THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992

AN ACT ACCELERATING THE CONVERSION OF MILITARY

RESERVATIONS INTO OTHER PRODUCTIVE USES, CREATING THE BASES
CONVERSION AND DEVELOPMENT AUTHORITY FOR THIS PURPOSE,
PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES.

Sec. 1. Short Title. This Act shall be known as the "Bases Conversion and
Development Act of 1992."
Sec. 2. Declaration of Policies. - It is hereby declared the policy of the
Government to accelerate the sound and balanced conversion into alternative
productive uses of the Clark and Subic military reservations and their extension
(John Hay Station, Wallace Air Station, ODonnell Transmitter Station, San
Miguel Naval Communications Station and Capas Relay Station), to raise funds
by the sale of portions of Metro Manila military camps, and to apply said funds as
provided herein for the development and conversion to productive civilian use of
the lands covered under the 1947 Military Bases Agreement between the
Philippines and the United States of America, as amended.
It is likewise the declared policy of the Government to enhance the benefits to be
derived from said properties in order to promote the economic and social
development of Central Luzon in particular and the country in general.
Sec. 3. Creation of the Bases Conversion and Development Authority. There is
hereby created a body corporate to be known as the Bases Conversion and
Development Authority, which shall have attribute of perpetual succession and
shall be vested with the powers of a corporation.
It shall be organized within thirty (30) days after approval of this Act. It shall have
a term of fifty (50) years from its organization: Provided, That Congress, by a
joint resolution, may dissolve the Conversion Authority whenever in its judgment
the primary purpose for its creation has been accomplished. It shall establish its
principal office in Metropolitan Manila unless otherwise provided by the
Conversion Authority and may put up such branches as may be necessary.
Sec. 4. Purposes of the Conversion Authority. - The Conversion Authority shall
have the following purposes:
(a) To own, hold and/or administer the military reservations of John Hay
Station, Wallace Air Station, ODonnell Transmitter Station, San Miguel
Naval Communication Station, Mt. Sta. Rita Station (Hermosa, Bataan)

and those portions of Metro Manila, military camps which may be

transferred to it by the President;
(b) To adopt, prepare and implement a comprehensive and detailed
development plan embodying a list of projects including but not limited to
those provided in the Legislative-Executive Bases Council (LEBC)
framework plan for the sound and balanced conversion of the Clark and
Subic military reservations and their extensions consistent with ecological
and environmental standards, in other productive uses to promote the
economic and social development of Central Luzon in particular and the
country in general;
(c)
To encourage the active participation of the private sector in
transforming the Clark and Subic military reservations and their extensions
into other productive uses;
(d) To serve as the holding company of subsidiary companies created
pursuant to Section 16 of this Act and to invest in Special Economic Zones
declared under Sections 12 and 15 of this Act;
(e)
To manage and operate through private sector companies
developmental projects outside the jurisdiction of subsidiary companies
and Special Economic Zones declared by presidential proclamations and
established under this Act;
(f) To establish a mechanism in coordination with the appropriate local
government units to effect meaningful consultation regarding the plans,
programs and projects within the regions where such plans, programs
and/or project development are part of the conversion of the Clark and
Subic military reservations and their extensions and the surrounding
communities as envisioned in this Act; and
(g) To plan, program and undertake the adjustment, relocation, or
resettlement of population within the Clark and Subic military reservations
and their extensions as may be deemed necessary and beneficial by the
Conversion Authority, in coordination with the appropriate government
agencies and local government units.
Sec. 5 Powers of the Conversion Authority. To carry out its objectives under
this Act, the Conversion Authority is hereby vested with the following powers:
(a) To succeed in its corporate name, to sue and be sued in such
corporate name and to adopt, alter and use a corporate seal which shall
be judicially noticed;
(b)

To adopt, amend and repeal its by-laws;

