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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
t$Hlft llf t~t *,.(fphHU 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
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JUl-8 P 2 :47 
SENATE 
S.No, 616 
IhtroduClld by Senator Ralph G. Recto 
Explanatory Note 
The Philippines' health profile is typical of a middle developing country. Aside from 
increasing population, deteriorating environment and poor nutrition, one of the biggest factors 
responsible for the weak performance of the health sector is the inadequate and ineffective public 
spending for health. 
To achieve an integrated and comprehensive approach to health development that shall 
endeavor to make essential goods, health and other social services available to all the people at 
affordable cost, the prudent use of financial resources to programs that can help prevent, control, 
and cure diseases should be prioritized. 
This bill proposes to allocate ten percent (10%) of annual VAT collections to expand the 
immunization program, augment the health insurance for the poor, improve and modernize rural 
health units in the fourth to sixth-class municipalities, district and provincial hospitals, and 
establish regional specialty hospitals. 
Additional funding support to expand the immunization program will help address the 
risk of infant mortality, and support our Millennium Development Goal (MDG) commitment to 
reduce under-five mortality rate by 67% between 1990 and 2015. 
As of December 2011,82% of the 95.6 million projected population have been enrolled 
in Philhealth 1. Of those enrolled, 38.45 million are indigents2• Earmarking VAT proceeds to the 
National Health Insurance Fund will help sustain the coverage in the long run, ensure better 
benefits for members at affordable premiums and eventually achieve universal coverage. 
Rural health units and district hospitals exercise the first line of defense against sickness. 
Thus, this bill allocates VAT dividends to modernize medical facilitieslhealth centers in areas 
that need most of the funding support - the fourth to sixth-class municipalities. 
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It also seeks to establish regional specialty hospitals without the use of loans, but instead 
earmark tax collections of government. Creation of these additional hospitals would unburden 
the specialty hospitals located in the National Capital Region. It would also allow patients who 
come from the provinces, and those who do not have the resources to combat orthopedic, heart, 
lung, and kidney diseases, immediate and more affordable hospital services without the need to 
travel long distance. 
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In light of the foregoing, immediate passage of this bill is e~'!eS~sought., 
1 See PhilHealth 20 II Stats & Charts accessed at http://www.philhealth.gov.phlabout_u 
on March 11, 2013. 
1 Ibid. 


SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 616 
Introduced by Senator Ralph G. Recto 
AN ACT 
Stuntr 
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JUL -8 P 2 :47 
MODERNIZING HEALTHCARE AND HEALTH INFRASTRUCTURE, PROVIDING 
FUNDS FROM THE ANNUAL VALUE-ADDED TAX COLLECTIONS, AMENDING 
FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED 
Be it enacted by the Senate and the House of Representative of the Philippines in Congress 
assembled: 
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SECTION 1. A new section, to be numbered two hundred eighty-seven, shall be added 
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to Chapter II, Title XI of the National Internal Revenue Code, as amended to read as! follows: 
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"SEC. 287. DISPOSITION OF PROCEEDS OF VALUE-ADDED/TAX - TEN 
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PERCENT (10%) OF THE VALUE-ADDED TAX COLLECTED UNDER TITLE IV 
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OF THIS ACT, AS AMENDED, SHALL BE ALLOCATED TO THE FOLLOWING 
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HEALTH EXPENDITURES IN THE FOLLOWING PROPORTIONS: 
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1. TEN PERCENT (10%) SHALL BE ALLOCATED FOR THE EXPANSION 
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OF THE IMMUNIZATION PROGRAM, TO BE ADMINISTERED BY THE 
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DEPARTMENT OF HEALTH (DOH); 
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2. THIRTY PERCENT (30%) SHALL BE ALLOCATED FOR THE 
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IMPROVEMENT AND MODERNIZATION OF HEALTH 
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INFRASTRUCTURE AND MEDICAL EQUIPMENT OF RURAL HEALTH 
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UNITS: PROVIDED, THAT PRIORITY SHALL BE GIVEN TO THOSE 
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LOCATED IN THE FOURTH TO SIXTH-CLASS MUNICIPALITIES: 
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PROVIDED, FURTHER, THAT THE ALLOCATION SHALL BE 
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ADMINISTERED BY THE DOH IN CONSUL TA TION WITH THE LOCAL 
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GOVERNMENT UNITS (LGUs) CONCERNED; 
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3. TWENTY PERCENT (20%) SHALL BE ALLOCATED FOR THE 
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IMPROVEMENT AND MODERNIZATION OF HEALTH 
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INFRASTRUCTURE AND MEDICAL EQUIPMENT OF DISTRICT AND 
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PROVINCIAL HOSPITALS, TO BE ADMINISTERED BY THE DOH IN 
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CONSULTATION WITH THE LGUs CONCERNED; 


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4. FORTY PERCENT (40%) SHALL BE ALLOCATED FOR THE 
ESTABLISHMENT OF A SPECIALTY DEPARTMENT IN MEDIqAL 
CENTERS AND REGIONAL HOSPITALS, TO BE ADMINISTERfD BY THE 
DOH IN CONSULTATION WITH THE LGUs CONCERNED. 
FOR 
PURPOSES OF THIS ACT, A "SPECIALTY DEPARTMENT" IS DEFINED 
AS 
A DEPARTMENT IN 
MEDICAL CENTERS AND 
REGIONAL 
HOSPITALS THAT IS PRIMARILY OR EXCLUSIVELY ENGAGED IN THE 
CARE AND TREATMENT OF ONE OF THE FOLLOWING: 
A.) PATIENTS WITH A CARDIAC CONDITION; 
B.) PATIENTS WITH A LUNG CONDITION; 
C.) PATIENTS WITH A KIDNEY CONDITION; 
D.) PATIENTS WITH AN ORTHOPEDIC CONDITION. 
Sec. 2. The succeeding Sections of the National Internal Revenue Code, as amended, are 
hereby renumbered accordingly. 
Sec. 3. Implementing Rules and Regulations (IRR). - The Department of Budget and 
Management (DBM), DOH, Department of Interior and Local Government (DILG) and the 
Bureau of Internal Revenue (BIR) shall within thirty (30) days after the effectivity of this Act 
issue the IRR for its effective implementation. 
Sec. 4. Repealing Clause. - All laws, decrees, executive orders, rules and regulations, or 
parts thereof which are inconsistent with this Act are hereby repealed, amended or modified 
accordingly. 
Sec. 5. Effectivity. - This Act shall take effect fifteen days (15) days following its 
publication in at least two (2) newspapers of general circulation or the Official Gazette. 
Approved,