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NUV 25 1'5 
REPUBLIC OF THE PHILIPPINES 
1 
Second Regular Session 
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Introduced by Senator FRANCIS G. ESCUDERO 
EXPLANATORY NOTE 
Health is a basic human right. Our constitution affirms this fundamental tenet 
when it declared as a policy of the State to "protect and promote the right to health of 
the people.. ." (Article 11, Sec. 15) 
Cognizant of this constitutional mandate, this bill seeks to convert the Eastern 
Regional Medical Center in Tacloban City into a Government Owned and Controlled 
Corporation (GOCC) and the Calbayog City District Hospital, as a subsidiary thereof. 
Public health care is one basic need that must be available and affordable to the 
citizenry especially the less fortunate. The Constitution has likewise guaranteed that 
"the State shall adopt an integrated and comprehensive approach to health 
development which shall endeavor to make essential goods, health and other social 
services available to all the people at affordable cost" (Article XIII, Sec. 11). 
The public health care center in the First District of Samar, consisting of 
Calbayog City and nine municipalities, is the Calbayog City District Hospital located in 
the Calbayog City proper. Since its operation in December 1957 it has always served the 
medical needs of the people of the First District of Samar. There are three existing 
private hospitals in the area whose services and facilities the poor people cannot afford 
to pay forcing them to go to Eastern Visayas Regional Medical Center (EVRMC) in 
Tacloban City. 
This deterioration brought about by the devolution and the astronomical fees of 
the three private hospitals add to the exodus of patients from the First District of Samar 
to EVRMC in Tacloban City. It is simply pathetic for patients of the Calbayog City 
District Hospital to be driven away because of lack of medical personnel, medicines, 
facilities and other necessary services. We have to consider the traveling expenses of 
patients who traveled 4-5 hours by very rough roads and the risks of dying on the way 
to Tacloban City. 
The LGU of Calbayog City has only one ambulance being used to transport 
patients once or twice daily from Calbayog City to Tacloban City. 
On the other hand, EVRMC has only a bed capacity of Two Hundred Fifty (250) 
serving the Four Million One Hundred Eighty Seven Thousand (4,187,000) populace of 
both Samar and Leyte. This is the very reason why there is a considerable number of 


patients not accommodated at once and many have to wait for their turn due to lack of 
available space in the hospital. 
It is hoped that with this bill, the foregoing problems may be resolved with 
dispatch and effectiveness. Transforming the EVRMC into a corporate entity and the 
Calbayog City District Hospital as a subsidiary thereof is to equip such hospitals the 
needed resource and organizational framework. 
Early passage of this bill is thus sought. 
FRANCI; G. ESCUDERO 


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Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
CONVERTING THE EASTERN VISAYAS REGIONAL MEDICAL CENTER 
IN TACLOBAN CITY INTO A GOVERNMENT OWNED AND 
CONTROLLED HOSPITAL CORPORATION AND THE CALBAYOG CITY 
DISTRICT HOSPITAL AS A SUBSIDIARY THEREOF AND 
APPROPRIATING FUNDS THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
WHEREAS, the President is given under existing laws the continuing 
authority to reorganize the National Government, including government owned 
or controlled corporations, having statutory and constitutional bases found in: 
Section 20, Book I11 of the Administrative Code of 1987 (Executive Order No. 292) 
on the President's residual powers; Presidential Decree No. 1416, as amended by 
Presidential Decree No. 1772; and Section 16, Article XVIII of the Constitution; 
WHEREAS, in the case of Larin vs. Executive Secretary (280 SCRA 713 
[1997j), the Supreme Court has categorically ruled that the above-enumerated 
laws exist, are valid and effective which constitute the bases for the President's 
continuing power or authority to reorganize the National Government; 
WHEREAS, pursuant to Section 11, Article XI11 of the 1987 Constitution, 
"the State shall adopt an integrated and comprehensive approach to health 
development which shall endeavor to make essential goods, health, and other 
social services available to all the people at affordable cost. There shall be priority 
for the needs of the underprivileged sick, elderly, disabled, women, and children. 
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The State shall endeavor to provide free medical care to paupers”. Section 12 of 
the same Article likewise mandates that ”the State shall establish and maintain 
an effective food and drug regulatory system and undertake appropriate health 
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manpower development and research, responsive to the country’s health needs 
and problems”. 
