c 
THIRTEENTH CONGRESS OF THE REPUl3LIC 
First Regular Session 
* ,. . 
OF THE PHlLlPPINES 
:& 
, {-j,I 3i'; y-J 
:< 2 
Introduced by Sen. Magsaysay, Jr. 
EXPLANATORY NOTE 
Some of the proposed amendments contained in this present legislation have been 
the subject of various policy measures which were filed in the Eleventh and TwelRh 
Congress. However, the said bills were never enacted into law due to legislative time 
constraints and other reasons and for this purpose, it is being submitted anew for 
consideration. 
The bill's salient provisions are as follows: 
the inclusion of the proceeds of the sale, lease, joint-venture 
agreements and other transactions and/or dispositions involving 
military bases and reservations and/or portions thereof as part of the 
capitalization of the Conversion Authority; 
rationalization of the fbnding scheme of the Conversion Authority; 
equitable redistribution of the proceeds from transactions involving 
military bases and so forth; 
4) 
exemption fi-om taxes, fees and charges of transactions involving 
military bases and so forth; and 
5 )  
recomposition of the Board of Directors of the Conversion Authority in 
order to make it more responsive to exigencies. 
1) 
2) 
3) 
In view of the extreme importance of the instant amendments, the legislation is 
respectfblly filed with the objective of seeing it pass d into a Republic Act at last 
/"I 


. 
THIRTEENTH CONGRESS OF THE REPUBLIC 
First Regular Session 
OF THE PHILIPPINES 
Introduced by Sen. Magsaysay, Jr. 
AN ACT 
AMENDING REPUBLIC ACT NUMBER 7227, OTHERWISE KNOWN AS THE 
“BASES CONVERSION AND DEVELOPMENT ACT OF 1992”, AS AMENDED, 
ADJUSTING THE ALLOCATION OF REVENUES FROM THE SALE, LEASE, 
MILITARY BASES AND RESERVATIONS, ALLOCATING FUNDS THEREFOR 
AND FOR OTHER PURPOSES. 
JOINT-VENTURE AGREEMENTS AND OTHER TRANSACTIONS INVOLVING 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled 
SECTION 1. Section 2 of Republic Act Number 7227 is hereby amended to read 
as follows: 
“SEC. 2. Declaration of Policies IT IS THE INTENT OF THIS LAW TO 
JOINTLY PROMOTE PRODUCTIVE USES OF FORMER MILITARY BASES 
AND RESERVATIONS AND/OR PORTIONS THEREOF ON ONE HAND 
AND TO ACCELERATE THE MODERNIZATION OF THE ARMED FORCES 
OF THE PHILIPPINES (AFP) ON THE OTHER. THE GOVERNMENT, 
WHILE RECOGNIZING THE VALUE OF GROWTH AND DEVELOPMENT, 
REALIZES THAT NO SUSTAINABLE GROWTH CAN TAKE PLACE 
OUTSIDE THE UMBRELLA OF SECURITY AND THAT ECONOMIC 
DEVELOPMENT WITHOUT A CREDIBLE 
NATIONAL DEFENSE 
CAPABILITY IS A DANGEROUS PROPOSITION. 
IT IS FURTHER DECLARED A POLICY AND COMMITMENT OF 
THE GOVERNMENT TO CONTINUOUSLY MODERNIZE THE AFP TO 
BETTER ENABLE IT TO PRESERVE AND PROTECT THE TERRITORIAL 
INTEGRITY OF THE REPUBLIC, SAFEGUARD THE NATIONAL 
PATRIMONY INCLUDING STATE RIGHTS IN 
THE 
EXCLUSIVE 
ECONOMIC ZONES (EEZ) AND ENGENDER A CLIMATE OF PEACE AND 
PEOPLE AND THEREBY FOSTER AN ATMOSPHERE THAT WOULD 
PROMOTE NATIONAL, CONFIDENCE AND ECONOMIC DEVELOPMENT” 
STABILITY FOR THE SECURITY AND WELL-BEING OF THE FILIPINO 
[ It is hereby declared the policy of the Government to accelerate the 
sound and balanced conversion into alternative productive uses of the Clark and 
Subic military reservations and their extensions (John Hay Station, Wallace Air 
Station, O’Donnell Transmitter Station, San Miguel Communications Station, and 
Capas Relay Station) to raise fimds by the sale of portions of Metro Manila 
military camps, and to apply said hnds as provided herein for the development, 


and conversion to productive civilian use of the land covered under 1947 Military 
Bases Agreement between the Philippines and the United States as amended. 
