1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ______ 
Introduced by Rep. MARIO VITTORIO “MARVEY” A. MARIÑO 
5th District, Batangas 
EXPLANATORY NOTE 
This proposed measure passed 3rd Reading in the House of Representatives 
during the 17th and 18th Congresses. 
As Chairman of the Committee on Trade and Industry for the 19th Congress, 
this Representation recognizes the important role of MSMEs as the backbone of 
our economy and as engines of economic growth and recovery, thus the filing of 
this measure. 
The Bill proposes to strengthen the Magna Carta for MSMEs by providing 
more opportunities for them to do business, provide enhanced financing programs 
for MSMEs; provision of a fund source for venture capital; ensure full 
capitalization of SB Corporation and increasing penalties for noncompliance of 
lending institutions with mandatory lending. 
In view of the foregoing, the early passage of this bill is earnestly requested. 
MARIO VITTORIO “MARVEY” A. MARIÑO 
November 29, 2022
3:31 pm
6465


2 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ______ 
Introduced by Rep. MARIO VITTORIO “MARVEY” A. MARIÑO 
5th District, Batangas 
AN ACT 
FURTHER PROMOTING ENTREPRENEURSHIP BY 
STRENGTHENING, EMPOWERING, AND ENHANCING THE 
FINANCING AND OTHER SUPPORT PROGRAMS FOR MICRO, SMALL 
AND MEDIUM ENTERPRISES, AMENDING FOR THE PURPOSE 
REPUBLIC ACT NO. 6977, AS AMENDED, OTHERWISE KNOWN AS THE 
“MAGNA CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES 
(MSMEs) 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. 
Section 2 of Republic Act No. 6977, as amended, is hereby further 
amended to read as follows: 
“SEC. 2. Declaration of Policy. – Recognizing that MSMEs have the 
potential [for] TO GENERATE more employment [generation] and SPUR 
economic growth AND RECOVERY and therefore can help provide a self-
sufficient industrial foundation for the country, it is hereby declared the 
policy of the State to promote, support, strengthen and encourage the 
growth and development of MSMEs in all productive sectors of the economy 
particularly rural / agri-based, MANUFACTURING, FINANCE AND 
SERVICES enterprises. To this end, the State shall recognize the specific 
needs of the MSMEs and shall undertake to 
promote 
entrepreneurship, 
support entrepreneurs, encourage the establishment of MSMEs and ensure 
their continuing viability and growth and thereby attain countryside 
industrialization by: 
“x x x.” 
SEC. 2.  Section 4 of the same Act, as amended, is hereby further amended to 
read as follows: 
6465


