FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.No. 2866 
'11 
JUN -7 ,L\ll :21 
Introduced by Senator FRANCIS G. ESCUDERO 
EXPLANATORY NOTE 
Article II, Section 15 of our Constitution declares as a policy of the State 
"to protect and promote the right to health of the people and instill health 
consciousness among them" 
In 1999, the Depaxtment of Health (DOH) initiated the Health Sector 
Reform Agenda, a component of which is the Hospital System Reform which 
aims to provide fiscal and management autonomy to public hospitals. 
The 
reform is envisioned to improve the quality of hospital care through better 
governance, fiscal management and wider sources of financing without 
sacrificing the availability of hospital services to the poor. It is within this 
framework that re-structuring of DOH Hospitals into government owned and 
controlled hospital corporation is being pursued by the DOl-I. 
House Bill 103, filed in the House of Representatives, entitled" An Act 
Converting the Western Visayas Medical Center into a Government-Owned and 
Controlled Corporation with the San Joaquin Municipal Hospital as its 
Subsidiary and Appropriating Funds Therefore" introduced by Representative 
Janette Loreto-Garin, seeks to address the glaring need for better and efficient 
hospital care and service to the constituency in Western Visayas and in support 
to the Health Sector Reform Agenda. Western Visayas Medical Center (WVMC), 
if given fiscal and management autonomy, is very much capable of improving its 
hospital services. 
In view of the foregoing, the approval of this counterpart bill is earnestly 
recommended. 
~ 
FRANCIS G. ESCUDERO 


FIFTEENTH CONGRESS OF THE 
) 
"11 
JUN -7 All :21 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 2866 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT CONVERTING THE WESTERN VISAYAS MEDICAL 
CENTER 
INTO A GOVERNMENT-OWNED AND -CONTROLLED HOSPITAL 
CORPORATION WITH THE SAN JOAQUIN MUNICIPAL HOSPITAL 
AS ITS SUBSIDIARY AND APPROPRIATING FUNDS THEREFOR 
Be it enacied by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. 
Short Tille. - This Act shall be known as "The Conversion of 
2 
the Western Visayas Medical Center to a Government-Owned and -Controlled 
3 
Hospital Corporation (GOCC) with the San Joaquin Municipal Hospital as its 
4 
Subsidiary". 
5 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State 
6 
to adopt an integrated and comprehensive approach to health development 
7 
which shall endeavor to mal<e essential goods, health and other social services 
8 
available to all the people at affordable cost; to prioritize the needs of the 
9 
underprivileged, sick, elderly, disabled, women and children; to provide free 
10 
medical care to paupers; to establish and maintain an effective food and drug 
11 
regulatory system; and to undertake appropriate health manpower development 
12 
and research responsive to the country's health needs and problems. 
13 
In the pursuit of the Health Sector Reform Program undertaken by the 
14 
national government in coordination with other health partners, this Act shall be 
15 
anchored on these principles: 
16 
(a) Public health is a measure of the equitable distribution of wealth and 
17 
sustainable economic growth; 
18 
(b) The citizens are entitled to a hospital care delivery system that is 
19 
affordable, accessible and acceptable; 


(e) Service provision to less privileged and indigent patients shall be 
2 
prioritized hence requiring necessary policy directions and financial support, 
3 
closer cooperation with local government unit (LGU) and other partners; 
4 
(d) Fiscal and management autonomy of the Western Visayas Medical 
5 
Center will lead to better quality and more efficient delivery of health services; 
6 
and 
7 
(e) The corporate form of organization will give hospital administrators the 
8 
necessary flexibility for the effective stewardship of hospital assets, funds, 
9 
management and personnel supervision. 
10 
SEC. 3. Name and Domicile. - The Western Visayas Medical Center, with 
II 
principal office at Mandurriao, Iloilo City, hereinafter referred to as the WVMC, 
12 
is hereby converted into a pilot government-owned and -controlled hospital 
13 
corporation, hereinafter referred to as the Corporation, with the 
San Joaquin 
14 
Municipal Hospital as its subsidiary, with principal office at 
15 
Iloilo. 
