EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE
S. No. 1421
. Senate
of tijr i&jcrctnrjj
20 APR 16 A8 ^5
RECEIVfDBV;
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
INSTITUnONALIZING MICROFINANCE PROGRAMS AND ACCESS TO 
CAPITAL TO SUPPORT AND GROW MICRO, SMALL, AND MEDIUM 
ENTERPRISES (MSMEs), ALLOCATING FUNDS THEREFOR, AND FOR OTHER 
PURPOSES
EXPLANATORY NOTE
Article II Section 20 of the Constitution states that, "The State recognizes the 
indispensable role of the private sector, encourages private enterprise, and provides 
incentives to needed investments."
According to the Philippine Statistics Authority (PSA), there is a total of 
1,003,111 business enterprises operating in the country as reported in the 2018 List 
of Establishments. Of this number, 998,342 or 99.52% are Medium, Small and 
Micro Enterprises (MSMEs) - 887,272 or 88.45% are micro enterprises; 106,175 or 
10.58% are small enterprises; and 4,895 or 0.49% are medium enterprises. They 
generated a total of 5,714,263 jobs or 63.19% of the country's total employment.
These MSMEs are concentrated in the National Capital Region (NCR), both in 
terms of number of establishments and job generation. The said List reveals that 
there are 203,312 establishments or 20.36% of the total number of MSMEs in NCR, 
generating 1,621,685 jobs.


The government has long recognized the essential contribution of MSMEs in 
our economy. Several laws, issuances, programs and projects were implemented to 
support their sustainability and growth. In 2002, Republic Act No. 9178 or the 
"Barangay Micro Business Enterprises (BMBEs) Act of 2002" was enacted. In 2008, 
Republic Act No. 9501 otherwise known as the "Magna Carta for Micro, Small and 
Medium Enterprises" amended previous laws to make business environment 
conducive for MSMEs and to develop entrepreneurial spirit among our countrymen. 
The most recent legislation is Republic Act No. 10644 entitled, "An Act Promoting 
Job Generation and Inclusive Growth Through the Development of Micro, Small and 
Medium Enterprises", otherwise known as the "Go Negosyo Act" which was enacted 
in 2014. Among others, RA 10644 established of Negosyo Centers in all provinces, 
cities and municipalities nationwide and established a Start-up Fund for MSMEs to be 
sourced from the MSME Development Fund and BMBE Fund.
However, as acknowledged by the World Bank's Finance, Competitiveness 
and Innovation Global Practice, in its paper published in 2019 entitled, "Philippines: 
Assessing the Effectiveness of MSME and Entrepreneurship Support", the potential 
for significant improvement of the MSMEs remains. They are considered as "bedrock 
of the private sector and innovation in the Philippines" and important contributor to 
the country's economic development but there are multiple constraints that hinder 
their productivity. Among the recommendations of the World Bank are remedial 
measures that include a "combination of policy reforms and strengthening of 
programs for private sector to improve the operating environment of the firms and 
within-firm performance, as well as entry of new firms."
The onset of COVID-19 pandemic in 2020 struck a big blow to the MSMEs in 
the country. Preventive measures, particularly the Enhanced Community Quarantine 
(ECQ) forced these MSMEs to temporarily close or to completely shut down 
operations. Such occurrence negatively affected both business owners and workers. 
Given the fact that majority of MSMEs are in the NCR which is included in the ECQ, 
its effect to the national economy is undeniably significant. It is, therefore.


imperative that in the recovery from the pandemic, priority should be given to them 
to be able to pump prime the economy once more.
This legislative measure seeks to further strengthen MSMEs by 
institutionalizing microfinance programs through "Puhunan, Tulungan and 
Kaunlaran" (PTK). Among others, it proposes the establishment of PTK Five-Star 
Program to "protect the capital of small proprietors, ensure the success of their 
MSMEs, and transform these MSMEs into five-star business by providing them with 
assistance and the necessary resources in order to help their businesses flourish." It 
also seeks to provide PTK Loan Program which will cater exclusively to micro­
enterprises in need of capital. The government will provide a funding of Twenty Five 
Billion Pesos (P25,000,000,000.00) per year for the next five (5) years upon 
implementation of this Act.
In view of the foregoing, the immediate passage of this 
recommended.
is highly
RAMOffBONG REVILLA, JR.