3 
 
“SEC. 4. Eligibility for Government Assistance. – To qualify for assistance, 
counseling, incentives and promotion under this Act, businesses falling 
under the above definition must be: 
“a) duly registered with the appropriate agencies as presently provided 
by law: Provided, That in the case of micro enterprises as defined herein, 
registration with the office of the municipal or city treasurer shall be 
deemed sufficient compliance with this requirement;  
“THE APPLICATION OF AN MSME FOR ANY PERMIT AND 
LICENSE FROM ANY LOCAL GOVERNMENT UNIT, INCLUDING A 
BARANGAY, 
AS LONG AS THE APPLICATION IS IN COMPLIANCE 
WITH THE REQUIREMENTS, SHALL 
 BE 
AUTOMATICALLY 
APPROVED 
PROVISIONALLY, 
SUBJECT 
TO 
THE 
FINAL 
APPROVAL OF THE APPLICATION AND THE ISSUANCE OF THE 
PERMIT OR LICENSE APPLIED FOR.  
“THE TOTAL COST FOR THE ISSUANCE OF ALL PERMITS, 
LICENSES, CERTIFICATIONS, AND OTHER SIMILAR REQUIRED 
DOCUMENTATION 
FOR THE CONDUCT OF BUSINESS 
FOR 
REGISTERED MICRO ENTERPRISES SHALL NOT EXCEED FIVE 
HUNDRED PESOS (₱500.00).  FOR 
REGISTERED 
SMALL 
ENTERPRISES, THE TOTAL COST SHALL NOT EXCEED FIVE 
THOUSAND PESOS (₱5,000.00) FOR A PERIOD OF FIVE (5) YEARS. 
“b) one hundred percent (100%) owned, capitalized by Filipino 
citizens, whether single proprietorship or partnership. If the enterprise is 
a juridical entity, at least sixty percent (60%) of its capital or outstanding 
stocks must be owned by Filipino citizens; 
“x x x. 
“[Eligible MSMEs shall be entitled to a share of at least ten percent 
(10%) of total procurement value of goods and services supplied to the 
Government, its bureaus, offices and agencies annually.] THE NATIONAL 
GOVERNMENT, ITS BUREAUS, OFFICES AND AGENCIES SHALL 
ALLOCATE 
AT 
LEAST TEN 
PERCENT 
(10%) 
OF 
ALL 
ITS 
PROCUREMENT OPPORTUNITIES FOR GOODS AND SERVICES TO 
ELIGIBLE MSMEs IN ACCORDANCE WITH THE PROVISIONS OF 
REPUBLIC 
ACT 
NO. 
9184, 
OTHERWISE 
KNOWN AS THE 
‘GOVERNMENT 
PROCUREMENT 
REFORM 
ACT’, 
AND 
ITS 
IMPLEMENTING RULES AND REGULATIONS. 
“The [Department of Budget and Management] GOVERNMENT 
PROCUREMENT POLICY BOARD (GPPB) shall FORMULATE RULES 
FOR THE EFFECTIVE IMPLEMENTATION OF THIS PROVISION AND 
monitor the compliance of government agencies on the required 
procurement for MSMEs and submit its report to the MSMED Council on 
a semestral basis and to the Congress of the Philippines, through its 
appropriate committees on a yearly basis. 
“DULY 
REGISTERED 
MICRO, 
SMALL 
AND 
MEDIUM 
ENTERPRISES SHALL BE ENTITLED TO A DISCOUNT OF AT LEAST 
TWENTY PERCENT (20%) ON SHIPPING AND DELIVERY FEES 
FOR THEIR PRODUCTS AND RAW MATERIALS, AS WELL AS FOR 


4 
 
MAILING, FREIGHT AND OTHER SIMILAR SERVICES PROVIDED BY 
EITHER PUBLIC OR PRIVATE COURIERS.  
“GOVERNMENT 
BUILDINGS, STRUCTURES 
AND 
OPEN 
AREAS, INCLUDING PUBLIC MARKETS, WHETHER WET OR DRY, 
AIRPORTS, 
SEA 
PORTS, 
FISH 
PORTS, 
PARKS, 
ZOOS, 
CONVENTION CENTERS, ENTERTAINMENT CENTERS, TOURISM 
CENTERS, SCHOOLS, SCHOOL CAMPUSES, AND OTHER SIMILAR 
STRUCTURES OR AREAS SUITABLE FOR SELLING OR MARKETING, 
WHETHER PERMANENT OR TEMPORARY, THAT CAN BE USED AS 
SELLING AREAS, SHALL GIVE AN AUTHORIZED MSME O R  A 
G R O U P  
O F  
M S M E s ,  
O R  
“ T I AN G G E ”  
I N  
L O C A L  
P A R L A N C E,  FREE SPACE MEASURING AT LEAST ONE PERCENT 
(1%) OF THE TOTAL SPACE AVAILABLE THEREIN, ON A ROTATION 
BASIS FOR A MINIMUM OF THREE (3) MONTHS TO A MAXIMUM OF 
SIX (6) MONTHS PER ROTATION.. 
“PRIVATE MALLS, 
SUPERMARKETS, 
SHOPPING CENTERS, 
COMMERCIAL SELLING ESTABLISHMENTS, STRUCTURES, OR 
AREAS WITH A SELLING AREA, WHETHER PERMANENT OR 
TEMPORARY, MEASURING AT LEAST FIVE THOUSAND SQUARE 
METERS (5,000 SQM), INCLUDING  COMMON  AREAS,  BUT  
EXCLUDING  PARKING SPACES  AND  DRIVEWAYS,  SHALL  
GIVE  FREE  SPACE  OR AREA EQUIVALENT TO ONE HALF 
OF ONE PERCENT (0.5%) OF THE SAID SELLING AREA FOR EVERY 
FIVE THOUSAND SQUARE METERS (5,000 SQM) OF SELLING AND 
COMMON SPACE, TO ANY AUTHORIZED MSME OR A GROUP OF 
MSMEs OR “TIANGGE” IN LOCAL PARLANCE, ON A ROTATION BASIS 
FOR A MINIMUM PERIOD OF THREE (3) MONTHS TO A MAXIMUM 
PERIOD OF SIX (6) MONTHS PER ROTATION. AS USED IN THIS ACT, 
“FREE SPACE” SHALL MEAN SPACE THAT MAY BE USED FOR 
SELLING PURPOSES WITHOUT NEED FOR THE PAYMENT OF RENT, 
GOODWILL FEES, ROYALTIES, COMMISSION, PERCENTAGES ON 
SALES, NOR ANY OTHER SIMILAR SCHEME. 
“THE 
MSMED 
COUNCIL 
OF 
THE 
CONCERNED 
CITY, 
MUNICIPALITY OR BARANGAY SHALL APPROVE THE MSME OR 
GROUP OF MSMEs THAT WILL BE GIVEN FREE SPACE, UPON THE 
RECOMMENDATION OF THE LOCAL OFFICE OF THE DEPARTMENT 
OF TRADE AND INDUSTRY. THE FREE SPACE ALLOCATED FOR 
THE 
MSME OR GROUP OF MSMEs SHALL BE GIVEN IN THE 
FOLLOWING ORDER OF PREFERENCE: 
1. ONE TOWN ONE PRODUCT (OTOP) STORE OR GO LOKAL! 
STORE OF THE DEPARTMENT OF TRADE AND INDUSTRY; 
2. MSME 
KUMUNIDARAN PRODUKTO 
AT 
RESONABLENG 
SERBISYO STORE (OR “KUMPARE STORE”); OR 
3. LOCAL MICRO OR SMALL ENTERPRISE STORE(S).  
“EXCEPT DURING ROTATION, AN MSME OR GROUP OF MSMEs 
GIVEN FREE USE OF THE AFOREMENTIONED SPACES SHALL NOT 
BE REMOVED OR REPLACED EXCEPT FOR VALID CAUSE AND 
AFTER DUE PROCESS. 


