FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 598 
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10 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
This proposed measure authorizes the President of the Philippines to 
identify military real estate or parts thereof that could be disposed of and/or 
commercially developed to raise funds for the Program. It would be noted that 
Congress has already included the proceeds of the disposal of such real estate 
among the sources of the trust fund when it passed the AFP Modernization Act. 
In identifying which real estate to include in the list of disposable military real 
estate, the President would be guided by the criteria for disposability that this bill 
contains. 
To undertake the disposal and manage the development of military real 
estate, this bill proposes the creation of a Military Real Estate Development 
Authority. The MREDA, a corporation stock wholly subscribed by the Philippine 
Government, which subscription' will be paid up basically by the transfer of the 
disposal military real estate to said corporation. The Secretary of National 
Defense will chair its Board of Directors in recognition of the Secretary's role as 
administrator of the Trust Fund. The President of the MREDA shall be the Vice 
Chair of the Board. The seven members of the Board shall come from the private 
sector, including the academe; the President of the Philippines will appoint the 
development authority president and the members from the private sector for a 
term of six years. It will not be subsidized by the national government but will be 
entitled to use seven and a half percent (7.5%) of the proceeds of every 
transaction involving military real .estate for its operating budget. 
The proposed measure provides that the disposal of a piece of military 
state will be done in accordance with pertinent rules and regulations to get its 
best possible value, As a contingency measure, the bill allows the Development 
Authority an option if the prevailing real estate market does not provide the best 
possible value for a piece of real estate through outright sale. Thus, the 
Development Authority is allowed to instead convert said real estate into 
commercial uses or enter into commercial arrangements over said real estate 
such as, but not limited to, lease, joint-ventures and any of the build-operate 
transfer (BOT) schemes. 
In view of the foregoing, approval of the bill is earnestly sought. 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 598 
, J' ' 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
AUTHORIZING THE DISPOSAL ANDIOR COMMERCIAL DEVELOPMENT OF 
CERTAIN MILITARY CAMPS AND RESERVATIONS, CREATING FOR THE 
PURPOSE THE MILITARY REAL ESTATE DEVELOPMENT AUTHORITY, 
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
ARTICLE I 
TITLE POLICY AND GENERAL PROVISIONS 
SECTION 1. Short Title. - This Act shall be known and cited as the 
"Military Real Estate Development Act." 
SEC. 2. Declaration of Policies. - It is the policy of the state to modernize 
the Armed Forces of the Philippines (AFP) to the level where it could effectively 
perform its constitutional duty as protector of the state and of the people. It is 
also the policy of the state to ensure the judicious, economical and efficient 
utilization of its resources to meet the growing demands of national government. 
Toward these ends, the state shall authorize and promote the disposal 
and/or commercial development of idle and underutilized military camps and 
reservation, including the immovable properties founds therein, hereinafter 
collectively referred to as "military real estate", to raise revenue to fund the 
implementation of the AFP Modernization Program under Republic Act Number 
Seventy-Eight Hundred and Ninety-Eight (RA No. 7898), otherwise known as 
the AFP Modernization Act. 
SEC. 3. Authority of the President to Amend List of Disposal Military 
Real Estate. -- The President :of the Republic of the Philippines may, when 
national interest so requires and upon the recommendation of the Secretary of 
National Defense, amend the list of alienable and disposable military real estate 
covered by this Act: Provided, however, That in case the amendment pertains to 
the inclusion of additional military real estate the list, such real estate must meet 
the criteria in the immediately preceding section and its ownership shall be 
transferred by the President of the Philippines to the Development Authority 
created under Section 6 hereunder. 
SEC. 4. Manner of Disposal. - The sale or disposal of military real estate 
or a part thereof identified in accordance with Section 3 of this act shall be done 
in accordance with existing laws, rules and regulations governing sales of 


government properties to get their best possible values. Such disposal shall be 
undertaken with the haste appropriate with the funding needs of the AFP 
Modernization Program and in accordance with the schedule approved by the 
President. In the exercise of sound business judgment and taking into 
consideration prevailing real estate market instead convert a piece of military's 
real estate or a part thereof into commercial uses or enter into commercial 
arrangement s such as, but not limited to, lease, joint ventures and build-operate 
transfer (BOT) and similar schemes under Republic Act Numbered Sixty-Nine 
Hundred and Fifty-Seven (R.A. No. 6967), as amended for the purpose of 
maximizing the commercial value of the said real estate. 
