REPUBLIC ACT NO.

7898
REPUBLIC ACT NO. 7898 - AN ACT PROVIDING FOR THE MODERNIZATION OF
THE ARMED FORCES OF THE PHILIPPINES AND FOR OTHER PURPOSES
Section 1. Short Title. - This Act shall be known as the "AFP Modernization Act."

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to modernize the
Armed Forces of the Philippines (AFP) to a level where it can effectively and fully perform its
constitutional mandate to uphold the sovereignty and preserve the patrimony of the Republic of
the Philippines. Toward this end, the principal thrusts of the modernization program under this
Act shall be:

(a) The development of a self-reliant and credible strategic armed force along the concept of a
"Citizens Armed Force"; the reconfiguration of the Armed Forces of the Philippines structure;
and the professionalization of the AFP;

(b) The undertaking of reforms in the recruitment, training, employment and management of
AFP personnel;

(c) The development, validation or modification of AFP doctrines;

(d) The acquisition and upgrading of appropriate technology and equipment; and

(e) The relocation, improvement, and construction of bases and other facilities.

Sec. 3. Objectives of the AFP Modernization Program. - The AFP modernization program shall
be implemented in accordance with the following objectives:

(a) To develop its capability to uphold the sovereignty and territorial integrity of the Republic
and to secure the national territory from all forms of intrusion and encroachment;

(b) To develop its capability to assist civilian agencies in the preservation of the national
patrimony, including the country's living and nonliving marine, submarine, mineral, forest and
other natural resources located within its territory and its exclusive economic zone (EEZ);

(c) To enhance its capability to fulfill its mandate to protect the Filipino people not only from
armed threats but from the ill effects of life-threatening and destructive consequences of natural
and man-made disasters and calamities, including typhoons, earthquakes, volcanic eruptions,
major accidents in far-flung or inaccessible terrain or at sea and from all forms of ecological
damage;

(d) To improve its capability to assist other agencies in the enforcement of domestic and foreign
policies as well as international covenants against piracy, white slavery, smuggling, drug
trafficking, hijacking of aircraft and seacraft and the transport of toxic and other ecologically-
harmful substances taking place in or through Philippine territory;

(e) To enhance its capability to assist the Philippine National Police in law enforcement and
internal security operations;

(f) To enhance its capability to fulfill the country's international commitments; and

(g) To develop its capability to support national development.

Sec. 4. Components of the AFP Modernization Program. - The AFP modernization program shall
consist of the following components:

(a) Force restructuring and organizational development. - The AFP modernization program shall
develop the AFP into a compact, efficient, responsive and modern force with the capability to
engage in conventional and/or unconventional warfare, disaster relief and rescue operations, and
contribute to economic development and other non-traditional military roles.

This component of the modernization program shall likewise provide for the identification,
organization, training and development of reserve force and affiliated reserve units in the AFP,
especially in the Navy and Air Force.

(b) Capability, material, and technology development. - The AFP modernization program entails
the development and employment of certain capabilities that can address the assessed threats:
provided, that the acquisition of air force, navy and army equipment and material of such types
and quantities shall be made in accordance with the need to develop AFP capabilities pursuant to
its modernization objectives: provided, further, that the acquisition of new equipment and
weapons systems shall be synchronized with the phase-out of uneconomical and obsolete major
equipment and weapons systems in the AFP inventory: provided, even further, that no major
equipment and weapons system shall be purchased if the same are not being used by the armed
forces in the country of origin or used by the armed forces of at least two countries: provided,
furthermore, that only offers from suppliers who are themselves the manufacturers shall be
entertained: provided, finally, that no supply contract shall be entered into unless such contract
provides for, in clear and unambiguous terms, an after-sales services and the availability of
spareparts.

(c) Bases/support system development. - The AFP modernization program shall entail the
development of permanent bases for land, air, and naval forces to conform with national defense
strategies and the government's socioeconomic thrusts; provide a systematic relocation of AFP
units to enhance their capability in the performance of their mission; provide adequate support
systems and housing facilities to AFP units and personnel; provide training grounds for
maneuver and territorial forces as well as the reserve components; and develop bases and camps
along standard criteria for space allocations, zoning and efficient correlation of land areas and
structure.

