QuestionsQuestions (Republic Act No. 7227)
RA 7227 is the “Bases Conversion and Development Act of 1992.” It aims to accelerate the conversion of the Clark and Subic military reservations (and extensions) into other productive uses, raise funds by selling portions of Metro Manila military camps, and apply those funds for the development and conversion of lands covered by the 1947 Military Bases Agreement, as amended, to promote economic and social development.
The government policy is to soundly and balance the conversion of Clark and Subic areas into alternative productive uses, raise funds through sale of portions of Metro Manila military camps, and apply those funds for development and conversion to productive civilian use. It also seeks enhanced benefits for Central Luzon and the country.
RA 7227 creates a body corporate called the Bases Conversion and Development Authority (the “Conversion Authority”) with perpetual succession and corporate powers. It must be organized within 30 days after approval and has a term of 50 years from organization, extendable/terminable only by Congress through a joint resolution dissolving it when the primary purpose is accomplished.
Examples include: (1) owning/holding/administering specified former military stations and transferred portions of Metro Manila camps; (2) adopting and implementing a comprehensive development plan consistent with ecological/environmental standards; (3) encouraging private sector participation; (4) serving as holding company of subsidiaries and investing in Special Economic Zones; (5) planning and undertaking readjustment/relocation/resettlement in base areas when necessary.
The President must transfer station areas listed in Section 7(a), such as John Hay, Wallace, O’Donnell, San Miguel Naval Communications, and Mt. Sta. Rita, and also transfer other properties including portions of Metro Manila military camps as provided in Section 8. However, areas that will remain as military reservations must be delineated and proclaimed as such by the President.
Capital comes from sales proceeds and/or transfers of certain Metro Manila military camps lands. The law allocates proceeds after sale expenses: 32.5% to AFP transfer/modernization/self-reliance/housing and medical facilities; 50% to conversion and commercial uses of Clark and Subic; 5% to housing loan assistance for the homeless in specified areas; and the balance to be remitted to the National Treasury for congressional appropriation for programs vital for Filipino economic upliftment. For Fort Bonifacio, 2.5% goes in equal shares to Makati, Taguig, and Pateros.
Section 8 exempts specified hectares in Fort Bonifacio and Villamor Air Base for security, housing, PNP jails, Presidential Airlift Wing, helicopter squadron security, and multiple areas identified by proclamations (e.g., officers’ and enlisted men’s villages, veterans center, national shrines, schools, terminals, housing, civil aviation purposes, etc.), plus a proposed relocation site for affected families after construction of roads. The exemption is significant because it limits disposal and therefore affects how much land can be sold to generate funds for conversion and development.
No sale/disposition is undertaken until a development plan embodying conversion projects is approved by the President in accordance with Section 4(b). However, six months after approval of the Act, the President authorizes the Conversion Authority to dispose of certain areas in Fort Bonifacio and Villamor as the Conversion Authority determines, subject to reporting to the President within one month from disposition or planned disposition.
The Board has nine members: a full-time chairman who is also the president of the Conversion Authority, and eight other members from the private sector, including two from the labor sector. Members are appointed by the President with Commission on Appointments consent. Initial terms are staggered (six years for three members including chairman and two others; four years for three; two years for three), and vacancies are filled for the unexpired term.
They must be natural-born Filipino citizens, of good moral character, of unquestionable integrity, and of recognized competence in relevant fields such as economics, management, international relations, law, or engineering (preferably naval/aeronautical).
It determines the organizational structure and duties/compensation scheme (at least equivalent to BSP), appoints officials down to third level and authorizes the president to appoint others, prepares annual/supplemental budgets, submits annual operations report to the President and Congress, and guides conversion projects using turnkey/BOT schemes where possible under RA 6957, and begins privatization/divestment program starting the fourth year of full operations based on presidential guidelines.
The President acts as CEO, executes/implements Board-approved policies, directs/supervises operations and administration, represents the authority in dealings with government offices and private entities, prepares agendas for Board meetings and submits necessary policies/measures, and exercises other functions under bylaws and Board delegation.
The Subic Special Economic Zone is created subject to concurrence by specified LGUs. It is developed as a self-sustaining industrial/commercial/financial/investment center with employment generation and attraction of foreign investments. It is operated as a separate customs territory; tax and duty-free importation of raw materials, capital, and equipment is allowed. No taxes (local and national) are imposed; instead businesses remit 3% of gross income (1% each to LGUs in proportion to population area and other factors) plus a 1% development fund for municipalities outside Olongapo/Subic and contiguous municipalities. Exchange controls are not applied.
In case of conflict between national and local laws regarding tax exemption privileges in the Subic Special Economic Zone, the law provides that the conflict shall be resolved in favor of the latter (i.e., local laws).
The Subic Bay Metropolitan Authority is a body corporate as an operating/implementing arm of the Conversion Authority. It manages development/operation of facilities within the Subic Special Economic and Free-port Zone (shipping, port, oil storage/refueling, Cubi Air Base, utilities, tourism-related activities, environmental protection/controls, etc.). For matters affecting the zone other than defense and security, the Subic Authority’s decision prevails over concerned LGUs, while overall policy oversight remains with the Conversion Authority.
Implementation of conversion projects is declared urgent and necessary and shall not be restrained or enjoined except by an order issued by the Supreme Court of the Philippines.
It has a separability clause: if any provision is unconstitutional or invalid, the rest remain in force. It also contains a repealing clause for inconsistent laws/issuances. It takes effect upon publication in at least one newspaper of general circulation.