(c) To enter into, make, perform and carry out contracts of every class,
kind and description which are necessary or incidental to the realization of
its purposes with any person, firm or corporation, private or public, and
with foreign government entities;
(d) To contract loans, indebtedness, credit and issue commercial papers
and bonds, in any local or convertible foreign currency from any
international financial institutions, foreign government entities, and local or
foreign private commercial banks or similar institutions under terms and
conditions prescribed by law, rules and regulations;
(e) To execute any deed of guarantee, mortgage, pledge, trust or
assignment of any property for the purpose of financing the programs and
projects deemed vital for the early attainment of its goals and objectives,
subject to the provisions of Article VII, Section 20, and Article XII, Section
2, paragraphs (4) and (5) of the Constitution;
(f) To construct, own, lease, operate and maintain public utilities as well
as infrastructure facilities;
(g)
To reclaim or undertake reclamation projects as it may deem
necessary in areas adjacent or contiguous to the Conversion Authoritys
lands described in Section 7 of this Act either by itself or in collaboration
with the Public Estates Authority (PEA) established under Presidential
Decree No. 1084, as amended;
(h) To acquire, own, hold, administer, and lease real and personal
properties, including agricultural lands, property rights and interests and
encumber, lease, mortgage, sell, alienate or otherwise dispose of the
same at fair market value it may deem appropriate;
(i) To receive donations, grants, bequeaths and assistance of all kinds
from local and foreign government and private sectors and utilize the
same;
(j) To invest its funds and other assets other than those of the Special
Economic Zones under Sections 12 and 15 of this Act in such areas it may
deem wise;
(k)

To exercise the right of eminent domain;

(l) To exercise oversight functions over the Special Economic Zones

declared under this Act and by subsequent presidential proclamations
within the framework of the declared policies of this Act;
(m)

To promulgate all necessary rules and regulations; and

(n) To perform such other powers as may be necessary and proper to

carry out the purposes of this Act.
Sec. 6. Capitalization. - The Conversion Authority shall have an authorized
capital of One hundred billion pesos (P100,000,000,000) which may be fully
subscribed by the Republic of the Philippines and shall either be paid up from the
proceeds of the sales of its land assets as provided for in Section 8 of this Act or
by transferring to the Conversion Authority properties valued in such amount.
An initial operating capital in the amount of seventy million pesos (P70,000,000)
is hereby authorized to be appropriated out of any funds in the National Treasury
not otherwise appropriated which shall be covered by preferred shares of the
Conversion Authority retireable within two (2) years.
Sec. 7. Transfer of Properties. Pursuant to paragraph (a), Section 4 hereof, the
President shall transfer forthwith to the Conversion Authority:
(a)

Station
John Hay Air Station
Wallace Air Station
O"Donnell Transmitter Station
San Miguel Naval Communication Station
Mt. Sta. Rosa Station (Hermosa, Bataan)

Area in Has.
(more or less)
570
167
1,755
1,100

(b) Such other properties including, but not limited to, portions of Metro
Manila military camps, pursuant to Section 8 of this Act: Provided,
however, That the areas which shall remain as military reservations shall
be delineated and proclaimed as such by the President.
Sec. 8. Funding Scheme. The capital of the Conversion Authority shall come
from the sales proceeds and/or transfers of certain Metro Manila military camps,
including all lands covered by Proclamation No. 423, series of 1957, commonly
known as Fort Bonifacio and Villamor (Nichols) Air Base, namely:
Camp

Area in has.
(more or less)

Phase I (for immediate disposal)

1.
2.
3.
4.

Camp Claudio
Camp Bago Bantay
Part of Villamor Air Base
Part of Fort Bonifacio

2.0
5.0
135.10
498.40
Total: 640.50

Phase II
1.
2.
3.
4.
5.
6.