(d) Human resource development. - The human resource development component of the AFP
modernization program shall have the following objectives:

(1) To strengthen the patriotic spirit and nationalist consciousness of the military and respect for
people's rights in the performance of their duty;
(2) To develop and transform the AFP into a primarily external security-oriented force;

(3) To develop a compact, effective, efficient and responsive citizen-based force;

(4) To implement programs that will enable the AFP to perform its role in environment/resource
protection and multinational peace-keeping operations;

(5) To convert the AFP into a service/people-oriented and professionally united force; and

(6) To improve the quality of life of soldiers and their families and reorient values of all
personnel in the AFP.

(e) Doctrines and development. - The transition of the AFP from an internal security-oriented
force to an external security-oriented force requires the review, evaluation and validation of its
present set of doctrines for the purpose of formalizing such doctrines. Towards this end, the
Department of National Defense and the general headquarters, AFP shall be responsible for the
generation, evaluation, consolidation and formalization of doctrines; the conduct of periodic
review and validation of doctrines through field application, testing and exercises; and the
dissemination of approved doctrines at all levels of command.

The Secretary of National Defense shall formulate guidelines to implement this section in
accordance with the objectives of the modernization program enumerated in the preceding
section.

Sec. 5. Development of AFP Capabilities. - The AFP modernization program shall be geared
towards the development of the following defense capabilities:

(a) Development of naval defense capability - Given the archipelagic nature of the Philippines,
the Philippine Navy (PN) shall develop its capabilities for naval defense, amphibious warfare,
sealift and transport, and surface warfare; naval gunfire support, detection and maritime
surveillance, search and rescue, disaster response as well as capabilities for anti-air, anti-
submarine and mine warfare. The enhanced navy defense capabilities shall enable the AFP to:

(1) Develop its capabilities for naval defense;

(2) Conduct amphibious operations for both military and civilian relief operations;

(3) Defend the Philippine territorial seas, all its internal waters, as well as its 200-mile exclusive
economic zone (EEZ), from all forms of illegal intrusion or passage;

(4) Protect all submarine-based lines of domestic and international communication;

(5) Identify all vessels and monitor all kinds of surface and submarine passage through
Philippine territorial waters;
(6) Protect and preserve, through the Philippine Coast Guard (PCG), all coastal, near-coastal and
riparian living and non-living marine resources;

(7) Provide transportation of personnel and material in times of natural disaster and rescue
operations; and

(8) Provide, and if practicable, manufacture, through Filipino skills and technology, its own
requirements for seacraft and infrastructure supply and maintenance.

(b) Development of air defense capability. - The Philippine Air Force (PAF), being the country's
first line of external defense, shall develop its air defense capability by acquiring multi-role
aircraft, air munitions, avionics, point and area defense missile system, maritime patrol and
reconnaissance, and early warning and control system, as well as capabilities for strategic and
battlefield airlift and limited ground attack in support of surface forces. The enhanced air
defense capability shall enable the AFP to:

(1) Detect, identify, intercept and engage, if necessary, any aircraft illegally intruding into or
passing through Philippine airspace, up to areas near or around Philippine territorial limits;

(2) Provide air support to Philippine ground and naval armed forces;

(3) Provide airlift, search and rescue, rapid deployment and related support in combat as well as
disaster and other civilian relief operations; and

(4) Provide, and if practicable, manufacture, through Filipino skills and technology, its own
requirements for aircraft and infrastructure supply and maintenance.