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
1421
^cuat?
of ti)f ^cr»*tAr2>
S. No.
20 APR 16 AS ^45
RECEiV'QFV;
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
INSTITUTIONALIZING MICROFINANCE PROGRAMS AND ACCESS TO 
CAPITAL TO SUPPORT AND GROW MICRO, SMALL, AND MEDIUM 
ENTERPRISES CMSMEs), ALLOCATING FUNDS THEREFOR, AND FOR OTHER 
PURPOSES
Be it enacted by the Senate and House of Representative of the Philippines in 
Congress assembled:
1 
Section 1. Short Title. - This Act shall be known as the "Puhunan, Tulungan,
2 
Kaunlaran (PTK) Act of2020'.
3 
Sec. 2. Declaration of Policy. - It shall be the policy of the State to promote
4 
genuine inclusive growth and alleviate poverty.
5 
It is likewise the policy of the State to promote a just and dynamic social
6 
order that shall ensure prosperity, promote full employment, a rising standard of
7 
living and an improved quality of life for all. 
In pursuit of this, the State shall
8 
endeavour to develop a program that will ensure that all of its citizens are equipped
9 
with or can readily access the necessary capital to pursue opportunities and uplift
10 
their lives.
11 
The 1987 Constitution provides that all sectors of the economy and all regions
12 
of the country shall be given optimum opportunity to develop. Private enterprises,
13 
including corporations, cooperatives, and similar collective organizations, shall be
14 
encouraged to broaden the base of their ownership.
15 
Access to finance and technical support shall be the core policy of this Act.
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To operationalize this policy, it shall be ensured that: (a) the process for obtaining
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micro-financing, grants and technical support in the Philippines shall be simple and
2 
practical; (b) the loan proceeds shall be exclusively used for capital; and (c) interests
3 
shall not be unconscionable and not higher than prevailing bank rates.
4 
Sec. 3. PTK Five-Star Program. - The Department of Trade and Industry
5 
(DTt), in coordination with the Department of Interior and Local Government (DILG),
6 
Department of Agriculture (DA), Department of Science and Technology (DOST),
7 
Department of Tourism (DOT), National Economic and Development Authority
8 
(NEDA), and the Technical Education and Skills Development Authority (TESDA) shall
9 
develop a comprehensive program for the development of micro, small and medium
10 
enterprises (MSMEs) in all regions of the country. The goal of the program is to
11 
protect the capital of small proprietors, ensure the success of their MSMEs, and
12 
transform these MSMEs into five-star business by providing them with assistance
13 
and the necessary resources in order to help their businesses flourish.
14 
The DTT shall be guided by the following principles in the development of the
15 
PTK Five-Star Program:
16 
(a)The Program shall be national in scope but shall be tailored to fit the
17 
business environment, market demands and available resources of
18 
each administrative region;
19 
(b)The DTI shall create a registry for all MSMEs per region based on their
20 
size category (i.e. micro, small or medium) and business area (i.e.
21 
agriculture, livestock, fisheries, food processing, fabric and clothing,
22 
eco-tourism activities, pottery and handicrafts, furniture and hardwood,
23 
infomnation and technology, etc.)
24 
(c) Each region shall choose a maximum of five (5) priority business areas
25 
to develop in order to reap the benefits of efficiency and specialization;
26 
(d)As much as possible, each region shall be encouraged to choose a
27 
diversified priority business portfolio in order to hedge for risks brought
28 
about by natural calamities and changing market demands;
29 
(e)To facilitate the implementation of this Act, each region shall establish
30 
a proprietor's guild for each of their priority business areas;
31 
(f) Free technical and administrative support, including, but not limited to,
32 
product development, skills and leadership training, packaging and


