policies and objectives of the Act.
k. To raise revenues from among, but not limited to, the following: Sec.11. Responsibilities of the SBMA. Other than the powers and functions
prescribed in Section 10 of these Rules, the SBMA shall have the following
(1) periodic license fees and/or application, filing and responsibilities:
registration and administrative/regulatory fees from SBF
Enterprises; a. The SBMA shall exercise authority and jurisdiction over all economic
activity within the SBF;
(2) lease of land, facilities or other properties in the former
Subic Naval Base area, as well other areas in the SBF; b. The SBMA shall provide and establish its own internal security and
fire fighting forces. However, the defense of the SBF and the
(3) management and administrative service fees for security of its perimeters shall be the responsibility of the National
processing, handling and escorting of importations, Government in coordination with the SBMA;
exportations and local sales or purchases;
c. The SBMA will coordinate the provisions of security, police, and
(4) capital or other contributions from the national municipal services within the overall area of the SBF with the
government; existing local government units;
(5) service and utility charges; d. The SBMA shall have the authority to exclude from the SBF any
articles substance, merchandise, operation, activity or process it
(6) voluntary contributions;\ considers to be inconsistent with the policies and purposes of the
Act and these Rules, or detrimental to the public interest , and to
(7) resources form external, technical and financial assistance establish procedures for such exclusion;
agencies;
e. The SBMA may require SBF Enterprises or Residents to secure the
(8) grants from the National Government, local government necessary permits for any article, substance, merchandise,
units, local and foreign stateowned and privately owned transaction, activity, or operation in the SBF, specify conditions
entities and international organizations; under which such permits will be issued, and establish procedures
(9) donations and contributions of all kinds; for issuing and revoking such permits; and
(10) funds from loans and/or other securities obtained as f. Consistent with the Constitution, the SBMA shall have the following
authorized by the Board of Directors; and powers to enforce the law and these Rules in the SBF:
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(2) to inspect and search the premises of any SBF Enterprise Sec. 13. Establishment of Secure Perimeters, Points of Entry and duty and Tax
or Resident, or any vehicle, aircraft, vessel, or person in Free Areas of the SBF. Pending the establishment of secure perimeters around
the SBF to detect any violation of the law or these Rules; the entire SBF, the SBMA shall have the authority to establish and demarcate
(3) to conduct investigations of any suspected violation of the areas of the SBF with secure perimeters within which articles and merchandise free
law or these Rules, provided that the investigation of any of duties and internal revenue taxes may be limited, without prejudice to the
violation of the criminal laws of the Philippines occurring in availment of other benefits conferred by the Act and these Rules in the SBF
the SBF shall not be conducted by the SBMA, but rather outside such areas. The SBMA shall furthermore have the authority to establish,
by the police or National Government agency having regulate and maintain points of entry to the SBF or to any limited duty and taxfree
jurisdiction in the area where the violation occurred; of the SBF.
(4) to seize articles, substances, merchandise and records
considered to be in violation of the law and these Rules, Sec. 14. General Land Use Plan. The SBMA shall draw up an publish a general
and to provide for their return to the enterprise of person land use plan specifying the general uses and economic activities to promoted for
from whom they were seized, or their forfeiture to the different areas of the SBF and shall enforce said plan subject to such revisions as
SBMA; the SBMA may deem necessary or appropriate to accomplish the policies and
(5) to issue subpoena duces tecum and ad testifcandum in objectives of the Act.
the course of its investigations;
(6) to arrest persons in the SBF for any violation of the laws of Sec. 15. Annual Reports. The SBMA shall render and publish annual reports on
the Philippines; the economic activities undertaken in the SBF.
(7) to assess and collect administrative fees or impose
administrative fines or other monetary penalties for
violations of these Rules; CHAPTER III. PROCEDURES FOR REGISTRATION OF
(8) to issue, alter, modify, suspend or revoke for cause, any SUBIC BAY FREEPORT ENTERPRISES & RESIDENTS
permit, certificate, license, visa or privilege allowed under
the Act or these Rules; A. General Provisions
(9) to regulate ingress to and egress from the SBF;
(10) to regulate traffic within the SBF and to impose Sec. 16. Registration Office The SBMA shall establish an office to register all
administrative fines and penalties for traffic violations, business enterprises or concerns applying to be SBF Enterprises, as well as natural
including charges for towing and impounding; and persons applying to be SBF Residents. This office shall consist of two (2)
(11) to promulgate such other rules, regulations and circulars departments, to wit: The SBF Enterprise Department and the SBF Residents
as may be necessary, proper or incidental to carry out the Department, which shall in turn consist of two (2) divisions each, to wit: the
policies and objectives of the Act, these Rules, as well as Evaluation Division and the followup Division.
the powers and duties of the SBMA thereunder.
The above departments shall issue standard application forms and require
Sec. 12. Best Use of SBMA Properties. The SBMA shall take all measures submission of pertinent documents to the proper department which shall act
necessary to secure the best of its properties within the SBF. The SBMA may thereon in the most expeditious manner possible. If warranted, the Registration
lease the aforesaid properties to private facilities operators who may thereafter, Office shall approve the application and register qualified enterprises and residents,
under conditions approved by the SBMA, sublease the facilities or otherwise after which it shall issue certificates attesting to their registration and residency,
provide services based thereon to other SBF Enterprises. respectively. After issuance of the certificates, the Registration Office shall
periodically monitor the status of all SBF Enterprises and Residents.
6
Sec. 17. Who are Eligible. Application for SBF registration shall be open to Sec. 22. Simultaneous Issuance of Certificates of Registration and Residency.
nationals and business enterprises of any country in any area of economic activity, Issuance of the Certificate of Registration shall be accompanied by issue of the a
except only as is specifically limited by the Constitution of the Philippines. Certificate(s) of Residency to qualified enterprises and residents, respectively,
when all required supporting documents are included in the applications.
Sec. 18. Conditions for Registration. An SBF Enterprise shall be a constituted Sec. 23. Validity. All certificates issued by the SBMA shall be valid for a period of
business enterprise organized or domiciled in the Philippines or any foreign one (1) year from issuance and shall be deemed automatically renewed every year
country. The enterprise must name a representative or agent who is a legal (I)upon payment of the prescribed fees at least ten (10) days prior to the expiration
resident of the SBF. If affiliated with an existing enterprise in the Philippines of the said one (1) year period for the particular year involved, and (ii) for as long as
outside of the SBF, the SBF Enterprise must establish a separate business the SBF Enterprise or Resident remains qualified to continue its business
organization to conduct business exclusively within the SBF which shall be a operations or reside within the SBF under similar terms and conditions for which
separate taxable entity. the original certificate(s) was/were issued.
Sec. 19. Criteria for Issuance of Certificates. The SBMA shall issue the Sec.24. Identification Card System. All SBF Residents must secure SBF
Certificates of Registration or Residency to an SBF Enterprise or Resident, Identification Cards from the SBMA, under an identification card system that the
respectively, if qualified and if in the SBMA’s discretion such issuance will promote SBMA will enforce and implement, which will contain such information as the
the policies set forth in the Act and these Rules. SBMA may deem necessary, including, but no limited to, the name, age, address,
blood type and skills of the SBF Resident.
Sec. 20. Period of Issuance of Certificates. Should the application(s) merit Identification cards may also be required of domestic tourists and visitors to the
approval, the SBMA shall issue the certificates applied for no later than thirty (30) SBF. These cards will constitute, among others, the domestic tourists’ or visitor’s
days following receipt of the completed application and all required supporting permit to enter the SBF and other similar documents that may be required under
documents. these Rules.