Camp Ver
Camp Melchor
Camp Atienza
Part of Villamor Air Base
Part of Fort Bonifacio
Fort Abad

1.9
1.0
4.9
37.9
224.90
.60
Total: 271.20

Provided, That the following areas shall be exempt from sale:

(a) Approximately 148.80 hectares in Fort Bonifacio for the National
Capital Region (NCR) Security Brigade, Philippine Army (PA) officers
housing area, and Philippine National Police (PNP) jails and support
services (presently Camp Bagong Diwa);
(b)
Approximately 99.91 hectares in Villamor Air Base for the
Presidential Airlift Wing, one squadron of helicopters for the NCR and
respective security units;
(c)

The following areas segregated by Proclamation Nos.:

1. 461, series of 1965; (AFP Officers Village)
2. 462, series of a965; (AFP Enlisted Mens Village)
3. 192, series of 1967; (Veterans Center)
4. 208, series of 1967; (National Shrines)
5. 469, series of 1969; (Philippine College of Commerce)
6. 653, series of 1970; (National Manpower and Youth Council)
7. 684, series of 1970; (University Center)
8. 1041, series of 1972; (Open Lease Concession)
9. 1160, series of 1973; (Manila Technical Institute)
10. 1217, series of 1970; (Maharlika Village)
11. 682, series of 1970; (Civil Aviation Purposes)
12. 1048, series of 1975; (Civil Aviation Purposes)
13. 1453, series of 1975; (National Police Commission)
14. 1633, series of 1977; (Housing and Urban Development)
15. 2219, series of 1982; (Ministry of Human Settlements,
BLISS)
16. 172, series 0f 1987; (Upper, Lower, and Western Bicutan
and Signal Housing)
17. 389, series of 1989; (National mapping and Resource
Information Authority)
18. 518, series of 1990; (CEMBO, SO CEMBO, W REMBO, E
REMBO, COMEMBRO, PEMBO, PITOGO)

19. 467, series of 1968; (Greater Manila Terminal Food Market

Site)
20. 347, series of 1968; Greater Manila Food Market Site)
21. 376, series of 1968; (National Development Board and
Science Community)
(d) A proposal of 15 hectares as relocation site for families to be
affected by circumferential road 5 and radial road 4 construction:
Provided, further, that the boundaries and technical description of
these crumpet areas shall be determined by an actual group
survey.
The President is hereby authorized to sell the above lands, in whole or in
part, which are hereby declared alienable and disposable pursuant to the
provisions of existing laws and regulations governing sales of government
properties: Provided, That no sale or disposition of such lands will be
undertaken until a development plan embodying projects for conversion
shall be approved by the President in accordance with Paragraph (b),
Section 4, of this Act. However, six (6) months after approval of this Act,
the President shall authorize the Conversion Authority to dispose of
certain areas in Fort Bonifacio and Villamor as the latter so determines.
The Conversion Authority shall provide the President a report on any such
disposition or plan for disposition within one (1) month from such
disposition or preparation of such plan. The proceeds from any sale, after
deducting all expenses related to the sale, of portions of Metro Manila
military camps as authorized under this Act, shall be used for the following
purposes with their corresponding percent shares of proceed:
(1) Thirty-two and five-tenths percent (32.5%) - To finance the transfer
of the AFP military camps and the construction of new camps, the selfreliance and modernization program of the AFP, the concessional and
long-term housing loan assistance and livelihood assistance to AFP
officers and enlisted men and their families, and the rehabilitation and
expansion of the AFPs medical facilities;
(2) Fifty percent (50%) - To finance the conversion and the commercial
uses of Clark and Subic military reservations and their extensions;
(3)
Five percent (5%) - To finance the concessional and long-term
housing loan assistance for the homeless of Metro Manila, Olongapo City,
Angeles City and other affected municipalities contiguous to the bases
areas as mandated herein; and
(4) The balance shall accrue and be remitted to the National Treasury to
be appropriated thereafter by Congress for the sole purpose of financing