5 
 
“THE APPROVAL AND THE REMOVAL OF THE MSME OR GROUP 
OF MSMEs THAT WILL BE GIVEN FREE SPACE SHALL BE 
REPORTED BY THE MSMED COUNCIL OF THE CONCERNED CITY, 
MUNICIPALITY 
OR 
BARANGAY 
TO 
THE 
CONGRESSIONAL 
OVERSIGHT COMMITTEE 
ON MICRO, 
SMALL 
AND 
MEDIUM 
ENTERPRISE DEVELOPMENT. 
“PRIVATE 
MALLS 
SHALL 
ALSO 
ALLOCATE 
TWENTY 
PERCENT (20%) OF THEIR TOTAL RENTABLE SPACE TO LOCAL 
MICRO AND SMALL ENTERPRISES WHICH SHALL BE EXTENDED 
A 
TWENTY PERCENT (20%) 
DISCOUNT 
ON RENTAL RATES.  
PRIVATE 
MALLS SHALL NOT CHARGE ROYALTY CHARGES, 
GOODWILL CHARGES, COMMISSION CHARGES, PERCENTAGE OF 
SALES, AND OTHER SIMILAR SCHEMES UPON THE MSMEs.” 
 
SEC. 3.  Section 5 of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 5. Guiding Principles. – To set the pace for MSME development, 
the State shall be guided by the following principles: 
“a) Minimal set of rules and simplification of procedures and 
requirements. All government agencies having to do with MICRO, small 
AND MEDIUM enterprises shall pursue the principles of minimum 
regulation to ensure stability of rules and to encourage entrepreneurial 
spirit among the citizenry. The agencies shall see to it that procedural 
rules and requirements, within their respective offices in coordination 
with other agencies, are minimized in the act of registration, availment of 
financing and accessing other government services and assistance. 
“b) Role of the private sector. In order to hasten growth and expansion 
of MICRO, small and medium enterprises, the private sector throughout 
the country shall be encouraged to assist in the effective implementation 
of this Act by participating in government programs for MICRO, small 
and medium enterprises strictly in accordance with the law, and 
consistent with the attainment of the purposes hereof. To encourage 
private sector participation, the Council, in consultation with the 
concerned sector, may recommend simplified 
procedure and localized 
incentives to MICRO, 
small 
AND 
MEDIUM 
enterprises. 
The     
Government shall encourage the organization 
and 
establishment 
of 
MICRO, small and medium enterprise industry associations at the local 
and 
regional 
levels 
preferably 
unified 
under 
a 
national 
federation/association. 
“c) Coordination of government efforts. Government efforts shall 
be coordinated to achieve coherence in objectives.  All  appropriate  
offices, particularly those under the Departments of Trade and Industry, 
Finance, Budget and Management, Agriculture, Agrarian Reform, 
Environment and Natural Resources, Labor and         
Employment, 
Transportation [and Communications], 
INFORMATION 
       AND 
COMMUNICATIONS TECHNOLOGY, 
 