Sec.21. Effect of Issuance of Certificates. Issuance of the Certificate of Sec. 25. Fees. The SBMA may charge reasonable fees for the acceptance,
Registration or Residency to an SBF Enterprise or Resident, respectively, shall processing, issuance and renewal of all applications, certificates and other similar
entitle and subject the business enterprise or resident to all the benefits and documents that may be required under these Rules.
obligations under the Act and these Rules, and other regulations that may be
promulgated by the SBMA, subject to the provisions of Section 5 and 13 hereof. Sec. 26. Withdrawal, Suspension or Cessation of Operations. Whenever an SBF
Enterprise decides to withdraw, suspend, or cease its registered activity or
In general, any business or enterprise registered as an SBF Enterprise shall be operations, written notice thereof shall be sent to the SBMA one (1) month prior to
automatically excluded from benefiting from any other preferential regime such as implementation of the action. Subject to provisions of pertinent laws and the rights
that provided for in Republic Act No. 7042, otherwise known as the Foreign of mortgage creditors, the withdrawal or cessation from business operations for a
Investments Act of 1991 and Executive Order No. 226, otherwise known as the continuous period of two (2) months, unless extended upon written request of the
Omnibus Investments Code of 1987, or other special laws of the Philippines. If the enterprise and approval of the SBMA, shall have the effect of automatically
enterprise already enjoys benefits under these regimes, these benefits shall be canceling the Certificate of Registration without the need of Board action. Upon
withdrawn in the same manner as they were granted, before it can enjoy any such withdrawal or cessation from operations, the SBF Enterprise shall cease to be
benefits under these Rules or the Act. Exceptions to the foregoing may be entitled to the incentives provided for in the Act and these regulations.
separately made and issued by the SBMA in consultation with the Board of
Investments, the Department of Finance and other concerned government Sec. 27. Revocation, Suspension or Cancellation of Certificates of Registration or
agencies under circumstances to be determined by the SBMA. Residency. Without prejudice to the imposition of penalties prescribed under the
pertinent provisions of the Tariff and Customs Code of the Philippines and the
7
National Internal Revenue Code of the Philippines, the Certificates of Registration d. if previously part of a larger business enterprise doing business elsewhere
issued by the SBMA to any SBF Enterprise or Resident may be revoked, in the Philippines, evidence of restructuring to exclude all business
suspended or canceled for any of the following grounds: operations taking place outside the boundaries of the SBF;
a. copies of relevant documentation of the legal status of the business d. if a spouse or child below 21 years of age of an SBF Resident, evidence of
enterprise (articles of incorporation, partnership agreement, SEC such relationship, i.e. marriage license, birth certificate, etc., accompanied
registration, and similar documents) showing, among others, beneficial by an affidavit of support by the SBF Resident; and
ownership;
e. such other documents that the SBMA may require.
b. if a corporation, partnership or other business enterprise organized or
constituted outside the Philippines, the name and address of the legal For the purposes of these Rules, current Filipino residents of the SBF refer to all
agent for the enterprise in the SBF accompanied with sworn proof of persons Filipino citizens residing within the SBF continuously for at least a period
consent of the agent to serve as such; of two (2) years as of the date of the promulgation of these Rules.
c. evidence of the physical location of the business enterprise within the SBF, Sec. 32. Foreign Nationals. Foreign nationals currently residing in the SBF
such as certificate of title, tax declaration, property deed, lease agreement, continuously for at least a period of two (2) years as of the date of the promulgation
and similar documents; of these Rules, and who have been accorded permanent residency status in the
Philippines may apply for a Certificate of Residency in the SBF upon presentation
8
of sufficient proof of such residency status. Foreign nationals currently residing in
the SBF who have not yet been accorded residency status shall be eligible therefor
subject to the Immigration and other provision of these Rules. D. Registration of Banks and Affiliates
Sec. 33. Certificate of Residency. The SBMA shall issue a Certificate of Sec. 35. Filing of Application. Applications for licensing of Commercial and
Residency to all qualified current residents of the SBF within thirty (30) days from Offshore Banks or their branches or affiliates to be located within the SBF shall be
receipt of the required application, information and documentation. This certificate filed with the SBMA. SBMA shall forward the applications to the Central Bank,
shall attest to the residency of the person within the SBF, and shall entitle and which if warranted shall directly issue a license and other required documentation,
subject the resident to the benefits and obligations as defined in the Act, these in accordance with the provisions of Chapter VIII of these Rules.
Rules and other regulations that may be promulgated by the SBMA.
Should the applicant’s license not be issued by the Central Bank within thirty
(30) days from the complete submission of all requirements, the SBMA shall
C. Registration of New Industrial, Commercial and forthwith inform the bank concerned and extend the period for the issuance of the
Service Enterprises bank’s Certificate of Registration.
Sec. 34. Filing of Application. Industrial, commercial and service enterprises
applying to be an SBF Enterprise shall file an application in the form prescribed by Sec. 36. Issuance of Certificates. Upon approval of the application and its proper
the SBMA to be supported by the following: endorsement by the Central Bank to the SBMA, the latter shall issue the necessary
Certificate of Registration to the bank under Chapters III and VIII of these Rules.
a. copies of relevant documentation of the legal status of the business
enterprise (articles of incorporation, partnership agreement, SEC E. Registration of New Subic Bay
Registration, and similar documents) showing, among others, beneficial Freeport Residents
ownership;
Sec. 37. Certificates of Residency for New SBF Filipino Residents. A Certificate
b. if there is foreign ownership, proof of inward foreign remittance and of Residency duly issued by the SBMA shall be required for all new Filipino
investment; residents of the SBF. Subject to the conditions of these Rules, such certificate
shall be available to any Filipino actually residing within the SBF who is an
c. evidence of the intended physical location of the enterprise within the SBF employee or owner of an SBF Enterprise, and the immediate members of the
(such as certificate of title, deed of sale, lease agreement, commitment family of such employee or owner, or who has leased or otherwise secured living
letter, and other similar documents) and the manner by which such location quarters in SBF.
was secured (i.e., whether it was secured directly with the SBMA, from
licensed facilities operator, or other property owner); Sec. 38. Foreign Nationals Residing Outside the SBF. Foreign nationals
accorded permanent residency status in the Philippines may apply for a Certificate
d. if part of a larger business enterprise doing business elsewhere in the of Residency in the SBF upon presentation of sufficient proof of such permanent
Philippines, evidence of corporate restructuring which excludes from the residency status and employment or investment in the SBF. Foreign nationals
SBF Enterprise all business operations taking place outside the boundaries without prior permanent residency status in the Philippines shall be subject to the
of the SBF; Immigration and other pertinent provisions of these Rules.
e. list of assets comprising the investment to be made; and
CHAPTER IV. RIGHTS AND OBLIGATIONS OF SUBIC
f. such other documents that the SBMA may require. BAY FREEPORT ENTERPRISES
9
AND RESIDENTS any of the said facilities, subject to the approval of the SBMA and other
concerned agencies of the latter;
A. Subic Bay Freeport Enterprises
d. to provide public or other services such as water, light and power,
Sec. 39. Rights and Obligations. SBF Enterprises shall have the following rights telecommunications, sewerage and any other public utilities or to contract
and obligations: or grant concessions to other individuals for the provision of such services
to SBF Enterprises, subject to the approval of the SBMA;
a. To freely engage in any business, trade, manufacturing, financial or
service activity, and to import and export freely all types of goods into and e. to install adequate environmental protection facilities and pollution control
out of the SBF, subject tot the provision of the Act, these Rules and other systems as the SBMA may deem necessary to protect the environment or
regulations that may be promulgated by the SBMA; otherwise conform to or observe environmental and pollution control
b. To Employ foreign nationals subject to evidence of the unavailability of standards of the SBMA;
comparablyskilled Filipinos within the Philippines;
f. to maintain adequate security measures including adequate fencing,
c. To faithfully comply with the Act, these Rules and other regulations that enclosures, lighting, alarm systems, fire fighting equipment and other
may be promulgated by the SBMA; similar devices to secure facility, subject to SBMA approval and in
cooperation with SBMA security force;
d. To report periodically to the SBMA any information on business activity
which the latter may reasonably require; and g. to charge and modify fees for any services or facilities it provides within the
SBF, directly to those who use such services or facilities; and
e. To file periodically any information normally required by the Bureau of
Internal Revenue. h. to adopt internal rules and regulations to promote the safe , efficient, and
successful operation of the facility consistent with the provisions of these
Sec. 40. Rights and Obligations of SBF Facilities Operators. SBF facilities Rules and subject to the approval of the SBMA.
operators shall have the rights and responsibilities of other SBF Enterprises, plus
the following:
B. Subic Bay Freeport Residents
a. to maintain facilities on real property it owns, has acquired or has leased
within the SBF;
Sec. 41. Rights of SBF Residents. SBF Residents shall have the following rights
b. to lease out real property it owns or has leased within the SBF, and to within the SBF:
acquire and leased land and sell or lease out facilities to SBF Enterprises,
subject to overall property management guidelines approved by the SBMA a. to import directly, free of Customs, duties and control, foreign
and to the provisions of Section 12 hereof; articles in noncommercial quantities subject to these Rules and
other regulations that may be promulgated by the SBMMA; and
c. to make improvements on, construct and maintain buildings, warehouses,
factory shells, office and commercial buildings and other facilities, and b. to purchase, lease or otherwise acquire articles from other SBF
develop all other infrastructure necessary or desirable to enhance the Residents or Enterprises, and maintain, utilize or otherwise consume
SBF’s efficient operation, or grant contracts or concessions to provision of such goods within the SBF free of national internal revenue taxes
and customs duties.