(c) Development of ground defense capability - The fragmented nature of Philippine land
territory requires the Philippine Army (PA) to develop its capabilities for ground defense and
internal security as well as its capability for assistance to national development, search and
rescue operations, relief and rehabilitation, natural resources and environmental protection. The
enhanced army defense capabilities shall enable the AFP to:

(1) Locate and maintain adequate ground forces in strategic sites in the major islands of the
country capable of carrying out independent or joint defense operations;

(2) Transport personnel and equipment rapidly through all kinds of terrain in all kinds of weather
conditions;

(3) Conduct disaster relief and civilian engineering and construction operations;

(4) Monitor compliance with the enforcement, as the proper government agency may require, all
laws relating to the preservation and protection of forest, wildlife and mineral resources; and

(5) Provide, and if practicable, manufacture, through Filipino skills and technology, its own
requirements for personnel and infrastructure supply and maintenance.
(d) Development of general headquarters capability - The modernization of the AFP further
requires the development of the general headquarters capabilities for command, control,
communications, and information systems network.

Sec. 6. Period of Implementation. - The modernization program under this Act shall be
implemented over a period of fifteen (15) years: provided, however, that payments for
amortization of outstanding multi-year contract obligations incurred under this Act may extend
beyond this period.

Sec. 7. Submission of the AFP Modernization Program. - (a) Within ninety (90) days from the
effectivity of this Act, the President, upon the recommendation of the Secretaries of National
Defense and Budget and Management, shall submit the AFP modernization program as provided
for in this Act to Congress for its consideration and approval in a joint resolution of the House of
Representatives and the Senate. The program shall indicate or show inter alia:

(1) The size and shape of the AFP in terms of personnel, equipment, and facilities during the
various phases of the modernization program;

(2) The modernization projects under it, including the major weapon and non-weapon equipment
and technology acquisitions sought by the respective services and units of the AFP, any major
infrastructure construction or improvement to be made and the particular objective(s) and
component(s) under Sections 3 and 4, respectively, of this Act to which such intended
acquisition, construction or improvements belongs; and

(3) The priorities, schedules as well as estimated average cost of each modernization project or
upgrading to be undertaken.

(b) In the event Congress approves the AFP modernization program, the joint resolution shall be
the basis for subsequent executive and legislative actions to implement the AFP modernization
program from year to year until its complete and full realization.

Sec. 8. Appropriations for the AFP Modernization Program. - The annual appropriations for the
AFP modernization program shall include the amounts necessary to support the funding
requirements for all modernization projects approved by Congress under the preceding section.

The funds to be appropriated by Congress under this Act shall be treated as a distinct and
separate budget item from the regular appropriation for the Department of National Defense
(DND) and the AFP and shall be administered by the Secretary of National Defense.

The proposed program shall be based on a ceiling, for the first five (5) years, of Fifty billion
pesos (P50,000,000,000.00): provided, that thereafter, this amount may be increased
commensurate to the increase in the Gross National Product (GNP).

Sec. 9. Multi-year Contracts and Other Contractual Arrangements. - (a) The Secretary of
National Defense, pursuant to the AFP modernization program, projects and appropriations
approved by Congress, may, subject to the approval by the President, provisions of existing laws
and regulations including those of the Commission on Audit and under such terms and
conditions most favorable to the government, enter into multi-year contracts, lease and lease-
purchase agreements.

(b) For multi-year contracts, Congress shall, upon certification by the President, make the
corresponding appropriation for the ensuing fiscal year: provided, that Congress shall
appropriate only such funds as may be necessary to pay any unpaid amount where such funds
mentioned in Section 11 of this Act are not sufficient or available to meet such payment in full or
in part.

(c) The Secretary of National Defense shall submit to Congress, through the chairmen of the
Senate Committees on National Defense and Security and Finance and the chairmen of the
House Committees on National Defense and Appropriations, copies of these multi-year contracts
and other agreements/arrangements to enable Congress to appropriate funds.

SECTION 10. Self-Reliant Defense Posture Program. - (a) In implementing the modernization
program, the AFP shall, as far as practicable, give preference to Filipino contractors and
suppliers or to foreign contractors or suppliers willing and able to locate a substantial portion of,
if not the entire, production process of the item(s) involved, within the Philippines.

