The plan calls for transforming a small existing naval facility at Oyster Bay, a cove within Ulugan Bay on Palawan island, into a fully-fledged operating base within five years for Philippine naval frigates to berth.
Catapang also said this week that warships from the United States, Japan, Australia and Vietnam would be welcome to make port calls.
The U.S. Navy could refuel and resupply at the base, he added, although the Philippine navy has said it would be hard to accommodate destroyers and aircraft carriers because of the bay's relatively shallow water.
Washington has already asked for access to Philippine military bases in eight locations to rotate troops, aircraft and ships for training as the United States shifts more of its forces to Asia, Catapang said last month.
Developing the mangrove-fringed bay into a major naval base could exacerbate tensions with China, which claims sovereignty over almost the entire South China Sea, including the Spratlys. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also claim parts of the vital waterway.
Read MoreChinese naval push could affect global trade
When Reuters visited the Ulugan Bay area this week, workers were busy cutting through Palawan's forest, building an access road to Oyster Bay, which is otherwise only accessible by boat.
The 12-km (7.5-mile) long, two-lane paved road should be ready within a few months, the workers said.
When road construction began in October 2013, residents told Reuters their concerns: bars and brothels would mushroom while fishing might be declared off-limits because of the naval activity.
The Philippines once hosted a giant American naval facility at Subic Bay, northwest of Manila, until it was closed in 1992 following a Philippine Senate vote.
What still rankles with some Filipinos were the brothels in nearby Olongapo City - around 500 establishments according to one local non-governmental organisation.
Environmental activists oppose the road to Oyster Bay, but local residents have their eyes on China, which last month defended its reclamation in the Spratlys, saying the new islands would provide civilian services such as weather forecasting and search and rescue facilities that would benefit other countries.
Read MoreMrs Xi Jinping: China's new source of soft power?
The majority of people in Macarascas supported the naval expansion plan, said Villarin.
Another Macarascas resident, Gerry Ginez, said a U.S. naval presence was needed to help protect the Philippines.
Carlos Quirante, head of the nearby village of Bahile, said he once opposed the base expansion, but could now feel tensions rising over China's island building.
"If this will help national security, who are we to oppose the construction of a naval base? Patriotism should be above personal interest," he said.