San Joaquin, 
16 
SEC. 4. Duration and Conditions of Existence. 
The conversion of the 
17 
WVMC as a government-owned and -controlled corporation, with the San 
18 
Joaquin Municipal Hospital as its subsidiary, shall be for a period of five (5) years 
19 
to commence at the beginning of the fiscal year 2010 up to the end of fiscal year 
20 
2015 and shall be extendable for another term of five (5) years upon the 
21 
discretion of the Department of Health (DOl-I) subject to the termination clause 
22 
provided hereunder or as subsequent legislation may provide. 
23 
During this transition, it will be monitored closely based on predetermined 
24 
performance indices by the National Center for Health FaCility Development 
25 
(NCHI'D) in order to determine the applicability of corporate restructuring. If 
26 
these said performance targets are not met or if backsliding is noted within five 
27 
(5) years and/ or if no significant improvement occurs after ten (10) years, upon 
28 
the recommendation of the Secretary of Health, this corporation Act shall be 
29 
revoked and the WVMC shall revert as a budgetary line agency under the DOH 
30 
and the San Joaquin Municipal Hospital shall revert to the local government of 
31 
San Joaquin. In this event, the DOH shall formulate the implementing rules and 
32 
regula tions (IRR) to carry out this reversion. 
33 
SEC. 5. General Objectives. - This Act has the following general objectives: 
34 
(a) Provide the Filipino people with a more affordable, quality and timely 
35 
hospital care through a more efficient health service delivery system; and 


(b) Institute reforms in the organization, administration and financial 
2 
management of the WVMC as a means of reducing the cost and improving the 
3 
quality of public health care. 
4 
SEC. 6. Purposes. -
The WVMc. with the San Joaquin Municipal Hospital 
5 
as its subsidiary, shall have the following purposes: 
6 
(a) To provide and maintain affordable, quality and timely hospital care 
7 
through a more efficient health service delivery system with priority for the 
8 
needs of the underprivileged sick, elderly, disabled, women and children, and 
9 
resources permitting to provide free medical care to indigent citizens; 
10 
(b) To promote the development of hospital facilities of the WVMC, 
II 
advancement in medical technology and establishment of health care providers 
12 
for the underprivileged; 
13 
(c) To foster hospital and medical service operation conditions conducive to 
14 
the efficient delivery service to the public; 
15 
(d) To promote, encourage and engage in scientific research in the 
16 
prevention of diseases and the care and/or treatment of patients and related 
17 
activities, including scholarship and conduct of relevant congresses, conventions, 
18 
seminars and conferences; 
19 
(e) To encourage and/or undertake the training of phYSicians, nurses, 
20 
medical technicians, health officers, social workers and other health professionals 
21 
on the practical and scientific conduct and implementation of health and medical 
22 
services, and related activities; and 
23 
(f) To extend services pursuant to the goals, objectives and rules of the 
24 
National Health Insurance Program (NHIP). 
