NINETEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES. )
First Regular Session )
HOUSE OF REPRESENTATIVES
H. B. No. 3u 173

Introduced by Representative Ralph G. Recto

AN ACT
PROVIDING FOR THE DEVELOPMENT OF THE HEALTHCARE AND
MANUFACTURING INDUSTRIES TO STRENGTHEN THE COUNTRY’S
PROTECTION AGAINST PANDEMICS AND PROVIDING FUNDS THEREFOR

EXPLANATORY NOTE

With the rapid spread of COVID-19, the world experienced a sudden surge in
the demand for critical medical supplies and equipment, hence, causing shortages and
disruption in the global supply chain of personal protective equipment (PPE). In April
2020, the Asian Development Bank determined that there is a backlog of 4 to 6 months
for PPE supply orders globally. Unfortunately, during this pandemic, the initial
shortage of PPE left doctors, nurses and other frontline workers dangerously ill-
equipped in protecting themselves while taking care of COVID-19 patients.

‘At the onset of the pandemic, many economies implemented an export ban on
PPE and its key raw materials and reserved their respective production for their
domestic use. In March 2020, just when the Philippine government declared the
imposition of Enhanced Community Quarantine, the total import value of PPE
amounted to USD 15.5 million, which dropped at an annual rate of 11.4 percent.? This

+ Asian Development Bank, (April 2020). "Global Shortage of Personal Protective Equipment amid COVID-19:
Supply Chains, Bottlenecks, and Policy Implications nformation retrieved at

> Philippine Statistics Authority, June 10, 202
Information retrieved from |)


is not due to the lack of demand for imported PPE but because there is hardly any
supply available in the international market. In effect, countries experiencing shortage
in sourcing PPE, including the Philippines, started looking inwards to supply its own
needs. Notwithstanding the international demand slowing down later, the overriding
concern and policy direction of each country is to ensure that the steady long-term
supply of PPE is locally guaranteed, and not reliant on international sources.

The Philippine health system does not have a local supply base of medical grade
PPE. Philippine hospitals and health systems do not stockpile PPE for emergency
situations, but use just-in-time procurement and supply to limit excess inventory. The
reliance on imports coupled with lack of local testing facilities and regulatory approvals
gave rise to substandard PPE, thereby putting at risk the lives of the Filipino frontline
health care workers during the pandemic.

As of January 9, 2022, the Department of Health reported that 117 health care
workers died from COVID-19 while a total number of 29,609 healthcare workers were
infected with the same. At that time, 1.0% of the total number of COVID-19 cases
were healthcare workers. One side of the spectrum brings forth the need to strengthen
our local industry to produce medical grade PPE of international health and safety
standard. At the opposite end of the spectrum, local manufacturers employing Filipino
workers and producing medical grade PPE need the support of government to
establish its competitiveness and provide a level playing field in the local market. The
sustainability of this emerging sector needs to be supported with a steady long-term
local market demand allowing it to build up its capacity and supply chain.

‘Thus, with the local manufacturers of medical grade PPE ready and products
available, it becomes a matter of utmost urgency and necessity for Congress to enact
a law that will adequately and effectively support and prioritize the purchase of critical
products produced by local manufacturers to: 1) retain employment of these skilled
workers during this time of crisis; and 2) assure the local availability of such critical
products to meet current demand and for stockpiling requirements.


This bill provides for the accreditation of manufacturers and producers of critical
products; exemption from custom duties, value-added tax, and fees; suspension of
‘export requirement; preferential procurement of critical products by the Government;
exemption from the requirement of Phase IV clinical trial under Health Technology
Assessment of vaccines and medicines; stockpiling of critical products; and, relocation
or expansion of manufacturing enterprises in the Philippines.

It is for this reason that the immediate approval of this bill is earnestly sought.



NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
H.B.No. 3173

Introduced by Representative Ralph G. Recto

AN ACT
PROVIDING FOR THE DEVELOPMENT OF THE HEALTHCARE AND
MANUFACTURING INDUSTRIES TO STRENGTHEN THE COUNTRY’S
PROTECTION AGAINST PANDEMICS AND PROVIDING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Section 1. Short Title. - This Act shall be known as the “Pandemic Protection
Act’.

Sec. 2. Declaration of Policy. ~ It is hereby the declared policy of the State to
protect and promote the right to health of the people and instill health consciousness
among them. The State recognizes pandemics and other public health emergencies
as threats to public health and national security, which can undermine the social,
economic, and political functions of the State. It shall protect the people from
pandemics and other public health emergencies. To this end, the State shall:

(a) adopt efficient and effective measures that will prevent the overburdening

of the healthcare system;

(b)develop the healthcare and manufacturing industries and preserve and

generate employment during the crisis;

(© ensure adequate and readily available supply of critical products and

services for the health workers and the public;

(d) protect the interest of the consumers and establish standards of conduct for

business and industry; and

(e) build strong partnership between the government and the private sector

and other stakeholders to deliver these measures quickly and efficiently.


