EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
)
)
SENATE 
S. No. ‘^766
2020 m
©ATE
TJME
i ND-EX
Introduced by Senator 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.1 Unfortunately, during this pandemic, the 
shortage of PPE is leaving doctors, nurses and other frontline workers dangerously 
ill-equipped in protecting themselves while taking care of COVID-19 patients.2
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.3 
This is not due to the lack of demand for imported PPE but because there is hardly
1 Asian Development Bank. (April 2020). ”Global Shortage of Persona! Protective Equipment amid COVID-19: 
Suppiy Chains, Bottienecks, and Poiicy Impiications". Information retrieved at
httDs://www.adb.ora/sites/default/files/Dublication/579121/DDe-covid-19-supplv-chains-bottlenecks-POlicv.pdf
2 World Health Organization. (March 3, 2020). "Shortage of persona! protective equipment endangering heaith 
workers worldwide". Information retrieved at https://www.who.int/news-room/detail/03-03-2020-shortaQe-of- 
personal-protective-equipment-endanaerina-health-workers-worldwide
3 Philippine Statistics Authority. (June 10,2020). "Highiights of the Phiiippine Export and Import Statistics". 
Information retrieved from https://psa.aov.ph/press-releases/id/162591
1


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 August 8, 2020, the Department of Health reported that 32 health care 
workers died from COVID-19 while a total number of 5,924 healthcare workers were 
infected with the same. At that time, 4.67% 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.
/mabm


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
)
)
SENATE 
S. No. 1766
2020m
Ttf.lE
NDfcX
Introduced by Senator 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:
1 
SECTION 1. Short Title. — This Act shall be known as the ''"Pandemic
2 
Protection Act of2020".
3 
SEC. 2. Declaration of Policy. — It is hereby the declared policy of the State
4 
to protect and promote the right to health of the people and instill health
5 
consciousness among them. The State recognizes pandemics and other public health
6 
emergencies as threats to public health and national security, which can undermine
7 
the social, economic, and political functions of the State. It shall protect the people
8 
from pandemics and other public health emergencies. To this end, the State shall:
9 
(a) adopt efficient and effective measures that will prevent the overburdening
10 
of the healthcare system;
11 
(b) develop the healthcare and manufacturing industries and preserve and
12 
generate employment during the crisis;
13 
(c) ensure adequate and readily available supply of critical products and
14 
services for the health workers and the public;
15 
(d) protect the interest of the consumers and establish standards of conduct
16 
for business and industry; and
17 
(e) build strong partnership between the government and the private sector
18 
and other stakeholders to deliver these measures quickly and efficiently.


1 
SEC. 3. Coverage. — This Act shall cover the manufacture or production of
2 
critical products, including repurposing of existing manufacturers, and supply of
3 
critical services. This also covers their entire supply chain including their capital
4 
equipment, spare parts and accessories, raw materials, packaging and its raw
5 
materials. The benefits under this Act shall be in addition to the incentives provided
6 
under existing laws.
7 
SEC. 4. Definition of Terms. - For the purposes of this Act, the following
8 
definitions shall apply:
9 
(a) Accreditation refers to the process of officially recognizing a person or
10 
entity under this Act;
11 
(b) Critical Products refer to medicines; vaccines; personal protective
12 
equipment; medical equipment such as ventilators, testing kits and such
13 
other supplies or tools. Including Its raw materials, required to address the
14 
pandemic as may be determined by the Department of Health (DOH) and
15 
other relevant government agencies;
16 
(c) Critical Services refer to services required for the manufacture, production
17 
and distribution of critical products. This shall also include testing
18 
laboratories; waste management. Including but not limited to waste
19 
segregation, storage, collection, sorting, treatment and disposal services;
20 
and other services as may be determined by the DOH and other relevant
21 
government agencies.
22 
(d) Manufacturer refers to an enterprise duly accredited or registered under
23 
Section 7 hereof, engaged in the production of critical products including
24 
preparation, processing, compounding, formulating, filling, packing,
25 
repacking, altering, ornamenting, finishing and labeling;
26 
(e) Packaging refers to material used to wrap or protect critical products;
27 
(f) Personal Protective Equipment (PPE) refers to helmets, masks, goggles,
28 
gloves, foot cover, face shields, gowns as well as other garments or
29 
equipment designed to protect the user against health or safety risks;
30 
(g) Producer refers to an enterprise that manufactures, makes, grows, or
31 
produces critical products;


