REPUBLIC OF THE PHILIPPINES g
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HOUSE OF REPRESENTATIVES ¥ RECEIVED %
Quezon City 4% pare, YUL.

EIGHTEENTH CONGRESS
First Regular Session

2246

House Bill No.

Introduced by MAGDALO Party-List Representative
HON. MANUEL DG. CABOCHAN III

EXPLANATORY NOTE

The latency of Presidential Decree 415, which was signed on March 19, 1974 has undeniably
caused much to diminish its relevance especially in the face of continuously evolving security
threats, transformations in the Philippine defense community and the overall outlook of the Filipino
people towards national security. Now, more than ever, the wisdom behind the decree’s
conceptualization and realization cannot be discounted in the light of the prevailing security issues
and the opportunities that an indigenous defense industry has to offer.

A closer look at the self-reliant defense posture (SRDP) programs of other states show just how
intense their appreciation of defense self-reliance is, not only for the preservation of their national
interests, but most especially for their national security and survival. Defense research and
development agencies like Singapore’s Defense Science and Technology Agency (DSTA) and
South Korea’s Defense Acquisition Program Administration are unique for their extensive
capabilities as an R&D organizational backbone for their domestic defense industry.

So far, Philippine SRDP has resulted to insufficient defense articles produced from previous SRDP
projects and a rather disappointing defense industry, to say the least. Consequently, there is no clear
cut direction as to where and how the existing framework for the Philippine SRDP program is going
despite its recent revival. Moreover, even with the AFP publishing a 20-year strategic plan and the
2013 revival of the SRDP advocacy of the DND, the program continues to stagnate.

Clearly, the aforementioned situations may be considered as dire defense positions, especially in the
midst of the continuously perilous security environment in and out of the country. Under this
proposed measure, Presidential Decree No. 415 shall be repealed and reinstituted as a Republic Act;
the Secretary of National Defense directed to formulate and adopt a National SRDP Roadmap; and
the Defense Research and Development Agency established as the primary defense research and
development arm of the Department of National Defense

In view of the foregoing, approval of this measure is earnestly sought.

MA! HAN III
Representat)
Magdalo Para sa Pilipino Party-List


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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 2246

Introduced by MAGDALO Party-List Representative
HON. MANUEL DG. CABOCHAN IIL

AN ACT
ESTABLISHING A PHILIPPINE SELF-RELIANT DEFENSE POSTURE PROGRAM
REPEALING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 415 AND FOR
OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title. — This Act shall be known as “Self-Reliant Defense Posture
Program Act.”

SEC. 2. Declaration of Policy. -It is hereby declared the policy of the State to promote and
spur the growth of an independent national defense by establishing a self-reliant defense posture
program that shall prioritize the development of the country’s national defense capabilities,
including a competent domestic defense industry. Under this Act, Presidential Decree No. 415 shall
be repealed and reinstituted as a Republic Act; the Secretary of National Defense directed to
formulate and adopt a National SRDP Roadmap; and the Defense Research and Development
Agency established as the primary defense research and development and procurement arm of the
Department of National Defense.

SEC. 3. Self-Reliant Defense Posture Program. ~ The self-reliant defense posture program,
herein referred to as the “SRDP” is hereby established and instituted as the State’s tool to undertake
the development of a domestic defense industry. The underlying concept is to produce locally,
when feasible, materiel for our defense forces through partnership between the military and civilian
establishments, while importing those that cannot be locally produced with the ultimate objective of
acquiring the technology for the production of these materiel. Paramount to this objective is the
primordial role of the military and government agencies of providing technical and financial
assistance to civilian defense manufacturers.