It is likewise declared policy of the Government to enhance the benefits to 
be derived from said properties in order to promote the economic and social 
development of Central Luzon in particular and the country in general.]” 
SECTION 2. Section 6 of the same Act is hereby amended to read as follows: 
’ 
“SEC. 6. Capitalization. - The Conversion Authority shall have an 
authorized capital of One hundred billion pesos (P 100,000,000,000.00) which 
may be klly subscribed by the Republic of the Philippines and shall either be paid 
up from the proceeds of its sale, LEASE, JOINT-VENTURE AGREEMENTS 
AND OTHER TRANSACTIONS AND/OR DISPOSITIONS INVOLVING 
MILITARY BASES AND RESERVATIONS AND/OR PORTIONS THEREOF 
[of its land assets] as provided for in Section 8 of this Act or by transferring to the 
Conversion Authority properties valued in such amount. 
An initial operating capital in the amount of Seventy million pesos (P 
70,000,000.00) is hereby authorized to be appropriated out of any fbnds in the 
National Treasury not otherwise appropriated which shall be covered by preferred 
shares of the Conversion Authority retireable within two (2) years.” 
SECTION 3. Section 8 (d) of the same Act is hereby amended to read as follows: 
SEC. 8. Funding Scheme. - x x x 
(d) 
A proposed 30.15 hectares as relocation site for families to 
be affected by circumferential road 5 and radial road 4 construction: 
Provided, further, That the boundaries and technical descriptions of these 
exempt areas shall be determined by an actual ground survey. 
The President is hereby authorized to [sell] DISPOSE 
THROUGH SALE, LEASE, JOINT VENTURE AGREEMENTS AND 
OTHER TRANSACTIONS the above lands, in whole or in part, which are 
hereby declared alienable and disposable, pursuant to the provisions of 
existing laws and regulations governing THE sales, LEASE, JOINT 
VENTURE 
AGREEMENTS 
AND 
OTHER 
TRANSACTIONS 
INVOLVING GOVERNMENT ASSETS AND/OR [of government] 
properties: Provided, THAT NO TRANSACTION WHATSOEVER 
INVOLVING [That no sale or disposition] of such lands [will] SHALL be 
undertaken until AFTER A MASTER development plan embodying 
[projects for conversion] S A I D  CONVERSION PROJECTS BY THE 
CONVERSION AUTHORITY shall be approved by the President in 
accordance with paragraph (b), Section 4 of this Act. However, six (6) 
months after approval of this Act, the President shall authorize the 
Conversion Authority to dispose certain areas in Fort Bonifacio and 
Villamor as the latter so determines. The Conversion Authority shall 
provide the President a report on any such disposition within one (1) 
month from such disposition or preparation of such plan. [The proceeds 
from any sale, after deducting all expenses related to the sale, of portions 
of Metro Manila military camps as authorized under this Act, shall be 
deemed appropriated for the purposes herein provided for the following 