1 
(h) Raw Material refers to materials and inputs from which a critical product
2 
and its packaging is made; and
3 
(i) Stockpiling refers to the acquisition and accumulation of critical products
4 
to make them readily available and accessible.
5 
SEC. 5. Conformity to Standards. — The materials, products, processes, and
6 
services shall conform and comply with the guidelines on the standards and
7 
requirements issued by the relevant government agencies such as, but not limited
8 
to, the DOH, Food and Drug Administration (FDA), and Bureau of Philippine
9 
Standards. In the case of other critical services, the equipment, technologies and
10 
services should be approved by the Department of Environment and Natural
11 
Resources, DOH or other relevant government agencies.
12 
For this purpose, said relevant government agencies shall prioritize the
13 
Issuance of licenses and other requirements to manufacturers and producers
14 
covered by this Act.
15 
SEC. 6. Development and Promotion of Healthcare and Manufacturing
16 
Industries. — The Board of Investments (BOI) Is hereby mandated to develop and
17 
promote the healthcare and manufacturing industries to strengthen the country's
18 
public health emergency preparedness and response mechanisms during a
19 
pandemic.
20 
SEC. 7. Accreditation. - Prior to the availment of the benefits herein, the
21 
manufacturers and producers shall apply for accreditation with the Department of
22 
Trade and Industry (DTI) through the BOI: Provided, That In lieu of DTI-BOI
23 
accreditation, manufacturers and producers that are registered with other
24 
Investment Promotion Agencies (IPAs) shall directly apply for authority to Import
25 
with the IPAs concerned.
26 
SEC. 8. Exemption from Custom Duties, Taxes and Fees. — Regardless of the
27 
country of origin, importation of the capital equipment, spare parts and accessories,
28 
raw materials, packaging and its raw materials, or any articles needed In the supply
29 
chain of the critical products or services shall be exempt from custom duties, taxes
30 
and fees such as import processing fees and fees Imposed by the Bureau of
31 
Customs, FDA and other relevant agencies: Provided, That the exemption from
32 
import duties, taxes and other fees on the Importation of equipment and supplies


1 
that are already considered as finished goods shali oniy appiy upon determination by
2 
the DOH or DTI on the non-avaiiabiiity or insufficiency of local supply of the said
3 
equipment and supplies: Provided furtherf That exemption under this Section shall
4 
terminate upon declaration by the President that the pubiic heaith emergency has
5 
ceased to exist.
6 
SEC. 9. Exemption from Vaiue-Added Tax (VAT) on Locai Saies. — The
7 
exemption from VAT shail appiy to the locai sale of critical products and services.
8 
The DTI-BOI shall provide the Bureau of Internal Revenue (BIR) the list of VAT-
9 
exempt criticai products or services, including the new and/or additional critical
10 
products covered under this Act. The list of VAT-exempt critical products or services
11 
shail be posted in the BIR website through a Revenue Memorandum Circular.
12 
Exemption under this Section shaii terminate upon declaration by the
13 
President that the public health emergency has ceased to exist.
14 
SEC. 10. Suspension of Export Requirement. - The export requirement
15 
imposed under the laws administered by relevant IPAs may be suspended by the
16 
DTI-BOI upon declaration of state of public health emergency. The export
17 
enterprises that manufacture the critical products or render critical services shall
18 
supply at least eighty percent (80%) of their daily production or service to
19 
government institutions, hospitals, and private establishments in the country for
20 
local or domestic use.
21 
The local sales of critical products and services of such export enterprises
22 
shall be deemed and treated as "export sales" In compliance with their export
23 
requirement. As such, the corresponding treatment, exemption on duties, taxes and
24 
fees, and other incentives warranted under the existing laws governing these export
25 
enterprises shall continue to apply; Provided, That if such export enterprises are
26 
located in special economic zones with the status of separate customs territory
27 
under relevant laws, such local sales shall likewise be exempt under Sections 8 and 9
28 
hereof. For this purpose, the DTI-BOI or IPAs concerned shall monitor the
29 
compliance of said export enterprises.
30 
The exemption on duties, taxes and fees under this Section shall subsist for a
31 
period of three (3) years after the declaration by the World Health Organization that
32 
the pandemic has ended.