SEC. 5. Criteria for Disposition. -To be declared alienable and 
disposable and be included in the list of military real estate that shall be 
submitted to the President of the Philippines for approval in accordance with 
Section 22 of this Act, a piece of military real estate or a part thereof must meet 
the following criteria: 
(a) It is currently idle or underutilized and its disposal or commercial 
development would maximize its utilization; 
(b) The revenues projected to be generated by its disposal or commercial 
development are considerable greater than the cost of relocating and/or 
replicating the military facilities and installations that currently occupy it, if there 
are any; 
(c) Its disposal or commercial development would not adversely affect its 
strategic importance to national defense; and 
(d) When necessary, an alternative location is available for the purpose it 
currently serves. 
, ARTICLE" 
CREATION, POWERS AND RESPONSIBILITIES OF 
THE MILITARY REAL ESTATE DEVELOPMENT AUTHORITY 
SEC.S. The Military Real Estate Development Authority. - There is 
hereby created a corporation to be known as the Military Real Estate 
Development Authority, hereinafter referred to as the "Development Authority," 
which shall have the attribute of perpetual succession and shall be vested with 
the powers of a corporation. 
It shall be organized within thirty (3) days after approval of this act. It shall 
have a term of fifty (50) years from its organization: Provided, that the Congress 
may dissolve the Development Authority whenever in its judgment the primary 
purpose for its creation has been accomplished. It shall establish its principal 
office in Metropolitan Manila unless otherwise provided by the Development 
Authority and may put up such branches as may be necessary. 
SEC.7. Purposes of the Development Authority. - The Development 
Authority shall have the following purposes: 
(a) To raise revenues for the AFP Modernization Program by owing, 
holding, managing, developing and/or disposing of the military real estate 
identified in accordance with Section 2 of this Act; 


(b) To adopt, prepare and implement a comprehensive and/or disposal 
plan that shall include detailed .'relocation and/or replication plans for affected 
facilities and installations, if any, for each of the real estate identified under 
Section 2 of this Act and those that may be subsequently added by the President 
of the Philippines pursuant to Section 4 hereof; 
(c) To encourage the active participation of the private sector in the 
development and/or disposal of military real estate; and 
(d) To serve as the holding company of the subsidiary company or 
companies that may be created pursuant to Section 13 of this Act. 
SEC. 8. Powers of the Development Authority. - To achieve its 
purposes under this Act, the Development Authority is hereby vested with the 
following powers; 
(a) To succeed in its corporate name, to sue and be sued in such 
corporate name and to adopt, alter and use a corporate seal which shall be 
judicially noticed; 
(b) To adopt, amend and repeal its bylaws; 
(c) To enter into, make, perform and carry out contracts of every class, 
kind and description which are necessary or incidental to the realization of its 
purposes with any person, firm or corporation, private or public, local or foreign, 
and with foreign government entities; 
(d) To contract loans, il')debtedness and credit, and issue commercial 
papers and bonds, in any local or convertible foreign currency from international 
financial institutions, foreign government entities, and local or foreign private 
commercial banks or similar institutions under terms and conditions prescribed 
by law, rules and regulations; 
(e) To execute any deed of guarantee, mortgage, pledge, trust or 
assignment of any of its properties of financing the programs and projects 
deemed vital for the early attainment of its goals and objectives, subject to the 
provisions of existing laws, rules and regulation; 
(f) To construct, own, lease, operate and maintain public utilities as well as 
infrastructure facilities; 
(g) To reclaim or undertake reclamation projects as it may deem 
necessary in areas adjacent to the development authorities real estate identified 
pursuant to Section 3 of this act either by itself or in collaboration with the Public 
Estates Authority (PEA) established under Presidential Decree No. 1084, as 
amended; 
(h) To acquire, own, hold, administer and lease real and personal 
properties, including agricultural lands, property rights and interests and 
encumber, lease, mortgage, sell, alienate or otherwise dispose of the same at 
fair market value it may deem appropri~te; 
(i) To accept donations, grants, bequest and assistance of all kinds from 
local and foreign governments and private sectors; 
U) To invest its funds and other assets in such areas it may deem wise; 


(k) To maintain a provident fund which consists of contributions made by 
both the Development Authority and its officials and employees or their heirs 
under such terms and conditions as it may prescribe; 
(I) To exercise the right of eminent domain; 
(m) To promulgate all necessary rules and regulations; and 
(n) To perform such other Powers as may be necessary and proper to 
carry out the purposes of this Act. 
SEC. 9. Capitalization .. - The Development Authority shall have an 
authorized capital of One Hundred Billion Pesos (100,000,000,000) which may 
be fully subscribed by the Republic of the Philippines and shall be paid up by the 
transfer to the development authority of real estate valued in such amount, as 
provided for the Section 23 of this Act. 
