Question & AnswerQ&A (Republic Act No. 7227)
The short title of Republic Act No. 7227 is the "Bases Conversion and Development Act of 1992."
The declared policy of the government is to accelerate the conversion of Clark and Subic military reservations and their extensions into alternative productive uses, raise funds from the sale of portions of Metro Manila military camps, and use the proceeds for economic and social development in Central Luzon and the country in general.
The BCDA is a body corporate with perpetual succession, created to own, hold, administer, and implement the conversion and development of former military reservations into productive civilian use.
The Conversion Authority shall own and manage specified military reservations, prepare and implement comprehensive development plans for their conversion, encourage private sector participation, serve as holding company of subsidiaries, manage projects outside subsidiary jurisdictions, coordinate with local government units, and plan relocation or resettlement initiatives as necessary.
The Conversion Authority can sue and be sued, make contracts, contract loans, issue bonds, execute guarantees, construct and maintain public utilities and infrastructure, reclaim lands, acquire and dispose of real properties, receive donations, invest funds, exercise eminent domain, oversee special economic zones, promulgate rules and regulations, and perform other necessary powers.
The Conversion Authority has an authorized capital of P100 billion, which may be fully subscribed by the Republic of the Philippines, funded by sales of land assets or property transfers. An initial operating capital of P70 million shall be appropriated and covered by preferred shares retireable within two years.
The President shall transfer military reservations including John Hay Air Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel Naval Communications Station, Mt. Sta. Rita Station (Hermosa, Bataan), and portions of Metro Manila military camps, after delineating areas to remain as military reservations.
Funding comes from the sale of certain Metro Manila military camps and lands (e.g., Fort Bonifacio and Villamor Air Base). Proceeds are allocated: 32.5% for AFP modernization and assistance, 50% for conversion/commercial use of Clark and Subic reservations, 5% for housing loans to homeless affected persons, and the balance to the National Treasury for economic projects.
The Board consists of nine members: a full-time chairman who is also president, and eight private sector members including two labor sector representatives. Appointed by the President with Commission on Appointments' consent. Terms are staggered for two, four, and six years; chairman and president serve six years. Board members receive a per diem for meetings.
The Board determines organizational structure, defines duties, appoints officials, approves budgets, submits annual reports to Congress and the President, and executes the purposes of the Conversion Authority including overseeing major conversion projects and privatization plans.
The president of the Conversion Authority acts as CEO, responsible for executing board policies, supervising operations and administration, representing the Authority in dealings, preparing meeting agendas, and exercising powers as provided in bylaws or delegated by the Board.
The SSEZ consists of Olongapo City, Subic Municipality, and nearby areas formerly occupied by the Subic Naval Base as defined by the 1947 Military Bases Agreement. It is a special economic and free-port zone developed to promote industrial, commercial, financial and investment activities with special tax, customs, immigration, and regulatory privileges.
No local or national taxes shall be imposed in the SSEZ. Instead, a 3% gross income remittance is paid to the national government, with portions to local governments, and a 1% development fund for contiguous municipalities. The zone is a separate customs territory allowing tax and duty-free importation of raw materials and equipment but customs duties apply for goods leaving SSEZ to other Philippine territories.
The SBMA is the operating and implementing arm of the Conversion Authority for the SSEZ, with powers to manage facilities, regulate utilities, enter contracts, borrow funds, issue securities, and enforce environmental control. Its Board has 15 members from local governments, national government, military/naval sectors, and private/business sectors, appointed by the President.
The SBMA must protect and maintain virgin forests as national parks, enforce permanent log bans, implement environmental pollution controls, and operate an Ecology Center to monitor pollution within the SSEZ.
The Act affirms the Conversion Authority's oversight role. In case of conflicts on matters affecting the SSEZ, except defense and security, the decision of the Subic Authority prevails over local government units, ensuring centralized administration within the zone.
Subject to local government concurrence, the President may create Special Economic Zones covering Clark and other former military base areas like Wallace Air Station and Camp John Hay. These zones will have similar development policies and be governed by a body with powers like the Export Processing Zone Authority.
The Conversion Authority may form subsidiary corporations under Philippine Corporation Law, owning at least 51% of their capital stock initially. It holds majority board control, and subsidiaries are exempt from civil service laws.
The Office of the President exercises direct policy supervision. The Commission on Audit appoints a full-time auditor for the Authority, subsidiaries, and special economic zones to conduct pre-audit of major property transactions and submit regular reports to Congress.