SEC. 4, Authorization to Enter into Contracts, — The Secretary of National Defense, in
behalf of the Government of the Republic of the Philippines, is hereby authorized to award
contracts, upon such terms and conditions as are set forth in an agreement between the parties,
through a public bidding process as provided for in Republic Act No. 9184 or the Government
Procurement Reform Act, with any natural or legal person, for the manufacture or procurement of
supplies, equipment, or components thereof, facilities, utilities and appurtenances thereto which are
necessary for the manufacture, servicing, or operating of such supplies, equipment or components
thereof needed for national defense and covered by R.A. 7898, as amended by R.A. 10349,
otherwise known as the AFP Modernization Program, and the Self-Reliant Defense Posture
Program approved by the President of the Philippines and other related laws; Provided, that accrued
interests of Bank Guarantee Deposits made with Philippine Veterans Bank and Philippine National
Bank (or any authorized banking institution) in favor of the SRDP Defense contractors covering the
amounts stipulated in above mentioned contracts shall automatically be reverted to SRDP funds for
utilization within the program; provided that the Program of Expenditure shall be submitted to and
approved by the Secretary of National Defense; Provided further that these accounts have been
properly accounted for and reported to the Department of Budget and Management and the
Commission on Audit; any provision of lawand other related laws to the contrary notwithstanding.

SEC. 5. Incentives for Prime Contractors. — Foreign and local prime contractors engaged
or proposing to engage in the manufacture and/or fabrication of defense materiel for the
government in accordance with the SRDP may be registered and avail of the incentives under
Republic Act No. 5186 as amended, with respect to defense industries covered by the program and
listed under a supplemental annual investment priority plan, upon recommendation of the
Department of National Defense and the National Economic Development Authority. In the interest
of national security, publication of the above supplemental list shall be dispensed with and the
Board of Investments shall adopt a special procedure in the processing of application for
registration by defense contractors under this Program.

SEC. 6. Loans. — For the purpose of this Act and any provision of law to the contrary
notwithstanding, the president of the Philippines is hereby authorized in behalf of the Republic of
the Philippines, to contract such loans, credits, or indebtedness including supplier's credit, deferred
payment arrangements upon such terms and conditions as maybe agreed upon with any local or
foreign source or lender not exceeding one hundred billion Pesos (?), or its equivalent in other
foreign currencies at the exchange rate prevailing at the time of the contracting of the loans, credits,


or indebtedness, supplier credits and deferred payment arrangements and at terms of payment of not
less than ten years and to enter into and conclude bilateral agreements involving other forms of
official assistance such as grants and commodity credit arrangement or indebtedness as may be
necessary with Government of foreign countries with whom the Philippines has diplomatic or trade
relations or which are members of the United Nations, their agencies, instrumentalities or financial
institutions or with reputable international organizations or non- governmental national or
international lending institutions or firms extending supplier's credit or deferred payment
arrangements; provided, that such loan, credit or indebtedness shall be incurred only after the plans
for such project have been prepared by the Department of National Defense and approved by both
the President of the Philippines and Congress; provided, further, that such loans, credits or
indebtedness shall be incurred only when the Secretary of Budget and Management has certified
that for the fiscal year in question, funds are appropriated and programmed to meet the servicing of
the external debt of the public sector, including the loan, credit or indebtedness proposed to be
contracted, and that the counterpart peso funding requirements of the projects for which such loans,
credits or indebtedness are being contracted have been programmed and shall be available as and
when needed for the completion of the project.

SEC. 7. Authorization for Lending. ~ The President may authorize the lending of the
proceeds of such loans, credits or indebtedness to the Development Bank of the Philippines, which
shall administer said proceeds in accordance with the agreement with the foreign director, for
relending, subject to terms and conditions which the President may impose, to the principal
contractor or sub-contractor, to meet the direct peso costs of projects authorized under this Act;
provided, that the Development Bank of the Philippines shall pay the Republic of the Philippines at
least the principal, interest and other charges on such loans, credit or indebtedness turned over to it.
The Development Bank of the Philippines, with the approval of the President of the Philippines,
may also guarantee such loans, credits or indebtedness secured by a principal contractor or sub-
contractor directly from local or foreign sources to cover all or part of the cost of performance of
contracts herein referred to.