The amount of One-Hundred Million Pesos (100,000,000) is hereby 
appropriated, as initial operating capital of the Development Authority, which 
shall be covered by preferred shares of the Development Authority retireable 
within two (2) years. In the event that no such unappropriated funds exist in the 
National Treasury, the initial operating capital of the Development Authority shall 
be taken from the share of the AFP in the proceeds of transactions of the Bases 
Conversion Development Authority covering Metro Manila military camps and 
reservations pursuant to Republic Act Number Seventy-Two Hundred Twenty-
Seven (R.A. No. 7227), as amended. 
SEC. 10. Board of Directors. - The powers and functions of the 
Development Authority shall be vested in and exercised by The Board of 
Directors to be composed of nine (9) members, as follows: 
(a) The Secretary of National Defense who shall be the ex officio Chair of 
the Board without compensation: 
(b) The President of the Development Authority who shall serve as the 
vice chair of the Board and who shall be appointed by the President of the 
Philippines for a term of six (6) years; and 
(c) Seven (7) members from the private sector, three (3) of whom shall be 
nominated by the Armed Forces of the Philippines through the Department of 
National Defense, to be appointed by the President of the Philippines for a term 
of six (6) years: Provided, that the remaining four (4) shall come from different 
sectors, including the academe: Provided, further, that of those first appointed, 
the three (3) nominees of the AFP shall serve for a period of six (6) years, the 
first two from the different sectors for four (4) years and the next two for two (2) 
years. 
(d) In case of vacancy in the Board, the appointee shall serve only the 
unexpired portion of the predecessor's term. 
No person shall be appointed unless he or she is a natural-born Filipino 
citizen, of good moral character, of recognized competence in relevant fields 
including, but not limited to, economics, management, law or engineering, and 
shall be at least thirty-five (35) years of age. Unless the context indicates 


otherwise, the use of the term "Member" or "Members" in this Act shall be 
construed as including the Chair and Vice Chair of the Board. 
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 (5,000.00) for every board meeting: Provided, however, that the 
per diem collected per month does not exceed the equivalent of four (4) board 
meetings regardless of the actual number of meetings attended: Provided, 
further, that the amount of per diem for every board meeting may be increased 
by the President but such amount shall not be increased within h"{o (2) years 
from the passage of this Act or from its last increase. Members of the board shall 
be reimbursed by the Development Authority for actual expenses, including 
traveling and subsistence expenses incurred by them in the performance of their 
duties. 
SEC. 11 . Functions of the Board. - The Board of Directors shall be the 
policy-making body of the Development Authority and shall perform the following 
functions: 
(a) Carry out the purpose of the Development Authority as embodied in 
this Act; 
(b) Adopt an annual budget for and authorize such expenditures by the 
Development Authority as are in the interest of effective administration and 
operations of the Development Authority in accordance with applicable rules and 
regulations; 
(c) Establish a human resource management system in accordance with 
Section 19 of this Act, reorganize the personnel of the Development Authority, 
and issue such rules and regulations as it may deem necessary or convenient for 
these purpose; and 
(d) On the recommendatiQn of the President, appoint, fix the remuneration 
and other emoluments, and remove personnel of the development authority, 
subject to pertinent civil service rules: provided, that the board shall have 
exclusive and final authority and these personnel actions are deemed made in 
the interest of the service and not disciplinary: Provided, further, that the board 
may delegate such authority to the president under such guidelines as it may 
determine. 
SEC. 12. Operating Budget and Business Development Fund. - The 
Development Authority shall be· entitled retain and utilize seven and one-half 
percent (7.5%) of the gross proceeds of every transaction involving military real 
state as its operating budget. The Development Authority may utilize the amount 
equivalent to not more than twelve and one-half percent (12.5%) of the net 
proceeds of all transactions' involving military real estate for business 
development purposes: Provided, however, That any unutilized portion of said 
amount shall be deposited with the AFP Modernization Act Trust Fund (MATF) 
created under R.A. no. 7898. 