10
Sec. 42. Obligations of SBF Residents. Except as expressly provided for by
exemptions in these Rules and other regulations of the SBMA, SBF Residents shall
have the following obligations: Sec. 44. Percentage of Income Allowable from Sources Within the Customs
Territory. SBF Enterprises may generate income from sources within the Customs
a. to obey and observe all laws of the Philippines; and Territory of up to Thirty Percent (30%) of its total income from all sources; provided,
that should an SBF Enterprise’s income from sources within the Custom Territory
b. to pay income and other taxes levied on individuals in the exceed Thirty Percent (30%) of its total income from all sources, then it shall be
Philippines. subject to the income tax laws of the Customs Territory; provided, further, that in
any case, customs duties and taxes must be paid with the respect to income from
CHAPTER V. SUBIC BAY FREEPORT TAXATION sales of articles to the Customs Territory.
AND TRADE REGIME
Sec. 45. Importation of Articles. In general, all articles may be imported by SBF
A. Incentives and Exemptions Enterprises into the SBF free of customs and import duties and national internal
revenue taxes, except those articles prohibited by the SBMA and those absolutely
Sec. 43 Tax Exemption – SBF Enterprises shall be exempted from all national and prohibited by law.
local taxes, including but not limited to the following:
Sec. 46. Importation by SBF Residents. Articles may be imported by SBF
a. Customs and import duties and national internal revenue taxes, Residents free of customs and import duties and national internal revenue taxes,
such as VAT, excise and ad valorem taxes on foreign articles; except those articles prohibited by the SBMA and those absolutely prohibited by
b. Internal revenue taxes, such as VAT, ad valorem and excise law; provided, that such articles are limited only for personal or household use or
taxes on their sales of goods and services for which they are consumption within the SBF.
directly liable;
c. Income tax on all income from sources within the SBF and B. Transactions with the Customs Territory
foreign countries, Export Processing Zones, Bonded
Warehouses and other Special Economic Zones within the Sec. 47. Articles Removed or Withdrawn from SBF. Notwithstanding the above
Philippines, as well as all other areas that may now or hereafter mentioned tax and duty exemptions, foreign articles removed, withdrawn or
be considered to be outside the Customs Territory, whether or otherwise disposed of from the SBF into the Customs Territory, shall be subject to
not payment of such income is actually received; made or the payment of customs duties and internal revenue taxes as ordinary importations
collected within such areas; provided, that SBF Enterprises in accordance with the provisions of Tariff and Customs Code of the Philippines, as
shall, as withholding agents for the National Government, amended, and the National Internal Revenue Code and other applicable laws.
withhold tax on compensation and income payments to persons
or individuals subject to expanded withholding tax; and Articles entered or introduced from the SBF into the Customs Territory will be
d. Franchise, common carrier or value added taxes and other presumed to be foreign unless there is sufficient evidence presented to satisfy
percentage taxes on public and service utilities and enterprises customs officials that they are domestic articles as defined in these Rules.
within the SBF.
Sec. 48. Articles admitted into the SBF from Customs Territory. Articles which
In lieu of paying taxes, all SBF Enterprises shall pay a final tax of five (5%) percent are admitted to the SBF from Customs Territory under proper permit shall be
of gross income earned in accordance to the breakdown specified and defined considered exported for purposes of the laws and regulations of the Philippines,
under Section 57 hereunder. and shall be considered exported for purposes of the laws and regulations of the
11
Philippines, and shall be considered to be zerorated and thereby become eligible and in accordance with, applicable rules and regulations, to the Collector of
for drawback, relief from duties and taxes, and any other tax or duty benefit Customs at the port of destination or export. The provisions of the Tariff and
conferred by reason of exportation; provided, that articles which are returned to the Customs Code, as amended, and its implementing regulations, in respect of
Customs Territory from the SBF shall be considered imported for the purposes of transshipment of articles from the ports in the Customs Territory to the SBF shall
the laws and regulations of the Philippines. govern cases of transshipment.
Sec. 49. Foreign Articles Used as Raw Materials. Foreign articles to be used in Sec. 54. Articles Exported to Foreign Countries and Reexported into Customs
the production, manufacture, processing of finished products may be brought from Territory. Articles which are manufactured in the SBF and exported therefrom to a
the SBF to designated Special Economic Zones, Bonded Warehouses, Export foreign country shall, upon subsequent importation into the Customs Territory, be
Processing zones, or under other duty or taxexempt treatment in the Customs subject to the import laws applicable to like
Territory by accredited subcontractors, under bond acceptable to the SBMA and articles manufactured in a foreign country.
the Bureau of Customs to guarantee the return of the finished goods to the SBF,
for export or for sale within the SBF. Sec. 55. Responsibility for Foreign Articles; Presumption on Missing Articles.
Sec. 50. Foreign Articles Sold to SBF Residents. Foreign articles sold by SBF a. SBF Enterprises shall be responsible for the safekeeping and
Enterprises to SBF Residents or to travelers, tourists, and/or investors under accounting of all articles received by them in the SBF, and shall be
Section 12 (g) of the Act shall be exempt from duties and taxes; provided, that such relieved from responsibility for the articles upon removal under
articles are actually exported to a foreign country upon their departure, or are proper permit from the SBF, transfer to another SBF Enterprise or
actually consumed within the SBF. Resident, destruction in the SBF, or abandonment to the SBMA in
the SBF.
Sec. 51. Limit of Purchase of Foreign Articles. Subject to the higher limits
allowed for balikbayans and returning residents, foreign articles purchased within b. Articles which are missing or cannot be accounted for in the SBF
the SBF and brought out of the SBF and entered into the Customs Territory for shall be presumed to have been transferred to the Customs Territory
personal use shall not be subject to customs duties and taxes as ordinary without permit. Articles which are found in the SBF but cannot be
importations; provided, that the value of such articles purchased shall not exceed accounted for in the records of an SBF Enterprise shall be treated as
TWO HUNDRED DOLLARS ( U.S. $200.00) per individual; provided, further, that having been received in the SBF without permit.
this privilege shall be availed of only once a month.
Sec. 56. Customs Manual of Operations. The SBMA may issue or promulgate
Sec. 52. Seizure of Foreign Articles. Foreign articles withdrawn transported or Customs or any other operations manual (s), compliance of the provisions of which
taken in commercial quantities from the SBF to the Customs Territory without shall be the responsibility of SBF Enterprises and Residents.
payment of duties and taxes, shall be subject to seizure and forfeiture proceedings
pursuant to the pertinent provisions of the Tariff and Customs Code and the C. Taxes and Fiscal Obligations
National Internal Revenue Code of the Philippines, without prejudice to any
criminal and/or administrative actions that may be instituted against the Sec. 57. Obligations and Liabilities.
person/persons liable/responsible therefor.