25 
SEC. 7. Powers and Functions. -
The WVMC and its subsidiary, the San 
26 
Joaquin Municipal Hospital, shall have the following powers and functions: 
27 
(a) To enter into contracts with any person or entity, domestic or foreign, 
28 
and with the government for the undertaking of the varied aspects of hospital 
29 
and health care operation, including the acquisition, by way of purchase, lease or 
30 
rent or other deferred payment arrangements of equipment and/ or raw 
31 
materials and supplies, as well as for service connected therewith under such 
32 
terms and conditions as it may deem proper and reasonable; 
33 
(b) To borrow money from local and foreign sources as may be necessary 
34 
for its operations; 


(c) To invest its funds as it may deem proper and necessary in any activity 
2 
related to hospital or medical care operations, including any bonds or securities 
3 
issued and guaranteed by the government of the Philippines; 
4 
(d) To authorize such expenditures by the Corporation in the interest of 
5 
effective administration and operation of the Corporation; 
6 
(e) To hold and acquire rights over lands of the areas permitted to 
7 
corporations, associations and persons by statute; 
8 
(f) To engage in export and import business of medicines, medical 
9 
equipment, hospital supplies and medical technology, as well as in related 
10 
activities; 
II 
(g) To acquire assets, real or personal, or interest therein, and encumber or 
12 
otherwise dispose the same as it may deem proper and necessary in the conduct 
13 
of its business; 
14 
(h) Subject to existing laws and regulations, if it deems necessary, to 
15 
establish and maintain such communication system, whether by radio, telegraph 
16 
or any other manner; 
17 
(i) To establish and maintain offices or other units anywhere as may be 
18 
needed by the Corporation and reorganize or abolish the same as it may deem 
19 
proper; 
20 
U) To exercise the right of eminent domain as may be necessary for the 
21 
purpose which the Corporation is created; 
22 
(k) Subject to payment of the proper amount, to enter private lands for 
23 
purposes of conducting medical experiment, research and studies in connection 
24 
with hospital and medical care operations; 
25 
(1) To acquire easement over public and private lands necessary for the 
26 
purpose of carrying out any work essential to its hospital and medical care 
27 
operations, subject to payment of reasonable consideration; 
28 
(m) 
To 
establish 
and 
maintain 
administrative, 
management, 
29 
professional and technical educational systems for the sustained development of 
30 
the necessary manpower to manage and operate its affair and business; 
31 
(n) To create position items and hire personnel to fill up such created 
32 
positions; 
33 
(0) To promulgate such rules and regulations as may be necessary to carry 
34 
out the purpose of this Act; 
35 
(p) To adopt and use a corporate seal which shall be judiCially noticed; 
36 
(q) To sue and be sued; 


(r) To accept any gift, contribution, endowment, grant, bequest and device 
2 
of any kind of real or personal property which are necessary and proper for the 
3 
attainment of the purposes of the Corporation; 
4 
(s) To exercise the general powers mentioned 111 the Corporation Law, 
5 
insofar as they are not inconsistent or incompatible with this Act; 
6 
(t) To perform such acts and exercise such functions as may be necessary 
7 
for the attainment of the purposes and objectives herein specified; and 
8 
(u) To perform such other functions as may be provided by law. 
9 
SIie. 8. Hoard of Trustees. - The affairs and business of the WVMC and its 
10 
subsidiary, the San Joaquin Municipal Hospital, shall be directed and its 
11 
properties managed and preserved and its corporate powers exercised, unless 
12 
otherwise provided in this charter, by a Board of Trustees, which shall be 
13 
composed of ten (10) members, as follows: 
14 
Voting m.embers: 
15 
(a) The Secretary of the Department of Health as Chairman of the Board; 
16 
(b) The President of the Philippine Health Insurance Corporation or his/her 
17 
duly authorized representative; 
18 
(c) The Director-General of the National Economic and Development 
19 
Authority or his/her duly authorized representative; 
20 
(d) The Secretary of the Department of Budget and Management or his/her 
21 
duly authorized representative; 
22 
(e) The representative of the Committee on Health of the House of 
23 
Representatives; 
24 
(f) The duly elected president of the WVMC employees association, 
25 
representing hospital personnel; 
26 
(g) A 
representative 
from 
local, 
medical 
and 
allied 
professional 
27 . 
organization; 
28 
(h) A 
representative 
from 
the 
people's 
organization/ socio-civic/ 
29 
nongovernment organization; and 
30 
(i) i\ representative from the business sector. 
31 
Non-voting member: 
32 
U) The WVMC Director (Medical Center Chief as Chief Executive Officer). 
33 
Members of the Board of Trustees enumerated in subparagraphs (a), (b), (c), 
34 
(d), (e), (f) and 0) shall serve as ex officio members. The members of the Board of 
35 
Trustees enumerated in paragraphs (g), (h) and (i) shall be appointed by the 


Secretary of Health for the first or initial appointees, and then by the Board of 
2 
Trustees for subsequent appointees. 