purposes with their corresponding percent shares of proceeds:] ALL 
TRANSACTIONAL EXPENSES RELATEiD TO THE SALE, LEASE, 
JOINT VENTURE AGREEMENTS AND OTHER TRANSACTIONS 
INVOLVING MILITARY BASES AND RESERVATIONS AND/OR 


J 
PORTIONS THEREOF AS AUTHORIZED UNDER THIS ACT S W L  
BE DEDUCTED FROM THE PROCEEDS OF SUCH SALE, LEASE, 
JOINT VENTURE AGREEMENTS AND TRANSACTIONS. THE 
FOLLOWING SHALL BE CONSIDERED AS TRANSACTIONAL 
EXPENSES:ACQUISITION AND TITLING OF REAL ESTATE AS 
WELL AS PREPARATIONS OF ALTERNATIVE SITES TO HOST 
RELOCATED MILITARY UNITS, FUNCTIONAL REPLICATION OF 
AFFECTED MILITARY FACILITIES AND RELATED TRANSFER 
MILITARY AGENCIES AND 
CLEARING OF 
SQUATTERS: 
PROFTDED, THAT EXPENSES RELATED TO THE SALE, LEASE, 
JOINT VENTURE OR OTHER TRANSACTIONS INVOLVING 
MlLITARY LANDS SHALL BE GOVERNED BY PROVISIONS TO 
BE STIPULATED IN AN IMPLEMENTING GWELINES, RULES 
AND REGULATIONS FOR THIS ACT: PROUDED, FINALLY, THAT 
THE NET TRANSACTIONS SHALL BE DEEMED APPROPRIATED 
FOR THE FOLLOWING PURPOSES WITH THE CORRESPONDING 
PERCENTAGE SHARES OF THE PROCEEDS: 
EXPENSES, RELOCATION OF AFFECTED G O V E m N T / N O N -  
(1) 
FIFTY- FIVE PERCENT (55%) - TO PRIMARILY 
FINANCE 
THE 
SELF-RELIANCE 
AND 
MODERNIZATION 
PROGRAM OF THE AFP WHICH SHALL INCLUDE BUT NOT 
LIMITED TO, THE FOLLOWING: EQUIPMENT ACQUISITION AND 
UPGRADE PROGRAM, INCLUDING THE MODERNIZATION OF 
THE 
GOVERNMENT 
ARSENAL, 
BASES 
DEVELOPMENT 
PROGRAM, 
HUMAN 
RESOURCE 
DEVELOPMENT 
AND 
DOCTRINES DEVELOPMENT, FORCE RESTRUCTURING AND 
ORGANIZATIONAL DEVELOPMENT. 
ALL PROCEEDS AND 
INCOME INCLUDING, BUT NOT LIMITED TO, INTEREST 
EARNINGS DERIVED FROM THE SALE, LEASE, JOINT VENTURE 
AGREEMENTS AND ALL OTHER TRANSACTIONS INVOLVING 
MILITARY BASES AND RESERVATIONS AND/OR PORTIONS 
THEREOF SHALL AUTHOMATICALLY ACCRUE TO THE AFP 
MODERNIZATION ACT TRUST FUND AND SHALL BE USED 
EXCLUSIVELY FOR THE AFP MODERNIZATION PROGRAM. 
[(l) Thirty-five (35%) - To primarily finance the self-reliance and 
modernization program of the AFP, the transfer of AFP military camps 
and the construction of new camps and the rehabilitation and expansion of 
the AFP’s medical facilities, and the modernization of the government 
arsenal;] 
(2) 
TWENTY-SEVEN AND A HALF PERCENT (27.5%) - 
TO FINANCE THE CONSTRUCTION AND UPGRADING OF 
INFRASTRUCTURE SUCH AS HIGHWAYS, RAILWAYS AND 
OTHER TRANSPORT FACILITIES TO MAKE SUBIC, CLARK AND 
OTHER FORMER BASES ACCESSIBLE: PROFTDED, THAT OTHER 
PUBLIC WORKS, UTILITIES AND IRRIGATION PROJECTS NOT 
SPECIFIED HEREIN SHALL BE DEEMED INCLUDED: PROVZED, 
FURTHER, THAT CONVERSION INTO COMMERCIAL, USES OF 
THE FORMER MILITARY BASELANDS PROPER AND THEIR 
EXTENSIONS 
SHALL BE 
UNDERTAKEN AS 
MUCH 
AS 
(BOT) SCHEME OR FINANCED BY LOCATOR ENTERPRISES: 
PROUDED, FINALLY, THAT THIS APPROPRIATION SHALL BE 
RETAINED BY THE CONVERSION AUTHORITY AS PART OF ITS 
PRACTICABLE THROUGH THE BUILD-OPERATE-TRANSFER 
PAID-UP CAPITAL PURSUANT TO SECTION 6 OF THIS ACT. 