a. Pursuant to Section 12 (c) of the Act., SBF Enterprises within the SBF shall, in
Sec. 53. Transshipment of Articles by Carriers. Carriers who undertake to lieu of paying local and national taxes, pay a five (5%) percent final tax on
transship articles from the SBF to a bonded warehouse to a Customs Territory shall their gross income earned in the following percentages:
be bonded in an amount to be determined by the SBAM which in no case shall be
less than FIFTY THOUSAND PESOS (P50, 000.00), Philippine currency, (1) To the National Government………………………………….………3%
conditioned that the carrier shall transport and deliver the articles, without delay,
12
Depreciation, lease payments or other expenditures on buildings and
(2) To the Local Government Units equipment
affected by the declaration of the
Zone, to be distributed in the Financing charges associated with fixed assets
proportion to be determined by
the Bureau of Internal Revenue……………………….…………… 1% Rent and utility charges associated with buildings and equipment,
warehousing or handling of goods
(3) To the Special Development Fund
to be utilized for the development Unallowable Deductions
of municipalities outside the City
of Olongapo and the Municipality Administrative Salaries
of Subic and other municipalities
contiguous to the base area…………………………………………….. 1% Corporate Management
b. “Gross Income Earned” for purposes of these Rules refers to gross sales or Marketing and sales salaries
gross revenues derived from any business activity, net of returns, discounts
and allowances, less costs of sales, cost of production or direct costs of Interest and financial charges on working capital
services (depending on the nature of business) but before any deduction for
administrative expenses and incidental losses during a given taxable period. Loss/gain on foreign exchange translation
In arriving at the base for which the five (5%) percent final tax stated in the Loss/gain on disposal of assets
preceding section shall be applied, the following deductions shall be
allowable/unallowable: Advertising
Allowable Deductions Miscellaneous supplies and expenses
Direct salaries, wages or labor expense Entertainment expense
Production supervision salaries
2. For Services Enterprises
Raw Materials
Allowable Deductions
Intermediate goods
Direct salaries, wages or labor expense
Finished goods
Services supervision salaries
Supplies and Fuels used in production
Raw Materials, goods in process or finished goods used or resold
13
Supplies and fuels used in rendering services Materials and Supplies used
Depreciation, lease payments or other expenditures on buildings and Depreciation
equipment
Financing charges associated with fixed assets Equipment lease payments
Rent and utility charges associated with buildings and equipment Rent and utilities
Unallowable Deductions Advertising
Administrative salaries Interest paid
Corporate Management salaries Cost of securities
Marketing and sales salaries Loan losses
Interest and financial charges on working capital Marketing and sales salaries
Loss/gain on foreign exchange translation Equipment lease payments
Loss/gain on disposal of assets Interest and financial charges
Insurance Loss/gain on foreign exchange translation
Advertising Corporate management salaries
Miscellaneous supplies and expenses Loss/gain on disposal of assets
Entertainment expense Insurance
Allowable Deductions Entertainment expense
None Provided, that, the SBMA may further review, revise, amend, supplement or
otherwise alter the foregoing schedule of allowable and unallowable deductions
Unallowable Deductions after consultation with the SBF Enterprises that may be affected thereby.
14
authorized to conduct at any time during office hours any audit, check, or inventory
Requirements. All SBF Enterprises subject to the (5%) tax on gross income count for the verification and reconciliation of the records with the inventory of
earned prescribed in Section 12 © of the Act shall render in duplicate a true and articles in the SBF.
accurate quarterly return and final or adjustment return with the provisions of
Section 68 and 69, Chapter IX of the National Internal Revenue Code, as For the effective implementation of the Act, the provisions of Title IX on the
amended. The return shall be filed by the President, Vice President or other Requirements of Keeping Books of Accounts and Records, Title X on the Statutory
principal officer of the SBF Enterprise and shall be sworn to by the Treasurer or Penalties and offenses, both of the National Internal Revenue Code, as amended,
Assistant Treasurer. as well as their implementing rules and regulations, shall apply to all SBF
Enterprises.
Place of Filing. The quarterly return and the final or adjustment return required in
the preceding paragraph shall be filed with the Revenue District Officer or the Sec. 60. Search, Arrest, and Seizure by Customs Officials. Persons, baggage,
collection agent/accredited bank in the City of Olongapo, with a copy thereof to be vehicles and cargo entering or leaving the SBF are subject to search by Customs
furnished to the SBMA. officials as a condition to enter or leave the SBF. Customs officials are authorized
to examine any merchandise held by the SBF Enterprises during regular business
Payment of the Tax. hours.
The amount representing the five (5%) percent final tax of the gross income earned Customs officers may seize any article found during a Customs search upon
by the SBF Enterprise directly from the operation of its registered activity shall be entering or leaving the SBF to be in violation of any provision of the customs laws
paid at the same time the return is filed with the Revenue District Officer or the for which a seizure is authorized, and such seizure shall be disposed of according
collecting agent/accredited bank in the City of Olongapo; provided, that (I) 1% of to the customs laws. Articles which are prohibited or excluded from the SBF under
the above amount shall be allocated to the representative local government units the rules and regulations of the SBMA which are found by the Customs officials
affected by the declaration of the SBF in accordance with the formula set forth in during an audit, examination or check within the SBF may be seized by them and
Section 57 (a) of these Rules, and (ii) the other 1%, which is intended for the turned over to the SBMA for disposition.
Special Development fund, shall be kept in trust.
The SBMA may secure the assistance of and/or coordinate with Customs officers
Time for Filing the Returns / Payment of the Tax. The provisions of Sections 63 to arrest persons in the SBF for violations of the customs laws for which arrest is
and 69 of the National Internal Revenue Code, as amended, and existing authorized concerning articles in the Customs Territory destined to the SBF or
regulations regarding the time for filing quarterly and final or adjustment returns and articles which have been removed from the SBF to the Customs Territory.
payments of the tax imposed herein, as well as the requirement of withholding and
remittances of the tax under Section 43 ©, Chapter V of these Rules shall apply to Sec. 61. Tax Credits for Foreign Corporations. The taxes paid herein by foreign
all SBF Enterprises. corporations that are registered as SBF Enterprises shall be considered as income
taxes for purposes of application for tax credits by said foreign corporations in their
Sec. 59. Bookkeeping and Reportorial Requirements. All SBF Enterprises respective countries.
shall keep regular and accurate records of their transactions, and maintain books of
accounts and allied documents in accordance with the bookkeeping rules and CHAPTER VI. SUBIC BAY FREEPORT IMMIGRATION REGULATIONS
regulations prescribed by the Bureau of Internal Revenue and/or the SBMA, which
shall be open to inspection and verification by authorized officers of the SBMA or of Sec. 62. General Provisions. Except as provided in the Act, these Rules and
the Bureau of Internal Revenue and the Bureau of Customs, upon prior notification other rules of the SBMA, all laws of the Philippines concerning the entry and
and coordination with the SBMA. For this purpose, the SBMA at its instance, or immigration of persons into the Philippines and their departure and emigration
jointly with the Bureau of Internal Revenue and/or the Bureau of Customs, is
15
therefrom shall be applicable in the SBF to persons arriving directly in the SBF from
a foreign country or departing directly from the SBF to a foreign country. Sec. 66. Temporary Work and Residency Visas. The SBMA is authorized to
issue temporary work and residency visas to foreign nationals under the conditions
Sec 63. Responsibility and Authority. All laws of the Philippines, including the and provisions of these Rules. Upon application by an SBF Enterprise, the SBMA
Act, these Rules, and the other rules of the SBMA concerning the entry, may issue work visas which are valid for and renewable every two (2) years to
immigration, departure, or emigration of persons including their arrival directly in or foreign nationals who possess executive or highlytechnical skills which no Filipino
departure directly from the SBF, shall be carried out within the SBF by personnel of citizen within the SBF possesses, as certified by the Department of Labor and
the Bureau of Immigration in coordination with the SBMA. Employment. The SBF Enterprise shall apply to the SBMA for renewal not less
than thirty (30) days before the scheduled expiration date of the work visas, and
Sec. 64. Right to Allow NoVisa Entry to Certain Foreign Nationals. shall inform the SBMA whenever any foreign national’s employment is terminated
Notwithstanding the immediately preceding provision, the SBMA may allow the by reason of contract expiration or termination, firing, redundancy or other removal.
entry of foreign nationals, particularly Hong Kong Chinese with British Passports or The temporary work visas will be automatically terminated upon:
Certificates of Identity and Taiwanese nationals with Republic of China Passports,
with the exception of foreign nationals barred from entering the Philippines, into the a. Nonrenewal of the visa, whether by reason of failure of the SBF
SBF without visas for a maximum period of fourteen (14) days, unless extended by Enterprise to apply for renewal or determination made by the SBMA;
the National Government; provided, that such entry will be limited to tourism and
business purposes only; provided, further, that should the foreign national desire to b. Expiration of the contract under which the foreign national is
extend his/her visit or to enter the Customs Territory, he/she must secure the working;
necessary authorization or visa from the Bureau of Immigration or the Department
of Foreign Affairs, as the case may be. c. Discharge or other termination of the foreign national by the SBF
Enterprise;
Sec 65. Application Outside Subic Bay Freeport The issuance of visas to,
and control of the arrival or departure of, persons who seek to work or reside in the d. Dissolution of the employing firm or revocation of its SBF
SBF under the Act and these Rules shall be applied outside the SBF by the Bureau registration;
of Immigration or the Department of Foreign Affairs to:
e. Acceptance of work for compensation outside the SBF without the
· Persons arriving in the Philippines from a foreign country destined approval of the SBMA;
for the SBF;
f. Death of the foreign national;
· Persons arriving in the Customs Territory from the SBF destined to
foreign countries; g. Conviction, by a competent court, of an offense defined by the
Revised Penal Code or special or other laws;
· Persons in the Customs Territory and whose work or residency visas
were conferred by the SBMA under the authority of the Act, these h. Commission of acts inimical to national security, public interest,
Rules and other rules of the SBMA; health, welfare and morals; or
16
Sec. 67. Revocation of Temporary Work Visa. The SBMA may, after appropriate c. A purchase of real estate in the SBF or of an SBF Enterprise for the
hearing, revoke a temporary work visa for any violation by the foreign national or purpose of renovation, construction, or expansion of buildings,
his or her dependent(s) of (I) any Philippine law or regulation, including the Act, equipment, structures, or appurtenances for capital improvement
these Rules and other regulations of the SBMA, or (ii) the terms and conditions for purposes; or
the issuance of the visa.
