REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

6904

House Bill No.

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

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proposed measure, Presidential Decree No. 415 shall be repealed and reinstituted as a Republic Act;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.

Gary @ Alejano


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

6904

House Bill No.

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

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

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

SECTION 1. Short Title. — This Act shall be known as “Self-Reliance Defense Posture
Program Act of 2017.”

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 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 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 matericl. 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 enter into
contracts, under such terms and conditions as may be agreed upon, with any natural or juridical
person, with or without public bidding, 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 the Self-Reliant Defense Program approved by the President of the
Philippines; 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 Budget
Commission and the Commission on Audit; any provision of law, including Section Six Hundred and
Seven of the Revised Administrative Code, Commonwealth Act Numbered Five Hundred Forty-one,
‘Act Numbered Four Thousand Two Hundred Thirty-Nine, Republic Act Numbered Five Thousand
‘One Hundred eighty- three and 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 material 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 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 three hundred million United States dollars, 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 the
President of the Philippines; provided, further, that such loans, credits or indebtedness shall be
incurred only when the Commissioner of Budget 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; Provided, finally, That in contracting any loan, credit or indebtedness under this Act, the
President of the Philippines, when necessary may agree to waive or modify the application of any
law granting preferences or imposing restrictions on international public bidding.

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 tumed 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 tured 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 Decree, 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 and other appropriate improvements
as may be deemed necessary by the Secretary. The National SRDP Roadmap shall also assume a
“whole-of-nation” approach as provided for in the Philippine Development Plan (PDP) and Security
Sector Reform (SSR).

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;

Chief Executive means the Chief Executive of 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.

¢) Common seal—

1) All deeds and other documents requiring the seal of the Agency shall be
scaled 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
Chief Executive.


2) All 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.

4) 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) a Chairman; and

B) not less than 8 and not more than 20 other directors as the Secretary
may from time to time determine.

©) 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 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;

E) 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;

F) 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;

G) 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;

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

1) 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;

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


K) to undertake any other activity considered necessary or desirable to
achieve a cost-effective defense science and technological capability in
the Philippines; and

L) 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 Hiability enforceable by proceedings
before any court.

f) 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—

A) enter into contracts 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) engage alone or in conjunction with other persons in the design and
development of defense systems and the provisions of systems design
services;

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


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

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

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

G) collect, compile, analyze and disseminate by any convenient means
information of a statistical nature or otherwise conceming matters

relating to its functions;

H) provide scholarships and training grants in the fields of defense
science and technology:

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

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

K) initiate, supervise, and coordinate the SRDP R&D activities of the
AFP, GA, and NDCP

L) 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.

8) Appointment of Chief Executive—


1) The Agency shall, with the approval of the Secretary, appoint a Chief
Executive of the Agency on such terms and conditions as the Agency may

determine.

2) The Chief Executive shall—
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;

h) 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.

i) Annual estimates

1) The Agency shall in every financial year 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.

j) 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.

k) 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 Tiable on conviction to a fine not


exceeding P400,000 or to imprisonment for a term not exceeding 6 months or
to both.

}) 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. Appropriations. —

a) The amount necessary for the implementation of the provisions provided for in
section (111) of this Act shall be included in the budget of the Department of National Defense
in the annual General Appropriations Act.

b) The amount of at least one hundred million pesos is hereby appropriated yearly
under the SRDP Program budget of the AFP, to carry out the provisions and purposes of this
‘Act. The Budget Commission is hereby authorized to release the amount to the Department
of National Defense upon request thereof.

SEC, 13. 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. 14, 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. 15. Effectivity. — This Act shall take effect immediately

Approved,