Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2557

Authored by HON. JOSEPH VICTOR G. EJERCITO

EXPLANATORY NOTE

This bill provides for the creation of a creation of a People’s Fund
which shall comprise thirty percent (30%) of all proceeds from the VAT
collected under Title IV of the National Internal Revenue Code. This
Portion estimates the share of incremental revenues from RA 9337,
the Expanded Value-Added Tax law, which increased to 12% the VAT
and removed the exemption.

These proceeds shall be allotted and deposited in a separate
trust fund or account to be created within the National Treasury. The
said portion shall be derived from all proceeds from the VAT after the
share of the Bureau of Internal Revenue from actual VAT collections in
excess of its collection goal, as provided for in Section 285 of this Act.

To ensure that the People’s Fund will cater to the people’s needs,
the President is asked to embark on broad consultations through the
different departments and agencies of government on a 3-year
utilization plan for public education and health. As envisioned, these
revenues will help close the resource gaps in teachers’ training and
salaries, infrastructure needs like classrooms and school buildings,
among others. In the area of health, these funds will alleviate
problems concerning substandard government hospitals and clinics,
lack of medical personnel and equipment, malnutrition especially
among children and minors, among others. The 3-year utilization plan
to be submitted by the President to Congress for approval would
ensure continuity of programs and a more programmatic approach in
resolving perennial problems rather than the usual incremental
application of resources that never quite closes these gaps.

Passage of this measure shall also prevent the use of VAT
resources under the People’s Fund to augment the maintenance and
other operating expenses of any national government agency and/or
government-controlled corporation, local government unit or any office
under their supervision. Funding for such expenses can be sourced


from traditional sources of revenues such as income taxes, customs
collections, and other fees attached to government services.

JOSEPH VICTOR G. EJERCITO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 2557 _
Authored by HON. JOSEPH VICTOR G. EJERCITO

AN ACT
CREATING A “PEOPLE’S FUND,” EARMARKING ALL PROCEEDS FROM
THE VALUE-ADDED TAX TO THE SAID FUND, FOR THE EXCLUSIVE
ALLOCATION TO THE EDUCATION AND HEALTH NEEDS OF OUR PEOPLE,
AMENDING FOR THIS PURPOSE 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. Short Title. This Act shall be known as the
“People’s Fund Act.”

SEC. 2. Declaration of Policy. It is the policy of the State to
exercise transparency and good governance in the utilization of public
funds, and to ensure that such funds be used to uplift the lives of the
common folk.

It is the policy of the State to protect and promote the right of all
citizens to quality

education at a1 levels, and to take appropriate steps to make such
education accessible to all. Likewise, it is the policy of the State to
adopt an integrated and comprehensive approach to health
development, to make essential goods health and other social services
available to all people at affordable cost, and to endéavor to provide
free medical care to indigents.

In this light, it is hereby declared the policy of the State to ensure that
taxes collected from the people are returned to them in the form of
meaningful public education and healthcare services, with the end-
view of enabling and empowering them to participate in nation-
building.

SEC. 3. Paragraph (D) of Section 288 of this Code, as amended,
is hereby deleted.


SEC. 4. A new Chapter, to be referred to as Chapter 11-A, shall
be inserted within Title XI and after Section 289 of Chapter I1 of the
same Title of the National Internal Revenue Code, as amended, to read
as follows:

“CHAPTER 11-A
SPECIAL DISPOSITION OF THE VALUE-ADDED TAX

“(A) CREATION OF A PEOPLE’S FUND. THIRTY
PERCENT (30%) OF ALL PROCEEDS FROM THE VALUE-ADDED
TAX (VAT) COLLECTED UNDER TITLE IV OF THIS CODE, AS
AMENDED, SHALL BE ALLOTTED AND DEPOSITED IN A
SEPARATE TRUST FUND OR ACCOUNT TO BE CREATED WITHIN
THE NATIONAL TREASURY, TO BE REFERRED HEREIN AS THE
“PEOPLES FUND.”

THE SAID PORTION SHALL BE DERIVED FROM ALL PROCEEDS
. FROM THE VAT AFTER THE SHARE OF THE BUREAU OF

INTERNAL REVENUE FROM ACTUAL VAT COLLECTIONS IN

EXCESS OVER THE .

COLLECTION GOAL, AS PROVIDED FOR IN SECTION 285 OF

THIS ACT, HAS BEEN DERIVED.