3 
The appointive members of the Board of Trustees shall serve for a term of 
4 
three (3) years who may be appointed for a maximum of two (2) terms; while the 
5 
ex officio members mentioned in subparagraphs (a), (b), (c), (d), (e), (f) and Gl shall 
6 
serve as members of the Board of Trustees for the duration of their incumbency. 
7 
No person shall be appointed member of the Board of Trustees unless 
8 
he/ she is a citizen and a resident of the Philippines, of good moral character and 
9 
has attained proficiency, expertise and recognized competence in one or more of 
10 
the following fields: hospital finance and administration, medical care, public 
11 
health care, government rules and regulations, law, business management and 
12 
marketing. They should have at least five (5) years experience in his/her field of 
13 
expertise. 
14 
The Board of Trustees shall be governed by a set of bylaws which shall 
15 
contain, but not limited to, their responsibilities, accountabilities and cause of 
16 
termination. 
17 
SEC 9. Corporate Officers. 
The Board of Trustees shall appoint a 
18 
Secretary of the Board and such other officers as may be deemed necessary. 
19 
Selection of the corporate officers must be based on the fundamental and specific 
20 
qualifications prescribed by existing laws. 
21 
SEC 10. Chief Executive Officer. - The present Director of the WVMC shall 
22 
assume the position of Chief Executive Officer (CEO) of the Corporation. As 
23 
CEO he/ she shall be in-charge of the usual and regular course of business of the 
24 
Corporation and shall be accountable to the Board of Trustees of the Corporation 
25 
who can remove or replace him/her for a cause for reasons of fraud, 
26 
incompetence, dishonesty and other similar grounds and after due process. In 
27 
case of vacancy after the assumption of office by the present Director of the 
28 
WVMC, the next CEO shall be appointed by the Board of Trustees of the WVMC 
29 
SEC 11. Corporate Structure. - The WVMC should follow the standard 
30 
corporate structure to be formulated by the DOH Central Office in coordination 
31 
with different agencies. 
32 
SEC 12. Executive Committee and Other Committees. - The Board of Trustees 
33 
may, by resolution passed by the majority of all its members, create an Executive 
34 
Committee of not more than five (5) members who shall be appointed by the 


Board of Trustees. At least three (3) members of the Executive Committee shall 
2 
be members of the Board of Trustees. The Executive Committee shall have and 
3 
exercise all such powers as may be delegated to it by the Board of Trustees. The 
4 
Executive Committee shall keep regular minutes of its proceedings and report 
5 
the same to the Board of Trustees whenever required. The Board of Trustees 
6 
shall have the power to change the members of the Executive Committee at any 
7 
time, to fill vacancies therein and to discharge or dissolve such committee either 
8 
with or without cause. 
9 
The majority of all the members of the Board of Trustees may, by resolution, 
10 
create other committees with such powers and functions as may be delegated to 
II 
them by the Board of Trustees. All such committees shall keep a record of their 
12 
proceedings and report the same to the Board of Trustees, whenever reqUired. 
13 
The Board of Trustees shall have the power to appoint and remove the members 
14 
of such committees and may, at any time, with or without cause, dissolve any of 
15 
such committees. 
