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SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session, 
) 
'14 
JAN 21 
P 2 :39 
SENATE 
S. No. 2074 
Introduced by Senator Ralph G. Recto 
Explanat()ry Note 
In 2012, Congress passed Republic Act No. 10351 or the Act Restructuring the Excise 
Tax on Alcohol and Tobacco Products (Sin Tax Reform Law) which primarily targets to reduce 
smoking- and alcohol-related diseases and deaths while raising more revenues for the 
government's health care programs. Under the law, the government earmarks, after deducting the 
allocations under R.A. Nos. 7171 and 8240, eighty pen.ent (80%) of the incremental revenue for 
universal health care, attainment of Millenium Development Goals (MDGs) and health 
awareness programs; and 20% for medical assistance and health enhancement facilities program 
nationwide. 
In 2013, the first year of the law's implementation, the Bureau ofInternal Revenue (BIR) 
already collected an increment~l revenue of P41 billion fr~m the excise tax on tobacco and 
alcohol products from January to November, higher by 20.7% percent against the P33.96-billion 
target for the full-year 2013. However, despite this increase in collection, it is unclear how this 
will be spent for the promised improvements '.in the delivery of public health services and 
universal health care, and promotion of alternative livelihoods to tobacco farmers and workers. 
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In the interest of transparency, the govermnent must inform the people where the money, 
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taken from them through taxes, would specifically be used. To ensure that the collected funds 
will reach directly their intended beneficiaries, this, bill identifies fixed percentages to meet and 
sustain the goal of universal coverage of the National Health Insurance Program, provide for the 
repair, maintenance and improvement of facilities of the 22 medical centers, 16 regional and 622 
district hospitals nationwide! and provide funding for an information campaign on the dangers of 
smoking and drinking. 
Our devolved health care service system appears to have led to the bypass of basic health 
care services provided by barangay health centers and city or rural health units in the referral 
system. Even in seeking basic' health services, people would go directly to hospitals which can 
provide a better and ,fuller range of facilities and services, thus, bearing the lion's share in the 
burden of delivering public health care services in the country. This results to hospitals' need for 
'more sources to fund the improvement oftheir services. 
As of 2012, out of the 1,824 licensed hospitals in the country, 729 or 40% are 
government-owned. Public hospitals are fewer in number, however, on the average, government 
hospitals are bigger.in size with a bed capacity of 68 compared to private hospitals with only 47 
bed capacitl., DOH-retained hospitals 'operate ~ith about 80% of their funds sourced from the 
General Appropriations Act (GAA) and 20% from their hospital income3. Meanwhile, allocation 
for Personnel Services (PS) comprise the largest share in the total budget of DOH hospitals 
followed bY,the budget for the Maintenance and Other Operating Expenses (MOOE) which is 
used for medical supplies and materials and the repair and maintenance of hospital facilities . 
I Figures as of2012. Source: Bureau ofI-Iealth Facilities and Services 
2 Source: Bureau of Health Facilities and Services, Department of Health 
3 Source: "I-low are Government Hospitals Perfonning?" PIDS Development Research News 


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The alfocation provided in this bill for me4ical centers, regional and district hospitals will 
supplement the meager budget from the GAA and is expected to allow provision of improved 
facilities and better services for the needs of their growing number of patients. 
Meanwhile, the allocation for the Philippine Health Insurance Corporation (PhiIHealth) 
will ensure that the goal of universal covl"rage of the National Health Insurance Program will be 
realized. It will also further strengthen the budget\lry support to the recently passed Republic Act 
No. 10606 or the National Health Insurance Act 0[2013. 
This scheme of earmarking fixed percentages will ensure that all the proposed programs 
will be strictly funded regardless of whether the. Bureau of Internal Revenue's yearly revenue 
targets are met or not. 
In view of the foregoing, immediate approval ofthis bill is earnestly sought. 
e j c v 


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• 
SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 2074 
Introduced by Senator Ralph G. Recto 
AN ACT 
'sttHtit> 
l~ff,;r ~f tit. $m.t .. ~ 
'14 
JAN 21 
P2 :39 
MODERNIZING GOVERNMENT HOSPITAL FACILITIES, PROVIDING SPECIAL 
FINANCIAL SUPPORT FOR HEALTII CARE COVERAGE AND AWARENESS 
PROGRAMS, AND FOR DISPLACED WORKERS IN THE ALCOHOL AND 
TOBACCO INDUSTRY AMENDJNG FOR THE PURPOSE' SECTION 288 OF THE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC 
ACT NO. 10351 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
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SECTION 1. Section 288, subsection C of the NIRC of 1997, as amended by Republic Act No. 