WHEREAS, it will take much longer time for government hospitals to 
become Centers of Excellence if they remain as budgetary line agencies under the 
Department of Health (DOH) and if current management practices and financing 
systems are followed; a comprehensive organizational change among these 
hospitals supported by management system reforms must be put in place to 
improve their existing conditions; 
WHEREAS, there is a need to demonstrate that corporate practices in 
government owned institutions will bring forth beneficial effects influenced by 
rewards for good performance and penalties for the lack of it, and there is a need 
further to demonstrate that these are effective not only in other industrial sectors 
but in the health sector particularly hospital institutions as well. 
WHEREAS, there is a need to convert some existing government hospitals 
into corporate entities or as government owned or controlled hospital 
corporation in order to strengthen their capability to more effectively deliver 
medical and hospital services to the CENTER (Eastern Visayas Regional Medical 
Center) based on pre-determined operational and performance indicators, has 
been identified as one of the DOH hospitals with the potential to operate as a 
government owned and controlled corporation and the Calbayog City District 
Hospital as its subsidiary; 
WHEREAS, the corporate re-structuring of government hospitals like the 
EVRMC and the Calbayog City District Hospital as subsidiary would enable 
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them to attain reasonable degree of financial, management and operation 
autonomy for efficiency and quality care; 
WHEREAS, this bill shall be the legal basis during the transition period to 
gather evidences of the applicability and success of corporate re-structuring of 
EVRMC and in due time when positive results have been achieved, eventual 
legislation shall be sought to convert the EVRMC into a corporate organization 
and the Calbayog City District Hospital in Calbayog City as subsidiary. 
SEC. 1. Skorf Title. - This shall be known as “An Act converting the 
EASTERN WSAYAS REGIONAL MEDICAL CENTER as a Government Owned 
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DISTRICTHOSPITAL us subsidiary”. 
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and Controlled Hospital Corporation (GOCHC) and the CALBAYOG CITY 
SEC. 2. Declaration of Princiioles and Policies. - Sections 11 and 12, Article 
XI11 of the Constitution of the Republic of the Philippines declares that the State 
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shall adopt an integrated and comprehensive approach to health development 
which shall endeavor to make essential goods, health, and other social services 
available to all the people at affordable cost; that there shall be priority for the 
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needs of the underprivileged sick, elderly, disabled, women, and children; that 
the State shall endeavor to provide free medica1 care to paupers; and that the 
State shall establish and maintain an effective food and drug regulatory system 
and undertake appropriate health manpower development and research, 
responsive to the country’s health needs and problems. 
In the pursuit of the Health Sector Reform Program undertaken by the 
National Government in coordination win other health partners, this Bill shall be 
anchored on those principles: 
a) Public health is a measure of the equitable distribution of the wealth 
and sustainable economic growth; 
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b) The citizens are entitled to a hospital care delivery system that is 
affordable, accessible and acceptable; 
c) Service provisions to less privileged and indigent patients shall be 
prioritized hence requiring necessary policy directions and financial 
support, closer cooperation with Local Government Units (LGUs) and 
other partners; 
d) Fiscal and management autonomy of the EVRMC will lead to better 
quality and more efficient delivery of health services; and 
e) The corporate form of organization will give hospital administrators 
the necessary flexibility for the effective stewardship of hospital areas, 
funds management and personnel supervision. 
SEC. 3. Name and Domicile.- The Eastern Visayas Regional Medical Center, 
with principal office at Mandurriao, Iloilo City, hereinafter referred to as 
EVRMC, is hereby converted into a pilot Government Owned and Controlled 
Hospital Corporation and the Calbayog City District Hospital with principal 
Office at Calbayog City, Samar as subsidiary. 
SEC. 4. Duration and Conditions ofExistence.- This bill shall serve to convert 
the EVRMC into a government owned and controlled corporation and the 
Calbayog City District Hospital as subsidiary for a period of five (5) years to 
commence at the beginning of the fiscal year 2009 up to the end of fiscal year 
2014 and shall be extended for another term of five (5) years upon the discretion 
of the DOH subject to the termination clause provided hereunder or until such 
that a Republic Act legislating the same has been passed. 
