Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL No._7420

Introduced by: Hon. Angelina “Helen” D.L. Tan, M.D,

AN ACT
STRENGTHENING DOMESTIC HEALTHCARE MANUFACTURING INDUSTRIES,
PROVIDING FOR THE PROTECTION AGAINST PANDEMIC, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Article II, Section 15 of the1987 Constitution provides that “the State shall protect and promote
the right to health of the people and instill health consciousness among them.”

To date, the Philippines has the highest number of COVID-19 active cases in Southeast Asia, Even
in the initial stage of the battle against COVID-19, frontline healthcare workers have repeatedly expressed
their dismay on the dangerously low supply of personal protective equipment (PPE) which are crucial in
the performance of their duties. As a result, many of them died while more than two thousand have been
infected, a tragedy that could have been prevented if proactive measures were taken early on.

The Department of Health (DOH) has been under fire for having acquired allegedly overpriced set
of PPEs amounting to PhP 1.8 billion when there are local manufacturers who can readily produce the
same medical equipment for a much cheaper price.

According to the Secretary Ramon Lopez of the Department of Trade and Industry (DTI), we are
now able to domestically produce three hundred thousand (300,000) PPEs per month. This growing
domestic capacity decreases the country’s import requirements for protective equipment for frontline
healthcare workers while at the same time boosts local economy and increases labor and employment in
the country.

Thus, this bill, which is being filed as a counterpart version to Senator Imee R. Marcos’ Senate
Bill No. 1708, seeks to promote healthcare manufacturing industries by granting them tax benefits and
mandating that, in times of pandemic or public health emergencies, they be given preference by the
government in the procurement of critical products and services.

In view of the foregoing, the passage of this measure is earnestly sought.

Oban

ANGELINA “HELEN” D.L. TAN, M.D.
4" District, Quezon.

Republic of the Philippines


HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS

Second Regular Session

HOUSE BILL NO. 7420

Introduced by: Hon. Angelina “Helen” D.L. Tan, M.D.

AN ACT
STRENGTHENING DOMESTIC HEALTHCARE MANUFACTURING INDUSTRIES,
PROVIDING FOR THE PROTECTION AGAINST PANDEMIC, AND FOR OTHER PURPOSES

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 “Healthcare Manufacturing and
Pandemic Protection Act.”

SEC. 2. Declaration of Policy. ~ It is the policy of the State to protect and promote the right to
health of the people and instill 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 other health-related 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;

(@) 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.

SEC. 3. Coverage. The provisions of this Act shall apply to domestic manufacturers or producers
of critical products and providers of critical services during the existence of a pandemic or public health
emergencies and only upon compliance with the accreditation requirements and standards issued by
relevant government agencies.

SEC. 4. Definition of Terms. — For purposes of this Act, the following terms shall be understood
as follows:

(a) Accreditation refers to the written authority issued by the Department of Trade and Industry
(DTH), through the Board of Investments (BON), and other relevant government agencies to manufacturers
and producers of critical products and providers of critical services;

(b) Critical Products refer to medicines, vaccines, ventilators and other medical supplies or
equipment, such as personal protective equipment (PPE) and surgical masks, including its raw materials,
required to address a pandemic or national health emergency, as may be determined by the Department of
Health (DOH) or other relevant government agencies;


(©) 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 or other relevant government agencies;

(@) Manufacturer refers to an enterprise duly accredited or registered under the provisions of this
Act, engaged in the production of critical products including the preparation, processing, compounding,
formulating, filling, packing, repacking, altering, ornamenting, finishing and labeling;

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

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

(g) Raw Material refers to materials and inputs from which a critical product and its packaging
made; and

(h) Standards refer to the guidelines 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.

SEC. 5. Tax Benefits, —

(a) 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 (BoC), the Food and Drug Administration
(FDA) and other relevant agencies.

(b) Exemption from VAT on Local Sales. ~The sale of critical products and rendition of critical
services shall be exempted from VAT which shall be based on the gross sales or gross receipts,
respectively.

(c) Treatment of Export Enterprises. - The local sales of critical products and rendition of critical
services by export enterprises shall be deemed and treated as “export sales” for purposes of its export
requirement pursuant to existing laws. As such, the corresponding treatment, exemption on duties, taxes
and fees, and other incentives warranted under 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 treated as “export sales”
for purposes of its export requirement.

SEC. 6. Export Limitation. - Export enterprises that manufacture or produce 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.
Provided, That in case the demand for critical products and critical services does not reach such
percentage, as certified by the DTI, the manufacturer or producer may opt to export the critical product or
critical service

SEC. 7. Procurement of Critical Products by the Government. ~ To ensure adequate and
responsive supply of critical products and supplies, the government, as the procuring entity shall give
preference to critical products manufactured, produced or made in the Philippines; Provided, That the
award shall be made to the lowest domestic manufacturer-bidder whose bid is not more than twenty five
percent (25%) in excess of the lowest foreign bid; Provided Further, That it has secured from the DTI 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 and producers.

SEC. 8. Funding. ~ The amount necessary to carry out the provisions of this Act shall be sourced
from the current year’s appropriations of the concerned department/agency. Thereafter, such sums as may
be needed for its continued implementation shall be included in the General Appropriations Act (GAA).

SEC. 9. Implementing Rules and Regulations. ~ The DTI, DOH and BOI shall promulgate the
rulesand regulations to implement this Act.

SEC. 10. Repealing Clause, ~ All provisions of existing laws, orders and regulations contrary to
or inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 11. Separability Clause. ~If for any reason any part or provision of this Act shall be deemed
unconstitutional or invalid, the other sections or provisions hereof shall not be affected and shall remain
in force and effect.

SEC. 12. Effectivity. — This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in two (2) newspapers of general circulation.

Approved,