SEC. 8. Debt Payment. — Any provision of law to the contrary notwithstanding and in order
to enable the Republic of the Philippines to pay the principal, interest, taxes and other normal
banking charges on the loans, credits or indebtedness, all revenues realized from the projects
financed by such loans, credits or indebtedness shall be turned over in full, after deducting actual
and necessary expenses for operation and maintenance of said projects, to the National Treasury by
the Department of National Defense, which is hereby appropriated for the purpose as when they


shall become due. In cases where the revenues realized are insufficient to cover the principal,
interests and other charges, such portion of the budgetary savings may be necessary to cover the
balance or deficiency shall be set aside by the Department of National Defense exclusively for this
purpose; Provided, That if there still remain a deficiency, the necessary amount is hereby
appropriated out of the funds in the National Treasury to cover the payment of principal and interest
of such loans, credits and indebtedness as and when they shall become due; Provided, further, That
the Monetary Board of the Central Bank shall make provisions out of current foreign exchange
receipts for the foreign exchange requirements to service the external debts.

SEC. 9. Exemption on Taxes, Charges and Other Levies. - Upon recommendations of the
Secretary of Finance in consultation with the National Economic and Development Authority and
approval of the President of the Philippines, loans, agreements, as well as, contracts, unless
otherwise falling under Section 5 of this Act, involving the availment of or utilization of the
proceeds of loans, credits or indebtedness obtained under the provisions of this Act, may provide
for the exemption from taxes, charges or other levies. Loans, credits or indebtedness incurred
pursuant to this Act,the payment of the principal, interests and other charges thereon, which are
secured from Government of foreign countries or from lending institutions of organizations owned
or controlled by said foreign governments, shall be exempted from the payment of all taxes, fees,
and other charges.

SEC. 10. Developing a National SRDP Roadmap. ~ The Secretary of National Defense is
hereby directed to adopt, as basis for the National SRDP roadmap, the strategic direction provided
by the Philippine Defense Transformation Program of the Department of National Defense,
including relevant provisions from the AFP 20-Year SRDP Strategic Plan, the NEDA’s Philippine
Development Plan and other appropriate strategies as may be deemed necessary by the Secretary.

SEC. 11, Defense Research and Development Agency. —

a) Definitions. — In this section, unless the context otherwise requires—

Agency means the Defense Research and Development Agency (DRDA)
established under subsection (b);

Board means the board of directors of the Agency;


Chairman means the chairman of the board and includes any temporary
chairman of the board;

Director General means theDirector Generalof the Agency appointed under
subsection (g) and includes any person acting in that capacity;

Director means the director of the board;

b) Establishment and incorporation of the Agency—

1) There is hereby established a body to be known as the Defense Research
and Development Agency (DRDA) which shall be a body corporate under the
control and supervision of the Department of National Defense, with a
perpetual succession and a common seal and shall, by that name, be capable
of—

A) suing and being sued;

B) acquiring, owning, holding, and developing or disposing of
property, both movable and immovable; and

C) doing and suffering all such other acts or things as a body
corporate may lawfully do or suffer.

c) Common seal—

1) Alll deeds and other documents requiring the seal of the Agency shall be
sealed with the common seal of the Agency and such instruments to which
the common seal is affixed shall be signed by any two (2) directors generally
or specially authorized by the Agency for the purpose or by one director and
the Director General.

2) Alll courts, judges, and persons acting judicially shall take judicial notice of
the common seal of the Agency affixed to any document and shall presume
that it was duly affixed.


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4) Structure of the Agency—The Agency is hereby authorized to create its own
internal structure, including its own compensation and position classification system
pursuant to the provisions of the Batas PambansaBlg. 68 or the Corporation Code of
the Philippines and Republic Act No. 10149, otherwise known as the Government-
Owned and Controlled Corporations Governance Act.

e) Board of directors of the Agency

1) There shall be a board of directors of the Agency which shall be
responsible for the policy and general administration of the affairs and
business of the Agency.