During this transition, it will. be monitored closely based on 
predetermined performance indices by the National Center for Health Facility 
Development of the DOH in order to determine the applicability of corporate re- 
structuring. If these said performance targets are not met or if backsliding is 
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noted within 5 years and / or if no significant improvement occurs after ten (10) 
years, upon the recommendation of the Secretary of Health, this corporatization 
act shall be revoked and the EVRMC and the Calbayog City District Hospital 
shall revert as a budgetary line agency under the DOH and the local government 
of Calbayog, respectively. In which case, the DOH shall issue the implementing 
rules and regulation to carry out this reversion. 
SEC. 5. General Objectives. - This Bill aims to: 
a) 
provide the Filipino people with a more affordable quality and 
timely hospital care through a more efficient health service 
delivery system; and 
As the main corporation, institute reforms in the organization, 
administration and financial management of the EVRMC as a 
means of reducing the cost and improving the quality of public 
health care; 
SEC. 6. Puwoses.- The EVRMC and the Calbayog City District Hospital 
shall have the following purposes: 
a) 
To provide and maintain affordable, quality and timely hospital 
care through a more efficient health service delivery system with 
priority for the needs of the underprivileged sick, elderly, 
disabled, women, and children and resources permitting, to 
provide free medical care to indigent citizens; 
To promote the development of hospital facilities of EVRMC, 
advancement in medical technology, and establishment of health 
care providers for the underprivileged; 
To foster hospital and medical service operation conditions 
conducive to the efficient delivery of health care to the public; 
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d) 
To promote, encourage and engage in scientific research on the 
prevention of deisease and the care and/or treatment of patients 
and related activities, including sponsorship and conduct of 
relevant congress, conventions, seminars and conferences; 
To encourage and/or undertake the training of physicians, 
nurses, medical technicians, health officers, social workers and 
other health professionals on the practical and scientific conduct 
and implementation of health and medical service, and related 
activities; and 
To extend services pursuant to the goals, objectives and rules of 
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the national health insurance program. 
SEC. 7. Poziiers and Functions.- The EVRMC and the Calbayog City 
District Hospital shall have the following powers and functions: 
a) To enter into contracts with any person or entity, domestic or 
foreign, and with government for the undertaking of the varied 
aspects of hospitals and health care operation, including the 
acquisition, any way of purchase, lease or rent or other deferred 
payment arrangements of equipment and/ or raw materials and 
supplies, as well as for services connected therewith such terms 
and conditions as it may deem proper and reasonable; 
b) To borrow money from local and foreign sources as may be 
necessary for its operations; 
c) To invest its funds as it may deem proper and necessary in any 
activity related to hospital or medical care operations, including 
any bonds or securities issued and guaranteed by the 
Government of the Philippines. 
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d) To authorize such expenditures by the Corporation as are in the 
interest of the effective administration and operation of the 
Corporation. 
e) To hold lands and acquire rights over lands of the areas 
permitted to corporations, associations and persons by statue; 
f) To engage in export and import business of medicines, medical 
equipment, hospital supplies and medical technology, as well as 
in related activities; 
g) To acquire assets, real or personal, or interests therein, and 
encumber or otherwise dispose the same as it may deem proper 
and necessary in the conduct of its business; 
h) Subject to existing laws and regulations, if it deems necessary, 
to establish and maintain such communication system, whether 
by radio, telegraph or any other manner; 
i) To establish and maintain offices, branches, agencies, 
subsidiaries, correspondents or other units anywhere as may be 
needed by the Corporation and reorganize or abolish the same 
as it may deem proper; 
To exercise the right of eminent domain as may be necessary for 
the purpose for which the Corporation is created; 
j) 
k) Subject to payment of the proper amount, to enter private lands 
for the purpose of conducting medical experiment, research and 
studies in connection with hospital and medical care operations; 
1) To acquire easement over public and private lands necessary for 
the purpose of carrying out any work essential to its hospital 
and medical care operations, subject to payment of reasonable 
consideration; 
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m) To establish and maintain administrative, management, 
professional and technical educational systems for the sustained 
development of the necessary manpower to manage and 
operate its affairs and business; 
n) To adopt a code of by-laws to complement this Bill; 
0) To promulgate such rules and regulations as may be necessary 
to carry out the purposes of this Bill; 
p) To adopt and use a corporate seal which shall be judiciary 
noticed 
q) To sue and be sued; 
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r) To accept any gifts, contributions, endowments, grants, 
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bequests and devices of any kind of real personal property 
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which are necessary and proper for the attainment of the 
purposes of the Corporation; 
s) To exercise the general powers mentioned in the Corporation 
Law, insofar as they are not inconsistent or incompatible with 
this Bill; 
t) To perform such acts and exercise such other functions as may 
be necessary for the attainment of the purposes and objectives 
herein specified and 
u) To perform such other mandates as may be provided by law. 