NOTHING IN THIS ACT SHALL DIMINISH THE ALLOTMENT TO
LOCAL GOVERNMENT UNITS FROM THE VAT, AS PROVIDED FOR
BY REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE
LOCAL GOVERNMENT CODE OF 1991.

“(B) ALLOCATION AND APPROPRIATION. THE PEOPLE'S
FUND SHALL SOLELY AND EXCLUSIVELY BE USED FOR PUBLIC
EDUCATION AND HEALTH SERVICES TO THE PEOPLE OF THE
PHILIPPINES. ANNUAL DEPOSITS TO THE SAID FUND SHALL BE
EARMARKED, WITH FIFTY PER CENTUM (50%) EACH, FOR
EDUCATION AND FOR HEALTH, PARTICULARLY IN ADDRESSING
RESOURCE GAPS INCLUDING, BUT NOT LIMITED TO,
INFRASTRUCTURE, FACILITIES, PERSONNEL AND SUPPLIES.

“THE PRESIDENT, IN CONSULTATION WITH THE RELEVANT
DEPARTMENTS AND WITH THE BROADEST SECTORS, SHALL
PREPARE A UTILIZATION PLAN COVERING THREE (3) FISCAL
YEARS FOR THE UTILIZATION OF THE SAID FUND, INCLUDING
1) PROJECTIONS OF PROCEEDS FROM VAT FOR THE SAID
THREE (3) FISCAL YEARS, AS WELL AS ACTUAL SAVINGS FROM
VAT IN THE PREVIOUS YEARS, AS DEPOSITED IN THE PEOPLE'S
FUND; AND 2) RESOURCE GAPS AND OTHER REQUIREMENTS.
FOR THE PROVISION OF MEANINGFUL PUBLIC EDUCATION AND
HEALTH SERVICES.


“SUCH THREE-YEAR PLAN SHALL BE FOLLOWED BY THE
PRESIDENT IN THE PREPAMTION OF THE GENERAL
APPROPRIATIONS ACT FOR THE COVERED YEARS. ALLOCATIONS
FROM THE PEOPLES FUND SHALL BE INDICATED IN THE
GENERAL APPROPRIATIONS ACT AS ITEMS SEPARATE FROM
ALLOCATIONS

FROM REGULAR FUND SOURCES.

“THE PEOPLE’S FUND SHALL NOT, AT ANY TIME AND IN ANY
WAY, BE USED TO AUGMENT THE MAINTENANCE AND OTHER
OPERATING EXPENSES OF ANY NATIONAL GOVERNMENT
AGENCY, GOVERNMENT OWNED OR CONTROLLED
CORPORATION, LOCAL GOVERNMENT UNIT OR THEIR
SUBDIVISIONS.

“(C) ALLOCATION FOR EDUCATION. OF THE TOTAL
ALLOCATION FOR PUBLIC EDUCATION SERVICES AS PROVIDED
FOR IN PARAGRAPH (B) HEREOF, THE FOLLOWING
PROPORTIONS SHALL BE EARMARKED TO THE FOLLOWING:

(1) THIRTY PERCENT (30%) FOR THE ACQUISITION AND
IMPROVEMENT OF SCHOOL SITES, THE CONSTRUCTION,
REHABILITATION AND REPAIR OF SCHOOL BUILDINGS
FOR PRE-SCHOOL, ELEMENTARY AND HIGH SCHOOL:
PROVIDED, THAT THE ALLOCATION OF SUCH FUNDS
SHALL BE SUBJECT TO THE PROVISIONS OF REPUBLIC
ACT NO. 7880, OTHERWISE KNOWN AS THE FAIR AND
EQUITABLE ACCESS TO EDUCATION LAW,

(2) TEN PERCENT (10%) FOR THE ACQUISITION,
REPLACEMENT AND REPAIR OF CLASSROOM FURNITURE,
FIXTURES AND EQUIPMENT, SUCH AS, BUT NOT LIMITED
TO, DESKS, CHAIRS, LABORATORY AND WORKSHOP
EQUIPMENT, COMPUTERS, AMONG OTHERS, FOR PRE-
SCHOOL, ELEMENTARY AND HIGH SCHOOL;

(3) TEN PERCENT (10%) FOR THE DEVELOPMENT,
ACQUISITION AND REPLACEMENT OF LEARNING
MATERIALS SUCH AS, BUT NOT LIMITED TO, TEXTBOOKS,
TEACHING AIDS, REFERENCE AND OTHER LIBRARY
BOOKS, COMPUTER PROGRAMS , AMONG OTHERS, FOR
PRE-SCHOOL, ELEMENTARY AND HIGH SCHOOL;

