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SECTION 1.  Statement of Policy. — As provided in the 1987 Constitution, professionalism in the armed forces and adequate remuneration and benefits of its members shall be a prime concern of the State. Toward this end, the State shall develop implementing plans and programs to enhance professionalism in the Armed Forces of the Philippines (AFP) by improving the lot of its members.   

SEC. 2.  Pay Schedule.  — In order to enhance the general welfare, commitment to service and professionalism of the members of the Armed Forces of the Philippines (AFP), the rate of base pay of officers and enlisted personnel shall be adjusted in accordance with the following schedule:

RANK	SALARY GRADE
General	30
Lieutenant General	29
Major General	28
Brigadier General	27
Colonel	26
Lieutenant Colonel	25
Major	24
Captain	23
First Lieutenant	22
Second Lieutenant	21
Cadet/P2LT	19
Chief Master Sergeant	18
Senior Master Sergeant	17
Master Sergeant	16
Technical Sergeant	15
Staff Sergeant	14
Sergeant	13
Corporal	12
Private First Class	11
Private	10
Candidate Soldier	7

Provided,   That Civil Service Commission (CSC) qualification standards shall not apply to the AFP:  Provided, further, That the AFP, in coordination with the CSC, shall formulate a continuing program of education for all the officers and enlisted personnel of the AFP:  Provided, furthermore,  That all benefits currently received by members of the AFP under other existing laws shall continue to be received by them.  

SEC. 3.  Merit System. — The Department of National Defense (DND) shall establish a system which shall govern the selection, hiring, appointment, transfer, promotion or dismissal of all personnel and officers in the AFP. The system shall cover incentives to deserving soldiers and military personnel in the form of scholarship grants through coordination with the Department of Education (DepEd) and Commission on Higher Education (CHED), to their deserving children, hospital care, social services and other non-cash benefits aimed at strengthening professionalism and excellence in the AFP:  Provided,  That under the scholarship program, children of prisoners of war or those missing in action and of those who were killed in action or otherwise died as a result of such service may be awarded scholarship grants.

SEC. 4.  Housing Assistance Program.  — The DND in coordination with the Housing and Urban Development Coordinating Council shall establish a special housing assistance program for AFP officers and personnel whose objective is to ensure that every soldier has a home that is structurally sound, environmentally safe, affordable and located in a wholesome community.

Under the program, deserving soldiers and military personnel shall receive housing assistance whose amounts shall be based on rank, geographic location and family status: Provided,   That the family of those who were killed in battle or otherwise died as a result of such service may receive such assistance.

SEC. 5.  Appropriations.  — The amount necessary for the initial implementation of this Act shall be charged against the appropriations savings of the AFP and/or other definite sources as determined by the Department of Budget and Management (DBM) to be sufficient and readily available. Thereafter, such sum as may be necessary for the continued implementation of this Act shall be incorporated in the regular appropriations of the AFP in the annual General Appropriations Act.

SEC. 6.  Annual Report.   — The DND and DBM shall jointly submit to the President of the Senate and to the Speaker of the House of Representatives an annual report on the implementation of this Act. This report will include information on the application of the budget for the salary and other benefits provided under this Act. The DBM, in consultation with the DND, shall periodically review and adjust every five (5) years the rate of base pay taking into consideration labor productivity, consumer price index, oil price and other similar economic indicators as may be determined by the National Economic and Development Authority (NEDA). 

SEC. 7.  Implementation.— The implementation of this Act shall be undertaken in staggered phases, but not to exceed two (2) years taking into consideration the financial position of the national government:  Provided,   That any partial implementation shall be uniform and proportionate for all ranks.

SEC. 8. Implementing Guidelines. — The DBM and the DND/AFP shall issue the necessary implementing guidelines to carry out the provisions of this Act.

SEC. 9.  Repealing Clause.  — All laws, decrees, orders, rules and regulations, and all other issuances, or parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 10.  Effectivity.  — This Act shall take effect fifteen (15) days after its complete publication in the  Official Gazette  or in at least two (2) newspapers of general circulation, whichever comes earlier.

 Approved,
 

(Sgd.) FRANKLIN M. DRILON	(Sgd.) JOSE DE VENECIA JR.
President of the Senate	Speaker of the House of Representatives

This Act which is a consolidation of Senate Bill No. 2086 and House Bill No. 4579 was finally passed by the Senate and the House of Representatives on May 29, 2002. 

(Sgd.) OSCAR G. YABES	(Sgd.) ROBERTO P. NAZARENO
Secretary of the Senate	Secretary General House of Representatives

Approved: JUN 07 2002