d. A donation in kind to the SBMA or an SBF Enterprise of an
Sec. 68. Temporary Residency Visas. Temporary residency visas may be equipment or materials for capital improvement purposes.
issued by the SBMA to any foreign national to whom a work visa has been issued Sec. 72. Revocation or Termination of Permanent Residency Visa for Investor.
and to his or her spouse and dependent children under 21 years of age. The The permanent residency visas of the investor, spouse, and children automatically
temporary residency visas of the foreign national, spouse, and children are valid for terminates when the investor, his spouse, children or any other individual or entity
residence either inside the SBF or the Customs Territory during the period of acting in his behalf, takes the investment out of the SBF through sale or receiving
validity of the work visa. The temporary residency visas shall be deemed payment, in cash or in kind, for grants, donations, or interestfree loans other than
terminated upon the termination or revocation of the work visa of the foreign the return of principal. The SBMA may also revoke summarily or after hearing the
national in accordance with Sections 66 and 67 of these Rules. permanent residency visa of any investor, spouse, or child for the same grounds
enumerated in Sections 66 and 67 of these Rules, as the case may be applicable.
Sec. 69. Reportorial Requirements. The names of foreign nationals who are
granted temporary work or residency visas, or whose work or residency visas are Sec. 73. Permanent Residency Visa for Retirees. The SBMA may issue
terminated or revoked, shall be reported by the SBMA to the Bureau of Immigration permanent residency visas to any foreign national who is a retired person and his
within thirty (30) days after issuance, termination or revocation. or her spouse and dependent children under 21 years of age for residence in the
SBF. A “retired person” is a person (I) over 60 years of age who can demonstrate
Sec. 70. Permanent Residency Visas. The SBMA is authorized to issue to the satisfaction of the SBMA that he or she is of good moral character; (ii) has
permanent residency visas to foreign nationals under the conditions and provisions not been convicted of nay crime involving moral turpitude; (iii) no longer employed
of these Rules. or selfemployed; and (iv) who receives a pension or passive income that is
payable in the SBF and exceeds FIFTY THOUSAND DOLLARS (US$50,000.00)
Sec. 71. Permanent Residency Visas for Investors. The SBMA may issue a per annum. “No longer employed or selfemployed” means the applicant for the
permanent residency visa within the SBF to any investor who has made and visa has worked for compensation fewer than seven hundred and fifty (750) hours
continues to maintain an investment of not less than TWO HUNDRED AND FIFTY during the year preceding the application for the visa.
THOUSAND DOLLARS (US$250,000.00) within the SBF. This privilege may
extend to the investor’s spouse and dependent children under 21 years of age. Sec. 74. Revocation or Termination of Permanent Residency Visa of Retiree.
The visa will be provided upon application by the investor with evidence of the The permanent residency visa of the retiree automatically terminates upon the
investment, made in conformance with the SBF’s land use plan, which may be in taking of residence by the retired person outside the SBF, or the acceptance by the
form of: retired person or his or her spouse of work for compensation within the SBF or the
Customs Territory without the approval of the SBMA.
a. Establishment of an SBF Enterprise or other direct investment within
the SBF; The residency visa of the spouse of the retiree automatically terminates upon
the death of the person to whom the residency visa was granted, or upon their
b. A cash grant or interestfree loan to the SBMA or to an SBF divorce, unless he or she makes application for and receives a residency visa from
Enterprise for the purpose of making capital improvements by the SBMA. The SBMA may summarily or after hearing revoke the residency visa of
recipient in the SBF; nay retiree, his/her spouse or child for the same grounds enumerated in Sections
66 and 67 of these Rules, as may be applicable.
17
EXCHANGE, BANKING AND OTHER FINANCIAL
Sec. 75. Reportorial Requirements. The names of foreign nationals who are INSTITUTIONS
granted permanent residency visas, or whose permanent residency visas are
terminated or revoked by the SBMA shall be reported by the SBMA to the Bureau A. Subic Bay Freeport Rules on Foreign Exchange
of Immigration within thirty (30) days after issuance, termination or revocation. The
residency visa is valid only for the SBF and not for the Customs Territory. Sec. 79. Foreign Exchange Accounts. All SBF Enterprises and Residents shall
However, persons with residency visas may enter and leave the SBF without any be free to maintain foreign exchange accounts with any bank or any financial
special authorization of the Bureau of Immigration. institution licensed to hold deposits in foreign exchange.
18
Sec. 88. Offshore Banking Units. Any foreign bank registered as an Offshore
b. payment for services rendered; Banking Unit (OBU) may accept deposits, make loans, and otherwise provide
financial services in foreign exchange to SBF Enterprises and Residents, in
c. repayment of loans; accordance with Central Bank regulations governing OBU’s.
d. transfer of profits earned by the SBF Enterprises; Sec. 89. Foreign Currency Depository Units. Any bank registered as a Foreign
Currency Depository Unit (FCDU) may accept deposits, make loans, and otherwise
e. repatriation of capital resulting from liquidation or sale of assets; provide financial services in foreign exchange to SBF Enterprises and Residents, in
accordance with Central Bank regulations governing FCDU’s.
f. any other transaction representing expenses or a decrease in capital
or assets to the enterprise. Sec. 90. Bank Licensed in the Philippines. Banks licensed in the Philippines may
freely open branches within the SBF. Minimum bids shall not be required, and the
Sec. 84. Registration of Foreign Exchange. The foreign investments registration number of banks opening branches within the SBF shall not be restricted. Banks
process provided for under Central Bank Circular 1353 shall be incorporated into applying to open branches shall be registered with the Central Bank provided that
the SBMA regular registration procedures. Transfer to affiliates or shareholders of the bank has not violated Central Bank conditions governing safe and sound
registered capital, and of profits up to the amount of cumulative profits declared net banking practices. Such branches may elect to bed registered as SBF Enterprises
of remittances in prior years shall be effected fully. with the SBMA, and shall be restricted to providing services or effecting
transactions with SBF Enterprises and Residents. If such branches do not elect to
Sec. 85. Philippine Currency Transactions. All SBF Enterprises and Residents be registered as SBF Enterprises, they shall not enjoy the right and privileges
shall be free to engage in business transactions the valuation and/or payments for under these Rules including the preferential tax treatment accorded SBF
which may be effected in the currency of the Philippines according to regulations in Enterprises as set forth in Chapter V of these Rules, and shall not be restricted to
force issued by the Central Bank or other authorities of the National Government. transactions with SBF Enterprises or Residents.
Sec. 86. Applicability of Central Bank Circular 1353. Unless specifically provided Sec 91. OBU Affiliates. Any foreign bank may apply with the Central Bank to
for in subsequent laws, these rules and other SBMA regulations, the provisions of establish (a) an extension office/branch of its existing OBU, if it has an existing
Central Bank Circular 1353 “Further Liberalizing Foreign Exchange Regulations”, OBU licensed to do business in the Philippines, or (b) an OBU within the SBF, if it
shall apply to SBF Enterprises and Residents; provided, however, that for the has no existing OBU license, which shall exclusively engage in services to SBF
foreign exchange proceeds of foreign loans, including loans contracted in the Enterprises and nonresidents of the Philippines.
Philippines in foreign exchange, conversion into the currency of the Philippines
shall not be required, if there is no intention in the future to service such loans by The Central Bank shall register such branch or SBF OBU’s as licensed to
foreign exchange procured from the banking system; provided, further that in the operate exclusively in the SBF. Such branch or OBU’s shall also be registered as
case of foreign investments, the foreign exchange required for capital repatriation an SBF Enterprise. If the foreign bank applies to operate within the SBF through a
and remittance of dividends shall not be sourced from the domestic (Philippine) local affiliate bank, then such application shall be subject to prevailing laws on
banking system. nationality of ownership of banking institutions.