SEC. 13. Subsidiaries - The Development Authority shall have the power 
to form, 
establish, organize and maintain a subsidiary corporation or 
corporations: Provided, however, that such power shall be exercised only in the 
pursuit of its mandate of raising revenues for the AFP Modernization Program: 
Provided, Further, that fifty percent (50%) of the net income of a subsidiary shall 


accrue to, and be deposited with the AFP MATF within thirty (30) days from the 
end of said subsidiary's fiscal year. Such subsidiary or subsidiaries shall be 
formed in accordance with the Philippine Corporation Law and existing rules and 
regulations promulgated by the Securities and Exchange Commission, unless 
otherwise provided in this Act. In all cases, the Development Authority shall own 
initially at least fifty-one percent (51%) of the capital stock of a subsidiary. The 
Development Authority Shall also initially have the power to vote for the majority 
of The Board of Directors of a subsidiary, of which at least one (1) director shall 
be the representative of the Chair of the Development Authority and a second 
director shall be the President of the Conversation Authority or his or her 
designated representative. 
The subsidiary or subsidiaries to be formed by the Development Authority 
under this provision shall be exempt from the coverage of Civil Service Laws, 
rules and regulations. 
SEC. 14. Supervision. - The Development Authority shall be attached to 
the Office of the President for purposes of policy direction and coordination. 
ARTICLE III 
PROCEEDS OF DISPOSAL ANDI OR DEVELOPMENT 
SEC. 15. Utilization of Proceeds. - The proceeds of the disposal and/or 
commercial development of military real estate shall become part of the AFP 
MATF: Provided, that said proceeds may be used to pay obligations incurred 
under the AFP Modernization Program and whose amortization or repayment 
extends beyond the fifteen (15) - year modernization period: Provided, further, 
that said proceeds may be used for other defense modernization and military 
development projects once the AFP Modernization Program under R.A. No. 7898 
shall have been finished. 
SEC. 16. Determination and Deposit of Proceeds. - For purposes of 
determining the amount to be deposited with the AFP MATF, or the National 
Treasury once the obligations under the AFP Modernization Program are fully 
settled, the proceeds of every transaction involving military real estate shall be 
calculated by deducting all expenses related to the transaction; the relocation 
and lor replication costs, if any; and the operating budget of the development 
authority. After deducting the percentage share of the developing authority for 
business development purposes, the proceeds shall be deposited with the AFP 
MATF or with the National Treasury, as the case may be, not later than thirty (30) 
days from the time amount of the proceeds is determined as herein provided but 
in no case shall such deposit be made later sixty (60) days from the time the 
funds were received by the Development Authority. 
SEC. 17. Funding for, Relocation/Replication. -
Funding for the 
relocation and/or replication of facilities and installation, if there are any, 
occupying military real estate disposed of or developed in accordance with this 
Act, shall come from the proceeds of the disposal or commercial development, 
as the case may be. 
Representatives of the Development Authority and the AFP shall jointly 
determine the cost of and the amount to be earmarked for relocation and/or 
replication prior to the disposal or development of a piece of military real estate 
or a part thereof. 


ARTICLE IV 
MANAGEMENT AND PERSONNEL 
SEC. 18. Duties and Responsibilities of the President of the 
Development Authority. - The President of the Development Authority shall 
have the following duties and responsibilities: 
(a) To act as Chief Executive Officer of the Development Authority; 
(b) To execute, administer and implement the policies and measures 
approved by the board; 
(c) To direct and supervise the operations and administration of the 
development authority; provided, that the president may delegate certain 
administrative responsibilities to other officers of the development authority, 
subject to the rules and regulations to be issued by the board; 
(d) To represent the development authority in all dealings with offices, 
agencies and instrumentalities to the government and with all persons and 
entities; public or private, domestic or foreign; 
(e) To direct and supervise the preparation of the agenda for the meeting 
of the Board, and to submit for the consideration of the Board such policies and 
measures as he or she believes. necessary to carry out the purposes of this Act: 
and 
(f) To exercise such other powers and functions the bylaws may provide 
and the Board may vest in him or her. 
The President shall be assisted by a Vice-president or such number of 
Vice-presidents and other officials as may be deemed necessary by the Board of 
Directors. During the absence or temporary incapacity of the President, or in 
case of vacancy or permanent incapacity and pending the appointment of a new 
President of the Development Authority, The Vice-president or the most Senior 
Vice-president, as the case may be, shall act a president and discharge the 
duties and responsibilities thereof. 
SEC. 19. Human Resources. - The Development Authority shall establish 
a human resource management system which shall govern the selection, hiring, 
appointment, transfer, promotion, or dismissal of all personnel. Such system shall 
aim to attract and retain professi9nally competent, well trained, honest, courteous 
and efficient personnel and to establish professionalism and excellence at all 
levels of the Development Authority in accordance with sound principles of 
management. 