Sec. 3. Coverage. - This Act shall cover the manufacture or production of critical
products, including repurposing of existing manufacturing facilities and supply of
critical services. This also covers their entire supply chain including their capital
equipment, spare parts and accessories, raw materials, packaging and its raw
materials. The benefits under this Act shall be in addition to the incentives provided
under existing laws.

Sec. 4. Definition of Terms. - For the purposes of this Act, the following
definitions shall apply:

(a) Accreditation refers to the process of officially recognizing a person or entity

under this Act;

(b) Critical Products refer to medicines; vaccines; personal protective
equipment; medical equipment such as ventilators, testing kits and such
other supplies or tools, including its raw materials, required to address the
pandemic as may be determined by the Department of Health (DOH) and
other relevant government agencies;

(c) Critical Services refer to services required for the manufacture, production
and distribution of critical products. This shall also include testing
laboratories; waste management, including but not limited to waste
segregation, storage, collection, sorting, treatment and disposal services;
and other services as may be determined by the DOH and other relevant
government agencies;

(d) Manufacturer refers to an enterprise duly accredited or registered under
Section 7 hereof, engaged in the production of critical products including
preparation, processing, compounding, formulating, filling, packing,
repacking, altering, ornamenting, finishing and labeling;

(e) Packaging refers to material used to wrap or protect critical products;

(f) Personal Protective Equipment (PPE) refers to helmets, masks, goggles,
gloves, foot cover, face shields, gowns as well as other garments or
equipment designed to protect the user against health or safety risks;

(g) Producer refers to an enterprise that manufactures, makes, grows, or
produces critical products;


(h) Raw Material refers to materials and inputs from which a critical product

and its packaging is made; and

(i). Stockpiling refers to the acquisition and accumulation of critical products to

make them readily available and accessible.

Sec. 5. Conformity to Standards. - The materials, products, processes, and
services shall conform and comply with the guidelines on the standards and
requirements issued by the relevant government agencies such as, but not limited
to, the DOH, Food and Drug Administration (FDA), and Bureau of Philippine
Standards. In the case of other critical services, the equipment, technologies and
services should be approved by the Department of Environment and Natural
Resources, DOH or other relevant government agencies.

For this purpose, said relevant government agencies shall prioritize the
issuance of licenses and other requirements to manufacturers and producers
covered by this Act.

Sec. 6. Development and Promotion of Healthcare and Manufacturing
Industries. ~ The Board of Investments (BOI) is hereby mandated to develop and
promote the healthcare and manufacturing industries to strengthen the country’s
public health emergency preparedness and response mechanisms during a
pandemic.

Sec. 7. Accreditation. — Prior to the availment of the benefits herein, the
manufacturers and producers shall apply for accreditation with the Department of
Trade and Industry (DTI) through the BOI: Provided, That in lieu of DTI-BOI
accreditation, manufacturers and producers that are registered with other
Investment Promotion Agencies (IPAs) shall directly apply for authority to import
with the IPAs concerned.

Sec. 8. Exemption from Custom Duties, Taxes and Fees. — Regardless of the
country of origin, importation of the capital equipment, spare parts and accessories,
raw materials, packaging and its raw materials, or any articles needed in the supply
chain of the critical products or services shall be exempt from custom duties, taxes
and fees such as import processing fees and fees imposed by the Bureau of
Customs, FDA and other relevant agencies: Provided, That the exemption from
import duties, taxes and other fees on the importation of equipment and supplies

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that are already considered as finished goods shall only apply upon determination by
the DOH or DTI on the non-availability or insufficiency of local supply of the said
equipment and supplies: Provided further, That exemption under this Section shall
terminate: upon declaration by the President that the public health emergency has
ceased to.exist.

Sec. 9. Exemption from Value-Added Tax (VAT) on Local Sales. ~ The
exemption from VAT shall apply to the local sale of critical products and services.
The DTI-BOI shall provide the Bureau of Internal Revenue (BIR) the list of VAT-exempt
critical products or services, including the new and/or additional critical products
covered under this Act. The list of VAT-exempt critical products or services shall be
posted in the BIR website through a Revenue Memorandum Circular.

Exemption under this Section shall terminate upon declaration by the President
that the public health emergency has ceased to exist.

Sec. 10. Suspension of Export Requirement. - The export requirement
imposed under the laws administered by relevant IPAs may be suspended by the
DTI-BOI upon declaration of state of public health emergency. The export enterprises
that manufacture the critical products or render critical services shall
supply at least eighty percent (80%) of their daily production or service to
government institutions, hospitals, and private establishments in the country for
local or domestic use.

