Bases Conversion and Development in the Philippines: How the BCDA Works

The Bases Conversion and Development Authority (BCDA) is the government corporation created by Republic Act No. 7227, the Bases Conversion and Development Act of 1992, to convert former military reservations into productive civilian use. The law covers the Clark and Subic military reservations and their extensions — John Hay Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel Naval Communications Station and Capas Relay Station — and authorizes the sale of portions of Metro Manila military camps to fund that conversion. Development happens through comprehensive plans, special economic zones, subsidiary corporations, and private-sector participation.

What the BCDA is and what it is meant to do

Section 3 of Republic Act No. 7227 created the BCDA as a body corporate with perpetual succession, vested with the powers of a corporation. It was to be organized within thirty (30) days after the law's approval and given a term of fifty (50) years from organization, although Congress may dissolve it by joint resolution once its primary purpose is accomplished. Its principal office is in Metropolitan Manila.

Section 4 lists the BCDA's purposes. These include owning, holding and administering the named military reservations and those portions of Metro Manila military camps transferred to it by the President; adopting and implementing a comprehensive development plan for the sound and balanced conversion of the Clark and Subic reservations consistent with ecological and environmental standards; encouraging active private-sector participation in the conversion; serving as a holding company for subsidiary companies; managing and operating developmental projects through private sector companies; consulting with local government units; and planning the readjustment, relocation or resettlement of affected populations.

The BCDA's powers over converted base lands

Section 5 vests the BCDA with the powers needed to carry out these objectives. Among them:

• Enter into contracts of every class necessary or incidental to its purposes, with private or public persons and firms, and with foreign government entities.
• Construct, own, lease, operate and maintain public utilities and infrastructure facilities.
• Acquire, own, hold, administer and lease real and personal properties, and encumber, lease, mortgage, sell, alienate or otherwise dispose of the same at fair market value.
• Reclaim or undertake reclamation projects in areas adjacent or contiguous to its lands, either alone or with the Public Estates Authority.
• Exercise the right of eminent domain.
• Exercise oversight functions over the special economic zones declared under the Act and by subsequent presidential proclamations.
• Promulgate all necessary rules and regulations.

Under Section 6, the BCDA has an authorized capital of One hundred billion pesos (P100,000,000,000), which may be fully subscribed by the Republic and paid up either from the proceeds of sales of its land assets or by transferring properties valued in that amount.

How former base lands are transferred and funded

Section 7 directs the President to transfer to the BCDA the military reservations identified in the law, including John Hay Air Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel Naval Communications Station and Mt. Sta. Rita Station in Hermosa, Bataan, as well as other properties such as portions of Metro Manila military camps. Areas that will remain military reservations are to be delineated and proclaimed as such by the President.

Section 8 sets out the funding scheme. The BCDA's capital comes from sales proceeds and/or transfers of certain Metro Manila military camps, including lands covered by Proclamation No. 423, series of 1957 — commonly known as Fort Bonifacio and Villamor (Nichols) Air Base. The law lists specific camps and areas for disposal in Phase I and Phase II, and expressly exempts certain areas from sale, such as portions of Fort Bonifacio for the NCR Security Brigade and related support services, portions of Villamor Air Base for the Presidential Airlift Wing, and areas covered by enumerated proclamations.

The President is authorized to sell these lands, which are declared alienable and disposable under existing laws governing sales of government properties. Crucially, no sale or disposition may be undertaken until a development plan embodying projects for conversion is approved by the President in accordance with Section 4. Six months after the law's approval, however, the President shall authorize the BCDA to dispose of certain areas in Fort Bonifacio and Villamor as it determines, with a report to the President within one month.