programs and projects vital for the economic upliftment of the Filipino
people.
Provided, That, in case of Fort Bonifacio, two and five tenths percent (2.5%) of
the proceeds thereof in equal shares shall each go to the Municipalities of
Makati, Taguig and Pateros: Provided, further, That in no case shall farmers
affected be denied due compensation.
With respect to the military reservations and their extensions, the President upon
recommendation of the Conversion Authority or the Subic Authority when it
concerns the Subic Special Economic Zone shall likewise be authorized to sell or
dispose those portions of lands which the Conversion Authority or the Subic
Authority may find essential for the development of their projects.
Sec. 9. Board of Directors: Composition. - The powers and functions of the
Conversion Authority shall be exercised by a Board of Directors to be composed
of nine (9) members, as follows:
(a)
A full-time chairman who shall also be the president of the
Conversion Authority; and
(b) Eight (8) other members from the private sector, two (2) of whom
coming from the labor sector.
The chairman and members shall be appointed by the President with the consent
of the Commission on appointments. Of the initial members of the Board, three
(3) including the chairman, a representative from the private sector and a
representative from the labor sector shall be appointed for a term of six (6) years,
three (3) for a term of four (4) years and the other three (3) for a term of two (2)
years. In case of vacancy in the Board, the appointee shall serve the unexpired
term of the predecessor.
No person shall be appointed or designated unless he is a natural-born Filipino
citizen, of good moral character, of unquestionable integrity, and of recognized
competence in relevant fields including, but not limited to, economics,
management, international relations, law or engineering, preferably naval or
aeronautical.
The chairman and president of the Conversion Authority shall have a fixed term
of six (6) years.
All procedural matters in the conduct of board meetings shall be prescribed in its
internal rules.
Members of the Board shall receive a per diem of not more than Five thousand
pesos (P5,000) for every board meeting: Provided, however, That the per diem

collected per month does not exceed the equivalent of four (4) meetings:
Provided, further, That the amount of per diem for every board meeting may be
increased by the President but such amount shall not be increased within two (2)
years after its last increase.
Sec. .10. Functions of the Board. - The Board of Directors shall be the policymaking body of the Conversion Authority and shall perform the following
functions:
(a) Determine the organizational structure of the Conversion Authority,
define the duties and responsibilities of all officials and employees and
adopt a compensation and benefit scheme at least equivalent to that of
the Central Bank of the Philippines;
(b)
Appoint all officials down to the third level and authorize the
president of the Conversion Authority to appoint all others: Provided, That
all appointments shall be on the basis of merit and fitness and all
personnel action shall be in pursuance of Civil service laws, rules and
regulations, except those coterminous employees of the members of the
Board;
(c) Prepare the annual and supplemental budgets of the Conversion
Authority;
(d) Submit an annual report of the operation of the Conversion Authority
to the President of the Philippines, President of the Senate and Speaker of
the House of Representatives;
(e) Carry out the purposes of the Conversion Authority with the following
terms and references:
(1) As much as possible, major conversion projects shall be
undertaken under the complete project turnkey or build-operatetransfer (BOT) scheme, as provided under Republic Act Numbered
Sixty-nine hundred and fifty-seven (R.A. 6957); and
(2) Starting the fourth year of the Conversion Authoritys full
operation, a privatization or divestment program of its projects and
subsidiaries shall begin under general guidelines prescribed.
Sec. 11. Duties and Responsibilities of the President of the Conversion Authority.
- The president of the Conversion Authority shall have the following duties and
responsibilities:
(a) To act as Chief Executive Officer of the Conversion Authority;

