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FIFTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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HI JIl·.9 AID :~7· 
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Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 20 provides that: 
SEC. 20. The State recognizes the indispensable role of the private 
sector, encourages private enterprise, and provides incentives to needed 
investments. 
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Small and medium sized enterprises comprise the vast majority of the industries in our 
country. Time and again we have often expressed our support for these industries. They are 
essential to us because they are the source of livelihood for many of our countrymen and in many 
instances, the breeding ground for our rising entrepreneurs. 
As the govermnent tries to reach out to them, more and more regulations are being 
issued. In many instances, due to their limited resources and expertise, our small and medium 
entities find themselves having a hard time complying with the govermnent requirements. We 
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need to exert certain efforts to make the rules and regulations accessible and easily understood. 
This way we will be to focus our efforts in assisting the businesses instead of policing them for 
failure to comply. By doing so, we can promote a culture of compliance with the regulation 
instead of avoiding the penalty. 
This bill seeks to mandate the Small and Medium Enterprise Development Council to 
prepare compliance guides for all regulations to assist our small and medinm entities. I 
Lw~ 4h,~;r- ~y~~ 
MY" MIRIAM DEF~NSOR S'ANTIfUO 
I This bill was originally filed in the Fourteenth Congress, Second Regular Session 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 
1525 
f'leCEIVEO lh' . . 
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Introduced by Senator Miriam Defensor San"tiago 
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AN ACT 
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AMENDING REPUBLIC ACT NO. 6977, OTHERWISE KNOWN AS THE MAGNA CARTA 
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FOR SMALL ENTERPRISES AS AMENDED, TO PROMOTE COMPLIANCE AMONG 
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SMALL AND MEDIUM ENTERPRISES 
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Be it enacted by the Senate and the House of Representatives of the Philippines in 
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Congress assemblec! 
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SECTION L Section 8 of RA 6977, otherwise known as the Magna Carta for Small 
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Enterprises, as amended, is hereby amended to read as follows: 
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"Sec. 8. Powers and Functions. -
The Small and Medium Enterprise Development 
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(SMED) Council shall have the following powers, duties and functions: 
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(a) to help establish the needed environment and opportunities conducive to the growth and 
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development ofthe small and medium sector; 
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(b) to recommend to the President ap.d the Congress all policy matters affecting small and 
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medium sale enterprises; 
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(c) to formulate a comprehensive small and medium enterprise development plan to be 
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integrated into the National Economic and Development Authority Development Plans; 
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(d) to coordinate and integrate various government and private sector activities relating to 
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small and medium enterprise development; 
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(e) to review existing policies of government agencies that would affect the growth and 
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development of small and medium enterprises and recommend changes to the President 
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and/or to the Congress whenever, deemed necessary. This shal1 include efforts to simplify 
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rules and regulations as well as procedural and documentary requirements in the 
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registration, financing, and other activities relevant to small and medium enterprises; 
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(f) to monitor and determine the progress of various agencies geared towards the 
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development of the sector. This shall include overseeing, in coordination with local 
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government units and the Department of Local Government as well as private sector 
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groups/associations, the developments among small and medium enterprises, particularly 
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the cottage and micro-sized firms; 
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(g) to promulgate implementing guidelines, programs, and operating principles as may be 
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deemed proper and necessary in .the light of government policies and objectives of this 
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Act; 
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(h) to provide the appropriate policy and coordinative framework in assisting relevant 
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government agencies, in coordination with the National Economic and Development 
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Authority and the Coordinating Council for the Philippine Assistance Program, as may be 
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necessary, in the tapping of local and foreign funds for small and medium enterprise 
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development; 
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(i) to promote the productivity and viability of small and medium enterprises by way of 
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directing and/or assisting relevaJ;1t government agencies and institutions at the national, 
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regional and provincial levels towards the; 
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(l) provision of business training courses, technical training for technicians and 
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skilled laborers and continuing skills upgrading programs; 
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(2) provision of labor-management guidance, assistance and improvement of the 
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working conditions of employees in small and medium-sized firms; chan robles 
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virtual law library 
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(3) provision of guidance and assistance regarding product quality/product 
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development and product diversification; 