(4) TWENTY PERCENT (20%) FOR THE HIRING AND
COMPENSATION OF PRE-SCHOOL, ELEMENTARY AND
HIGH-SCHOOL TEACHERS AND PRINCIPALS, AND FOR THE
DEVELOPMENT AND ADMINISTRATION OF MEANINGFUL
TRAINING PROGRAMS AND OTHER PROJECTS FOR THEIR
CAPACITY BUILD-UP;


(5) TEN PERCENT (10%) FOR THE RESEARCH,
DEVELOPMENT AND IMPLEMENTATION OF A MEANINGFUL
IN-SCHOOL SUPPLEMENTARY NUTRITION PROGRAM, AS
WELL AS FOR IN-SCHOOL HEALTH SERVICES FOR PRE-
SCHOOL, ELEMENTARY AND HIGH SCHOOL STUDENTS;
AND

(6) TWENTY PERCENT (20%) FOR STUDENT FINANCING IN
TECHNICAL-VOCATIONAL AND TERTIARY EDUCATION,
INCLUDING SCHOLARSHIPS AND OTHER FINANCIAL
SUPPORT FOR DESERVING AND/OR INDIGENT STUDENTS,
AND FOR LOANS TO STUDENTS WHICH COULD BE PAID
BACK, WITH MINIMAL INTEREST AND REASONABLE
TERMS, AFTER GRADUATION.

“(D) ALLOCATION FOR HEALTH. OF THE TOTAL ALLOCATION
FOR PUBLIC HEALTH SERVICES AS PROVIDED FOR IN
PARAGRAPH (B) HEREOF, THE FOLLOWING PROPORTIONS
SHALL BE EARMARKED TO THE FOLLOWING:

(1) TWENTY PERCENT (20%) FOR THE CONSTRUCTION,
REHABILITATION AND REPAIR OF PUBLIC HEALTH
INFRASTRUCTURE INCLUDING, BUT NOT LIMITED TO,
GOVERNMENT HOSPITALS AND HEALTH CENTERS, AS
WELL AS FOR HEALTHCARE FACILITIES, EQUIPMENT AND
OTHER IMPLEMENTS;

(2) TWENTY PERCENT (20%) FOR THE HIRING AND
COMPENSATION OF DOCTORS, NURSES, MIDWIVES AND
OTHER HEALTCARE WORKERS, AND FOR THE
DEVLEOPMENT AND ADMINISTRATION OF MEANINGFUL
TRAINING PROGRAMS AND OTHER PROJECTS FOR THEIR
CAPACITY BUILD-UP;

(3) TEN PERCENT (10%) FOR THE ADMINISTRATION OF
MATERNAL AND REPRODUCTIVE HEALTHCARE;

(4) TEN PERCENT (10%) FOR DISEASE PREVENTION
PROGRAMS INCLUDING, BUT NOT LIMITED TO,
IMMUNIZATION PROGRAMS FOR INDIGENTS, EDUCATION
AND AWARENESS PROGRAMS AND CAMPAIGNS, AMONG
OTHERS;

(5) TWENTY PERCENT (20%) FOR THE DETECTION AND
CONTROL OF INFECTIOUS AND OTHER DISEASES
CAUSING HIGH MORTALITY AND MORBIDITY RATES, AS
WELL AS THE CONTROL OF OUTBREAKS AND OTHER
HEALTH EMERGENCIES; AND


(6)TEN PERCENT (10%) FOR THE DEVELOPMENT AND
IMPLEMENTATION OF PROGRAMS TO IMPROVE
SANITATION AND THE QUALITY OF WATER.

"(E) REPORT TO CONGRESS. THE OFFICE OF THE PRESIDENT,
IN CONSULTATION WITH THE DEPARTMENT OF FINANCE, THE
DEPARTMENT OF BUDGET AND MANAGEMENT, THE
DEPARTMENT

OF EDUCATION AND THE DEPARTMENT OF HEALTH, SHALL
SUBMIT TO CONGRESS, BEFORE OR AT THE END OF EACH
FISCAL YEAR, A REPORT ON THE DISPOSITION OF THE
PEOPLE'S FUND, INCLUDING, BUT NOT LIMITED TO, THE
FOLLOWING INFORMATION:

