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'22 JUL 12 AlO :04
NINETEEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
F/rst Regular Session
SENATE
Senate Bill No. 817
RECtIVcD BY:
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
REDEFINING THE COVERAGE AND EXTENDING THE MANDATORY CREDIT 
ALLOCATION TO MICRO, SMALL AND MEDIUM ENTERPRISES, AMENDING FOR 
THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6977, AS 
AMENDED, OTHERWISE KNOWN AS THE "MAGNA CARTA FOR SMALL 
ENTERPRISES" AND FOR OTHER PURPOSES
Explanatory Note
Republic Act No. 6977 otherwise known as the Magna Carta for Micro Small and 
Medium Enterprises (MSMEs) was first enacted in 1991 to promote, encourage, support 
and strengthen the growth and development of MSMEs. Recognizing the critical role 
MSMEs play in reducing poverty and achieving inclusive growth, the Magna Carta for 
MSME was further amended in 1997 by Republic Act No. 8289.
According to data1 from the DTI-Bureau of Small and Medium Enterprise 
Development, there are 957,620 establishments in the Philippines based on the Philippine 
Statistics Authority's Annual List of Establishments, of which, 99.51% are MSMEs. Of the 
total MSMEs, 88.77% are micro enterprises, 10.25% and 0.49% are small and medium 
enterprises, respectively. In terms of job generation, MSMEs provided a total of 5,380,815 
jobs or 62.66% of the total jobs generated by all types of business establishments in the 
country. In terms of value-added, the MSME sector contributed 35.7%.
Despite their contribution, various challenges continue to hinder the growth and 
competitiveness of MSMEs. Lack of access to financing, sustainable markets and training 
to acquire the needed mindset and skills to ultimately grow and sustain a business are 
just a few of the constraints faced by MSMEs.
To address these concerns, this bill proposes to redefine the coverage of micro 
enterprises, extend the mandatory lending provisions to MSMEs, and increase the 
penalties for noncompliance thereof. It is hoped that with these amendments the MSMEs 
will gain better access to financing to make them truly dynamic, resilient and globally 
competitive.
In view of the foregoing, immediate approval of this bill is earnestly requested.
IGUEL F. ZUBIRI


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
Senate Bill No. 3^7
of liu'
72 JUL 12 AlO '-OA
RECEIVED E'i.
Introduced by Senator Juan Miguel F. Zubiri
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AN ACT
REDEFINING THE COVERAGE AND EXTENDING THE MANDATORY CREDIT 
ALLOCATION TO MICRO, SMALL AND MEDIUM ENTERPRISES, AMENDING 
FOR THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6977, AS 
AMENDED, OTHERWISE KNOWN AS THE "MAGNA CARTA FOR SMALL 
ENTERPRISES" AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
SECTION 1. Section 3 of Republic Act No. 6977, as amended, is hereby further 
amended to read as follows:
"SEC. 3. Micro, Small and Medium Enterprises (MSMEs) as Beneficiaries. — MSMEs 
shall be defined as any business activity or enterprise engaged in industry, 
agribusiness and/or services, whether single proprietorship, cooperative, 
partnership or corporation whose total assets, inclusive of those arising from loans 
but exclusive of the land on which the particular business entity's office, plant and 
equipment are situated, must have value falling under the following categories: 
Micro 
: 
Less than [P3,000,000] P5,000,000
Small 
[P3,000,001] P5,000,001 - P15,000,000
Medium 
: 
P15,000,001 - P100,000,000
"The above definitions shall be subject to review and adjustment by the Micro, 
Small and Medium Enterprises Development (MSMED) Council under Section 6 of 
this Act or upon recommendation of sectoral organizations concerned, taking into 
account inflation and other economic indicators. The Council may use other 
variables such as number of employees, equity capital and assets size.
"x XX."