SEC. 8. Board of Trustees: Composition, Term of Office.- The affairs and 
business of EVRMC and the Calbayog City District Hospital shall be directed 
and its properties managed and preserved and its corporate powers exercised, 
unless otherwise provided in this Charter, by a Board of Trustees which shall be 
composed of ten (10) members, as follows: 
Voting members: 
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a. The Secretary of Health as Chairman of the board; 
b. The Philippines Health Insurance Corporation President or his 
duly authorized representative; 
c. The National Economic Development Authority Executive 
Director or his duly authorized representative; 
d. The Department of Budget and Management’s Secretary or his 
duly authorized representative. 
e. Chairpersons of the Committees on Health of both Houses of 
Congress; 
f. The duly elected president of the EVRMC employees or 
association, representing hospital personnel; 
g. A representative from the local, medical and allied professional 
organization; 
h. A representative from the people’s organization/socio- 
civic/non-government organization; 
A representative from the business sector; 
i. 
And a non-voting member: 
j. The EVRMC Director (Medical Center Chief), as Chief Executive 
Officer. 
The members of the Board enumerated in paragraphs (g), (h) to (i) shall be 
appointive while those in paragraphs (a), (b), (c), (d), (e), (f), and (j) the current 
EVRMC Director (Medical Center Chief) shall serve as ex-officio members. 
Appointments shall be made by the Secretary of Health for the first or initial 
appointees, and then by the Board of Trustees for subsequent appointees. 
The aforesaid appointive members of the Board of Trustees shall serve for 
a term of three (3) years who may be reappointed for a maximum of two terms; 
while the ex-officio member mentioned in paragraph (a), (b), (c), (d), (e), (f), and 
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(j) hereof shall serve as members of the Board of Trustees for the duration of their 
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incumbency as such. 
No person shall be appointed member of the Board of Trustees unless he 
/she is a citizen and a resident of the Philippines, of good moral character and 
has attained proficiency, expertise and recognized competence in one or more of 
the following: hospital finance and administration, medical care, public health, 
government rules and regulations, legal business management, and marketing. 
They should have at least five (5) years experience in their respective fields of 
expertise. 
The Board of Trustees shall be governed by a set of by-laws, which shall 
contain, among others, their responsibilities, accountabilities, and cause of 
termination. 
SEC. 9. Corporate Officers.- The Board of Trustees shall appoint a Secretary 
of the Board and such other officers as may be deemed necessary. Selection of the 
Corporate Officers must be based on the fundamental and specific duties and 
responsibilities prescribed by existing laws. 
SEC. 10. Chief Executive Officer.- The present Director of EVRMC shall 
assume the position of Chief Executive Officer (CEO) of the Corporation. As 
CEO, he/she shall be in-charge of the usual and regular course of business of the 
Corporation and shall be accountable to the Board of Trustees of the Corporation 
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SEC. 11. Corporate Structure.- EVRMC should follow the standard 
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corporate structure to be formulated by the DOH Central Office in coordination 
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with different agencies. 
who can remove or replace him/her only for cause (e.g., fraud, incompetence, 
dishonesty and the like.) and after due process. In case of vacancy after the 
assumption of office by the present Director of EVRMC, the next CEO shall be 
appointed by the Board of Trustees of EVRMC. 