(b) To execute, administer and implement the policies and measures

approved by the Board
(c) To direct and supervise the operations and administration of the
Conversion Authority;
(d) To represent the Conversion Authority in all dealings with offices,
agencies and instrumentalities of the Government and with all persons
and entities, public or private, domestic or foreign;
(e) To direct and supervise the preparation of the agenda for the
meeting of the Board, and to submit for the consideration of the Board
such policies and measures as he believes necessary to carry out the
purpose and objectives of this Act; and
(f) To exercise such other powers and functions provided in the bylaws
and as may be vested in him by the Board.
Sec. 12. Subic Special Economic Zone. - Subject to the concurrence by
resolution of the Sangguniang Panlungsod of the City of Olongapo and the
Sangguniang Bayan of the Municipalities of Subic, Morong and Hermosa, there
is hereby created a Special Economic and Free-port Zone consisting of the City
of Olongapo and the Municipality of Subic, Province of Zambales, the lands
occupied by the Subic Naval Base and its contiguous extensions as embraced,
covered, and define by the 1947 Military Bases Agreement between the
Philippines and the United States of America as amended, and within the
territorial jurisdiction of the municipalities of Morong and Hermosa, Province of
Bataan, hereinafter referred to as the Subic Special Economic Zone whose
metes and bounds shall be delineated in a proclamation to be issued by the
President of the Philippines. Within thirty (30) days after the approval of this Act,
each local government unit shall submit its resolution of concurrence to join the
Subic Special Economic Zone to the Office of the President. Thereafter, the
President of the Philippines shall issue a proclamation defining the metes and
bounds of the zone as provided herein.
The abovementioned zone shall be subjected to the following policies:
(a) Within the framework and subject to the mandate and limitations of
the Constitution and the pertinent provisions of the Local Government
Code, the Subic Special Economic Zone shall be developed into a selfsustaining, industrial, commercial, financial and investment center to
generate employment opportunities in and around the zone and to attract
and promote productive foreign investments;
(b) The Subic Special Economic Zone shall be operated and managed
as a separate customs territory ensuring free flow or movement of goods

and capital within, into and exported out of the Subic Special Economic
Zone, as well as provide incentives such as tax and duty-free importations
of raw materials, capital and equipment. However, exportation or removal
of goods from the territory of the Subic Special Economic Zone to the
other parts of the Philippine territory shall be subject to customs duties
and taxes under the Customs and Tariff Code and other relevant tax laws
of the Philippines;
(c) The provision of existing laws, rules and regulations to the contrary
notwithstanding, no taxes, local and national, shall be imposed within the
Subic Special Economic Zone. In lieu of paying taxes, three percent (3%)
of the gross income earned by all businesses and enterprise within the
Subic Special Economic Zone shall be remitted to the National
Government, one percent (1%) each to the local government units
affected by the declaration of the zone in proportion to their population
area, and other factors. In addition, there is hereby established a
development fund of one percent (1%) of the gross income earned by all
business and enterprise within the Subic Special Economic Zone to be
utilized for the development of municipalities outside the City of Olongapo
and the Municipality of Subic, and other municipalities contiguous to the
base areas.
In case of conflict between national and local laws with respect to tax
exemption privileges in the Subic Special Economic Zone, the same shall
be resolve in favor of the latter;
(d) No exchange control policy shall be applied and free markets for
foreign exchange, gold, securities and future shall be allowed and
maintained in the Subic Special Economic Zone;
(e) The Central Bank, through the Monetary Board, shall supervise and
regulate the operations of banks and other financial institutions within the
Subic Special Economic Zone;
(f) Banking and finance shall be liberalized with the establishment of
foreign currency depository units of local commercial banks and offshore
banking units of foreign banks with minimum Central Bank regulation;
(g)
Any investor within the Subic Special Economic Zone whose
continuing investment shall not be less than Two hundred fifty thousand
dollars ($250,000), his/her spouse and dependent children under twentyone (21) years of age, shall be granted permanent resident status within
the Subic Special Economic Zone. They shall have freedom of ingress
and egress to and from the Subic Special Economic Zone without any
need of special authorization from the Bureau of Immigration and
deportation. The Subic Bay Metropolitan Authority referred to in Section