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10351, is hereby amended to read as follows: 
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"SEC. 288. Disposition of Incremental Rev~nues.-
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"x x x 
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"(C) Incremental Revenues from the Excise Tax on Alcohol and Tobacco 
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Products. - After deducting the allocations under Republic Act Nos. 7171 and 
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8240, [eighty percent (80%) of the remaining balance of the incremental 
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revenue derived from this Act shall be allocated for the universal health care 
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under the National Health Insurance Program, the attainment of the Millennium 
, 
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Development Goals and health awareness programs;. and twenty percent (20%) 
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shall be allocated nationwide, based on political and district subdivisions, for 
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medical assistance and health enhancement facilities program, the annual 
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requh'ements of which shall be determined by the Department of Health (DOH)] 
14TH,E :REMAINING BALANCE OF THE INCREMENTAL REVENUE 
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DERIVED FROM REPUBLIC ACT NO. 10351 SHALL BE ANNUALLY 
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ALLOCATED FOR'THE FOLLOWING: 
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n(l) "EIGHTY 
PERCENT 
(80%) 
SHALL BE 
DIRECTLY 
RELEASED TO THE PHILIPPINE HEALTH INSURANCE 
CORPORATION (PHILHEALTH) FOR THE PURPOSE OF 
MEETING AND SUSTAINING THE GOAL OF UNIVERSAL 
COVERAGE OF THE NATIONAL HEALTH INSURANCE 
PROGRAM: PROVIDED, THAT SAID AMOUNT SHALL 
NOT BE USED FOR PERSONNEL SERVICES, AS WELL AS 
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FOR TRAVEL, TRANSPORTATION OR REPRESENTATION 
EXPENSES, OR PURCHASE OF MOTOR VEHICLES; 
"(2) "SEVEN PERCENT (7%) TO BE DIVIDED EQUALLY AND 
RELEASED DIRECTLY 
BY THE DEPARTMENT OF 
BUDGET AND MANAGEMENT (DBM) TO EACH OF THE 
SIXTEEN (16) REGIONAL HOSPITALS AND TWENTY-
TWO (22) MEDICAL CENTERS FOR THE REPAIR, 
MAINTENANCE AND IMPROVEMENT OF FACILITIES 
A1;!D THE UPGRADING OF SERVICES; 
"(3) "TEN PERCENT (10%) TO BE DIVIDED EQUALLY AND 
RELEASED DIRECTLY BY THE DBM TO EACH OF THE 
, 
SIX 
HUNDRED 
TWENTY-TWO 
(622) 
DISTRICT 
HOSPITALS OPERATED BY LGUs FOR THE REPAIR, 
MAINTENANCE AND IMPROVEMENT OF FACILITIES 
AND THE UPGRADING OF SERVICES; 
"(4) "ONE PERCENT (1%) TO BE DIRECTLY RELEASED TO 
AND 
ADMINISTERED 
BY 
THE 
DEPARTMENT OF 
HEALTH (DOH) TO FINANCE A PUBLIC INFORMATION 
AND 
EDUCATION 
PROGRAM 
EXCLUSIVELY 
AND 
. DIRECT~Y AIMED TO PROVIDE HEALTH AWARENESS 
INFORMATION ON THE DANGERS OF SMOKING AND 
DRINKING; 
"(5) "ONE PERCENT (1%) TO BE DIRECTLY RELEASED TO 
AND ADMINISTERED BY THE DEPARTMENT OF LABOR 
AND 
EMPLOYMENT, (DOLE) 
TO 
FINANCE 
AN 
UNEMPLOYMENT 
BENEFIT 
PROGRAM . FOR 
THE 
DISPLACED 
WORKERS 
IN 
THE 
ALCOHOL 
AND 
TOBACCO 
INDUSTRY: 
PROVIDED, 
THAT 
THE 
UNEMPLOYMENT' BENEFIT SHALL BE EXTENDED TO 
THE DISPLACED WORKERS FOR A MAXIMUM PERIOD 
OF ONE (1) YEAR; AND 
"(6) "ONE PERCENT (1%) TO BE DIRECTLY RELEASED TO 
AND ADMINISTERED BY THE TECHNICAL EDUCATION 
AND SKILLS DEVELOPMENT AUTHORITY (TESDA) TO 
FINANCE 
THE 
RE-TRAINING 
AND 
RE-TOOLING 
PROGRAMS FOR THE DISPLACED WORKERS IN THE 
ALCOHOL AND TOBACCO INDUSTRY. 
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"THE EARMARKING PROVISIONS UNDER PARAGRAPHS (C)(S) 
AND (C)(6) HEREOF SHALL BE IMPLEMENTED FOR SIX (6) YEARS 
STARTING FROM JANUARY I, '20IS. 
"EFFECTIVE ON JANUARY I, 2021, THE ALLOCATION GRANTED 
UNDER PARAGRAPHS (C)(S) AND (C)(6) HEREOF SHALL ACCRUE TO 
THE GENERAL FUND." 
SEC. 2. Separability Clause. - If any part or provision of this Act shall be held to be 
unconstitutional or invalid, other parts or provisions hereof which are not affected thereby shall 
continue to be in full force and,effect. 
SEC. 3. Repeqling .Clause. - Section 9 of Republic Act No. 103S1 and all other laws, 
decrees, resolutions, orders or ordinances or parts thereof inconsistent with this Act, are hereby 
repealed, amended or modified accordingly. 
SEC. 4. Effectivity. - This Act shall take effect fifteen (IS) days after its publication in the 
Official Gazette or in at least two (2) ne:vspapers'of general circulation. 
Approved, 
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