B. Subic Bay Freeport Rules on Banking and Other Financial Institutions Sec. 92. Tax Exemption Privileges of SBF Registered Banks and Affiliates. SBF
OBU’s, bank branches and affiliates which are registered as SBF Enterprises shall
Sec. 87. In general. Any bank or financial institution intending to operate within be exempt from any and all taxes otherwise levied on OBU’s or banks and banking
the SBF must first be licensed by the Central Bank. transactions under the existing laws and regulations, including but not limited to:
19
a. withholding or other final taxes; Center shall have the responsibility for the implementation of all environmental and
natural resources conservation and protection programs adopted or assumed by
b. remittance taxes; the SBMA as a natural corporation and as a governmental entity.
c. capital taxes; The Ecology Center shall undertake the normal functions associated with
d. profits taxes; environmental management, including, but not limited to, enforcement, monitoring,
permitting, training and education, and contingency and emergency planning.
e. gross receipts taxes;
The Ecology Center shall seek to privatize services and infrastructure related to
f. documentary and science tax. environmental management to the extent that it shall deem appropriate. This shall
include such environmental services as water supply, wastewater treatment
Sec. 93. Tax Liability of SBF Registered Banks and Affiliates. In lieu of all local facilities, waste management facilities, waste transportation services, and
and national taxes, SBF OBU’s and SBF bank affiliates and branches shall pay five environmental monitoring services as can be contracted to the private sector.
(5%) percent final tax of gross income earned annually to the Bureau of Internal
Revenue as provided for in Section 57, and subject to the provisions of these Sec. 97. Application of Philippine Environmental Laws. All Philippine
Rules. environmental laws, particularly Presidential Decrees Nos. 984, 1151, 1152 and
1586, as well as Republic Acts No. 6969 and 7586, including the rules and
Sec. 94. Effect of Existing Central Bank Regulations on SBF Registered OBU’s. regulations of the Department of Environment and Natural Resources and other
Existing regulations governing OBU’s shall apply to SBF OBU’s, except as government agencies concerning environmental pollution and pollution control
specifically provided in these Rules and other regulations of the SBMA. SBF insofar as these rules and regulations are not inconsistent with these Rules, are
OBU’s shall pay annual registration or license fees normally required directly to the hereby adopted.
Central Bank. Sec 98. Coverage. The regulations for environmental and natural resources
CHAPTER IX. ENVIRONMENTAL REGULATIONS conservation and protection shall be applicable to all areas within the SBF and/or
under the jurisdiction of the SBMA. All facilities existing outside the boundaries of
Sec. 95. Principles. SBMA recognizes the importance of maintaining a high the SBF and/or the jurisdiction of the SBMA shall be considered for the purposes
degree of environmental quality as a precursor to the sustainable economic of these Rules to be existing facilities. All facilities to be introduced within the
development of the areas both under and adjacent to its jurisdiction. Specific confines of the SBF or the jurisdiction of the SBMA shall be considered new
regulations to protect and conserve environmental quality as may be promulgated facilities for the purposes of these Rules.
by the SBMA shall conform to and not contradict those environmental policies and
regulations established by the National Government. The SBMA shall introduce a system of regulations that shall be applicable to all
existing and new facilities within its jurisdiction and/or the SBF. This system of
Recognizing that the Department of Environment and Natural Resources and its regulations shall incorporate existing DENR policies and regulations and shall
predecessor agencies have established environmental quality and emission and provide for the permitting of all such facilities by the SBMA.
effluent standards for air and water quality, the SBMA adopts those standards and
incorporates them into the environmental quality standards and regulations to be All facilities within the SBF and/or the jurisdiction of the SBMA shall possess a
adopted by the SBMA. Permit to Operate issued by the SBMA. Any facility deemed to be covered under
these Rules found to be without an appropriate permit shall be subject to
Sec. 96. Administration/Ecology Center. There is hereby created an Ecology immediate closure.
Center that shall have responsibility for the protection of the environment and
natural resources within the SBF and/or jurisdiction of the SBMA. The Ecology
20
Sec. 99. Permits and Clearances. The SBMA shall be the entity responsible for Control Officer who shall serve as the person responsible for ensuring compliance
the issuance of all permits and clearances related to environmental protection and with monitoring and reporting requirements and for the environmental integrity of
conservation within the SBF, such permits and clearances to include, but not the enterprise and compliance with these Rules and such other regulations
limited to Environmental Compliance Certificates, Authorities to Construct, Permits promulgated or to be promulgated by the SBMA, including but not limited to,
to Operate, and Water use Permits. The SBMA may, at its discretion, amend the effluent discharge and emission standards, waste management, and emergency
requirements associated with such permits at any time and may introduce such and contingency plans.
other permits or clearances that it deems necessary to protect and conserve the
environment. Sec. 100. Natural Resource Protection Areas. The SBMA shall, in cooperation
with the DENR, cause to be protected the forested area defined by DENR and shall
Environmental Compliance Certificates. Unless otherwise exempted from manage that area in accordance with practices acceptable to DENR. This shall
doing so by the SBMA, no business enterprise shall be registered as an SBF include the provision of forest guards, as defined by DENR, to ensure that the
Enterprise and allowed to do business or undertake any activity within the SBF natural resources of the area are provided sufficient protection to insure their
unless it secures an Environmental Compliance Certificate from the SBMA. No longevity.
SBF Enterprise shall be allowed to engage in any building and/or construction
activity unless it similarly secures an Environmental Compliance Certificate. All The Natural Resource Protection Area agreed upon between SBMA and DENR
business enterprises seeking registration as SBF Enterprises under these Rules shall include such area as necessary to provide for the protection of the watershed
shall submit an Environmental Report to the SBMA. Such Environmental Reports upon which SBMA is dependent for its water supply. This area shall include both
shall detail and describe the proposed undertaking, the short and long term virgin and residual forests as agreed upon with DENR.
environmental consequences of their business, establishment, construction project,
or other activity; measures proposed to mitigate adverse environmental impacts; Sec. 101. Air Quality. The SBMA shall not permit air quality to deteriorate within
and unavoidable adverse impacts. Decisions by the SBMA on the issuance of the its jurisdiction and/or the SBF as a result of industrial development. To determine
Environmental Compliance Certificate for the proposed undertaking shall be based the existing air quality of the region, the SBMA shall implement a regional air
on the Environmental Report submitted for its consideration. quality monitoring program within its jurisdiction. All stationary sources of air
pollution within the SBF and/or the jurisdiction of SBMA shall be subject to
All public agencies or corporations seeking to build or construct any structure or regulation and shall be required to obtain a Permit to Operate as a condition of
infrastructure for business or public purposes shall secure an Environmental their occupancy in the SBF and/or the regulatory area of the SBMA. All sources of
Compliance Certificate prior to undertaking such activity. 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
Authority to Construct. Following the issuance of the Environmental stationary air pollution sources shall be required to conduct monitoring of the
Compliance Certificate, any proponent intending to engage in the construction of emissions from those sources and report the results of that monitoring to the
any structure or infrastructure shall secure an Authority to Construct. Such SBMA. The frequency of monitoring and reporting shall be established by the
authority shall be based on the building and/or construction plans mentioned SBMA in the Permit to Operate but shall be not less than annually.
elsewhere in these Rules.
