FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
SENATE 
S.B. NO. 3163 
INTRODUCED BY SENATOR MANNY VILLAR 
EXPLANATORY NOTE 
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According to the recent Family Income and Expenditures Survey of the National 
Statistics Office, drugs and medicines account for 46 percent of the total medical out-of-
pocket expenses of households. In fact, the average person spent P1, 136, or around 
US$22, on medical care totaling to 3.2 percent of the total expenditures per person. The 
expenditure on drugs and medicines is much higher, about 50% more or less, for the low-
income groups. Imagine, the country's poverty incidence is estimated at 40%, hence, a 
substantial portion of the population is lacking in medical care for they cannot afford to buy 
drugs and medicines. As grim as it may be, the government has to take care of the health of 
the nation, otherwise, the consequence is unimaginable. Hence, afford ability of medicines is 
a vital issue, and must be given utmost priority by the government. 
The "Universally Accessible Cheaper Medicines Act of 2008" or RA No. 9502 
intended to lower the prices of essential medicines and drugs in the Philippines. This 
measure was clearly crafted with the purpose of making medicines accessible for aiL 
However, despite the law, medicines remain to be one of the most expensive commodities, 
a condition which deprives a majority of our people of medical aid and treatment. Thus, 
there is a great need for additional legislation in order to make adequate and affordable 
healthcare accessible for aiL 
Under the current circumstances, most basic raw materials, active ingredients and 
other auxiliary materials for the manufacture of medicines are imported by pharmaceutical 
companies. Upon importation, these products are already burdened with importation duties 
and tariffs and in addition a 12 percent Value Added Tax (VAT) is imposed on their sales. 
Sales of manufactured drugs are further subjected to another 12 percent Value Added Tax 
and sales taxes by local governments. With all these fees and taxes on medicines, their 
prices become unreachable to the ordinary Filipino. 
The removal of Tariffs and Value Added Tax on medicines will lead to significant 
savings for our people especially where millions live in poverty. With the exclusion of VAT 
lower-priced healthcare can be achieved by every Filipino. 
For the foregoing reasons, the approval of this bill is earnestly sought. 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
SENATE 
S.B. 3163 
INTRODUCED BY SENATOR VILLAR 
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AN ACT EXEMPTING THE SALE AND IMPORTATION OF DRUGS, MEDICINES, 
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PHARMACEUTICAL PRODUCTS AND RELATED RAW MATERIALS, AND 
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PHARMACEUTICAL EQUIPMENT AND INSTRUMENTS USED FOR THE 
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MANUFACTURE THEREOF FROM THE COVERAGE OF REPUBLIC ACT NO. 8424, 
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OTHERWISE KNOWN AS NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED 
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BY REPUBLIC ACT NO. 9337 AND THE IMPOSITION OF TARIFF AND DUTIES AND FOR 
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OTHER PURPOSES 
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Be it enacted by the Senate and the House of Representatives of the Philippines in 
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Congress assembled: 
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SECTION 1. This Act shall apply to the sale and importation of drugs, medicines, 
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pharmaceutical products and related raw materials and pharmaceutical equipment and 
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instruments used for the manufacture thereof. 
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SECTION. 2. 
Section 109 of Republic Act No. 8424, otherwise known as the National 
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Internal Revenue Code of 1997, as amended by Republic Act No. 9337, is hereby further 
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amended to read as follows: 
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SEC. 109. Exempt Transactions - Subject to the provisions of subsection 
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(2) hereof, the following transactions shall be exempt from value- added tax: 
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X 
X 
X 
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(W) 
SALE OR IMPORTATION OF DRUGS, MEDICINES, 
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PHARMACEUTICAL 
PRODUCTS 
AND 
RELATED 
RAW 
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MATERIALS, AND PHARMACEUTICAL EQUIPMENT AND 
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INSTRUMENTS USED FOR THE MANUFACTURE THEREOF. 
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SECTION. 3. 
The importation 
of drugs, medicines, pharmaceutical products 
and 
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related raw materials 
and 
pharmaceutical equipment 
and instruments 
used for the 
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manufactured thereof shall be exempted from tariff and duties; Provided, That the importation 
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of said articles shall be accompanied by a certificate duties issued by the Department of 
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Finance stating that such importation is exempt from tariffs and duties; Provided further, that 
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said certificate is based on a certification by the Food and Drugs Administration that the said 
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products being brought into the country are drugs, medicines, pharmaceutical products and 
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related raw materials and pharmaceutical eqUipment and instruments used for the manufacture 
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thereof. 
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SECTION 4. Implementing Rules and Regulations. - The Secretary of Finance, upon 
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recommendation of the Commissioners of Internal Revenue and the 
Tariff Commission, 


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respectively, and, in coordination with the Department of Health and the Food and Drugs 
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Administration shall 
promulgate within thirty days 
from 
the 
effectivity 
of this Act the 
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necessary Rules and Regulations to implement the provisions of this Act. 
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SECTION. 5. 
Separability Clause -
If any provision of this Act is declared 
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unconstitutional or invalid, Ule provisions not affected thereby shall continue to be in full force 
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and effect. 
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SECTION. 6. Repealing Clause - All laws, republic acts, presidential decrees orders, 
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rules and regulations or other issuance of government agencies inconsistent 
with 
the 
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provisions of this Act are hereby repealed, amended or modified accordingly. 
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SECTION. 
7. 
Effectivity Clause - This Act shall take effect fifteen days after its 
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publication in the Official Gazette or in two newspapers of general circulation. 
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Approved