16 
SEC. 13. Board of Trustees' Meetings and Quorum. -
The Board of Trustees 
17 
shall hold meetings at least once a month. Special meetings may be convened at 
18 
the call of the Chairman or by the majority of the members of the Board of 
19 
Trustees. The Chairman or his/her designated representative shall preside over 
20 
the meeting of the Board of Trustees. In the absence of the Chairman or his/her 
21 
representative, a temporary presiding officer shall be designated by the majority 
22 
of the quorum. Six (6) members of the Board of Trustees shall constitute a 
23 
quorum to transact business, and the vote of the majority of those present, there 
24 
being a quorum, shall constitute valid and binding act of the WVMC. However, 
25 
the affirmative vote of at least six (6) members of the Board is required on the 
26 
following matters: 
27 
(a) Adoption or changes of policy; 
28 
(b) Investment of the WVMC funds; 
29 
(c) Contracting loans, except as may be provided for in the IRR where a 
30 
vote of a majority of those present, there being a quorum, shall suffice as to 
31 
specified certain amount of loan borrowed; 
32 
(d) Appointment, discipline and termination of the WVMC Hospital Chief 
33 
Executive Officer/Director. The appointment, discipline and termination of other 
34 
officers and employees shall be by a vote of a majority of those present, there 
35 
being a quorum; and 
36 
(e) Authority to use corporate assets as collateral for loans and borrowings. 


SEC. 14. Compensation of Nongovernment Members of the Board of Trustees. -
2 
The appointive nongovernment members of the Board of Trustees shall be 
3 
entitled to honorarium for each meeting actually attended at rates in accordance 
4 
with existing laws, rules and regulations. 
5 
However, all members of the Board of Trustees, by resolution of the 
6 
majority of the members in good standing of the Corporation, claim expenses for 
7 
attendance in regular or special meetings of the Board of Trustees. Actual and 
8 
necessary traveling expenses of the members of the Board of Trustees while 
9 
engaged in serving the interests of the Corporation and in pursuit of its defined 
10 
objectives and purposes may be allowed by special resolution of the Board of 
11 
Trustees. 
12 
SEC. 15. Property of the WVMC and the San Joaquin Municipal Hospital. - The 
13 
property of the WVMC and San Joaquin Municipal Hospital shall consist of such 
14 
real, personal, mix and other type of property now owned by it or reserved for or 
15 
may hereafter be given, donated, acquired, transferred or conveyed to it by the 
16 
Philippine government, its branches and instrumentalities, or any foreign 
17 
government, as well as by trust, foundation, corporations or persons, alien or 
18 
domestic, in order to carry out its purposes and objectives as set forth herein. 
19 
SEC. 16.lIssistal1ce from Other Government Offices. - The WVMC may call 
20 
upon any department, bureau, office, agency or instrumentality of the 
21 
government, including government-owned or -controlled corporations, for such 
22 
assistance, as it may need in the pursuit of its purposes and objectives. 
23 
All individuals, entities and institutions are hereby enjoined to render full 
24 
assistance and cooperation to the WVMC in the accomplishment of its objectives 
25 
and activities. 
26 
SEC. 17. Loans. - The Corporation is hereby authorized to contract loans, 
27 
credits and other indebtedness in any convertible foreign currency, from time to 
28 
time, from foreign governments, or any international financial institutions or 
29 
fund sources, or any other entities, on such terms and conditions it shall deem 
30 
appropriate for the accomplishment of its purposes and to enter into and execute 
31 
agreements specifying such terms and conditions. 
32 
The property and assets of the Corporation may be used as collateral for its 
33 
loans and borrowings. 
34 
SEC. 18. Donations. - Any donation, contribution, bequest and grant which 
35 
may be made to the WVMC shall be exempt from the donor's tax and the same 
36 
shall be considered as allowable deduction from the gross income in the 


computation of the income tax of the donor in accordance with the provisions of 
2 
the National Internal Revenue Code (NIRC) of 1997, as amended: Provided, That 
3 
such donations shall not be disposed of, transferred or sold. 
4 
SEC. 19. Continuous and Subsequent Government Appropriations. - Amounts as 
S 
may be necessary to further improve hospital facilities, support the continued 
6 
operation and maintenance of the WVMC and to continuously subsidize their 
7 
indigent patients based on the Department of Health Medical Social Worker 
8 
classification shall be appropriated in the annual General Appropriations Act. 
9 
SEC. 20. Auditor. - The Commission on Audit shall appoint a representative 
10 
who shall be the auditor of the WVMC and such personnel as may be necessary 
11 
to assist said representative in the performance of his/her duty. 