13 of this Act may also issue working visas renewable every two (2) years
to foreign executives and other aliens possessing highly-technical skills
which liked Filipino within the Subic Special Economic Zone possesses,
as certified by the Department of Labor and Employment. The names of
aliens granted permanent residence status and working visas by the Subic
Bay metropolitan Authority shall be reported to the Bureau of Immigration
and Deportation within thirty (30) days after issuance thereof;
(h) The defense of the zone and the security of its perimeters shall be
the responsibility of the National Government in coordination with the
Subic Bay Metropolitan Authority. The Subic Bay Metropolitan Authority
shall provide and establish its own internal security and firefighting forces;
and
(i) Except as herein provided, the local government units comprising the
Subic Special economic Zone shall retain their basic autonomy and
identity. The cities shall be governed by their respective charters and the
municipalities shall operate and function in accordance with republic Act
No. 7160, otherwise known as the Local Government Code of 1991.
Sec. 13. The Subic Bay Metropolitan Authority.
(a) Creation of the Subic Bay Metropolitan Authority - A body corporate to
be known as the Subic Bay Metropolitan Authority is hereby created as an
operating and implementing arm of the Conversion Authority.
(b) Powers and functions of the Subic Bay Metropolitan Authority - The
Subic Bay Metropolitan Authority, otherwise known as the Subic Authority,
shall
have
the
following
powers
and
function:
(1) To operate, administer, manage and develop the ship repair
and ship building facility, container port, oil storage and refueling
facility and Cubi Air Base within the Subic Special Economic and
Free-port Zone as a free market in accordance with the policies set
forth in Section 12 of this Act;
(2)
To accept any local or foreign investment, business or
enterprise, subject only to such rules and regulations to be
promulgated by the Subic Authority in conformity with the policies of
the Conversion Authority without prejudice to the nationalization
requirements provided for in the Constitution;
(3) To undertake and regulate the establishment, operation and
maintenance of utilities, other services and infrastructure in the
Subic Special Economic Zone including shipping and related
business, stevedoring and port terminal services or concessions,

incidental thereto and airport operations in coordination with the

Civil Aeronautics Board, and to fix just and reasonable rates, fares
charges and other prices therefor;
(4) To construct, acquire, own lease, operate and maintain on its
own or through contract, franchise, license permits bulk purchase
from the private sector and build-operate transfer scheme or jointventure the required utilities and infrastructure in coordination with
local government units and appropriate government agencies
concerned and in conformity with existing applicable laws therefor;
(5) To adopt, alter and use a corporate seal; to contract, lease,
sell, dispose, acquire and own properties; to sue and be sued in
order to carry out its duties and functions as provided for in this Act
and to carry exercise the power of eminent domain for public use
and public purpose;
(6) Within the limitation provided by law, to raise and/or borrow
the necessary funds from local and international financial
institutions and to issue bonds, promissory notes and other
securities for that purpose and to secure the same by guarantee,
pledge, mortgage deed of trust, or assignment of its properties held
by the Subic Authority for the purpose of financing its projects and
programs within the framework and limitation of this Act;
(7) To operate directly or indirectly or license tourism related
activities subject to priorities and standards set by the Subic
Authority including games and amusements, except horse racing,
dog racing and casino gambling which shall continue to be licensed
by the Philippine Amusement and Gaming Corporation (PAGCOR)
upon recommendation of the Conversion Authority; to maintain and
preserve the forested areas as a national park;
(8) To authorize the establishment of appropriate educational and
medical institutions;
(9) To protect, maintain and develop the virgin forests within the
baselands, which will be proclaimed as a national park and subject
to a permanent total log ban, and for this purpose, the rules and
regulations of the Department of Environment and Natural
Resources and other government agencies directly involved in the
above functions shall be implemented by the Subic Authority;
(10)
To adopt and implement measures and standards for
environmental pollution control of all areas within its territory,
including but not limited to all bodies of water and to enforce the

same. For which purpose the Subic Authority shall create an

Ecology Center; and
(11) To exercise such powers as may be essential, necessary or
incidental to the powers granted to it hereunder as well as to carry
out the policies and objectives of this Act.
(c) Board of Directors - The powers of the Subic Authority shall be vested
in the exercised by a Board of Directors, hereinafter referred to as the
Board of Directors, hereinafter referred to as the Board, which shall be
composed of fifteen (15) members, to wit:
(1) Representatives of the local government units that concur to
join the Subic Special Economic Zone;
(2)