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SEC. 12. Executive Committee and Other Committees.- The Board of trustees 
may, by resolution passed by a majority of all its members, create an Executive 
Committee of not more than five (5) members who shall be appointed by the 
Board. At least three (3) members of the Executive Committee shall be members 
of the Board. The Executive Committee shall have and exercise all such powers 
.as may be delegated to it by the Board. The Executive Committee shall keep 
regular minutes of its proceedings and report the same to the Board whenever 
required. The Board shall have the power to change the members of the 
Executive Committee at any time, to fill vacancies therein and to discharge or 
dissolve such committee either with or without cause. 
The majority of all the members of the Board of Trustees may by 
resolution create other committees with such powers and functions as may be 
delegated to them by the Board. AI1 such committees shall keep a record of their 
proceedings and report the same to the Board, whenever required. The Board 
shall have the power to appoint and remove the members of such committees 
and may at any time with or without cause dissolve any of such committees. 
SEC. 13. Board of Trustees' Meetinxs 
- and Quorum.- The Board of Trustees 
shall hold regular meetings at least once a month. Special meetings may be 
convened at the call of the Chairman or by majority of the members of the Board. 
The Chairman or his/her designated representative shall preside over the 
meetings of the Board. In the absence of the Chairman and his/her 
representative, a temporary presiding officer shall be designated by the majority 
of the quorum. Six (6) members of the Board of Trustees shall constitute a 
.quorum to transact business, and the vote of a majority of those present there 
being a quorum shall constitute a valid and binding act of the EVRMC. However, 
the affirmative vote of at least six (6) members of the Board is required on the 
following matters: 
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(a) Adoption or changes of policy; 
(b) Investments of EVRMC funds; 
(c) Contracting of loans, except as may be provided for in the 
implementing rules and regulations where a vote of a majority 
of those present there being a quorum shall suffice as to 
specified certain amounts of loan borrowed; 
(d) Appointment, discipline and termination of the EVRMC 
Hospital Chief Executive Officer/Director, but the appointment, 
discipline and termination of other officers and employees shall 
be by a majority of those present there being a quorum; 
(e) Authority to use Corporate assets as collateral for loans and 
borrowings. 
SEC. 14. Cornpensafion of Non-ymernment 
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members of the Board of Trustees.- 
The appointive non-government members of the Board shall be entitled to 
honorarium for each meeting actually attended at such amount as may be fixed by 
the Board in accordance with existing laws, rules and regulations. 
However, all Members of the Board of Trustees, by resolution of a 
majority of the members in good standing of the Corporation, claim expenses of 
attendance at regular or special meetings of the Board. Actual and necessary 
traveling expenses of the members of the Board while engaged in the service of 
the Corporation and in pursuit of its defined objectives and purposes may be 
allowed by special resolution of the Board. 
SEC. 15. Proper& of the EVRMC and Calbaiiog Ci& District Hospital.- The 
property of the EVRMC and Calbayog City District Hospital shall consist of such 
real, personal, mixed, and other types of 
reserved for or may hereafter be given 
conveyed to them by the Philippine 
property now owned by them or 
donated, acquired, transferred or 
Government, its branches and 
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instrumentalities, or any foreign government, as well as by trust, foundations, 
corporations, or persons, alien or domestic, in order to carry out their purposes 
and objectives as set forth herein. 
SEC. 16. Assistance from Government Offices, etc.- The EVRMC may call 
upon any department, bureau, office, agency or instrumentality of the 
Government, including government-owned or controlled corporations, for such 
assistance, as it may need in the pursuit of its purposes and objectives. 
All individuals, entities and institutions are hereby enjoined to render full 
assistance and cooperation to the EVRMC in the accomplishment of its objectives 
and activities. 
SEC. 17. Loans.- The Corporation is hereby authorized to contract loans, 
credits, and other indebtedness in any convertible foreign currency, from time to 
time, from foreign governments, or any international financial institutions or 
fund sources, or any other entities, on such terms and conditions it shall deem 
appropriate for the accomplishment of its purposes and to enter into and execute 
agreements specifying such terms and conditions. 
The property and assets of the corporation may be used as collateral for its 
loans and borrowings. 
SEC. 18. Exemption From Taxes and Duties.- The Corporation shall be 
exempt from the payment of taxes on all contributions thereto and all accruals on 
its income and investment earnings. 