12 
SEC. 21. Civil Service Law Coverage for Employees. - The hiring, appointment, 
13 
promotion, discipline and other terms and conditions of the service of all 
14 
employees of the WVMC and the San Joaquin Municipal Hospital shall be 
1S 
consistent with the provisions of the Civil Service law, rules and regulations, 
16 
except as otherwise provided for in this Act. 
17 
SEC. 22. Salaries, Benefits and Other Compensation. -
The salaries, benefits 
18 
and other compensation of the officers and employees of the WVMC shall be in 
19 
accordance with the existing compensation and position classification system. 
20 
SEC. 23. Early Retirement and Separation Benefits. - Officials and employees of 
21 
the WVMC and the San Joaquin Municipal Hospital voluntarily opting for 
22 
separation or retirement shall be entitled to the benefits provided for under 
23 
existing laws. 
24 
SEC. 24. Non-registration with the Securities and Exchange Commission. - The 
2S 
WVMC, as a government-owned and -controlled hospital corporation, with the 
26 
San Joaquin Municipal Hospital as its subsidiary, shall be governed by its charter 
27 
and prohibiled from being registered in the Securities and Exchange Commission 
28 
(SEC) as a private corporation. 
29 
SEC. 25. 111lplementing Rules and Regulations (IRR). - Within fifteen (15) days 
30 
from completion of membership, the Board of Trustees shall convene to 
31 
formulate the rules and regulations necessary for the implementation of this Act 
32 
which shall be issued within six (6) months after the approval of this Act. The 
33 
IRR shall adopt appropriate provisions of issuances of government agencies on 
34 
corporate organizational structures as well as corporate governance. 


SEC. 26. Events of Early Termination. - (a) In the event a law has been 
2 
passed and approved by Congress revoking the conversion of the WVMC into a 
3 
Corporation and the San Joaquin Municipal Hospital as its subsidiary. 
4 
(b) In the event that the Corporation shall fail to perform or to meet pre-
5 
arrange indicators or to a degree such that in a reasonable opinion of the 
6 
Secretary of the DOH, such failure amounts to an ineffective management of the 
7 
hospital and it jeopardizes the delivery of hospital and medical services. 
8 
SEC. 27. Suppletory Application of Corporation Code. - The provisions of the 
9 
Corporation Code shall have suppletory application in matters not provided for 
lOin this Act. 
II 
SEC. 28. Reports. - The Corporation shall, within three (3) months after the 
12 
end of every fiscal year, submit such periodic or other reports as may be required 
13 
of it from time to time to the DOH. 
14 
SEC. 29. Transfer of Personnel, Assets, Records and Equipments. 
All 
15 
personnel, assets, funds, records, equipments and liabilities of the WVMC and 
16 
the San Joaquin Municipal Hospital are hereby transferred to and shall 
17 
henceforth appertain to the WVMC as a Corporation and the San Joaquin 
18 
Municipal Hospital as its subsidiary. 
19 
SEC. 30. Effect of Dissolution of the Center. - If, for any reason, the WVMC is 
20 
dissolved, its property and personnel remaining at the time of such dissolution 
21 
shall revert to the DOH and the San Joaquin Municipal Hospital shall revert to 
22 
the local government of San Joaquin for disposition in accordance with law. 
23 
SEC. 31. Separability Clause. - If any part, section or proVision of this Act is 
24 
held invalid or unconstitutional, the other parts or provisions not affected 
25 
there by shall remain in force and effect. 
26 
SEC. 32. Repealing Clause. - All other laws, decrees, orders, issuances, rules 
27 
and regulations that are inconsistent with the provisions of this Act are hereby 
28 
repealed, amended or modified accordingly. 
29 
SEC. 33. Effectivity. 
This Act shall take effect fifteen (15) days after its 
30 
publication in the Official Gazelle or in any newspaper of general circulation. 
31 
32 
Approved