2) The board shall consist of —

A) the Secretary of National Defense as ex-officio chairman;

B) the Secretary of Science and Technology as ex-officio vice
chairman;

©) the Secretary of Information and Communications Technology and
three (3) retired AFP officers with at least a rank of Brigadier General
or its equivalent from the Army, Navy, and Air Force, as appointed by
the Chairman,as ex-officio members; and

D) two (2) representatives from the private sector, as appointed by the
Chairman, subject to the confirmation of the Board of Directors. The
appointed representatives shall serve for a fixed term of six years.

3) Qualifications of the Board—The Chairman shall, in appointing the
representatives from the AFP and the private sector, decide based on the

following qualifications:


A) a comprehensive understanding of defense research and
development, materiel and technology, and procurement processes
and laws;

B) international experience and education on defense and security-
related matters;

C) the aptitude and experience to fully appreciate the legal

government owned and controlled corporation;

D) a willingness to commit, as well as have, sufficient time to
discharge his or her duties to the Board.

4) Monthly Meetings—The Board of Directors is hereby directed to conduct
a meeting at least once a month to assess the progress and overall operations
of the corporation. In such cases that the Secretary of Defense, Science and
Technology, and Information and Communications Technology proves
unable to attend a meeting, their respective Undersecretaries shall represent
them. Provided, That a letter containing the reason/s for such absence be
presented to the Board and be included in the minutes of the meeting.

f) Missions and functions of the Agency —
1) The Agency shall harness and exploit science and technology, and provide
technological and engineering support, to meet the defense and national
security needs of the Philippines.

2) The functions of the Agency shall be—

A) to advise the Department of National Defense on all matters
relating to defense science and technology;

B) to provide defense science and technology services and facilities to
the Department of National Defense;


C) to promote and facilitate the development of the defense science
and technological capabilities of the Philippines;

D) to manage the acquisition of air force, navy, and army equipment
and materielpursuant to the provisions of Republic Act 7898 or the
AFP Modernization Act, as amended by R.A. 10349;

E) to manage the acquisition of defense systems, provide engineering
support for such systems, provide quality assurance and systems
engineering services, and forecast and assess future defense systems,
for the Department of National Defense;

F) to manage the acquisition of command, control, communications,
computer and simulation systems, develop software and provide
engineering support for such systems, and forecast and assess such
future systems, for the Department of National Defense;

G) to manage the design and development of defense buildings and
infrastructure, and manage the maintenance of such buildings,
infrastructure, and defense estates, for the Department of National
Defense;

H) to manage the acquisition of management information systems and
information technology infrastructure, and develop, maintain and
support such systems and infrastructure and forecast and assess future
developments in information technology and formulate standards, for
the Department of National Defense;

1) to conduct research on military medicine and perform human
factors engineering studies, for the Department of National Defense;

J) to manage contracts for the purchase of defense systems, spares and
services, maintain a catalogue of stocked items, and manage the


disposal of old stocks and equipment, for the Department of National
Defense;

K) to manage technological cooperation with other persons, and
conduct and manage research and development programs, for the
Department of National Defense;

L) to manage the transfer of defense technology and intellectual
property rights to and from the Agency in pursuance of the provisions
of R.A. 10055 or the Philippine Technology Transfer Act of 2009.

M) to undertake any other activity considered necessary or desirable
to achieve a costeffective defense science and technological
capability in the Philippines; and

N) to perform any such other functions as are conferred on the
Agency by any other written law.

3) The Agency may undertake such other functions as the Secretary may
assign to the Agency and in so doing, the Agency shall be deemed to be
fulfilling the purposes of this Act and the provisions of this Act shall apply to
the Agency in respect of such functions.