1 
SEC. 11. Exemption from the requirement of Phase IV ciinicai Mai under
2 
Heaith Technoiogy Assessment of vaccines and medicines. — The vaccines and
3 
medicines determined to be critical products under this Act shall be exempt from the
4 
requirement of Phase IV clinical trial under Section 34(b)(2) of Republic Act No.
5 
11223, otherwise known as the "Universai Heaith Care Act": Provided, That
6 
minimum safeguards, systems and infrastructure are put in place by the DOH and
7 
other relevant agencies.
8 
SEC. 12. Procurement of Criticai Products by the Government. - To ensure
9 
adequate and responsive supply of critical products and services, the government, as
10 
the procuring entity shall strictly implement Section 43, Article XII of Republic Act
11 
No. 9184, otherwise known as the "Government Procurement Reform Act"to give
12 
preference to the purchase of domestically-produced and manufactured goods,
13 
supplies and materials that meet the specified or desired quality. In the interest of
14 
availability, efficiency and timely delivery of critical products and services under this
15 
Act, the Department of Budget and Management (DBM)-Procurement Service or the
16 
procurement entity concerned shall award to the lowest domestic manufacturer-
17 
bidder: Provided, That its bid is not more than fifteen percent (15%) in excess of the
18 
lowest foreign bid: Provided further, That It secures from the DTI a certification that
19 
the articles forming part of its bid are substantially composed of articles, materials,
20 
or supplies grown, produced, or manufactured in the Philippines.
21 
Private enterprises are also encouraged to source their requirements for
22 
critical products from the local manufacturers.
23 
SEC. 13. Stockpiiing of Criticai Products. - The DOH and the DBM, in
24 
coordination with DTI and other relevant agencies, shall stockpile necessary critical
25 
products to prepare for an Imminent or potential pandemic or public health
26 
emergency. The DOH and DBM shall procure the critical products and services In
27 
accordance with the preceding Section.
28 
SEC. 14. Reiocation or Expansion of Manufacturing Enterprises in the
29 
Phiiippines. - Manufacturers or producers of critical products that will relocate or
30 
expand operations in the Philippines are qualified to avail of the exemptions under
31 
this Act provided that they meet the requirements prescribed herein. The
32 
manufacturing activities covered under this Act shall be included as a strategic


1 
preferred area in the Investment Priorities Plan under Executive Order No. 226, as
2 
amended, otherwise known as the "Omnibus Investments Act of 1987". The
3 
strategic preferred areas listed therein shall be granted pioneer incentives or the
4 
maximum incentives allowed under existing laws.
5 
Nothing in this Act or any law that may be created to the contrary shall
6 
diminish, derogate, nor limit in whatever manner the grant and entitlement to
7 
incentives by qualified activities herein, including the option to avail of future
8 
incentives that are more relevant and generous.
9 
SEC. 15. Synchronized and Integrated Government Approach. - All
10 
departments, bureaus, agencies or instrumentalities of the government shall ensure
11 
the implementation of this Act in a synchronized and integrated manner. No
12 
government body shall adopt any policy or take any course of action contrary to or
13 
inconsistent with this Act.
14 
SEC. 16. Funding. - The amounts necessary for the implementation of this
15 
Act shall be taken from current appropriations of agencies concerned. Thereafter,
16 
such amount as may be necessary for the implementation of this Act shall be
17 
included in the General Appropriations Act.
18 
SEC. 17. Penaity for Government Officiai or Employee. - Any government
19 
official or employee who fails to Implement Section 12 of this Act shall be penalized,
20 
after due process, by a fine equivalent to the official's or employee's basic salary for
21 
a period of one (1) month to six (6) months or by suspension from government
22 
service for not more than one (1) year, or both, in addition to any criminal and
23 
administrative penalties imposable under existing laws.
24 
SEC. 18. Applicability. - This Act shall apply and shall remain in force and
25 
effect during the existence of a pandemic of national and/or international concerns
26 
as declared by the Secretary of Health, or during a state of public health emergency
27 
as declared by the President.
28 
SEC. 19. Implementing Rules and Regulations (IRR). - The DTI and BOI shall,
29 
within sixty (60) days after the approval of this Act, prepare and issue the necessary
30 
guidelines to implement the provisions of this Act.


1 
SEC. 20. Repealing Clause. — All laws, issuances, orders, rules and
2 
regulations, or parts thereof, which are contrary to or inconsistent with this Act are
3 
hereby repealed, amended or modified accordingly.
4 
SEC. 21. Separability Clause. - If any provision of this Act is declared invalid
5 
or unconstitutional, the other provisions not affected thereby shali remain valid and
6 
subsisting.
7 
SEC. 22. Effectivity Clause. - This Act take shall effect fifteen (15) days from
8 
the date of its publication in the OfTicial Gazette or in a newspaper of general
9 
circulation.
Approved,