EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No, 7165

EXPLANATORY NOTE

When the COVID-19 outbreak was declared as a public health emergency, the
absence of local manufacturers of the required personal protective equipment (PPEs),
medicines, and testing kits for the healthcare industry became apparent. As this went into a
pandemic, the supply of these critical products and their raw materials became scarce, difficult
to access, and if accessible, they are very expensive. Hospitals were forced to buy these PPES
at an exorbitant price.

At the onset of the pandemic, the Philippines totally lacked its own manufacturing
facilities for PPEs, their raw materials, and testing facilities. The lack of these PPEs contributed
to the deaths of our healthcare workers and other frontliners. In terms of the minimum required
protection, i.e. wearing of face masks, the public is left with the choice to either buy face masks
at a high price, stay unprotected because they cannot afford, or use whatever material is
available that actually provides false sense of protection.

The necessity of developing our own manufacturing capacity to respond to health
emergencies such as COVID-19, prompted the DTI-BO! to encourage our existing
manufacturing firms to repurpose their operations. These firms, however, after going through
the rigid process of complying the registration for their manufacturing facility and products to
conform to international standards, find themselves competing with (1) substandard imported
products, (2) fake and counterfeit imported PPEs, and (3) preference to imported over local
PPEs

The Philippines needs to develop its healthcare industry to protect the health and
safety of its people and safeguard the lives of our healthcare workers. Hence, this bill which
seeks to avoid a similar dilemma in the future and to make our local manufacturing for
healthcare industry responsive and competitive, preserve and generate employment, and
sustain its development.

This bill aims to adopt efficient and effective measures that will prevent the
coverburdening of the healthcare system; 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 to the health workers and the public; Protect
the interest of the consumers and establish standards of conduct for business and industry;
and Build strong partnership with the private sector and other stakeholders to deliver these
measures quickly and efficiently.

In view of the foregoing, immediate approval of this measure is earnestly requested.

RUFUS B, RODRIGUEZ


EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rutus B. Rodriguez
7165
House Bill No.

AN ACT
PROVIDING FOR THE PROTECTION AGAINST PANDEMIC AND THE DEVELOPMENT
OF THE HEALTHCARE AND MANUFACTURING INDUSTRIES, 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 of 2020"

SECTION 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 instil 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
(€) build strong partnership with the private sector and other stakeholders to deliver
these measures quickly and efficiently

‘SECTION 3. Coverage. This Act shall cover the manufacture or production of critical products,
including repurposing of existing manufacturers, and supply of critical services. This also
covers their entire supply chain including their raw materials, packaging and its raw materials.
The benefits under this Act shall be in addition to the incentives provided under existing laws.

SECTION 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,
ventilators and such other supplies or equipment, 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 6 hereof, engaged in the production of critical products including
preparation, processing, compounding, formulating, filing, packing, repacking,
altering, omamenting, finishing and labeling:

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

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

(9) Raw Material refers to materials and inputs from which a critical product and its
packaging is made.

SECTION 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 and technologies and services should be approved by the Department
of Environment and Natural Resources, DOH or other concerned regulatory agencies

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

SECTION 6. Accreditation. Prior to the availment of benefits herein, the manufacturers and
producers shall apply for accreditation with the Department of Trade and Industry (DTI),
through the Board of Investments (BOI). Provided That, in lieu of DTI-BO! accreditation,
manufacturers that are registered with other Investment Promotion Agencies (IPAs) shall
directly apply for authority to import with the concemed IPA

SECTION 7. Exemption from Custom Duties, Value Added Tax (VAT), Other Taxes and Fees.
Regardless of the country of origin, importation under this Act 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,
VAT, other taxes and fees such as import processing fees and fees imposed by the Bureau of
Customs, FDA and other relevant agencies.

SECTION 8. Exemption from VAT on Local Sales. The exemption from VAT shall apply to
the sale of critical products and services. The DTI-BO! shall provide the Bureau of intemal
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.

Further, in accordance with the invoicing requirements, the word “VAT-EXEMPT” shall
prominently be indicated in the invoice issued for the sale of critical products.

SECTION 9. Suspension of Export Requirement. The export requirement imposed under the
laws administered by relevant IPAs may be suspended by the DTI-B0O! to satisfy national
interest or in an emergency situation. The export enterprises that manufacture the critical
products or render critical services shall supply up to 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 of 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. Further, if
‘such export enterprises are located in special economic zones with status of separate customs
territory under relevant laws, such local sales shall likewise be exempt under Sections 7 and
8 hereof. For this purpose, the DTI-BOI or concemed IPA 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.

SECTION 10. Procurement of Critical Products by the Government. To ensure adequate and
tesponsive supply of critical products and supplies, the government, as the procuring entity
shall give preference and procure critical products manufactured, produced or made in the
Philippines; Provided, that the award shall be made to the lowest domestic manufacturer-
bidder provided the bid is not more than twenty percent (20%) in excess of the lowest foreign
bid; Provided further, that it has secured from the DT! a certification that the products, articles,
materials, or supplies are produced, made or manufactured in the Philippines.

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

SECTION 11. 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.

SECTION 12. Synchronized and Integrated Government Approach. All departments, bureaus,
agencies or instrumentalities of the government shall ensure the implementation of this Act by
the agencies concemed 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.

SECTION 13. Funding. An amount not exceeding One Billion Pesos (PhP1,000,000,000.00)
is hereby allocated to the DT!-BO! to operationalize the mechanisms contained in this Act.

SECTION 14, Implementing Rules and Regulations (IRR). The DT! and BO! shall promulgate
the rules to implement this Act.

SECTION 15. Repealing Clause. All laws, issuances, orders, rules and regulations, or parts
thereof, which are contrary or inconsistent with this Act are hereby repealed, amended or
modified accordingly.

SECTION 16. Separability Clause. If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and subsisting

SECTION 17, Effectivity Clause. This Act shall take effect immediately upon its publication in
a newspaper of general circulation or in the Official Gazette: Provided that, Sections 7 and 8
shall apply to all transactions during the effectivity of Republic Act No. 11469. Except for
Section 9 under this Act, Sections 7 and 8 shall terminate upon declaration by the President
that this public health emergency has ceased to exist.

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

Approved,