4) Nothing in this subsection shall be construed as imposing on the Agency,
directly or indirectly, any form of duty or liability enforceable by proceedings
before any court.

g) Powers of the Agency

1) The Agency shall have the power to do anything for the purpose of
discharging its functions under this section or under any other written law, or
which it may consider advantageous, necessary or convenient to the discharge
of those functions and, in particular, may—


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A) enter into contracts, through the public bidding process, for itself
or the Government for defense systems, facilities, technology,
equipment, materials or services or for the execution of works or any
other contract as may be necessary for the discharge of its duties and

functions;

B) acquire all defense technology transfers and intellectual property
rights for the Department of National Defense, subject to the
provisions of R.A. No. 10055 or the Phili
Act of 2009;

ine Technology Transfer

C) licensing of all defense technology and intellectual property rights
developed and produced by the Agency to the Government Arsenal
and local defense manufacturers for commercialization, subject to the
provisions of R.A. No. 10055 or the Philippine Technology Transfer
Act of 2009;

D) engage alone or in conjunction with other persons in the design
and development of defense systems and the provisions of systems
design services;

E) form or participate in the formation of any company or enter into
any joint venture or partnership for the purposes of this section;

F) provide technical advice, training and assistance to any government
body or statutory board and to defense authorities of other countries,

G) levy such charges and fees as may be reasonable for services and
facilities provided by the Agency;

H) provide financial loans, advances, grants, aid or assistance to any
person for all or any purposes of this section;


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D collect, compile, analyze and disseminate by any convenient means
information of a statistical nature or otherwise concerning matters
relating to its functions;

J) provide scholarships and training grants in the fields of defense
science and technology;

K) receive donations, grants, gifts, subsidies, and contributions from
any source and raise funds by all lawful means;

L) make provisions for gratuities, pensions, allowances or other
benefits for employees or former employees of the Agency;

M) initiate, supervise, and coordinate theproduction activities of the
Government Arsenal;

N) do such other acts as are incidental to any of its functions or
powers.

2) The Agency may, in addition to the powers vested in it by subparagraph
(1), exercise such other powers as the Secretary may in writing authorize the

Agency to exercise.

3) This subsection shall not be construed as limiting any power of the Agency
conferred by or under any other written law.

h) Appointment of Director General—
1) The Agency shall, with the approval of the Secretary, appoint a Director
General of the Agency on such terms and conditions as the Agency may

determine.

2) The Director General shall—


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A) be responsible to the Agency for the proper administration and
management of the functions and affairs of the Agency in accordance
with the rules and regulations laid down by the Agency; and

B) not be removed from office without the consent of the Secretary.

C) be known by such designation as the Agency may determine;

i) Funds and property of the Agency

1) The funds and property of the Agency shall consist of —

‘A) all moneys paid to the Agency for the purposes of the Agency:

B) all moneys paid to the Agency by way of grants, subsidies,
donations, gifts, and contributions;

C) all moneys received by the Agency by way of charges and fees for
services rendered by the Agency to any person;

D) all moneys, dividends, royalties, interest or income received from
any transactions made pursuant to the powers conferred on the
Agency under this Act;

E) all moneys borrowed by the Agency under this Act;

F) all other moneys and property lawfully received by the Agency for
the purposes of the Agency; and

G) all accumulations of income derived from any such moneys or
Property.

j) Core Industries of the Agency—The Agency shall, through the Government
Arsenal, prioritize the development and production of the following defense capabilities:


1) small arms, shells, artillery, tank, and naval ammunitions, including its
different variants;

2) military-grade weapons and armaments,

2) armored and mechanized vehicles;

3) integrated helicopters;

4) fixed-wing close air support aircraft capable of real-time communications
with ground units and provide direct air support to ground forces engaged in

combat;

5) small naval craft, armed with small-caliber weapons capable of patrolling
coastal waters or lay mines for defensive operations;

6) support naval craft capable of air/surface search, guided missile targeting,
and naval gun fire support;

7) frigates with defensive capabilities for escorting other naval craft;

8) destroyers designed to provide land attack capability as well as air, water,
surface, and submarine defense capabilities; and

9) jamming and interception devices.