Any donation, contribution, bequest, subsidy or financial aid which may 
be made to the Corporation shall constitute allowable deduction from the income 
of the donor for income tax purposes and shall be exempt from donor’s tax 
subject to such conditions as provided in the National Internal Revenue Code. 
The Corporation shall be exempt from all other taxes, whether direct or 
indirect, on its income, properties, and operations. 
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SEC. 19. Continuous and Subsequent Government Appropriations.- Amounts 
as may be necessary to further improve hospital facilities and support the 
continued operation and maintenance of the EVRMC and to continuosly 
subsidize their indigent patients based on the Department of Health Medical 
Social Worker classification shall be appropriated in the annual General 
Appropriations Act. 
SEC. 20. Auditor.- The Commission on Audit shall appoint a 
representative who shall be the auditor of the EVRMC and such personnel as 
may be necessary to assist said representative in the performance of his/her 
duty. 
SEC. 21. Civil Semice Law Coveraxe for Emp1ouees.- The hiring, appointment, 
promotion, discipline and other terms and conditions of the service of all 
employees of EVRMC and the Calbayog City District Hospital shall be consistent 
with the provisions of the Civil Service Law, rules and regulation, except as 
otherwise provided for in this Bill. 
SEC. 22. Salaries, benefits and other compensation. At least for the first three 
(3) years of existence of the EVRMC as a corporation, the compensation of its 
officers and employees shall be in accordance with RA 6758 otherwise known as 
the Salary Standardization Law. After said period and provided that EVRMC 
shall have then attained financial viability or capability, all positions therein shall 
be governed by compensation, position classification system and qualification 
standards approved by the Board of Trustees based on comprehensive job 
analysis and audit of actual duties and responsibilities. 
SEC. 23. Earlv Retirement and Separation Benefits.- Officials and employees 
of the EVRMC and the Calbayog City District Hospital voluntarily opt for 
separation or retirement shall be entitled to the benefits provided for under 
existing laws. 
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SEC. 24. Non-Re&ration 
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with the Securities and Exchange 
. Commission. The 
EVRMC as a government owned and controlled hospital Corporation and the 
Calbayog City District Hospital as subsidiary shall be governed by its charter 
and is prohibited from being registered in the Securities and Exchange 
Commission (SEC) as a private corporation. 
SEC. 25. Implementing - Rules and ReauZations.- 
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Within fifteen (15) days from 
completion of membership, the Board shall convene to formulate the rules and 
regulations necessary for the implementation of this House Bill, which shall be 
issued within (6) months. The implementing rules and regulations shall adopt 
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appropriate provisions of issuances of government agencies on corporate 
organizational structures as well as corporate governance. 
SEC. 26. Events of Early Termination.- Termination shall ensue at any time 
under any of the following circumstances: (a) In the event a law has been passed 
and approved by Congress authorizing the conversion of EVRMC into a 
corporation and the Calbayog City District Hospital as subsidiary; or (b) in the 
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event that the corporation shall fail to perform or to meet the pre-arranged 
indicators or to a degree such that in the reasonable opinion of the Secretary of 
the DOH such failure amounts to an ineffective management of the hospital and 
it jeopardizes the delivery of hospital and medical services. 
SEC. 27. Suppletow Application of Corporation Code.- The provisions of the 
Corporation Code shall have suppletory application in matters not provided for 
in this Bill and insofar as they are not inconsistent therewith. 
SEC. 28. Reports.- The Corporation shall, within three(3) months after the 
end of every fiscal year, submit such periodic or other reports as may be required 
of it from time to time to the DOH. 
SEC. 29. Trnnsfer ofPersonnel, Assets, Records and Equipment.- All personnel, 
assets, funds, records, equipment and liabilities of the EVRMC and the Calbayog 
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City District Hospital are hereby transferred to and shall henceforth appertain to 
EVRMC as a Corporation and the Calbayog City District Hospital as subsidiary. 
SEC. 30. Effect of Dissolution of the Center.- If, for any reason, the EVRMC is 
dissolved, its property and personnel remaining at the time of such dissolution 
shall revert to the Department of Health and the Calbayog City District Hospital 
shall revert to the Local Government of Calbayog City for disposition in 
accordance with law. 
SEC. 31. Effectivity.- This act shall take effect upon its approval. 
Approved, 
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