Public 
 
Works 
 
and  
Highways,  Science  and  Technology, Interior and Local Government, 
and Tourism as well as the National Economic and Development Authority, 


6 
 
Philippine 
Information 
Agency, 
SECURITIES AND 
EXCHANGE 
COMMISSION and the Bangko Sentral ng Pilipinas, through their 
national, regional and provincial offices shall, to the best of their efforts 
and in coordination with local government units, provide the necessary 
support and assistance to MSMEs. THE DEPARTMENT OF TRADE 
AND INDUSTRY SHALL BE THE LEAD AGENCY THEREFOR. 
“x x x.” 
 
SEC. 4.  Section 6 of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 6. Micro, Small and Medium Enterprises Development Plan 
(MSMEDP). – The President OF THE PHILIPPINES shall approve a six-
year micro, small and medium enterprises development plan prepared 
by the Department of Trade and Industry (DTI) which shall form part of 
the [Medium Term] Philippine Development Plan ([MT]PDP). It shall 
be formulated in consultation with the private sector, validated and 
updated semestrally. Such plan shall include a component on a [micro] 
credit financing scheme.” 
 
SEC. 5. Section 7 of the same Act, as amended, is hereby further amended to read 
as follows: 
“SEC. 7. Micro, Small and Medium Enterprise Development (MSMED) 
Council. – The existing Small and Medium Enterprise Development 
Council, which was created by Republic Act No. 6977, as amended [by 
Republic Act No. 8289], shall be strengthened to effectively spur the growth 
and development of MSMEs throughout the country, and to carry out the 
policy declared in this Act and shall now be known as the Micro, Small 
and Medium Enterprise Development (MSMED) Council.  The Council 
shall be attached to the Department of Trade and Industry and shall be 
constituted within sixty (60) days after the approval of this Act. 
“The Council shall be the primary agency responsible for the 
promotion, growth and development of MICRO, small and medium 
enterprises 
in the country 
by 
way 
of 
facilitating 
and 
closely 
coordinating national efforts to promote the viability and growth of 
MICRO, small and medium enterprises, including assisting relevant 
agencies in the tapping of local and foreign funds for MICRO, small and 
medium enterprise development, as well as promoting the use of existing 
programs, as well as seeking ways to maximize the use of our labor 
resources.” 
 
SEC. 6.  Section 7-A of the same Act, as amended, is hereby further amended 
to read as follows: 
“SEC. 7-A. Composition of the Micro, Small and Medium Enterprises 
Development (MSMED) Council. – The members of the Council shall be 
the following: 
“(a) The Secretary of Trade and Industry as Chair; 
“(b) The Secretary of Agriculture; 
“(c) The Secretary of the Interior and Local Government; 