Sale proceeds are allocated by fixed percentages: thirty-two and five-tenths percent (32.5%) for the transfer of AFP military camps, the AFP self-reliance and modernization program, housing and livelihood assistance, and medical facilities; fifty percent (50%) to finance the conversion and commercial uses of the Clark and Subic reservations; five percent (5%) for housing loan assistance for the homeless of Metro Manila, Olongapo City, Angeles City and affected municipalities; and the balance to the National Treasury for programs for the economic upliftment of the Filipino people. For Fort Bonifacio, two and five tenths percent (2.5%) of proceeds goes in equal shares to the Municipalities of Makati, Taguig and Pateros.

Special economic zones inside converted areas

Conversion often takes the form of special economic zones. Section 12 created the Subic Special Economic Zone, subject to concurrence by resolution of the sangguniang panlungsod of Olongapo and the sangguniang bayan of Subic, Morong and Hermosa. Within the zone, and subject to the Constitution and the Local Government Code, no taxes, local and national, shall be imposed; in lieu of taxes, three percent (3%) of gross income earned by businesses in the zone is remitted to the National Government, with one percent (1%) each to affected local government units, plus a one percent (1%) development fund.

Section 13 created the Subic Bay Metropolitan Authority as the operating and implementing arm of the BCDA. Section 15 authorizes the President, subject to concurrence by the affected local government units, to create by executive proclamation a Special Economic Zone covering the Clark military reservations, and to create other zones in the base areas of Wallace Air Station in San Fernando, La Union, and Camp John Hay in Baguio.

Who may participate and how projects are structured

Section 10 provides that, as much as possible, major conversion projects shall be undertaken under the complete project turnkey or build-operate-transfer (BOT) scheme as provided under Republic Act No. 6957. Starting the fourth year of the BCDA's full operation, a privatization or divestment program of its projects and subsidiaries shall begin under general guidelines prescribed by the President.

Section 16 allows the BCDA to form subsidiary corporations under the Philippine Corporation Law, provided the BCDA initially owns at least fifty-one per centum (51%) of the capital stock and holds the majority of the board, with the BCDA chairman and president among the directors. These subsidiaries are exempt from the coverage of the Civil Service Laws.

For investors, the practical entry point is the private-sector participation contemplated in Section 4, whether through BOT arrangements, joint ventures, or locator registration in the relevant economic zone. Section 17 places the BCDA under the direct control and supervision of the Office of the President for policy direction and coordination.

Frequently asked questions

Who owns the former military bases in the Philippines? The BCDA owns, holds and administers the military reservations transferred to it under Republic Act No. 7227, including the Clark and Subic reservations and their extensions, while areas that remain military reservations are delineated and proclaimed as such by the President.

Can the BCDA sell former base land? Yes. Under Section 8, the President is authorized to sell lands covered by the funding scheme, which are declared alienable and disposable. No sale may be undertaken until a development plan embodying conversion projects is approved by the President.

What incentives apply inside a converted base ecozone? In the Subic Special Economic Zone, no local or national taxes are imposed; instead, three percent (3%) of gross income earned is remitted to the National Government, with one percent (1%) each to affected local government units and a one percent (1%) development fund.

Practical takeaways

• The BCDA is a corporate body created by Republic Act No. 7227 with a 50-year term, oversight over special economic zones, and the power of eminent domain.
• Land sales in Metro Manila military camps fund conversion, with fixed statutory shares for the AFP, Clark and Subic, housing assistance, and the National Treasury.
• No disposition of covered lands may proceed without a Presidentially approved development plan.
• Major conversion projects are meant to use turnkey or build-operate-transfer schemes, with privatization beginning in the fourth year of full operation.
• Subic and Clark operate as special economic zones with their own tax regimes and implementing authorities.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 10083 - AN ACT AMENDING REPUBLIC ACT NO. 9490, OTHERWISE KNOWN AS THE "AURORA SPECIAL ECONOMIC ZONE ACT OF 2007"

• REPUBLIC ACT NO. 7227 - AN ACT ACCELERATING THE CONVERSION OF MILITARY REVERVATIONS INTO OTHER PRODUCTIVE USES, CREATING THE BASES CONVERSION AND DEVELOPMENT AUTHORITY FOR THIS PURPOSE, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.