Two (2) representatives from the National Government;

(3) Five (5) representatives from the private sector coming from
the present naval stations, public works center, ship repair facility,
naval supply depot and naval air stations; and
(4)
The remaining balance to complete the Board shall be
composed to representatives from the business and investment
sectors.
The chairman and the members of the Board shall be appointed by the
President to serve for a term of six (6) years, unless sooner removed for
cause except for the representatives of the local government units who
shall serve for a term of three (3) years. In case of removal for cause, the
replacement shall serve only the unexpired portion of the term.
No person shall be appointed as a member of the Board unless he is a
Filipino citizen, of good moral character, and of recognized competence in
relevant fields including, but not limited to, economics, management,
international relations, law or engineering. Preference in the appointment
of the members of the Board shall be given to residents within the Subic
Special Economic Zone.
Members of the Board shall receive a per diem of not more than Five
Thousand pesos (P5,000) for every board meeting: Provided, however,
That the per diem collected per month does not exceed the equivalent of
four (4) meetings: Provided, further, That the amount of per diem for every
board meeting may be increased by the President: Provided, finally, That

the amount of per diem shall not be increased within two (2) years after its
last increase.
(d) Chairman/Administrator - The president shall appoint a professional
manager as administrator of the Subic Authority with a compensation to
be determined by the Board subject to the approval of the Secretary of
Budget, who shall be the ex officio chairman of the Board and who shall
serve as the chief executive officer of the Subic Authority: Provided,
however, That for the first year of its operation from the effectivity, the
mayor of the City of Olongapo shall be appointed as the chairman and
chief executive officer of the Subic Authority.
(e) Capitalization - The Subic Authority shall have an authorized capital
stock of Twenty billion pesos (P20,000,000,000) divided into twenty
thousand (20,000) number per shares fully subscribed and paid up by the
Republic of the Philippines with:
(1) All lands embraced covered and defined in Section 12 hereof,
as well as permanent improvements and fixtures upon proper
inventory not otherwise alienated, conveyed, or transferred to
another government agency;
(2) All other assets which the President may transfer to the Subic
authority as part of the equity contribution of the Government; and
(3) Cash contribution by the Government in the amount of Three
hundred million pesos (P300,000,000) a year for the next three (3)
years, which is hereby appropriated out of any fund in the National
Treasury not otherwise appropriated.
Sec. 14. Relationship with the Conversion Authority and the Local Government
Units.
(a) The provisions of existing laws, rules and regulations to the contrary
notwithstanding, the Subic Authority shall exercise administrative powers,
rule-making and disbursement of funds over the Subic Special Economic
Zone in conformity with the oversight function of the Conversion Authority.
(b)
In case of conflict between the Subic Authority and the local
government units concerned on matters affecting the Subic Special
Economic Zone other than defense and security, the decision of the Subic
Authority shall prevail.
Sec. 15. Clark and Other Special Economic Zones. - Subject to the concurrence
by resolution of the local government units directly affected, the president is
hereby authorized to create by executive proclamation a Special Economic Zone
covering the lands occupied by the Clark military reservations and its contiguous