7 
 
“(D) THE SECRETARY OF FINANCE; 
“[(d)] (E) Three (3) representatives from the MSME sector, [to 
represent Luzon, Visayas and Mindanao, with at least one (1) 
representative from the microenterprise sector] TO BE DESIGNATED BY A 
NATIONAL ORGANIZATION REPRESENTING AND DOMINATED BY 
MSMEs; AND 
“[(e) One (1) representative from the women sector designated by 
the Philippine Commission on Women;] 
“[(f) One (1) representative from the youth sector designated by 
the National Youth Commission; and] 
“[(g)] (F) The [Chairman]PRESIDENT of THE Small Business 
Corporation. 
“A. Advisory Unit. –There shall be an Advisory Unit to the Council, 
which shall consist of the following: 
“(a) The Secretary of Science and Technology; 
“(b) The Governor of the Bangko Sentral ng Pilipinas; 
“(C) 
THE 
COMMISSIONER 
OF 
THE 
SECURITIES 
AND 
EXCHANGE COMMISSION; 
“[(c)] (D) The President of the Land Bank of the Philippines; 
“[(d)] (E) The President of the Development Bank of the Philippines; 
“[(e)] (F) The Director General of the National Economic and 
Development Authority; 
“(G) THE 
EXECUTIVE DIRECTOR 
OF THE 
COOPERATIVE 
DEVELOPMENT AUTHORITY; 
(H) A 
REPRESENTATIVE OF A NATIONAL 
ORGANIZATION 
REPRESENTING AND DOMINATED BY MSMEs; 
“[(f)] (I) One (1) representative from the labor sector, to be nominated 
by accredited labor groups; 
“[(g)] (J) A representative from the private banking sector to 
serve [alternatively] ALTERNATELY between the [c]Chamber of [t]Thrift 
[b]Banks, and the Rural Banker’s Association of the Philippines (RBAP); 
“[(h)] (K) A representative of the microfinance nongovernment 
Organizations (NGOs), DESIGNATED BY THE MICROFINANCE NGO 
REGULATORY COUNCIL; 
“[(i)] (L) A representative of the University of the Philippines-Institute 
for Small Scale Industries (UP-ISSI); [and] 
“[(j)] (M) The President of the Credit Information Corporation[.]; 
“(N) ONE (1) REPRESENTATIVE FROM THE WOMEN SECTOR 
DESIGNATED BY THE PHILIPPINE COMMISSION ON WOMEN; 
“(O) ONE 
(1) REPRESENTATIVE    FROM    THE    YOUTH 
SECTOR DESIGNATED BY THE NATIONAL YOUTH COMMISSION; 
AND 
“(P) A REPRESENTATIVE FROM NONSTOCK SAVINGS AND 
LOAN ASSOCIATIONS DESIGNATED BY THE ALLIANCE OF NON-
STOCK SAVINGS AND LOAN INSTITUTIONS, INC. (ANSLI). 
“x x x.” 
 


8 
 
SEC. 7. Section 7-B of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 7-B. Powers and Functions. – A. The MSMED Council shall 
have the following powers, duties and functions: 
“x x x; 
“d) To review the existing policies of government agencies that would 
affect the growth and development of MSMEs and recommend 
changes to the President and Congress through the Committee on 
Economic Affairs of the Senate and the Committee on [Small Business 
and Entrepreneurship] MICRO, SMALL AND MEDIUM ENTERPRISE
 Development of the House of Representatives, whenever 
deemed 
necessary. This shall include efforts to simplify rules and regulations, 
as well as review of the applicability and relevance of procedural 
and documentary requirements in the registration, financing, and 
other activities relevant to MSMEs the result shall be included in the 
annual report to be submitted to Congress; 
“x x x; 
“h) To promote the productivity and viability of MSMEs IN DTI’S 
TOP PRIORITY INDUSTRIES FOR DEVELOPMENT by way of 
directing [and/] or assisting relevant government agencies and 
institutions at the national, regional and provincial levels towards the: 
“x x x; 
“12) Through appropriate government agencies: 
“x x x; 
“f) Set-up new MSME NEGOSYO centers and revitalize already 
established MSME NEGOSYO centers to provide MSMEs in the 
regions easier access to services such as the following: 
“x x x.” 
“B.  ADDITIONAL FUNCTIONS OF THE MSMED COUNCIL.  
–  AS PROVIDED 
FOR 
IN SECTION 10 OF 
REPUBLIC 
ACT 
NO. 10644, OTHERWISE KNOWN AS THE “GO NEGOSYO ACT”, 
THE 
MSMED COUNCIL SHALL HAVE THE FOLLOWING 
ADDITIONAL FUNCTIONS: 
“(A) COORDINATING AND OVERSIGHT BODY FOR THE MSME 
NEGOSYO CENTER. – THE MSMED COUNCIL, THROUGH THE 
DTI, SHALL ACT AS THE COORDINATING AND SUPERVISING 
BODY FOR ALL 
THE 
AGENCIES 
INVOLVED 
IN 
THE 
ESTABLISHMENT AND OPERATION OF THE MSME NEGOSYO 
CENTERS. FURTHER, THE MSMED COUNCIL SHALL MONITOR 
AND ASSESS THE PROGRESS OF THE MSME NEGOSYO CENTERS, 
WHICH SHALL BE INCLUDED IN ITS ANNUAL REPORT SUBMITTED 
TO THE CONGRESS; 
“(B) PROVISION OF A COMPLIANCE GUIDE. – FOR EACH RULE 
OR GROUP OF RELATED RULES ISSUED BY ANY GOVERNMENT 
AGENCY FOR COMPLIANCE BY MSMES, THE 
COUNCIL 
SHALL 
PUBLISH COMPLIANCE 
GUIDELINES 
WHICH 
SHALL 
BE 
WRITTEN IN PLAIN LANGUAGE OR IN THE LOCAL DIALECT, IF 
NECESSARY. 