All positions in the Development Authority shall be governed by a 
compensation and position classification system and qualification standards 
approved by the Board based on a comprehensive job analysis and audit of 
actual duties and responsibilities. The compensation plan shall be comparable 
with the prevailing compensation plan in government financial institutions and 
shall be subject to periodic review by the Board no more than once every two (2) 
years without prejudice to yearly merit reviews or increases based on productivity 
and efficiency. The Development Authority shall, therefore, come up with 
qualification standards. The Development Authority shall, however, endeavor to 
make its system conform as closely a possible to the principles under R. A. No. 


6758 as amended otherwise known as the Compensation and Position 
Classification Act of 1989. 
SEC. 20. Ex-Officio Legal Counsel. -Without prejudice to the hiring of an 
outside counsel, the Government Corporate Counsel shall be the Ex-Officio legal 
counsel of the Development Authority and the subsidiaries wherein the 
Development Authority owns majority of the shares of stock. For this purpose, 
the Government Corporate Counsel may designate a full time representative in 
the Development Authority. 
SEC. 21. Auditor. -
The Commission on Audit shall appoint a 
representative who shall be the full time auditor of the development authority. At 
its discretion, the development authority may also hire an external auditor . 
.. ARTICLEV 
TRANSITORY AND SUNSET PROVISIONS 
SEC. 22. Submission of List of Disposable Military Real Estate. -
Within sixty (60) days from the passage of this Act, the Secretary of National 
Defense shall, upon the recommendation of the Chief of Staff of the Armed 
Forces of the Philippines, submit to the President of the Philippine for approval 
the list of alienable and disposable military real estate to be covered by this Act in 
accordance with Section 3 hereof. Such list shall clearly indicate the boundaries 
and technical description of each piece of military real estate; the legal basis for 
the government's ownership; its existing condition and use, if any; and the 
proposed schedule of disposal. The list may indicate the military real estate or 
parts thereof that are prioritized for disposal in view of the immediate funding 
needs of the AFP Modernization Program. 
SEC. 23. Transfer of Properties. - Pursuant to paragraph (a), Section 7 
of this Act, the President of the Philippines shall transfer forthwith to the 
Development Authority ownership over the alienable and disposable military real 
estate upon approval of the submitted list as required in the immediately 
preceding section. 
SEC. 24. Authority to Enter into Asset Management Contracts. - (a) 
During the first five (5) years of its establishment, the Development Authority may 
enter into Asset Management Contracts (AMCs) or similar arrangements for the 
management of all or a part or some parts of military real estate covered by this 
Act. After said period and the provisions of Section 8 of this Act to the contrary 
notwithstanding, no AMCs or similar arrangements shall be entered into or 
renewed unless the Board of Directors has determined that the Authority still 
does not possess sufficient capability to manage said military real estate. In no 
case shall AMCs or similar arrangements be entered into after, or be effective 
beyond, ten (10) years after the ~stablishment of the Authority. 
(b) In case the AMC or similar arrangement is to be entered into with the 
private sector, the contract shall be awarded in accordance with laws, rules and 
regulations governing the award of similar contracts in the interest of 
transparency, economy, efficiency and equity: Provided, that to be entitled to the 
award of the contract, the private- contractor must demonstrate its capability to 
manage or develop real estate by showing that it has successfully run a similar 
business for at least five (5) years. 


SEC. 25. Sunset Provisions. - At the end of its corporate existence, the 
Development Authority shall liquidate its assets and the remainder, if any, shall 
be used in accordance with the provisions of Section 15 of this Act. 
ARTICLE VI 
MISCELLANEOUS AND FINAL PROVISIONS 
SEC. 26. Injunction and Restraining Order. - The disposal and/or 
commercial development of the military real estate covered by this Act are urgent 
and necessary and shall not be restrained or enjoined except by an order issued 
by the Supreme Court of the Philippines. 
SEC. 27. Reportorial Requirements. - The Board of Directors of the 
Development Authority shall submit an annual report of operations to the 
President of the Republic of the Philippines, the President of the Senate and the 
Speaker of the House of Representatives within the first quarter of the 
immediately succeeding year. Such report shall include an account of revenues it 
generated as well as the remittances made to the AFP MATF or the National 
Treasury, as the case may be. 
. 
SEC. 28. Separability Clause. - If for any reason, any section or provision 
of this Act is declared invalid or unconstitutional, the other sections or provisions 
hereof, unaffected thereby, shall :continue to be in full force and effect. 
SEC. 29. Repealing Clause. - All laws, executive issuances or parts 
thereof inconsistent with this Act are hereby repealed or amended accordingly. 
SEC. 30. Effectivity Clause. -This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in at least two (2) newspaper of 
general circulation. 
Approved,