extensions as embraced, covered and defined by the 1947 Military Bases

Agreement between the Philippines and the United States of America, as
amended, located within the territorial jurisdiction of Angeles City, Municipalities
of Mabalacat and Porac, Province of Pampanga, and the municipality of Capas,
Province of Tarlac, in accordance with the provision as herein provided insofar as
applied to the Clark military reservations.
The governing body of the Clark Special Economic Zone shall likewise be
established by executive proclamation with such powers and functions exercised
by the Export Processing Zone Authority pursuant to Presidential Decree No. 66,
as amended.
The policies to govern and regulate the Clark Special Economic Zone shall be
determined upon consultation with the inhabitants of the local government units
directly affected which shall be conducted within six (6) months upon approval of
this Act.
Similarly, subject to the concurrence by resolution of the local government units
directly affected, the President shall create other Special Economic Zones, in the
base areas of Wallace Air Station in san Fernando, La Union (excluding areas
designated for communications, advance warning and radar requirements of the
Philippine Air Force to be determined by the Conversion Authority) and Camp
John Hay in the City of Baguio.
Upon recommendation of the Conversion Authority, the President is likewise
authorized to create Special Economic Zones covering the Municipalities of
Morong, Hermosa, Dinalupihan, Castillejos, and San Marcelino.
Sec. 16. Subsidiaries. - The Conversion Authority shall have the power to form,
establish, organize and maintain a subsidiary corporation or corporations. Such
subsidiary or subsidiaries shall be formed in accordance with the Philippine
Corporation Law and existing rules and regulations promulgated by the
Securities and Exchange Commission, unless otherwise provided in this Act. In
all cases, the Conversion Authority shall own initially at least ffity-one per centum
(51%) of the capital stock of a subsidiary. The Conversion Authority shall also
initially have the majority of the Board of Directors of the subsidiaries, of which at
least one (1) director shall be the chairman of the Conversion Authority and a
second director shall be the president of the Conversion Authority or his
designated representative.
Such subsidiaries shall be exempt from the coverage of the Civil service Laws,
rules and regulations.
Sec. 17. Supervision. The Conversion Authority shall be under the direct
control and supervision of the Office of the President for purposes of policy
direction and coordination.

Sec. 18. Legal Counsel. - Without prejudice to the hiring of an outside counsel,
the Government Corporate Counsel shall be the ex officio legal counsel of the
Conversion Authority, the governing boards of the Special Economic Zones and
the subsidiaries wherein the Conversion Authority owns the majority of the
shares of stocks, and for this purpose he may designate a full time representative
whose compensation shall be approved by the Board.
Sec. 19. Auditor. The Commission on Audit shall appoint a representative who
shall be the full time auditor of the Conversion Authority, its subsidiaries and the
Special Economic Zones and such personnel as may be necessary to assists
said representative in the performance of his duties. He is mandated to impose
pre-audit within thirty (30) days after submission of all proposed substantial
sales, transfer, and alienations of property. He shall likewise render a full report
thereof to Congress every sixty (60) days. The salaries of the auditor and his
staff shall be approved by the Board.
Sec. 20. Interim Capacity. - Except for the chairman of the Subic Authority, the
chairman and other members of the Board of the Conversion Authority and the
Subic Authority shall act in an interim capacity and shall serve until the 31st of
July 1992 or until such time that their successors shall have been duly appointed.
Sec. 21. Injunction and Restraining Order. - The implementation of the projects
for the conversion into alternative productive uses of the military reservations are
urgent and necessary and shall not be restrained or enjoined except by an order
issued by the Supreme Court of the Philippines.
Sec. 22. Separability Clause. - If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall
remain in full force and effect.
Sec. 23. Repealing Clause. - All laws, executive issuances or parts thereof which
are inconsistent herewith are hereby repealed or amended accordingly.
Sec. 24. Effectivity Clause. - This Act shall take effect upon its publication in at
least one (1) newspaper of general circulation.

Approved,
NEPTALI A. GONZALES
President of the Senate

RAMON V. MITRA
Speaker of the House of Representatives

This Act which is a consolidation of House Joint Resolution No. 10 and Senate
Bill No. 1648 was finally passed by the House of Representatives and the Senate
on February 5, 1992 and February 6, 1992, respectively.

ANACLETO D. BADOY, JR.

Secretary of the Senate

CAMILO L. SABIO
Secretary General
House of Representatives

Approved: March 13, 1992

CORAZON C. AQUINO
President of the Philippines