9 
 
“THE COUNCIL SHALL PREPARE SEPARATE COMPLIANCE 
GUIDES COVERING 
GROUPS 
OR 
CLASSES 
OF 
SIMILARLY 
AFFECTED MSMES AND  
SHALL  
COOPERATE           WITH 
INDUSTRY ASSOCIATIONS TO DEVELOP AND 
DISTRIBUTE SUCH 
COMPLIANCE  GUIDES. THE 
PUBLICATION 
OF 
EACH 
COMPLIANCE GUIDE SHALL INCLUDE THE POSTING OF THE 
GUIDE IN A CONSPICUOUS LOCATION ON THE WEBSITE OF 
THE AGENCY, AND DISTRIBUTION OF THE GUIDE TO KNOWN 
INDUSTRY CONTACTS, SUCH AS SMALL ENTITIES, ASSOCIATIONS 
OR INDUSTRY LEADERS AFFECTED BY THE RULE. THE ISSUING    
GOVERNMENT AGENCY SHALL PUBLISH AND DISSEMINATE THE 
COMPLIANCE RULES WITHIN NINETY (90) DAYS FROM THE DATE 
OF ISSUANCE; 
“(C) 
CONDUCT 
OF 
RESEARCH 
ON 
WOMEN 
ENTREPRENEURSHIP. 
– THE 
COUNCIL 
SHALL 
CONDUCT 
RESEARCH 
TO 
SUPPORT 
WOMEN 
ENTREPRENEURSHIP 
INCLUDING 
ENTREPRENEURIAL 
BEHAVIOR, 
BARRIERS, 
PARTICIPATION AND 
CESSATION 
RATES, 
DISCRIMINATORY 
PRACTICES AND CONTRIBUTION TO THE NATIONAL ECONOMY 
AND GROWTH; 
“(D) POLICY FORMULATION ON WOMEN ENTREPRENEURSHIP. 
–  THE COUNCIL SHALL PROVIDE POLICY DIRECTION TOWARDS 
RECOGNIZING 
WOMEN’S 
PROPENSITY 
AND 
TALENT 
IN 
ENTREPRENEURSHIP AS WELL AS ESTABLISH LINKAGES THAT 
WILL ENABLE MORE OPPORTUNITIES FOR WOMEN TO ENGAGE
 IN ENTREPRENEURSHIP; AND 
“(E) DEVELOPMENT OF ENTREPRENEURIAL EDUCATION AND 
TRAINING. 
– 
THE 
MSMED 
COUNCIL SHALL DEVELOP, IN 
COORDINATION WITH THE 
DEPARTMENT 
OF 
EDUCATION, 
TECHNICAL 
EDUCATION 
AND 
SKILLS 
DEVELOPMENT 
AUTHORITY, AND COMMISSION ON HIGHER EDUCATION, A 
COURSE 
CURRICULUM 
OR 
TRAINING 
PROGRAM 
IN 
ENTREPRENEURSHIP THAT WILL PROMOTE ENTREPRENEURIAL 
CULTURE AND COMPETENCE ENTREPRENEURSHIP SHALL BE 
INTEGRATED IN THE CURRICULUM OF EDUCATIONAL AND 
TRAINING INSTITUTIONS IN ALL LEVELS. 
 
SEC. 8. A new subsection is hereby inserted after Section 7-B of the same Act, as 
amended, and numbered as Section 7-C to read as follows: 
“SEC. 
7-C. 
CITY, MUNICIPALITY, AND BARANGAY MSMED 
COUNCIL. - 
THERE SHALL BE CREATED A MSMED COUNCIL 
IN EVERY LOCAL GOVERNMENT UNIT WHICH SHALL HAVE THE 
AUTHORITY TO PROPOSE POLICIES THAT ARE GEARED TO 
ASSIST MSMEs IN THE AREAS OF PRODUCTIVITY ENHANCEMENT, 
MARKETING, 
ACHIEVING 
SUSTAINABILITY 
BY 
EXTENDING 
CREDIT TO CUSTOMERS, AND IMPLEMENTING EFFICIENT LOAN 
COLLECTION SYSTEMS, AMONG OTHER STRATEGIES. 


