FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
SECOND REGULAR SESSION 
SENATE 
S.B. NO. 3130 
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'12 
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Introduced by Senator FRANKLIN M. DRILON 
EXPLANATORY NOTE 
This bill supports the State policy to adopt an integrated and comprehensive 
approach to health development which shall endeavor to make healthcare, medicines, 
and other social services available to all the people at affordable cost under the 
program of Universal Health Care or Kalusugan Pangkalahatan. Under this bill, a 
Corporate Restructuring Program for National Government Hospitals shall be instituted, 
with the end in view of providing all citizens with an acceptable, modern, and national 
hospital care delivery system that is affordable and efficient. 
Through the restructuring of state hospitals to corporate entities, these medical 
institutions will be allowed to engage in revenue-generating activities which shall help 
subsidize medical care to indigent patients. Fiscal autonomy is also expected to usher in 
a more efficient delivery of health care as well as provide hospital administrators with 
the requisite flexibility for the effective stewardship of hospital assets, funds, 
management and personnel supervision. Finally, the corporate nature of such hospitals 
makes the hospital self-perpetuating and saves funds of the national government which 
it could use for other health efforts. 
Under this bill, twenty-six (26) national government hospitals which are currently 
under the administrative supervision of the Department of Health will be converted into 
government corporate entities. As such, they shall have the attribute of perpetual 
succession and shall be vested with the powers of a corporation. They shall continue to 
exist until dissolved for a lawful cause and/or by joint resolution of Congress. 
Foregoing considered, the passage of this Bill is earnestly requested. 


Fifteenth Congress of the Republic 
of the Philippines 
Second Regular Session 
) 
) 
) 
SENATE 
Senate Bill No. 313 0 
'12 
FEB 21 
') 5 :21 
Introduced by Hon. FRANKLIN M. DRILON 
AN ACT INSTITUTING A CORPORATE RESTRUCTURING PROGRAM FOR 
NATIONAL GOVERNMENT HOSPITALS, PROVIDING FUNDS THEREFOR, AND 
FOR OTHER PURPOSES. 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
SEC 1. Short Title. -
This Act shall be known as the "National Government 
2 
Hospital Corporate Restructuring Act. 
3 
SEC. 2. Declaration of Policy and Principles. - It is the policy of the State to 
4 
adopt an integrated and comprehensive approach to health development which shall 
5 
endeavor to make healthcare, medicines, and other social services available to all the 
6 
people at affordable cost under the program of Universal Health Care or Kalusugan 
7 
Pangkalahatan. There shall be priority for the needs of the poor, underprivileged, sick, 
8 
elderly, and disabled, women and children. The State shall likewise endeavor to provide 
9 
free medical care to paupers. It is further the policy of the State to establish and 
10 
maintain an effective food and drug regulatory system and undertake appropriate health 
11 
manpower development and research activities responsive to the country's health 
12 
needs and problems. 
13 
In the pursuit of this Policy, a Corporate Restructuring Program for National 
14 
Government Hospitals shall be instituted in this Act with the following as its guiding 
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1 
principles: 
2 
a. 
The provision of health services remains one of the most essential 
3 
functions of the government; 
4 
b. 
The government should provide all citizens with an acceptable, modern, 
5 
and national hospital care delivery system that is affordable and efficient; 
6 
c. 
The provision of health care to indigent patients is a substantial 
7 
expenditure requiring close cooperation between the State, the Local Government Units 
8 
(LGUs) and the private sector. The formulation of consistent over-all policy directions at 
9 
all levels of government is therefore necessary. 
10 
d. 
Through the operation of corporate hospitals, the government may engage 
11 
in proprietary and revenue-generating activities to help subsidize medical care to 
12 
indigent patients; 
13 
e. 
Fiscal autonomy of government hospitals will lead to more efficient 
14 
delivery of health services; 
15 
f. 
The corporate form of organization will give hospital administrators the 
16 
necessary flexibility for the effective stewardship of hospital assets, funds, management 
17 
and personnel supervision; and 
18 
g. 
The corporate nature makes the hospital self-perpetuating at the same 
19 
time saves funds of the national government which it could use for other health efforts. 