(b) In order to reduce foreign exchange outflow, generate local employment opportunities and
enhance technology transfer to the Philippines, the Secretary of National Defense shall, as far as
feasible, incorporate in each contract/agreement special foreign exchange reduction schemes
such as countertrade, in-country manufacture, co-production, or other innovative arrangements
or combinations thereof.

(c) The AFP likewise ensure that in negotiating all applicable contracts or agreements, provisions
are incorporated respecting the transfer to the AFP of the principal technology involved as well
as the training of AFP personnel to operate and maintain such equipment or technology.

SECTION 11. AFP Modernization Act Trust Fund. - There is hereby created a trust fund, to be
known as the AFP Modernization Act Trust Fund. Said trust fund, which shall be used
exclusively for the AFP modernization program, but not to include salaries and allowances, shall
be funded out of the following:

(a) Appropriations for the AFP modernization program;

(b) The proceeds from the sale, lease or joint development of military reservations, as may be
authorized by Congress, including such immovable and other facilities as may be found therein,
not covered by the Bases Conversion Development Authority, as provided for in Republic Act
No. 7227;

(c) Shares of the AFP from the proceeds of the sale of military camps provided for under
Republic Act No. 7227;
(d) Proceeds from the sale of the products of the government arsenal;

(e) The proceeds from the disposal of excess and/or uneconomically repairable equipment and
other movable assets of the AFP and the government arsenal; i

(f) Funds from budgetary surplus, if any, as may be authorized by Congress subject to the
provisions of Sec. 8 of this Act; and

(g) All interest income of the trust fund.

The trust fund shall be administered by the Secretary of National Defense in accordance with
existing government auditing rules and regulations.

SECTION 12. Modernization of the Government Arsenal. - The modernization of the

SECTION 13. Austerity and Use of Savings. - Effective upon the approval of this Act, the
Secretary of National Defense, shall submit to Congress, within the first quarter of the
succeeding year, a report on:

(a) The amount of all unused or undisbursed funds, other than unused appropriations for salaries
and benefits of the AFP personnel, remaining from all previous DND and AFP appropriations;
and

(b) The amount of savings from austerity measures, which are hereafter to be pursued by all
services and units of the AFP, generated in the previous fiscal year.

The savings generated under this section are hereby authorized to be used to augment funds for
the AFP modernization program.

SECTION 14. AFP Procurement System. - The DND-AFP shall strengthen its systems and
procedures for equipment acquisition, taking into account new requirements under the AFP
modernization program. Contract negotiations and equipment acquisition shall be treated as two
sequential but separate steps, each requiring the separate decision of the Secretary of National
Defense. The decision making process for equipment acquisition shall start at the appropriate
service command and submitted to the AFP Weapons Systems Board, while contract negotiation
shall start at general headquarters AFP level. In its system and procedures for equipment
acquisition, the provisions of Presidential Decree No. 1594, as amended, and other applicable
laws shall apply.
SECTION 15. Guidance for the President. - To meet unforeseen national security emergencies,
the President, upon the recommendation of the Secretary of National Defense, may modify the
program through substitution or revision of a component project therein: provided, however, that
he shall report such action to Congress within thirty (30) days.

SECTION 16. Annual Reports. - Not later than the end of the first quarter of the succeeding
year:

(a) The Secretary of National Defense shall submit to the President and Congress an annual
report on the status of the AFP Modernization Act Trust Fund, as provided for in Section 11 of
this Act;

(b) The Chief of Staff, AFP, shall submit to the President and Congress, through the Secretary of
National Defense, an annual report containing the progress of the implementation of the
modernization program under this Act to include the AFP modernization activities implemented
prior to the approval of this Act.

SECTION 17. 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.

SECTION 18. Repealing Clause. - All laws, executive orders, rules and regulations inconsistent
with or contrary to this Act, are hereby deemed accordingly repealed or amended.

SECTION 19. Effectivity Clause. - This Act shall take effect after fifteen (15) days from its
publication in at least two (2) newspapers of national circulation.

Approved: February 23, 1995