THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
S E N A T E  
S.B. No. 
Introduced by SENATOR LUlSA "LOI" P. EJERCITO ESTRADA 
EXPLANATORY NOTE 
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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 after its establishment, however, it has yet to be fully implemented, 
the hindrance to which has been lack of resources. Despite the establish 
AFP Modernization Act Trust Fund, a separate and distinct item from the 
appropriations of the Department of National Defense and the AFP itself, 
allocation for the program's component such as the upgrading of 
weapon equipment, for example; could not be supported by the trust 
other sources would have to be tapped to augment the limited 
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: 
1. Excise taxes collected under Section 151 o f  the National Internal Revenue 
Code of 1997; 
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 
LUISA "LOI" P. ~ J E R C I T O  
ESTRADA 
Senator 


THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
'04 NUV 16 P6 :05 
First Regular Session 
1 
G- 
S E N A T E  
~~~~~~~~ 
BY :----.--e- 
Introduced by SENATOR LUISA "LOI" P. EJERCITO ESTRADA 
AN ACT 
ALLOCATING 
TO 
THE 
AFP 
MODERNIZATION ACT 
TRUST 
FUND THE 
SALE OF REAL PROPERTY AND THE SHARE OF THE NATIONAL GOVERNMENT 
ON ALL TBXES,--Rc/fALTIES AND CHARGES 
COLLECTED 
FROM THE 
COLLECTION FROM CAPITAL GAINS TAX AND VALUE-ADDED TAX ON THE 
MALAMPAYA NATURAL GAS PROJECT 
Be if enacted by the Senate a nd the House of Representatives o f  the Philippines in 
Congress assembled 
SECTION 1, All proceeds from the collections from capital gains tax and value- 
added tax on sale of real propeity as provided under Sections 24 (D), 25jA) (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 national 
from the Malampaya Natural Gas Project shall be directly transferred 
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 imrhmentation 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 public I tion in the 
I 
c
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Official Gazette or in at least two (2) newspapers of general circulation. 
Approved, 
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