FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
7 &- -3 1\111 :a 
First Regular Session 
)~ 
S E N A T E  
Senate Bill No. 6 8 1 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Armed Forces of the Philippines (AFP) Modernization Program was 
created by virtue of Republic Act No. 7898 which was signed into law in 1995. 
The program consists of several components such as force restructuring and 
organizational program, capability, material and technology development, bases 
and/or support system development, human resource development, and 
doctrines development. 
Several years afler its establishment, however, it has yet to be fully 
implemented, the hindrance to which has been lack of resources. Despite the 
establishment of the AFP Modernization Act Trust Fund, a separate and distinct 
item from the regular annual appropriations of the Department of National 
Defense and the AFP itself, the necessary allocation for the program's 
component such as the upgrading of weapon equipment, for example, could not 
be supported by the trust fund alone. Thus the other sources would have to be 
tapped to augment the limited sources of the Trust Fund. 
Hence, this bill. It seeks to allocate and transfer to the AFP Modernization 
Trust Fund the following items representing the share of the National 
Government from the taxes, royalties and charges collected from the Malampaya 
Natural Gas Project: 
Revenue Code of 1997; 
1. Excise taxes collected under Section 151 of the National Internal 
2. Other applicable mining taxes, royalties and other such taxes, fees or 
charges, including surcharges, interests and fines, authorized by existing laws, 
issuances or regulations. 
Furthermore, the bill seeks to allocate collections made by the Bureau of 
Internal Revenue from capital gains tax and value-added tax on the sale of real 
properties to the AFP Modernization Act Trust Fund. Needless to say, the 
proceeds from such taxes will go a long way in realizing the thrust of the AFP 
Modernization program in terms of weapons systems, technology and bases 
development. In view of the foregoing, the approval of this bill is earnestly 
sought 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
1 
7 4, -3 AN :2Q 
OF THE PHILIPPINES 
First Regular Session 
) 
S E N A T E  
Senate Bill No. 6 8 1 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
ALLOCATING TO THE AFP MODERNIZATION ACT TRUST FUND THE 
THE SALE OF REAL PROPERTY AND THE SHARE OF THE NATIONAL 
GOVERNMENT ON ALL TAXES, ROYALTIES AND CHARGES COLLECTED 
FROM THE MALAMPAYA NATURAL GAS PROJECT 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
COLLECTION FROM CAPITAL GAINS TAX AND VALUE-ADDED TAX ON 
SECTION 1 - All proceeds from the collections from capital gains tax and 
value added tax on sale of real property as provided under Sections 24 (D), 
25(A) (3) (3), 27 (D) (5) and 106 of the National Internal Revenue Code of 1997 
as well as the National Government from all taxes, charges, royalties, including 
related interests and fines from mining, exploration and/or utilization of 
Malampaya Natural Gas Project shall be directly transferred to the AFP 
Modernization Act Trust Fund. 
The transfer and remittance of such proceeds to the AFP Modernization 
Act Trust Fund shall be done in the manner prescribed under item 4.3 of Joint 
Circular No. 4-98 issued by the Department of Finance, Department of Budget 
and Management and Commission on Audit on the proper handling of the AFP 
Modernization Act Trust Fund. 
SEC 2. The Secretaries of Finance, National Defense and Budget and 
Management shall promulgate and publish the necessary rules and regulations 
for the effective implementation of this Act. 
SEC 3. All laws, decrees, issuances, rules and regulations or parts thereof 
inconsistent with the provisions of this Act are hereby repealed, amended or 
modified accordingly. 
SEC. 4. This Act shall take effect fifteen (15) days following its publication 
in the Official Gazette or in at least two (2) newspapers of general circulation. 
Approved,