Provided, That the Agency, should it successfully produce en masse the defense
capabilities as provided beforehand, proceed into developing and producing more advanced
defense capabilities.

k) Annual estimates

1) The Agency shall in every financial year have annual estimates of income
and expenditure of the Agency for the ensuing financial year.


2) A copy of all annual estimates and supplementary estimates shall, upon
their adoption by the Agency, be sent forthwith to the Secretary who may
approve or disallow any item or portion of any item shown in the estimates,
and shall return the estimates as amended by the Secretary to the Agency, and
the Agency shall be bound thereby.

1) Annual report

1) The Agency shall, as soon as practicable after the end of each fiscal year,
submit to the Secretary an annual report on the activities of the Agency
during that fiscal year.

2) The Secretary shall send a copy of every such report to the President,
Senate, and House of Representatives.

m) Symbol or representation of the Agency—

1) The Agency shall have the exclusive right to the use of such symbol or
representation as it may select or devise and thereafter display or exhibit such
symbol or representation in connection with its activities and affairs; and

2) Any person who uses a symbol or representation identical with that of the
‘Agency or which so resembles the Agency’s symbol or representation as to
deceive or cause confusion, or to be likely to deceive or to cause confusion,
shall be guilty of an offense and shall be liable on conviction to a fine not
exceeding P400,000 or to imprisonment for a term not exceeding 6 months or
to both.

n) Dedicated Employee Training — No one shall be assigned to a position in the
Defense Research and Development Agency without the requisite qualifications and training
in defense science and technology, defense acquisition and logistics.

0) Defense Acquisition Program~ The Defense Research and Development Agency,
in coordination with the National Defense College of the Philippines shall develop a defense
acquisition curriculum that shall offer defense acquisition, technology, and logistics training


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to military, government civilian staff, government contractors and other such persons
currently affiliated with the Philippine government.

p) Internal Rules and Regulations ~ The Agency shall formulate the necessary rules
and regulations for the implementation of all provisions as provided in this section.

SEC. 12. Procurement Authority. — The Defense Research and Development Agency shall
henceforth be the sole agency responsible for the procurement of defense-related acquisitions of the
Department of National Defense.

SEC. 13. Subsidiary Company.—The Government Arsenal shall henceforth, pursuant to the
provisions of Republic Act No. 10149 otherwise known as the GOCC Governance Act, be
converted as a subsidiary company of the Defense Research and Development Agency.

SEC. 14, Performance Evaluation System —The Agency shall adopt a performance
evaluation system, including performance scorecards pursuant to Section 5 (f) of Republic Act No.
10149 otherwise known as the GOCC Governance Act of 2011

SEC. 15. Appropriations. — To carry out the purpose of this Act, an initial fund of one
hundred million pesos (P100,000,000.00) is hereby appropriated out of any funds in the National
Treasury not otherwise appropriated.

SEC. 16. Repealing Clause. — Presidential Decree No. 415 is hereby repealed. All other
provisions of existing laws, orders, and regulations contrary to, or inconsistent with this Act are
hereby repealed or modified accordingly.

SEC. 17. Separability Clause — If any provision, section or part of this Act shall be declared
unconstitutional or invalid, such judgment shall not affect, invalidate or impair any other
provisions, sections or parts thereof.

SEC. 18. Implementing Rules and Regulations. ~ The Department of National Defense,
within ninety (90) days after the approval of this Act shall formulate the necessary rules and
regulations for the implementation of the provisions of this Act.


1 SEC. 19. Effectivity. — This Act shall take effect immediately after its publication in the
2 Official Gazette and two (2) newspapers of general circulation.

Approved,