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(4) provision of gnidance and assistance for the adoption of improved production 
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techniqnes and commercialization of appropriate technologies for the product 
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development and for increased utilization of indigenous raw materials; 
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(j) 
(5) provision of assistance in marketing and distribution of products of small and 
medium scale enterprises through local supply-demand information, industry and 
provincial profiles, overseas marketing promotion, domestic market linkaging and 
the establishment of common service facilities such as common and/or 
cooperative bonded warehouse, grains storage, agro-processing and drying 
facilities, ice plants, refrigerated storage, cooperative trucking facilities, etc.; 
(6) intensification of assistance and guidance to enable greater access to credit 
through a simplified multi agency financing program; to encourage development 
of other models of financing such as leasing and venture capital activities; to 
provide effective credit guarantee systems, and encourage for formation of credit 
guarantee associations, including setting up of credit records and information 
systems and to decentralize loan approval mechanisms; 
(7) provision of concessional interest rates, lower financing fees, which may include 
incentives for prompt credit payments, arrangements tying amortizations to 
business cash flows, effective substitution of government guarantee cover on 
loans for the borrower's lack of collateral; 
(8) provision of bankruptcy preventive measures through the setting up of a mutual 
relief system for distressed enterprises, and the establishment of measures such as 
insurance against extraordinary disaster; 
(9) intensification of information dissemination campaigns and entrepreneurship 
education activities; 
(10) easier access to and availment oftax credits and other tax and duty incentives as 
provided by the Omnibus investment Code and other laws; 
(11) of support for product experimentation and research and development activities 
as well as access to information on commercialized technologies; and 
(12) provision of more infrastructure facilities and public utilities to support 
operations of small and medium enterprises; 
TO FORMULATE A COMPLIANCE GUIDE AS PROVIDED IN SECTION 9-A OF 
THIS ACT; 
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(k) to submit to the President and the Congress a yearly report on the status of small and 
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medium enterprises in the country, including the progress and impact of all relevant 
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government policies, programs and legislation as well as private sectors activities; 
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(1) to assist in the establishment of modem industrial estates outside urban centers; and 
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(m)generally, to exercise all powers and functions necessary for the objectives and purposes 
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of this Act. 
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SECTION 2. Section 9-A of RA 6977 is hereby inserted after Section 9 to read as 
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follows: 
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"Sec. 9-A. Compiianre Guide. For each rule or group of related rules 
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issued by any government agency for compliance by any small and 
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medium sector, the Council, through the Secretariat shall publish one or 
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more guides to assist small and medium entities in complying with the 
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rule and shall entitle such publications "small and medium entity 
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compliance guides".' 
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The Council shall, in its sole discretion, taking into account the subject 
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matter of the rule and the language of relevant statutes, ensure that the 
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guide is written using sufficiently plain language likely to be understood 
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by affected small and medium entities. The Council may prepare separate 
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guides covering groups or classes of similarly affected small entities and 
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may cooperate with associations of small entities to develop and 
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distribute such guides. The Council may prepare guides and apply this 
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section with respect to a rule or a group of related rules. 
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Each guide shall explain the actions a small or medium entity is required 
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to take to comply with a rule. The explanation shall include a description 
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of actions needed to meet the requirements of a rule, to enable a small or 
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medium entity to know when such requirements are met; and if 
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determined appropriate by the agency, may include a description of 
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possible procedures, such as conducting tests, that may assist a small or 
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medium entity in meeting such requirements. 
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The publication of each guide shall include the posting of the guide in an 
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easily identified location on the website of the agency; and distribution of 
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the guide to known industry contacts, such as small entities, associations, 
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or industry leaders affected by the rule." 
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SECTION 3. Separability Clause. - If any provision, or part hereof is held invalid or 
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unconstitutional, the remainder of the law or the provision not otherwise affected shaH remain 
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valid and subsisting. 
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SECTION 4. Repealing Clause. - Any law, presidential decree or issuance, executive 
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order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent 
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with, the provisions ofthis Act is hereby repealed, modified, or amended accordingly. 
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SECTION 5. Effectivity Clause. ~ This Act shall take effect fifteen (15) days after its 
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publication in at least two (2) newspapers of general circulation. 
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Approved. 
/apm122208 
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