4 
[(2) Twenty-seven and a half percent (27.5%) - To finance the 
construction and upgrading of infrastructure such as highways, railways 
and other transport facilities to make Subic, Clark and other former bases 
accessible: Provided, That other public works, utilities and irrigation 
projects not specified herein shall be included: Provided, further, That the 
conversion into commercial uses of the former military baselands 
proper and their extensions shall be undertaken as much ass practicable 
through the Build-Operate-Transfer (BOT) scheme or financed by locator 
enterprises: Provided, jinaZZy, That this appropriation shall be retained by 
the Conversion Authority as part of its paid-up capital pursuant to Section 
6 of this Act;] 
(3) 
TEN PERCENT' (10%) - TO FINANCE THE AFP 
HOUSING PROGRAM; AND 
[(3) Twelve percent (12%) - To finance the National Shelter 
Program: Provided, That fifty percent (50%) thereof, shall be used to 
finance mass social housing projects for the underprivileged and homeless 
citizens of the country and the other fifty percent (50%) to concessional 
and long-term housing loan assistance for the homeless of Metro Manila, 
Olongapo City, Angeles City and other affected municipalities contiguous 
to the base areas;] 
y 
(4) 
SEVEN AND A HALF PERCENT (7.5%) - TO BE 
UTILIZED SOLELY FOR THE DEVELOPMENT OF IDLE LANDS 
GENERATING PROJECTS; PROylTDED THAT THE INCOME 
DEFUVED 
FROM 
THESE 
PROJECTS 
SHALL 
BE 
USED 
EXCLUSIVELY FOR THE AFP MODERNIZATION ACT UNDER 
REPUE3LIC ACT NUMBER 7898. 
WITHPN MILITARY BASES AND RESERVATIONS FOR INCOME- 
[(4) Three percent (3%) - To finance the National Health 
Insurance Program; 
(5) 
Five percent (5%) - To finance critical infrastructure 
projects not covered by the Build-Operate Transfer (BOT) program in 
areas surrounding the former baselands; 
(6) 
Two percent (2%) - To finance the benefits/claims of 
Military War Veterans and their dependents under Republic Act No. 7696; 
(7) 
One percent (1%) - As contribution for the Higher 
Education Development Fund under Section 10 of Republic Act No. 7722, 
otherwise known as the Higher Education Act of 1994, the amount of Five 
hundred million pesos (P500,OOO.OO) or so much thereof, and the balance 
to finance students scholarship, faculty development and the improvement 
of physical plants of colleges and universities under the Commission on 
Higher Education (CHED); 
(8) 
Two percent (2%) - To finance the science and technology 
scholarships and training of thousand of young Filipino scientists and 
students in selected countries to be identified by the Department of 
Science and Technology and the Study Now Pay Later Program for poor 
but deserving youths who shall enroll or are enrolled in science and 
technology (S & T) courses which will propel the country to achieve 
modernization and competitive excellence in the 2 la century: Provided, 


That at least one (1) scholadtrainee shall be selected from each 
municipalitylcity of the country: Provided, firther, That they shall render 
service to the Government for at least three (3) years or shall engage in S 
& T entrepreneurial activities within the country; 
(9) 
One percent (1%) - To finance the multi-year program of 
the prosecution service; 
(10) 
Two percent (2%), but in no case exceeding Two billion 
pesos (P2,000,000,000) - To finance a multi-year modernization program 
of the National Bureau of Investigation P I ) ,  the Philippine National 
Police (PNP) and improvement of prison facilities. 