10 
 
“THE LOCAL MSMED COUNCIL, IN THE CASE OF A CITY 
OR MUNICIPALITY, SHALL BE COMPOSED OF THE CITYOR 
MUNICIPAL BUSINESS PERMIT AND LICENSING OFFICER AS 
CHAIRPERSON, THE PRESIDENT 
OF 
THE 
ASSOCIATION 
OF 
BARANGAY CAPTAINS, THE PRESIDENT OF THE SANGGUINIANG 
KABATAAN FEDERATION, THE TOURISM OFFICER, AND THE 
CITY ORMUNICIPAL AGRICULTURIST OR THE CITY PLANNING 
OFFICER. 
“THE BARANGAY MSMED COUNCIL SHALL BE COMPOSED OF 
THE     PUNONG 
BARANGAY 
AS      CHAIRPERSON,    THE 
SANGGUNIANG KABATAAN CHAIRPERSON, A REPRESENTATIVE 
OF THE LADIES’ BRIGADE OR LADIES’ SECTOR, A REPRESENTATIVE 
OF THE 
BARANGAY 
PUBLIC 
SAFETY 
OFFICE, 
AND 
A 
REPRESENTATIVE OF THE SENIOR CITIZENS. 
“TO ENSURE THEIR  
CONTINUED FINANCIAL 
VIABILITY, 
THE CITY, MUNICIPAL, AND BARANGAY MSMED COUNCILS 
SHALL COORDINATE AND FORMULATE MEASURES TO ENSURE 
OPERATIONAL 
AND 
FINANCIAL 
VIABILITY 
WITHIN THEIR 
TERRITORIAL JURISDICTION, TAKING INTO CONSIDERATION 
THE RELEVANT FACTORS AFFECTING THE CAPACITIES OF THE 
MSMEs.” 
 
SEC. 9. Section 8 of the same Act, as amended, is hereby further amended to read 
as follows: 
“SEC. 8. Designation of the Bureau of Micro, Small and Medium 
Enterprise Development as Council Secretariat. – x xx: 
“1) to prepare, in coordination with local government units 
and/or associations of local government officials, and recommend annual as 
well as medium-term MICRO, small and medium enterprise development 
plans for approval of the Council; 
“x x x; 
“3) to assist the Council in coordinating and monitoring MICRO, small 
and medium enterprise policies and programs and activities of all 
government agencies with respect to MICRO, small and medium enterprises; 
“4) to prepare, collate and integrate all inputs to the Council’s 
yearly report on the status of MICRO, small and medium enterprises 
in the country; 
“x x x.” 
 
 
SEC. 10. Section 11 of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 11. Creation of THE Small Business [Guarantee and Finance] 
Corporation. – There is hereby created a body corporate to be known as 
the Small Business [Guarantee and Finance] Corporation, hereinafter 
referred to as the [Small Business Corporation (SB Corporation)] SB 
CORPORATION, which 
shall 
be 
charged 
with 
the 
primary 
responsibility of implementing comprehensive policies and programs to 


11 
 
assist MSMEs in all areas, including but not limited to finance and 
information services, training and marketing.” 
 