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SEC. 2. Section 13 of the same Act, as amended, is hereby further amended to 
read as follows:
"SEC. 13. Mandatory Allocation of Credit Resources to Micro, Small and Medium 
Enterprises. — [For the period of ten (10) years from the date of the effectivity of 
this ActJ All lending institutions as defined under Bangko Sentral ng Pilipinas rules, 
whether public or private, shall set aside at least [six] TEN PERCENT ([6] 10%) 
[and at least two percent (2%) for small and medium enterprises, respectively,] 
of their total loan portfolio based on their balance sheet as of the end of the 
previous quarter, and make it available for MICRO, small and medium enterprises 
credit as herein contemplated FOR A PERIOD OF TEN (10) YEARS FROM THE 
EFFECTIVITY OF THIS ACT: PROVIDED, THAT NO MORE THAN TWO 
PERCENT (2%) OF THE MANDATORY ALLOCATION SHALL BE MADE 
AVAILABLE TO MEDIUM ENTERPRISES.
"The Bangko Sentral ng Pilipinas shall, IN CONSULTATION WITH THE SMALL 
BUSINESS CORPORATION AND SUBJECT TO THE APPROVAL OF THE 
SECRETARY OF TRADE AND INDUSTRY, formulate rules for the effective 
implementation of this provision: Provided, Tliat the purchase of government 
notes, securities and other negotiable instruments[, with the exemptions of such 
instruments as may be offered by the SBGFC which do not pay market rates,] shall 
not be deemed [compliance] COMPLIANT with the foregoing provisions: 
Provided, further, That the Bangko Sentral ng Pilipinas, IN CONSULTATION 
WITH ALL STAKEHOLDERS, shall establish AN incentive [program] SYSTEM 
to encourage [lending to micro, small and medium industries beyond the 
mandatory credit allocation to said enterprises,] COMPLIANCE WITH THESE 
PROVISIONS, such as possible reduction in bank's reserve requirement.
"ANY BANK OR LENDING INSTITUTION FOUND TO HAVE VIOLATED THE 
MANDATORY LENDING PROVISIONS UNDER THIS SECTION SHALL 
SUFFER A FINE OF NOT LESS THAN FIVE HUNDRED THOUSAND PESOS 
(P500,000.00) BUT NOT MORE THAN FIVE MILLION PESOS 
(P5,000,000.00) IN THE CASE OF LARGER BANKS AND A FINE OF NOT 
LESS THAN ONE HUNDRED THOUSAND PESOS (P100,000.00) IN THE 
CASE OF SMALLER BANKS. THE BANGKO SENTRAL NG PILIPINAS SHALL 
FORMULATE THE RULES AND REGULATIONS ON THE RANGE AND


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AMOUNT OF FINES TO BE IMPOSED IN PROPORTION TO THE AMOUNT 
OF NONCOMPLIANCE OF BANKS AND OTHER LENDING INSTITUTIONS; 
AND THAT SUCH AMOUNTS MAY BE ADJUSTED PERIODICALLY FOR 
INFLATION.
"The MSMED Council shall set up the appropriate systems to monitor all loan 
applications of MICRO, small and medium enterprises in order to account for the 
absorptive capacity of the MICRO, small and medium enterprises sector.
"The Bangko Sentral ng Pilipinas shall [require lending institutions covered by this 
Act to] furnish to the Small and Medium Enterprise Development Council on a 
quarterly basis regular reports on the[ir] compliance AND/OR 
NONCOMPLIANCE OF BANKS AND OTHER LENDING INSTITUTIONS, AND 
PENALTIES IMPOSED FOR ANY VIOLATION OF [with] the above provisions 
on the mandatory credit allocations for MICRO, small and medium enterprises[, 
and expeditiously act on the Council's reports of non-compliance therewith]."
SEC. 3. Separability Clause. — The provisions of the Act are hereby declared 
to be separable. If any provision of this Act shall be held unconstitutional, the remainder 
of the Act not otherwise affected shall remain in full force and effect.
SEC. 4. Repealing Clause. — All laws, executive orders, rules and regulations, 
or parts thereof, inconsistent herewith are hereby repealed or modified accordingly.
SEC. 5. Effectivity Clause. — This Act shall take effect within fifteen (15) days 
from its publication in at least two (2) national newspapers of general circulation.
Approved,