Provided, That seventy percent (70%) of this appropriations shall 
be used for capital outlay and thirty percent (30%) for training programs 
and early retirement schemes for their officers and personnel. 
(11) 
One percent (l%), but in no case to exceed One billion 
pesos (P 1,000,000,000) - To finance a multi-year judicial reform program; 
(12) 
Two percent (2%) to finance the establishment of pre- 
school and daycare centers nationwide; 
(13) 
One-half percent (1/2%) but not to exceed Five hundred 
million pesos (P500,OOO.OO) for the summer program for the education of 
student (SPES) in accordance with Republic Act No. 7323; 
(14) 
One percent (1%) for the construction of Senior Citizens 
Centers as provided under Republic Act No. 7876; 
(1 5) 
Three percent (3%) to the emergency and contingent needs 
of the areas devastated by the Mount Pinatubo eruptions; 
(16) 
Two percent (2%) for infrastructure development of fkture 
special economic zones to be created:] 
Approximately forty hectares (40has.) of land in Fort Bonifacio, 
Phase I, AS HEREIN PROVIDED, shall be retained as national 
government and local government centers, sports facilities and parks: 
Provided, That[, in the case of Fort Bonifacio,] two and five-tenths 
[percent (2.5%) of the proceeds thereof [in equal shares shall each go to 
the Municipalities of Makati, Taguig and Pateros:] SHALL BE 
DISTRIBUTED IN EQUAL SHARES TO THE CITY OF MAKATI 
AND THE MUNICIPALITIES OF TAGUIG AND PATEROS: Provided, 
further, That in no case shall farmers affected be denied due 
compensation. 
SEC. 4 Section 8-A is hereby inserted in the Act which will read as 
follows: 
“SEC. 8-A. 
EXEMPTION FROM TAXES, FEES OR 
CHARGES. - ALL LAWS TO THE CONTRARY NOTWITHSTANDING, TKE 
PROCEEDS OF TEE S K E ,  LEASE, JOINT VENTURE, AND ALL OTHER 
TRANSACTIONS INVOLVING MILITARY LANDS SHAL,L NOT BE 
DIMINISHED AND SHALL THEREFORE BE EXEMPT FROM ALL FORMS 
OF NATIONAL AND LOCAL TAXES AND FEES, DIRECT OR INDIRECT. 
NO TAX MEASURE OF WHATEVER NATURE ENACTED SHALL APPLY 
TO THESE TRANSACTIONS UNLESS IT IS PROVIDED THEREIN THAT 


THE SAME IS APPLICABLE 
TRANSACTIONS.” 
BY EXPRESSLY STATING THE SAID 
SEC. 5. Section 9 of the same Act is hereby amended to read as follows: 
“SEC. 9. Board of Directors: Composition. - The powers and hnctions of 
of Directors to be 
the Conversion Authority shall be exercised by a Board 
composed of nine (9) members, as follows: 
(a) A hll-time chairman who shall also be the president of the Conversion 
Authority. 
(b) SEVEN [Eight (S)] (7) other members fiom the private sector. [,two 
(2) of whom coming from the labor sector.] 
(c) ONE REPRESENTATIVE 
T0,BE NOMINATED BY THE 
DEPARTMENT OF NATIONAL DEFENSE (DND) AND AFP. 
The chairman and members shall be appointed by the President with 
the consent of the Commission of Appointments. Of the initial members 
of the Board, three (3) including the chairman, [a representative from the 
private sector and a representative from the labor sector] shall be 
appointed for a term of six (6) years, three (3) for a term of four (4) years 
and the other three (3) including the DND-AFP NOMINEE for a term of 
two (2) years. In case of vacancy in the Board, the appointee shall serve 
the unexpired term of the predecessor. 
No person shall be appointed or designated AS A MEMBER OF THE 
BOARD unless he is a natural-born Filipino citizen, of good moral 
character, of unquestionable integrity and of recognized competence in 
related fields INCLUDING, but not limited to economics, management, 
international relations, law or engineering, preferably naval or 
aeronautical. 