The local sales of critical products and services of such export enterprises
shall be deemed and treated as “export sales” in compliance with their export
requirement. As such, the corresponding treatment, exemption on duties, taxes and
fees, and other incentives warranted under the existing laws governing these export
enterprises shall continue to apply: Provided, That if such export enterprises are
located in special economic zones with the status of separate customs territory
under relevant laws, such local sales shall likewise be exempt under Sections 8 and 9
hereof. For this purpose, the DTI-BOI or IPAs concerned shall monitor the compliance
of said export enterprises.

The exemption on duties, taxes and fees under this Section shall subsist for a
period of three (3) years after the declaration by the World Health Organization that
the pandemic has ended.


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Sec. 11. Exemption from the Requirement of Phase IV Clinical Trial under
Health Technology Assessment of Vaccines and Medicines. - The vaccines and
medicines determined to be critical products under this Act shall be exempt from the
requirement of Phase IV clinical trial under Section 34(b)(2) of Republic Act No.
11223, otherwise known as the “Universal Health Care Act’: Provided, That
minimum safeguards, systems and infrastructure are put in place by the DOH and
other relevant agencies.

Sec. 12. Procurement of Critical Products by the Government. - To ensure
adequate and responsive supply of critical products and services, the government, as
the procuring entity shall strictly implement Section 43, Article XII of Republic Act
No. 9184, otherwise known as the “Government Procurement Reform Act” to give
preference to the purchase of domestically-produced and manufactured goods,
supplies and materials that meet the specified or desired quality. In the interest of
availability, efficiency and timely delivery of critical products and services under this
Act, the Department of Budget and Management (DBM)-Procurement Service or the
procurement entity concerned shall award to the lowest domestic manufacturer-
bidder: Provided, That its bid is not more than fifteen percent (15%) in excess of the
lowest foreign bid: Provided further, That it secures from the DTI a certification that
the articles forming part of its bid are substantially composed of articles, materials, or
supplies grown, produced, or manufactured in the Philippines.

Private enterprises are also encouraged to source their requirements for
critical products from the local manufacturers.

Sec. 13. Stockpiling of Critical Products. - The DOH and the DBM, in
coordination with DTI and other relevant agencies, shall stockpile necessary critical
products to prepare for an imminent or potential pandemic or public health
emergency. The DOH and the DBM shall procure the critical products and services in
accordance with the preceding Section.

Sec. 14. Relocation or Expansion of Manufacturing Enterprises in the
Philippines. - Manufacturers or producers of critical products that will relocate or
expand operations in the Philippines are qualified to avail of the exemptions under
this Act provided that they meet the requirements prescribed herein. The
manufacturing activities covered under this Act shall be included as a strategic

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preferred area in the Investment Priorities Plan under Executive Order No. 226, as
amended, otherwise known as the “Omnibus Investments Act of 1987” The
strategic preferred areas listed therein shall be granted pioneer incentives or the
maximum incentives allowed under existing laws.

Nothing in this Act or any law that may be created to the contrary shall
diminish, derogate, nor limit in whatever manner the grant and entitlement to
incentives by qualified activities herein, including the option to avail of future
incentives that are more relevant and generous.

Sec. 15. Synchronized and Integrated Government Approach. — All
departments, bureaus, agencies or instrumentalities of the government shall ensure
the implementation of this Act in a synchronized and integrated manner. No
government body shall adopt any policy or take any course of action contrary to or
inconsistent with this Act.

Sec. 16. Funding. - The amount necessary for the implementation of this Act
shall be taken from the current appropriations of agencies concerned. Thereafter, such
amount as may be necessary for the implementation of this Act shall be included in
the General Appropriations Act.

Sec. 17. Penalty for Government Official or Employee. - Any government official
cor employee who fails to implement Section 12 of this Act shall be penalized, after due
process, by a fine equivalent to the official’s or employee's basic salary for a period of
one (1) month to six (6) months or by suspension from government service for not
more than one (1) year, or both, in addition to any criminal and administrative
penalties imposable under existing laws.

Sec. 18. Applicability. This Act shall apply and shall remain in force and effect
during the existence of a pandemic of national and/or international concerns as
declared by the Secretary of Health, or during a state of public health emergency
as declared by the President.

Sec. 19. Implementing Rules and Regulations (IRR). ~ The DTI and BOI shall,
within sixty (60) days after the approval of this Act, prepare and issue the necessary
guidelines to implement the provisions of this Act.


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Sec. 20. Repealing Clause. — All laws, issuances, orders, rules and regulations,
or parts thereof, which are contrary to or inconsistent with this Act are hereby
repealed, amended or modified accordingly.

Sec. 21. Separability Clause. — If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and
subsisting.

Sec. 22. Effectivity Cause. - This Act take shall effect fifteen (15) days from
the date of its publication in the Official Gazette or in a newspaper of general
circulation.

Approved,