, 
13th CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
Year in, year out, Congress approves a national budget that is never 
enough to cover the needs of the public sector. Government's capacity to meet its 
fiscal needs rests on the ability of the revenue agencies' efficiency and 
effectiveness to collect and meet their respective collection goals. 
This bill proposes to allocate fifty percent (50%) of total value-added tax 
(VAT) collections for a period of five years beginning fiscal year 2004 to health 
(25%), education (50%), and agriculture (25%). 
The allocation of these revenues will immediately respond to the 
inadequacy of primary and secondary education facilities by augmenting the 
capital outlay for schoolrooms and other similar facilities. It addresses the need 
for enhanced technical education by appropriating funds for the Technical 
Education and Skills Development Authority (TESDA). It provides for 
scholarships to qualified indigent students particularly in fourth to sixth-class 
municipalities to upgrade the quality of education of our citizenry. 
All earmarked funds shall be spent in accordance with the built-in 
limitation intended to ensure the judicious use of such funds: that the earmarked 
funds cannot be used to augment the maintenance and other operating expenses 
of any national government agency or local government unit or their 
subdivisions. 
It will also address insufficiency of emoluments for our health workers, 
including the long-overdue compensation of barangay health workers, an area 
which has not been given funding beyond support on a "best efforts" basis. It 
allocates funds for farm inputs, post-harvest facilities, and infrastructure 
support. 
It is in this light that immediate 
bill is earnestly sought, 
TO 


13th CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
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~~~~~~~~~ 
BY:--.-' -- t a
S E N A T E  
S. BILL NO. 
31337 
Introduced by Senator Ralph G. Recto 
AN ACT 
ALLOCATING FIFTY PERCENT OF VALUE-ADDED TAX COLLECTIONS 
TO HEALTH, EDUCATION, AND AGRICULTURE, THEREBY AMENDING 
THE NATIONAL INTERNAL REVENUE CODE. AS AMENDED 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. A new section, to be numbered two hundred eighty-seven, shall be 
added to Chapter 11, Title XI of the National Internal Revenue Code, to read as 
follows: 
"SEC. 287. DISPOSITION OF PROCEEDS OF VALUE-ADDED 
TAX. - (A) rN GENERAL. - FIFTY PERCENT (50%) OF THE VALUE- 
ADDED TAX COLLECTED UNDER TITLE IV OF THIS CODE SHALL BE 
ALLOCATED TO EXPENDITURES FOR EDUCATION, HEALTH, AND 
AGRICULTURE, FOR A PERIOD OF FIVE YEARS IN THE FOLLOWING 
PROPORTIONS: 
EDUCATION 
50 % 
HEALTH 
25 % 
AGRICULTURE 
25 % 
(B) ALLOCATION FOR EDUCATION. - OF THE TOTAL 
ALLOCATION FOR EDUCATION AS PROVIDED IN PARAGRAPH (A) 
HEREOF: 
(1) ELEMENTARY AND SECONDARY EDUCATION. - FIFTY 
PERCENT (50%) SHALL BE ALLOCATED FOR ELEMENTARY 
AND 
SECONDARY 
EDUCATION 
FOR 
(A) 
THE 
ACQUISITION AND IMPROVEMENT OF SITES; (B) THE 
CONSTRUCTION, REPLACEMENT, REHABILITATION AND 
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REPAIR 
OF 
BUILDINGS, 
CLASSROOMS, 
LIBRARIES, 
WORKSHOPS, TOILETS AND OTHER STRUCTURES; AND 
(C) FURNITURE, FIXTURES, AND EQUIPMENT SUCH AS, 
BUT NOT LIMITED TO, DESKS, CHAIRS, LABORATORY 
AND WORKSHOP IMPLEMENTS, COMPUTERS, BOOKS, 
AND OTHER BASIC AND ESSENTIAL TOOLS FOR 
LEARNING WHOSE BENEFICIAL USE SHALL EXCEED ONE 
(1) YEAR. THIS FUND SHALL BE ADMINISTERED BY THE 
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS. 
(2) TECHNICAL EDUCATION AND SKILLS DEVELOPMENT 
AUTHORITY (TESDA). - (A) TWENTY PERCENT (20%) 
SHALL BE ALLOCATED AS PROVIDED FOR IN SECTION 31 
OF REPUBLIC ACT NO. 7796, ESTABLISHING THE TESDA 
DEVELOPMENT FUND, WHICH SHALL BE UTILIZED 
EXCLUSIVELY FOR GRANTS AND ASSISTANCE TO 
TRAINING 
INSTITUTIONS, 
INDUSTRIES, 
LOCAL 
GOVERNMENT 
UNITS 
FOR 
UPGRADING 
THEIR 
CAPACITIES AND TO DEVELOP AND IMPLEMENT 
TRAINING ACTIVITIES. (E) TEN PERCENT (10%) SHALL BE 
ALLOCATED 
FOR 
SCHOLARSHIP 
GRANTS 
FOR 
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT IN 
THE DIFFERENT REGIONS, AS PROVIDED FOR IN SECTION 
32 OF REPUBLIC ACT 7796, TO BE ADMINISTERED BY THE 
'TESDA. 