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design, quality control, market promotion, client or supplier matching,
2 
and financial literacy and planning, shall be made available to MSMEs
3 
falling under the five (5) priority business areas in their respective
4 
regions;
5 
(g) Every year, the five (5) top-performing enterprises per size and
6 
category in each region shall receive a Five-Star award and shall be
7 
eligible for grants, not less than ten percent (10%) of their current
8 
capital, to be used solely for further business capitalization;
9 
(h) Every medium-sized enterprise that evolves into a large enterprise
10 
through the help of the PTK Five-Star Program shall likewise be eligible
11 
for a one-time grant of Twenty Five Thousand Pesos (P25,000.00) to
12 
be used solely for further business capitalization;
13 
(i) There shall be a mandatory review of the PTK Five-Star program every
14 
three (3) years in order to ensure that the program meets the present
15 
market demands.
16 
Sec. 4. PTK Loan Program. - In addition to the PTK Five-Star Program, the
17 
DTI, in consultation with the National Anti-Poverty Commission (NAPC) and the
18 
Bangko Sentra! ng Pilipinas (BSP) shall develop a loan program catering exclusively
19 
to micro-enterprises in need of capital, whether or not they fall under the priority
20 
business areas of their respective regions.
21 
The DTI shall be guided by the following principles in the development of the
22 
loan program:
23 
(a) The loans shall be extended only to borrowers who have satisfied the
24 
requirements under this Act;
25 
(b)Each loan shall not exceed Ten Thousand Pesos (P10,000.00) for first
26 
time borrowers; Thirty Thousand Pesos (P30,000.00) for second time
27 
borrowers; and Two Hundred and Fifty Thousand (P250,000.00) for
28 
those borrowing for a third time or oftener: Provided, That the latter
29 
shall be borrowers in good standing. The DTI is hereby authorized to
30 
amend these amounts, after the mandatory review provided in this Act,
31 
in order to meet present market demands;
32 
(c) Collateral shall not be required from borrowers;


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(d) Loan proceeds shall be exclusively used for capital;
(e) The period for repayment shall be mutually agreed upon by the 
borrower and the lender: Provided, That such repayment period shall 
be at least three (3) months for a first time borrower; at least six (6) 
months for a second time borrower; and at least one (1) year for those 
borrowing for a third time or more oftener
(f) Delivery of the program shall be through partner lenders which are 
cooperatives and/or associations that are registered with the 
Cooperative Development Authority (CDA), or the Securities and 
Exchange Commission (SEC), and the DTI. In the absence of such 
participating partner lenders in the area, government institutions, 
centers or facilities, now existing or may be created by law, which are 
dedicated to the promotion of inclusive growth and anti-poverty 
objectives, are mandated to implement the program;
(g) The lenders shall have a collection mechanism, whereby payments are 
made on a weekly or a monthly basis. It shall be the duty of the 
lender to collect the loan principal, together with the interest, from the 
borrower;
(h) Government lenders shall not profit from the microfinance program. 
Neither shall they be entitled to interest proceeds, the amounts of 
which shall be devoted to a fund for the development of MSMEs. 
Participating partner lenders shall be entitled to a reasonable amount 
of the proceeds of the interest collected by them, as may be 
detemiined in rules and regulations promulgated in implementation of 
this Act;
(i) Priority shall be given to MSMEs falling under the priority business 
areas of their respective regions and to MSMEs with innovative 
businesses; and,
0) There shall be a mandatory review of the loan program every three (3) 
years in order to ensure that the loan program meets the present 
market demands.