Air quality in the SBF or the jurisdiction of the SBMA shall be maintained so as
Permit to Operate. SBF Enterprises shall obtain Permits to Operate prior to the to achieve the national ambient air quality standards. These standards are those
initiation of any operation of any activity subject to the requirement to obtain an deemed necessary to protect public health and welfare and to reduce potential
Environmental Compliance Certificate and the determination that such activity may damage to property. To achieve these standards, the SBMA shall formulate an air
result in discharge to the environment. The Permit to Operate shall establish the quality management strategy for limiting emissions from both mobile and stationary
monitoring and reporting requirements applicable to the SBF Enterprise and shall sources. The following standards may not be exceeded more than once per year.
be renewed on an annual basis. Such SBF Enterprises shall designate a Pollution
21
Sec. 102. Water Quality. The SBMA shall not permit water quality to deteriorate Solid Waste. All SBF Enterprises shall dispose of solid wastes in a manner
within its jurisdiction and/or the SBF as a result of industrial development. To approved by the SBMA. Such approval shall include the use of approved waste
determine the existing water quality of the region, the SBMA shall implement a transporters and approved disposal facilities.
regional water quality monitoring program within its jurisdiction. All sources of water
pollution within the SBF and/or the jurisdiction of the SBMA shall be subject to Waste Generators. Any SBF Enterprise deemed by the SBMA to be a waste
regulation and shall be required to obtain a Permit to Operate as a condition of generator shall be required to report the type, quantity and disposition of such
their occupancy in the regulatory area of the SBMA. All sources of water pollution wastes every quarter. Every firm deemed to be a generator of hazardous and toxic
must comply with the relevant regulations and standards applicable to water wastes and shall develop a plan for the proper management of those wastes and
effluent sources. also develop an emergency and contingency plan for accidental releases of those
wastes to the environment. Waste generators shall maintain a manifest inventory
Water quality in the SBF and/or the jurisdiction of the SBMA shall be maintained of the wastes generated and the disposition of such wastes.
so as to meet national standards applicable for the highest and best use of the
waterbody as established and determined by the SBMA in coordination with the Waste Management. Any firm(s) intending to engage in waste transport within
DENR. In general, this is intended to promote and maintain water quality that is the SBF shall obtain approval by the SBMA to engage in such activity. Such
suitable for contact water recreation. All surface waterbodies, including marine and approval shall be predicated upon the demonstration of the firm(s) capability and
fresh waters, shall be included in this provision. competence to engage in such activity in a safe manner. Waste transporters shall
maintain a manifest of the waste materials handled and/or transported by them and
To protect the waters within the SBF and/or the jurisdiction of the SBMA, the present such manifest upon the demand of the SBMA. No waste transporter shall
SBMA shall not allow the direct discharge of nay wastewater, either industrial or dispose of, or deliver, wastes in any manner not approved or authorized by the
domestic, that does not meet the effluent discharge standards a established by the SBMA to accept such materials.
DENR and adopted by the SBMA. In the case of discharge wastewater treatment
facilities by either industrial or domestic discharges, the acceptable standard for Waste Management Facilities. All waste management facilities shall be
acceptance of those wastewater shall be determined by the owner/operator of subject to the approval and authorization of the SBMA prior to commencing
those facilities. Discharges of effluent from wastewater treatment facilities shall operations. Such facilities shall be open to inspection by the SBMA at any time
meet the applicable discharge standards; compliance with such standards shall be and shall maintain sufficient record as to allow the SBMA to determine the
the responsibility of the owner/operator of the facility. competence of their operation. No waste management facility may accept any
waste delivered to them by a transporter not approved or authorized by the SBMA
All discharges of wastewater shall, as a condition of the Permit to Operate, to engage in such activity. Waste management facilities shall include, but not be
conduct monitoring of the effluent subject to discharge and of the water quality of limited to, landfills, incinerators, physicochemical treatment facilities, and other
the receiving water and shall report the results of that monitoring to the SBMA. facilities processing, recovering, or disposing of wastes. Enterprises engaged in
The frequency of the monitoring and reporting shall be established by the SBMA in the operation of waste management facilities on their premises shall be included in
the Permit to Operate but shall in no case be less than annually. these Rules and other regulations promulgated and adopted, or to be promulgated
and adopted, by the SBMA to regulate such facilities.
Sec 103. Waste Management. All solid and toxic and hazardous wastes shall be
managed in the manner deemed appropriate by the SBMA. The SBMA shall define Toxic and Hazardous Waste Management. All toxic and hazardous wastes
solid and hazardous and toxic wastes in a manner consistent with the definitions used by any all and all persons, businesses or other entities within the SBF and/or
developed by the DENR under Republic Act 6969 and shall define the the jurisdiction of the SBMA shall comply with the provisions of Republic Act 6969
requirements for waste generators, transporters, and owners/operators of waste and these Rules, as well as other regulations promulgated, or to be promulgated,
management facilities. by the SBMA with respect to the management of those materials. This shall
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include the registration of chemicals employed, imported or otherwise utilized at followed during the handling of such materials and those to be followed in the event
any time in any manner. of their discharge. Such plans are to be prepared in conformance with the
requirements of the Philippine Coast Guard and with the standards of practice for
Sec. 104. Water Resources Planning. The SBMA shall issue policies and the industry.
objectives relative on water resources that will seek to ensure that sources of water
supply within the SBF and/or the jurisdiction of the SBMA shall be protected and CHAPTER X. OTHER PROVISIONS
conserved, including marine waters, surface waters, and groundwater. While such
policies and objectives shall be consistent with those established by the National A. Expropriation
Government, the policies and objectives shall recognize the development goals and
objectives established for the SBF and/or jurisdiction of the SBMA, and be Sec. 107. Power of Eminent Domain. The SBMA may exercise its power of
consonant with the availability of water resources. As such, the SBMA shall eminent domain over any privatelyowned property located within the SBF subject
formulate a groundwater protection program to ensure the continued viability of to the requirements of the Constitution and existing law.
groundwater resources. The SBMA shall also require new water resource
developments to obtain a Water Use Permit prior to the development of any Sec. 108. Effect of Expropriation on Lease Agreements. Any cancellation or
groundwater well or surface water abstraction. Such permit shall be reviewed and early termination of a lease agreement between the SBMA and a lessee as a result
approved by the SBMA. Applicants for a Water Use Permit shall provide such of expropriation shall be governed by the terms of that lease agreement.
information as the SBMA deems necessary to evaluate the development proposal.
Water Use Permits issued by the SBMA shall specify the allowable rate and B. Security
quantity of water withdrawal. Permitees shall report to the SBMA the water
consumption and quality on a quarterly basis. Sec. 109. Function of SBMA Security force. SBMA security force agents shall
police and maintain law and order within the boundaries of the SBF. Access into
Sec. 105. Conservation Areas. Recognizing that a healthy environment is and departure from the SBF shall be fully controlled by SBMA security agents.
essential to the attainment of the development goals of the SBMA jurisdiction and
there are competing uses of environment, the SBMA shall designate such areas Sec 110. Responsibility for security of SBF: License to Carry Firearms. The
that it deems appropriate as Conservation Areas. These Areas may include those security of the SBF and the maintenance of peace and order therein shall be the
areas necessary for the protection of water supplies (such as groundwater aquifer responsibility of the SBMA. SBF Facilities Operators and/or Enterprises shall
recharge zones), or areas important to the protection and preservation of bio provided and be responsible for the security of their respective facilities and extend
diversity (such as marine conservation and sanctuary areas and natural forest support and cooperation to the SBMA security force/agents in the performance of
areas), or development that will be allowed in those areas, including the the latter’ s duties.
designation of areas as excluded from development. Those areas designated as
Conservation Areas shall be included in any land use plant or zoning ordinance These security forces may be licensed to carry firearms within the premises of
adopted by the SBMA. the particular enterprise, subject to approval from SBMA and compliance with these
Rules.
Sec. 106. Emergency and Contingency planning. All entities operating with the
SBF and/or the jurisdiction of the SBMA having potential to discharge oil, Sec. 111. Request for Assistance. The SBF Facilities Operator or enterprise
petroleum products, or other deleterious substances (including chemicals or their may, as necessary, request assistance from SBMA security forces/agents to
by products) of the environment shall prepare a plan for preventing such discharge enforce security for their facilities. Such security agents shall act in cooperation
to the environment (including the aquatic, marine or land environments) and with the SBMA security forces and shall adhere to such rules and regulations as
detailing the measures to be employed in the event that such discharges occur. SBMA may promulgate.
This plan shall be submitted to the SBMA and shall include the procedures to be
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Sec. 112. Search and Inspection of Persons and Vehicles. All persons and be generally aware of the policy objectives of the SBF as provided under the Act
vehicles entering in and existing from the SBF shall be subject to search and and these Rules, and proclamations of the National Government and the SBMA.
inspection. They shall be required to register and/or secure appropriate SBF
passes/clearances or permits from the SBMA. Their movements inside the SBF Sec. 117. Labor Disputes. Subject to existing labor laws or as may be specified
shall be governed by the security rules of the SBMA. No inspection or control in employment contracts or collective bargaining agreements, all labor disputes
initiated by other governmental agencies shall take place within an SBF Enterprise must be brought before the Inspection and Disputes Office of the Labor Center
without prior coordination with the SBMA. Lawful warrants should first be which will attempt to amicably settle the case. In case the SBMA cannot settle the
presented to the administrative office of the SBF prior to entering the SBF and dispute amicably, it will certify the dispute for mediation or arbitration before the
actual service of the warrant. proper office of the Department of Labor and Employment or the Secretary of Labor
and Employment for compulsory arbitration or assumption of jurisdiction.