20 
SEC. 3. Purpose and Objectives. -
The National Government Hospital 
21 
Corporate Restructuring Program aims to: 
22 
a. Provide the Filipino people an affordable but quality and timely hospital care 
23 
24 
25 
26 
27 
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and medical service delivery system; and 
b. Institute 
reforms 
in 
the 
organization, 
administration 
and 
financial 
management of national hospitals as a means of reducing the cost and 
improving the quality of public health care primarily through the corporate 
restructuring of these hospitals, i.e. converting them into corporate entities. 
c. Develop the present DOH Hospitals into government owned, non-profit 
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corporate hospitals with its attendant rights and privileges. 
2 
SEC. 4. Conversion of National Government Hospitals into Government 
3 
Owned Corporations. -
Twenty-six (26) national government hospitals listed 
4 
hereunder which are currently under the administrative supervision of the Department of 
5 
Health are hereby converted into government corporate entities. As such, they shall 
6 
have the attribute of perpetual succession and shall be vested with the powers of a 
7 
corporation. They shall continue to exist until dissolved for a lawful cause and/or by joint 
8 
resolution of Congress. 
9 
a. Cagayan Valley Medical Center 
10 
b. Veterans Regional Hospital 
11 
c. Baguio General Hospital and Medical Center 
12 
d. Ilocos Training and Regional Medical Center 
13 
e. Region I Medical Center 
14 
f. 
Dr. Paulino J. Garcia Memorial Research and Medical Center 
15 
g. Jose B. Lingad Memorial Medical Center 
16 
h. Batangas Regional Hospital 
17 
i. 
Bicol Medical Center (Naga City) 
18 
j. 
Bicol Research Training and Teaching Hospital (Legaspi City) 
19 
k. Quirino Memorial Medical Center 
20 
I. 
Jose R. Reyes Memorial Medical Center 
21 
m. Rizal Medical Center 
22 
n. Amang Rodriguez Medical Center 
23 
o. San Lazaro Hospital 
24 
p. Vicente Sotto Memorial Medical Center 
25 
q. Eastern Visayas Regional Medical Center 
26 
r. 
Corazon Locsin Montelibano Memorial Regional Hospital 
27 
s. Western Visayas Medical Center 
28 
t. 
Northern Mindanao Medical Center 
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1 
u. Southern Philippines Medical Center 
2 
v. Zamboanga City Medical Center 
3 
w. Cotabato Regional and Medical Center 
4 
x. CARAGA Regional Hospital 
S 
y. Davao Regional Hospital 
6 
z. Mayor Hilarion A. Ramiro, Sr. Regional Training and Teaching Hospital 
7 
SEC. 5. Purpose and Objectives. - Each of the foregoing corporatized hospitals, 
8 
in accordance with its area of specialization, shall have the following objectives: 
9 
a. To provide and maintain affordable, quality and modern hospital care 
10 
through a more efficient health service delivery system with priority for the 
11 
needs of the underprivileged, sick, elderly, disabled, women and children; 
12 
b. To ensure the development of hospital facilities into modern medical 
13 
centers; 
14 
c. To continuously improve hospital and medical service operation conditions 
15 
conducive to the efficient delivery of health care to the public; 
16 
d. To promote, encourage and engage in scientific research on the prevention 
17 
of diseases and the care and/or treatment of patients and related activities, 
18 
including sponsorship and conduct of relevant congresses, conventions, 
19 
seminars and conferences; 
20 
e. To encourage and/or undertake the training of physicians, nurses, medical 
21 
technicians, health officers, social workers and other health professionals 
22 
on the practical and scientific conduct and implementation of health and 
23 
medical services, and related activities; and. 
24 
f. 
To engage in public-private partnership (PPP) activities in accordance with 
2S 
the declared policy of the State to recognize the indispensable role of the 
26 
private sector as the main engine for national growth and development and 
27 
provide the most appropriate favorable incentives to mobilize private 
28 
resources for the purpose. 
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SEC. 6. Powers and Functions. - Each of the corporatized hospitals shall have 
2 
the following powers and functions: 
3 
a. To adopt a code of by-laws to complement this Charter; 
4 
b. To adopt and use a corporate seal which shall be a matter of judicial notice; 
5 
C. To determine its organizational structure and the number and salaries of its 
6 
officers and employees, subject to the pertinent provisions of Republic Act 
7 
No.1 0149 (RA 10149), also known as the GOCC Governance Act of 2011; 
8 
d. To establish and maintain professional and technical educational systems 
9 
for the sustained development of the necessary manpower to manage and 
10 
operate its affairs and business; 
11 
e. To invest its funds as it may deem proper and necessary, but subject to 
12 
applicable laws, rules and regulations, in any activity related to hospital or 
13 
medical care operations, including in any bonds or securities issued and 
14 
guaranteed by the Government of the Philippines; 
15 
f. 