1 
In the pursuit of inclusive growth and poverty alleviation, pertinent rules and
2 
regulations promulgated in the implementation of this Act shall provide for the
3 
details, conditionalities, and other schemes in the operationalization of the program,
4 
such as, but not limited to, penalty rates upon default and the dispensation of the
5 
proceeds from the loan program.
6 
Sec. 5. Eligibility for Loan Program. - To qualify for the loan program under
7 
this Act, the borrower must be:
8 
(a) At least eighteen (18) years of age;
9 
(b)A member in good standing of the duly-registered cooperative or
10 
association, or a resident of the local government unit (LGU), from
11 
which he/she intends to avail of the loan;
12 
(c) Willing to state under oath the facts establishing the foregoing;
13 
(d) Comprehensive feasibility study of the business proposal; and,
14 
(e) Has attended a DTl-accredited livelihood seminar, as evidenced by a
15 
certificate of participation, and possess credit-worthiness, as likewise
16 
proven by a certificate issued by the DTI for that purpose.
17 
Sec. 6. Registration of Cooperatives and Associations. - The DTI shall keep a
18 
registry of all participating cooperatives and associations for monitoring and record-
19 
keeping purposes. Cooperatives and associations which are eligible to participate in
20 
Programs provided for in this Act must register to be included in the database.
21 
Sec. 7. Local Government Unit Participation. - Any law, executive order,
22 
department order, ordinance and the like, to the contrary notwithstanding, local
23 
government units, through the local sanggunian, as defined in the 1991 Local
24 
Government Code, are hereby authorized to provide a loan program in cooperation
25 
with the cooperatives/associations, non-governmental organizations, and people's
26 
organizations that are lending assistance to MSMEs within their jurisdiction.
27 
Provided, That in cities or municipalities where there are no such
28 
cooperatives/associations, the local government (LGU) unit shall, within one year
29 
from the effectivity of this Act, require the municipal/city social welfare and
30 
development office or the local trade and industry office or livelihood development
31 
office in the city or municipal government concerned, to develop and implement a


1 
loan program consistent with the provision of this Act, under the supervision of the
2 
DTI.
3 
Provided, further, That each participating LGU must prepare a comprehensive
4 
feasibility study for the development of a loan program. Each LGU must fund, from
5 
its internal revenue allotment, at least Five Million Pesos (P5,000,000.00), where
6 
possible and practicable, or thirty percent (30%) of the total funding cost related to
7 
small business improvement, agricultural improvement, institutional advancement
8 
and consumer protection, whichever is higher. Likewise, for this purpose, the LGU
9 
shall maintain a separate and dedicated office which shall be responsible for the
10 
over-all implementation of the program in the locality.
11 
Sec. 8. Matching Fund. - Participating cooperatives or association, and LGUs
12 
with loan programs are hereby authorizes to accept donations from the private
13 
sector in order to augment the available funds for the loan program.
14 
In order to promote private sector participation in promoting inclusive growth
15 
and government poverty alleviation efforts, donations for purposes of this Act from
16 
the private sector to an LGU shall be matched with a corresponding amount by the
17 
recipient LGU: Provided, That donations of more than Five Million Pesos
18 
(P5,000,000.00) shall be matched by the national government for the LGU. In any
19 
case, should the LGU concerned be financially incapable of matching a donation, the
20 
national government shall augment the internal revenue allotment of such LGU for
21 
this purpose.
22 
Sec. 9. Incentives for Private Support. - Any person or corporate entity may
23 
donate funds, equipment, materials or services for the improvement of the PTK Five-
24 
Star and/or PTK loan program. Such donations shall be done through a
25 
memorandum of agreement between the cooperative or association, LGU, and the
26 
donor. The agreement shall expressly state the value of the donated funds,
27 
materials, or services.
28 
Ail income, legacies, gifts, and donations for the benefit of the program shall
29 
be exempt from the payment of all forms of taxes, fees, assessments, and other
30 
charges of the government, its branches, and subdivisions. Subject to the issuances
31 
of the appropriate revenue regulations by the Bureau of Internal Revenue, the value