C. Labor Relations
Sec. 118. Labor Skills Inventory; Identification Card. The Labor Office shall
Sec. 113. Objectives and Policy. One of the principal objectives of the SBMA is maintain a Labor Skills Inventory for the SBF which shall contain a list of
to create jobs through vibrant economic activity in order to address the needs of employees already working in the SBF, former U.S. Base workers and residents of
displaced former base workers, the people of the cities and municipalities adjoining cities and municipalities surrounding the former U.S. Bases, and other
surrounding the former Subic Naval Base, as well as the victims of Mt. Pinatubo employees based on their skills and experience, including those who were forced to
disaster. go abroad due to the closure of the U.S. Bases.
All employees working in the SBF must secure identification cards from the
The SBMA adopts a policy of industrial peace, harmony and productivity within SBMA pursuant to Section 24 hereof which will contain, among others, the specific
the SBF giving due consideration to the new concept of the Freeport in order to skill(s), trade or occupation of the employee concerned.
establish a business and commercial atmosphere which encourages investments
and simultaneously promotes and enhances the lives and dignity of all workers. Sec. 119. Employment of Foreign Nationals. – SBF Enterprises desiring to employ
foreign nationals must secure the prior approval of the SBMA show shall see to the
Sec 114. Applicability of Labor Laws. Unless otherwise provided by law, all enforcement of relevant Philippine laws and regulations.
Philippine labor and social security laws shall apply within the SBF. Pursuant to
the abovestated policy, all laws on strikes and lockouts will be strictly enforced. Sec. 120. Training Program for Understudies – An SBF Enterprise employing
foreign supervisory, technical and/or advisory personnel shall provide a training
Sec. 115. Labor Center. A Labor Center shall be established within the SBMA. program for Filipinos to be conducted by said foreign nationals each in his own
This Center shall be responsible for studying and amicably settling professional and specialized field; provided, that every foreign nationals shall have at least one (1)
labor relations and disputes, interpretation of employment contracts, and Filipino understudies, and such training shall be done regularly during office hours;
monitoring work, hygiene and safety standards within the SBF. The Labor Center provided, further, that the SBF Enterprise shall submit its training program within
shall comprise a Labor Office; an Industrial Health and Safety Office; and an thirty (30) calendar days from arrival of the foreign national or from the day he
Inspection and Disputes Office. reports for duty or from the date of registration in case the foreign national was
employed before registration; and , provided, finally, that it shall submit an annual
Sec. 116. Requirements for All Persons Seeking Employment Within the SBF. progress report to the SBMA on such training program within the month of June
All persons seeking employment within the SBF must first register and secure every year containing the following data:
clearance from the SBMA, through the Labor Office of the Labor Center. For this
purpose, the applicant must provide the SBMA information on his/her a. Name of the foreign national and his field of specialization as
educational/vocational background and/or work experience and skills, as well as prescribed in the program;
other information as may be required by the SBMA. The applicant must likewise
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b. Names and addresses of the Filipino understudies under him/her; Sec. 127. Fees. – The SBMA may impose and collect reasonable fees from SBF
Enterprises and Residents for the implementation of a sanitation system, the
c. Number of hours of actual training for each understudy and specific collection and disposal of garbage and/or the installation and maintenance of a
subject(s) covered; and sewage system.
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infrastructures. Pending the issuance of such rules and regulations, all laws on
building and construction, as well as the rules and regulations of the Department fo Sec. 140 Arbitration or Litigation. – Any dispute, which is not amicably settled, may
Public Works and Highways and other government agencies concerning building be resolved by arbitration or judicial action before the competent courts in the
and construction are hereby adopted. Philippines having jurisdiction over such dispute.
Sec. 137 Who are Eligible to Organized. – Organized markets, exchanges, d. Reporting requirements for fund activities.
clearing houses and other arrangements for effecting transactions in standardized
financial instruments may be organized by SBF Enterprises, SBF OBU’s, bank Sec. 143 Transfer of Funds. – The Revenue District Officer or the accredited
branches or their affiliates. Such markets may include transactions in securities, agent/collecting bank in the City of Olongapo shall transfer funds representing one
bonds, debt instruments as may be freely traded among parties. (1%) percent of the five (5%) percent final tax on gross income earned, as herein
defined, of all SBF Enterprises to the SBF Development Fund. Such transfers shall
Sec. 138 Mode of Organization. – Such financial markets shall be organized be made in accordance with standard procedures for internal revenue allotments to
according to principles and procedures established and agreed to by the member local government units.
firms or each market or exchange, and registered with the SBMA.
K. Miscellaneous and Transitory Provisions
I. Disputes and Litigation
Sec. 144 Bankruptcy or Liquidation. – The bankruptcy or liquidation of SBF
Sec. 139 Amicable Settlement. – In case of disputes between or among SBF Enterprises shall be carried out in accordance with the laws and regulations relating
Enterprises, the parties shall promptly meet and exert best efforts towards to liquidation in force in the Philippines.
amicable settlement of the dispute in good faith. The SBMA may conciliate or
mediate the disputes upon request of the parties.
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Sec. 145 Lien on Property of SBF Enterprise. – Any unpaid sums of money owed have been properly notified and given the opportunity to present their views in a
by an SBF Enterprise to the SBMA to the SBMA, or any unpaid duties, taxes, public hearing called for the purpose.
penalties or charges owed to the Bureau of Internal Revenue, or the Bureau of
Custom shall constitute a lien against the property of the SBF Enterprises Sec. 152 Separabiltiy Clause. – If any clause, sentence, provision or section of
concerned. these Rules, including any appendices thereto, shall be held invalid or
unconstitutional, the remaining parts thereof shall not be affected thereby.
Sec. 146 Liability for Damages. – SBF Enterprises or Residents shall be liable for Sec. 153 Effectivity Clause. These Rules shall take effect immediately upon its
damages arising from violations of the Act, these Rules and other regulations of the publication in a newspaper of general circulation.
SBMA.
Sec. 147 General Authority to Dispose of Abandoned, Foreclosed, Forfeited or APPROVED by the Board of Directors of the Subic Bay Metropolitan Authority at its
Unclaimed Articles. – The SBMA has the authority, consistent with the Constitution Board Meeting on 3 November 1992.
and existing laws,, to sell, destroy, or convert to its own use articles and
merchandise that have been abandoned, left unclaimed, foreclosed, or forfeited to (Sgd.) Richard J. Gordon
the SBMA on the SBF, and to established procedures for sale, destruction, or Chairman and Administrator
conversion.
(Sgd.) Rogelio L. Singson
Sec. 148 Effect of Board action on Vested Rights. – In no case shall any Board Director
action impair the obligation of contracts or vested rights that may have arisen by
virtue of the contractual obligations of SBF Enterprises. (Sgd.) Teresita L. de Castro
Director
Sec. 149 Issuance of Memoranda and Circulars. – The SBMA shall, from time to
time, issue memoranda and circulars to amend, later, modify, supplement, amplify (Sgd.) Donato S. Cruz
or implement the provisions of these Rules, including but not limited to the Director
imposition of administrative penalties or fines.
(Sgd.) Eugenio S. dela Cruz
Sec. 150 Rules of Procedure for Investigations. – The SBMA shall promulgate Director
rules of procedure governing the conduct of investigations and hearings involving
violations of the provisions of the Act and these Rules, the corresponding (Sgd.) Andres Dacayanan, Jr.
implementing memoranda o r circulars and the terms and conditions of the Director
registration agreement between the SBMA and the SBF Enterprise. Pending the
promulgation of said rules of procedure, the SBMA may continue to conduct said (Sgd.) Francisco S. Legaspi
investigations and hearings provided that the basic requirements of due process of Director
law are met.
(Sgd.) Rosalinda S. Ligsay
L. Amendments, Separability and Effectivity Director
Sec. 151 Power to Amend Rules. – The SBMA may amend, alter, supplement, (Sgd.) Vicente A. Sandoval
suspend, modify or revoke these Rules or any portion thereof as may be Director
necessary; provided, however, that SBF Enterprises directly affected thereby shall
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