To acquire assets, real or personal, or interest therein and encumber or 
16 
otherwise dispose the same as it may deem proper and necessary in the 
17 
conduct of its business; 
18 
g. To borrow money from local or foreign sources as may be necessary for its 
19 
operations, subject to applicable laws, rules and regulations; 
20 
h. To accept any gifts, contributions, endowments, grants, bequests and 
21 
devices of any kind of real or personal property which are necessary and 
22 
proper for the attainment of the purpose of the hospital; and 
23 
i. 
To perform such acts and exercise such functions as may be necessary and 
24 
proper for the attainment of the purposes and objectives herein specified. 
25 
SEC. 7. Contracts. - Every corporatized hospital shall have the authority to enter into 
26 
contracts with any person or entity, domestic or foreign and with government for the 
27 
undertaking of the varied aspects of hospital and health care operation, including the 
28 
acquisition, by way of purchase, lease or rent or other deferred payment arrangements of 
5 


1 
equipment and/or raw materials and supplies, as well as for services connected therewith 
2 
under such terms and conditions as it may deem proper and reasonable. 
3 
In the acquisition and disposal of property real or personal, a bidding process shall be 
4 
necessary to conform to the requirements of public bidding as provided for in Republic Act 
5 
9184 and related laws. 
6 
SEC. 8. Board of Trustees. The affairs and business of each corporatized hospital 
7 
shall be directed; its properties managed; and its corporate powers exercised, unless 
8 
otherwise provided in this Charter, by its own Board of Trustees which shall be composed 
9 
of seven (7) members, as follows: 
10 
a. The Secretary of the Department of Health as Chairman of the Board or his 
11 
duly authorized representative; 
12 
b. The 
Operations 
Cluster 
Undersecretary/Assistant 
Secretary 
of the 
13 
Department of Health; 
14 
c. The Regional Director of the Department of Health Center for Health 
15 
Development; 
16 
d. Three (3) members from the private sector preferably with experience in 
17 
finance, administration or management; and 
18 
e. The Medical Center Director. 
19 
The terms of office, manner of appointment of the trustees and other matters 
20 
pertaining to the governance of each corporate hospital shall be determined in 
21 
accordance with the pertinent provisions of RA 10149. 
22 
The Board of Trustees shall be governed by a set of by-laws, which shall contain, 
23 
among 
others, 
an 
enumeration 
of each 
of the 
member's 
responsibilities, 
24 
accountabilities, and cause of termination. 
25 
SEC. 9. Powers and Functions of the Board. The Board of Trustees which shall 
26 
be the policy-making body of the corporate-restructured hospital shall have the following 
27 
powers and functions: 
28 
a. Determine the general policies of the hospital within the scope of its powers, 
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objectives and financial resources; 
b. Establish the organizational structure of the hospital, define the duties and 
responsibilities of all officials and employees and adopt a compensation and 
benefit scheme, subject to the pertinent provisions of RA 10149; 
c. To acquire, hold and own in any manner, property of whatever nature or 
description, and to dispose of such property under any mode of 
encumbrance or conveyance; 
d. To enter into, make, perform and carry out contracts of every kind and for 
any lawful purpose with any person, firm, association or corporation, 
whether pUblic or private, domestic or foreign; 
e. To mortgage, lease, sell, transfer, conveyor otherwise dispose of its 
properties; 
f. 
To solicit and receive donations, endowments and funds in the form of 
contributions, whether in cash or in kind, from both the public and private 
sectors and from domestic or foreign sources; 
g. To open such accounts in banks and other financial institutions, and to 
disburse such funds or invest the same as the Board of Trustees may direct 
to accomplish or advance the purposes or interest of the hospital; 
h. To invite foreign or local health specialists and similar experts in the various 
medical fields to train the personnel, trainees or residents of the hospital; 
i. 
To send the personnel of the hospital to research institutes, medical 
institutes or universities for advance training or observation and to attend 
international or regional conventions, conferences, congresses or seminars 
as the Board of Trustees may deem necessary to accomplish the purposes 
and objectives of the hospital; 
j. 