(1) REVENUES FROM THE COLLECTION OF VAT, AND THE
CORRESPONDING SHARE OF THE PEOPLES FUND FROM
SUCH, FOR THE SAID YEAR COMPARED WITH REVENUES
FROM THE COLLECTION OF VAT FOR THE PRECEEDING
TEN (10) YEARS;

(2) PROJECTIONS OF REVENUES FROM COLLECTION OF
THE

VAT, AND THE CORRESPONDING SHARE OF THE PEOPLE'S
FUND FROM SUCH, FOR AT LEAST THE FOLLOWING THREE
(3) YEARS;

(3)STATUS OF THE ACTUAL IMPLEMENTATION OF THE
THREE-YEAR UTILIZATION PLAN, AS PREPARED BY THE
PRESIDENT, COMPARED WITH TARGETS SET IN THE SAID
PLAN; AND

(4)OTHER INFORMATION ON THE DISPOSITON OF THE
FUND, AS MAY BE DEEMED NECESSARY BY THE OFFICE OF
THE PRESIDENT, OR AS MAY BE REQUIRED BY CONGRESS.
OR ANY OF ITS MEMBERS.

“THE NATIONAL TREASURER SHALL LIKEWISE SUBMIT TO.

CONGRESS, BEFORE OR AT THE END OF EACH FISCAL YEAR,

‘THE STATUS OF THE PEOPLE’S FUND, INCLUDING THE
FOLLOWING INFORMATION:

(1) DEPOSITS MADE TO THE SAID FUND FOR THE FISCAL
YEAR COVERED;

(2) SAVINGS RETAINED IN THE SAID FUND FROM THE
PRECEEDING FISCAL YEARS, DISAGGREGATED TO
SAVINGS FROM EDUCATION AND SAVINGS FROM HEALTH;


(3)WITHDRAWALS MADE FROM THE SAID FUND, AS
AUTHORIZED BY THIS ACT AND BY THE GENERAL
APPROPRIATIONS ACT PREPARED FOR THE YEAR
COVERED.

(4)OTHER INFORMATION ON THE FUND, AS MAY BE
DEEMED NECESSARY BY THE NATIONAL TREASURY, OR AS

MAY BE REQUIRED BY CONGRESS OR ANY OF ITS
MEMBERS.

“(F) MIDTERM REVIEW: CONGRESS SHALL MAKE A REVIEW OF
THE IMPLEMENTATION OF THIS CHAPTER AT THE END OF EVERY
THREE YEARS COVERED BY THE UTILIZATION PLAN, AS
PREPARED BY THE PRESIDENT, OR WHENEVER DEEMED
NECESSARY BY CONGRESS THROUGH A JOINT RESOLUTION.

“THE CONGRESSIONAL OVERSIGHT COMMITTEE, AS CREATED
IN SECTION 290 OF THIS CODE, AS AMENDED, SHALL CONDUCT
THIS MIDTERM REVIEW, TOGETHER WITH THE CHAIRMEN OF
THE FOLLOWING STANDING COMMITTEES OF CONGRESS:

(1) THE COMMITTEE ON APPROPRIATIONS OF THE HOUSE
OF REPRESENTATIVES, AND THE COMMITTEE ON FINANCE
OF THE SENATE;

(2) THE COMMITTEE ON BASIC EDUCATION AND CULTURE
OF THE HOUSE OF REPRESENTATIVES, AND THE
COMMITTEE ON EDUCATION OF THE SENATE; AND

(3)THE COMMITTEE ON HEALTH OF THE HOUSE OF
REPRESENTATIVES, AND THE COMMITTEE OF HEALTH AND
DEMOGRAPHY OF THE SENATE.

“THE SAID REVIEW SHALL BE WITH THE END-VIEW OF MAKING
RECOMMENDATIONS ON THE UTILIZATION OF THE PEOPLE'S
FUND AS SPECIFIED IN PARAGRAPHS (C) AND (D) OF THIS
CHAPTER, AND TO ANY OTHER PROVISION OF THIS CHAPTER.
ANY

PROPOSED CHANGES THROUGH THIS CHAPTER SHALL BE
PROPOSED BY THE COMMITTEE, AND THEREBY APPROVED BY
CONGRESS FOLLOWING THE APPROPRIATE LEGISLATIVE
PROCEDURE AS SPECIFIED IN THE CONSTITUTION.

SEC. 5. Repealing Clause. All other 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. 6. Separability Clause. - 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 full force and effect.

SEC. 7. Effectivity. - This Act shall take effect upon its
approval.

Approved,