The Chairman and president of the Conversion Authority shall have a 
fixed term of six (6) years. 
All procedural matters in the conduct of board meetings shall be 
prescribed in its internal rules. 
Members of the Board shall receive a per diem of not more than Five 
thousand pesos (P5,OOO.OO) for every board meeting: Provided, however, 
That the per diem collected per month does not exceed the equivalent of 
four (4) meetings: Provided firther, That the amount of per diem for 
every board meeting may be increased by the President, but such amount 
shall not be increased within two (2) years after its last increase.” 
SEC. 6. Section 15 of the same Act is hereby amended to include the 
following provisions. 
“SEC. 15. Clark and Other Special Economic Zones. - Subject to the 
concurrence by resolution of the local government units directly affected, the 
President is hereby authorized to create by executive proclamations a Special 
Economic Zone covering lands occupied by the Clark military reservation and its 
contiguous extensions as embraced, covered and defined by the 1947 Military 
Bases Agreement between the Philippines and the United States of America, as 
amended, located within the territorial jurisdiction of Angeles City, Municipalities 


. 
of Mabalacat and Porac, Province of Pampanga, and the Municipality of Capas, 
Province of Tarlac, in accordance with the policies as herein provided insofar as 
applicable to the Clark military reservations. 
The governing body of the Clark Special Economic Zone shall likewise be 
established by executive proclamations with such powers and hnctions exercised 
by the Export Processing Zone Authority pursuant to Presidential Decree No. 66, 
as amended, 
The policies to govern and regulate the Clark Special Economic Zone 
shall be determined upon consultation with the inhabitants of the local 
government units directly affected which shall be conducted within six (6) months 
upon approval of this Act. 
Similarly, subject to the concurrence by resolution of the local government 
units directly affected, the President shall create other Special Economic Zones, in 
the base areas of Wallace Air Stations in San Fernando, La Union (excluding 
* 
areas designated for communications, advance warning and radar requirements of 
the Philippine Air Force to be determined by the Conversion Authority) and 
Camp John Hay in the City of Baguio. 
Upon recommendation of the Conversion Authority, the President is 
likewise authorize to create Special Economic Zones covering the Municipalities 
of Morong, Hermosa, Dinalupihan, Castillejos and San Marcelino. 
IN ALL ECONOMIC ZONES TO BE CREATED BY THE PRESIDENT 
PRIMARILY AFFECTED BY THE CONVERSION OF THESE PARTICULAR 
REPRESENTATIVE IN THE RESPECTIVE G O V E m G  BODIES OF 
IN THE IMPLEMENTATION OF THIS ACT, THE DND-AFP, BEING 
BASES, 
SHALL 
BE 
DULY 
REPRESENTED 
BY 
A 
DND-AFP 
THESE SPECIAL ECONOMIC ZONES.’, 
SEC. 7. Section 24 of the same Act is hereby amended to read as follows: 
“SEC. 24. Effectivity. - THIS ACT SHALL TAKE EFFECT AFTER 
FIFTEEN (15) DAYS FOLLOWING ITS PUBLICATION IN A NEWSPAPER 
OF GENERAL CIRCULATION. 
[This Act shall take effect upon its publication in at least one 91) 
newspaper of general circulation.] 
AS OF AFOREENTIONED EFFECTIVITY, THE AMENDATORY 
DISTRIBUTION OF SHARES IN SECTION 8 HEREOF SHALL APPLY TO 
EXISTING 
CONTRACTS 
OF 
SALE, 
LEASE, 
JOINT 
VENTURE 
AGREEMENTS OR OTHER TRANSACTIONS INVOLVING MILITARY 
BASES AND RESERVATIONS AND/OR PORTIONS THEREOF AS 
AUTHORIZED UNDER THIS ACT IRRESPECTIVE OF THE DATE OF 
EXECUTION. 
Approved,