1 
of the donation shall also be deductible as an expense in the determination of the
2 
taxable income of any donor.
3 
Sec. 10. Funding. - The total amount of One Hundred Twenty Five Billion
4 
Pesos (P125/000/000,000.00) for the next five (5) years upon the implementation of
5 
this Act or Twenty Five Billion Pesos (P25,000,000,000.00) per year for the next five
6 
(5) years upon implementation of this Act, shall be appropriated for the initial
7 
implementation of the PTK Five-Star Program and the PTK Loan Program. Said
8 
amount shall at all times be divided equitably among each administrative region of
9 
the country. Thereafter, such sums as may be necessary shall be included in the
10 
General Appropriations Act.
11 
In addition, the amount of Five Hundred Million Pesos (P500,000,000.00) is
12 
hereby appropriated as a Special Development Fund to generally support the initial
13 
implementation of this Act.
14 
The funds shall be held in trust by the DTI in collaboration with the
15 
Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP) and
16 
other government financial institutions. The DTI may likewise allocate a portion of
17 
the funds to be allocated to the PDTF shall be used solely for microfinance-related
18 
organizing activities.
19 
Sec. 11. Primary Implementing Government Agency. - The DTI shall be the
20 
lead agency, which shall ensure the implementation of this Act.
21 
Sec. 12. Pole of Government Financial Institutions. - All government financial
22 
institutions (GFIs) shall set aside funding for microfinance operations to complement
23 
the purposes of this Act. Participating government financial institutions shall include
24 
the DBP, LBP, and other GFIs.
25 
Sec. 13. PTK Task Force. - There shall be a PTK Task Force in charge of
26 
coordinating with banks and financial institutions on their existing programs on
27 
microfinancing. This shall be consolidated and submitted to DTI to be taken into
28 
consideration for the PTK Loan Program.
29 
Sec. 14. Reports. - The DTI Secretary shall submit to the President of the
30 
Philippines, the President of the Senate and the Speaker of the House of
31 
Representatives, an annual accomplishment report on projects covered in this Act,
32 
detailing the amount of appropriations released by end of the calendar year, the


1 
extent of the work accomplished, further work to be done, 
and any
2 
recommendations for additional appropriations or charges thereof.
3 
Sec. 15. Full Financial Disclosure, Accountability, and Transparency. - The
4 
DTI, as lead agency of the program, and the LGU concerned shall quarterly publish,
5 
print, and disseminate at no cost to the public and in an accessible form, in
6 
conjunction with Republic Act No. 9485, otherwise known as the "Anti-Red Tape Act
7 
of 2007", and through their website, timely, true, accurate and updated key
8 
information relating to the program. Likewise, they shall endeavour to translate key
9 
information and present them in popular form and means.
10 
Sec. 16. Implementing Rules and Regulations. - The DTI, in consultation
11 
with relevant government agencies, shall prepare such rules and regulations for the
12 
proper and effective implementation of this Act, within sixty (60) days from the date
13 
of its pubiication. The DTI shall publish such rules and regulations once a week for
14 
two (2) consecutive weeks in two (2) newspapers of general circulation.
15 
Sec. 17. Separability Clause. - If any provision or part hereof is held invalid
16 
or unconstitutional, the remainder of the law or the provision or part not otherwise
17 
affected shall remain valid and subsisting.
18 
Sec. 18. Repealing Clause. - Any law, presidential decree or issuance,
19 
executive order, letter of instruction, administrative order, rule, or regulation
20 
contrary to or inconsistent with the provisions of this Act are hereby repealed,
21 
modified, or amended accordingly.
22 
Sec. 19. Effectivity. - This Act shall take effect fifteen (15) days after its
23 
publication in the Official Gazette or in a newspaper of general circulation.
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Approved,