To enter into such agreements and arrangements with other medical or 
similar institutions, domestic or foreign, as may be deemed desirable by the 
Board of Trustees toward promoting the purposes and objectives of the 
7 


1 
hospital; 
2 
k. To continuously develop its capabilities so that the hospital becomes the 
3 
referral center for specialized care of its catchment area; 
4 
I. 
To adopt a set of by-laws, rules, regulations, policies, guidelines and 
5 
procedures consistent with law and the provisions hereof to govern the 
6 
administration and operation of the hospital; and 
7 
m. To do all such other acts and things as are or may be necessary for or 
8 
incidental to the accomplishment of the purposes and objectives of the 
9 
hospital. 
10 
SEC. 10. Duties and Responsibilities of the Chief Executive Officer. The Chief 
11 
Executive Officer of each corporate-restructured hospital shall have the following duties 
12 
and responsibilities: 
13 
a. To prepare the agenda for the meetings of the board, and to submit for 
14 
consideration of the board such policies and measures as he believes 
15 
necessary to carry out the purposes and objectives of this Act; 
16 
b. To execute, administer and implement the policies and measures approved 
17 
by the board; 
18 
c. To direct and supervise the operations and administration of the hospital; 
19 
d. To represent the hospital in all dealings with all other offices, agencies and 
20 
instrumentalities of the government and with all persons and other entities, 
21 
domestic or foreign; and 
22 
e. To exercise such other powers and perform such other duties provided in 
23 
the by-laws and as vested to him by the board. 
24 
SEC. 11. Remittance of Income. - All corporate hospitals are hereby authorized 
25 
to retain and utilize their income derived from the hospital operation and non-patient 
26 
related activities for the maintenance of the other operating expenditures, including 
27 
capital outlay especially in the acquisition of equipment and medical supplies, subject to 
28 
auditing rules and regUlations. Further, no amount from such income shall be used to 
8 


1 
augment the salaries and other compensation of hospital personnel beyond the 
2 
amounts determined by the Governance Commission for Government-Owned and 
3 
Controlled Corporations (GCG), as provided for in RA 10149. 
4 
The Department of Health in coordination with the Department of Budget and 
5 
Management shall issue the necessary rules and regulation to implement this provision. 
6 
SEC. 12. Exemption from Taxes. - Each of the corporate-restructured hospitals 
7 
shall be exempt from the payment of taxes on all contribution thereto and all accruals on 
8 
its income and investment earnings. 
9 
Any donation, contribution, bequest, subsidy or financial aid which may be made to 
10 
it shall constitute allowable deduction from the income of the donor for income tax 
11 
purposes and shall be exempt from donor's tax subject to such conditions as provided 
12 
for in the National Internal Revenue Code. 
13 
Every corporate-restructured hospital shall be exempt from all other taxes, whether 
14 
direct or indirect, on its income, properties and operations. 
15 
SEC. 13. Supervision. All the corporate-restructured hospitals shall be under the 
16 
direct supervision of the Department of Health for purposes of policy direction and 
17 
control. It shall submit an annual report, pursuant to the pertinent provisions of RA 
18 
10149. 
19 
SEC. 14. Implementing Rules and Regulations. - Within thirty (30) days from 
20 
the completion of the appointment of its members, the Corporation's Board of Trustees 
21 
shall convene to formulate the rules and regulations necessary for the implementation 
22 
of this Act. 
23 
SEC. 15. Transitory Provisions. -
This Act reinforces and broadens the 
24 
corporatization program initiated by the DOH prior to the passage hereof. Hospital 
25 
corporations organized out of the hospitals enumerated under Section 4 hereof prior to 
26 
this Act shall be transferred by the Secretary of Health within ninety (90) days from its 
27 
organization. Current government subsidy to the various hospitals shall be maintained 
28 
or increased until such time that financial sustainability is achieved. 
9 


1 
SEC. 16. 
Separability Clause. -
Should any provision of this Act be held 
2 
unconstitutional, no other provision when able to stand by itself shall be affected 
3 
thereby. 
4 
SEC. 17. Repealing Clause. -
All laws, acts, executive orders, administrative 
5 
orders, rules and regulations inconsistent herewith, including but not limited to the 
6 
charters of the hospitals enumerated in Section 4 hereof, are hereby repealed, 
7 
amended or modified accordingly. 
8 
SEC. 18. Effectivity. - This Act shall take effect fifteen (15) days after its 
9 
publication in the Official Gazette or in any newspaper of general circulation. 
Approved, 
10