(3) SCHOLARSHIP ASSlSTANCE PROGRAM FOR QUALlFIED 
INDlGENT STUDENTS. - TWENTY PERCENT (20%) SHALL 
BE 
ALLOCATED FOR SCHOLARSHIP GRANTS FOR 
QUALIFIED INDIGENT STUDENTS. PRIORITY SHALL BE 
GIVEN TO QUALIFIED INDIGENT STUDENTS COMING 
FROM FOURTH TO SIXTH-CLASS MUNICIPALITIES. THE 
SCHOLARSHIP FUND SHALL BE ADMINISTERED BY THE 
COMMISSION ON HIGHER EDUCATION (CHED). 
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(C) ALLOCATION 
FOR 
HEALTH. - OF 
THE 
TOTAL 
ALLOCATION FOR HEALTH AS PROVIDED IN PARAGRAPH (A) 
HEREOF: 
(1) BARANGAY HEALTH WORKERS. - THIRTY PERCENT (30%) 
SHALL BE ALLOCATED FOR THE ALLOWANCE OF 
BARANGAY 
HEALTH 
WORKERS 
AS 
DEFINED 
BY 
REPUBLIC ACT NO. 7883. THE .FUND SHALL BE 
ADMINISTERED BY THE DEPARTMENT OF HEALTH IN 
CONSULTATION WITH THE DEPARTMENT OF INTERIOR 
AND LOCAL GOVERNMENT. 
(2) PUBLIC HEALTH WORKERS. - TWENTY PERCENT (20%) 
SHALL 
BE 
ALLOCATED 
FOR 
THE 
ADDITIONAL 
COMPENSATION FOR PUBLIC HEALTH OFFICERS AS 
PROVIDED FOR IN SECTION 20 OF REPUBLIC ACT NO. 
7305, OTHERWISE KNOWN AS THE MAGNA CARTA OF 
PUBLIC HEALTH WORKERS, TO BE ADMINISTERED BY 
THE DEPARTMENT OF HEALTH. HOWEVER, BARANGAY 
HEALTH WORKERS ALREADY INCLUDED 
IN THE 
PRECEDING PARAGRAPH SHALL BE EXCLUDED IN THIS 
SECTION. 
(3) FIELD HEALTH AND HOSPITAL SERVICES. - TWENTY 
PERCENT (20%) SHALL BE ALLOCATED FOR MEDICINES 
AND MEDICAL EQUIPMENT FOR HEALTH FACILITIES 
DEVOLVED TO LOCAL GOVERNMENT UNITS UNDER 
REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE 
LOCAL GOVERNMENT CODE. THIS FUND SHALL BE 
ADMINISTERED BY THE DEPARTMENT OF HEALTH IN 
CONSULTATION WITH THE DEPARTMENT OF INTERIOR 
AND LOCAL GOVERNMENT. 
(4) NATIONAL HEALTH INSURANCE PROGRAM. - THIRTY 
PERCENT (30%) SHALL BE 
ALLOCATED FOR THE 
NATIONAL HEALTH INSURANCE FUND, AS PROVIDED 
FOR IN SECTIONS 24 AND 46 OF REPUBLIC ACT NO. 7875, 
OTHERWISE KNOWN AS THE NATIONAL HEALTH 
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INSURANCE ACT OF 1995, TO BE ADMINISTERED BY THE 
PHILIPPINE HEALTH INSURANCE CORPORATION. 
(D) ALLOCATION FOR AGRICULTURE - THE WHOLE AMOUNT 
SHALL BE ALLOCATED FOR COMMUNAL IRRIGATION SYSTEMS, 
POST-HARVEST 
FACILITIES 
INCLUDING 
MECHANICAL AND 
SOLAR DRYERS AND WAREHOUSES, SEED AND ORGANIC 
FERTILIZER 
SUBSIDIES, 
AND FARM-TO-MARKET JXOADS IN 
MUNICIPALITIES WITH SIGNIFICANT AGRICULTURAL ACTIVITIES, 
TO BE ADMINISTERED BY THE DEPARTMENT OF AGRICULTURE. 
(E) AT NO TIME SHALL ANY PORTION OF THE EARMARKED 
FUNDS BE USED TO AUGMENT MAINTENANCE AND OTHER 
OPERATING EXPENSES OF ANY 
NATIONAL GOVERNMENT 
AGENCY, 
GOVERNMENT 
OWNED 
OR 
CONTROLLED 
CORPORATIONS, 
LOCAL 
GOVERNMENT UNITS 
OR 
THEIR 
SUBDIVISIONS. 
SEC. 2. Coverage of this Act. - The allocation of value-added tax revenues 
shall commence in the fiscal year within which this Act shall take effect for a 
period of five (5) years. 
SEC. 3. Repealing Clause. - All laws, executive order, rules and regulations, 
or parts thereof, inconsistent with this Act are hereby repealed, amended or 
modified accordingly. The provisions of this Act shall not be repealed, amended 
or modified, unless expressly provided in subsequent general or special laws. 
SEC. 4. Separability Clnuse. - If, for any reason, any part or provision of this 
Code shall be held to be unconstitutional or invalid, other parts or provisions 
hereof which are not affected thereby shall continue to be in fuIl force and effect. 
SEC. 5. Effectivity. - This Act shall take effect upon its approval. 
Approved, 
4