SEC. 11. Section 11-A of the same Act, as amended, is hereby further amended 
to read as follows: 
“SEC. 11-A. Composition of the Board of Directors and its Powers. – 
The SB Corporation [corporate powers shall be vested on] SHALL HAVE 
a Board of Directors composed of [eleven (11)] THIRTEEN (13) members 
which shall include the following: 
“a) The Secretary of Trade and Industry, WHO SHALL ACT AS 
CHAIRPERSON 
OF  
THE 
BOARD UNTIL SUCH TIME 
THAT 
THE PRESIDENT 
OF 
THE 
PHILIPPINES 
SHALL 
HAVE 
APPOINTED THE CHAIRPERSON OF THE BOARD FROM AMONG ITS 
MEMBERS; 
“b) The Secretary of Finance; 
“C) 
THE 
PRESIDENT 
OF 
THE 
GOVERNMENT 
SERVICE 
INSURANCE SYSTEM (GSIS); 
“D) THE PRESIDENT OF THE SOCIAL SECURITY SYSTEM (SSS); 
“[c] E) A private sector representative to be appointed by the President 
OF THE PHILIPPINES upon the recommendation of the MSMED Council; 
“[d] F) Seven (7) representatives of the SB Corporation common 
stock shareholders who shall be elected based on proportional 
distribution, 
in accordance with Section [24] 23 of the REVISED 
Corporation Code; and 
“[e)]G)The president of the SB Corporation as ex-officio member and 
to serve as vice chairman of the Board. 
“The 
President OF 
THE PHILIPPINES 
shall 
appoint 
the 
[chairman] CHAIRPERSON of the Board from among its members. 
“All members of the Board so appointed, except for the ex-officio 
members, shall serve for a term of three (3) years [without reappointment.] 
AND MAY BE REAPPOINTED TO ANOTHER TERM UNLESS 
EARLIER REVOKED. IF 
THE 
TERM 
OF 
THE 
INCUMBENT 
MEMBER HAS EXPIRED, THE MEMBER  
SHALL CONTINUE TO 
FUNCTION IN A HOLDOVER CAPACITY UNTIL A REPLACEMENT 
HAS BEEN APPOINTED AND QUALIFIED. [The] ANY person [so] 
appointed to replace a member who has resigned, died, or been removed 
for cause shall serve only for the unexpired portion of the term. 
“The Board of Directors shall have, among others, the following 
specific powers and authorities: 
“x x x; and 
“f) [Notwithstanding the provisions of Republic Act No. 6758 and 
Compensation Circular No. 10, Series of 1989 issued by the Department 
of Budget and Management, the Board shall have the authority to 
p]Provide for the organizational structure, [and] staffing pattern [of SB 
Corporation and to extend to the employees and personnel thereof salaries, 
allowances and fringe benefits similar to those extended to and currently 
enjoyed by employees and personnel of other government financial 
institutions.] 
AND 
COMPENSATION 
OF 
EMPLOYEES 
AND 


12 
 
PERSONNEL OF THE SB CORPORATION, FOR SUBMISSION TO 
THE GOVERNANCE COMMISSION FOR GOCCs.” 
 
SEC. 12. Section 11-B of the same Act, as amended, is hereby further amended, 
to read as follows: 
“SEC. 11-B. Corporate Structure and Powers. – “A. The SB Corporation 
shall: 
“x x x. 
“B. For this purpose, the SB Corporation [subject to compliance with 
the rules and regulations to be issued by the Bangko Sentral ng Pilipinas 
(BSP) and the Securities and Exchange Commission,] shall have the 
following functions and duties: 
“a) Source 
and 
adopt 
development 
initiatives 
for 
globally 
competitive MSMES in finance and business technologies; 
“b) [To] [e]Extend all forms of financial assistance, EXCEPT 
GRANTS AND SUBSIDIES, to eligible MSMEs[.], AND NOT TO 
PRECLUDE RETAIL LENDING 
IN 
AREAS 
WHERE 
PRIVATE 
BANKS 
ARE 
NOT 
ABLE 
TO 
SERVE, 
SUBJECT 
TO 
CONSULTATION WITH PRIVATE BANKS. SB Corporation may also 
engage in wholesale lending. The SB Corporation shall be given two (2) 
years from the effectivity of this Act to comply with this requirement; 
“x x x; 
“f) Apply for, receive and accept grants and donations from sources 
within and outside the country; [and] 
“g) Hold, own, purchase, acquire, sell, mortgage, dispose or 
otherwise invest or re-invest in stocks, bonds, treasury bills, debentures, 
securities and similar forms of indebtedness of the government, its agencies 
and instrumentalities or any government financial institution[.]; AND 
“H) ESTABLISH AN ENTERPRISE REHABILITATION 
FUND 
FOR 
CALAMITY-STRICKEN 
MSMEs 
NOT 
TO 
EXCEED 
FIVE 
HUNDRED 
MILLION 
PESOS 
(P500,000,000.00) 
AS 
PART 
OF 
SB 
CORPORATION’S 
CAPITALIZATION BY THE NATIONAL GOVERNMENT;  
“I) SUBMIT AN ANNUAL REPORT TO THE MSMED COUNCIL, 
THE    CONGRESS OF THE PHILIPPINES AND THE GOVERNANCE 
COMMISSION 
FOR 
GOCCs 
ON 
THE 
PERFORMANCE 
AND 
FINANCIAL CONDITION OF THE CORPORATION. 
“THE 
SB 
CORPORATION 
SHALL 
BE 
EXEMPT 
FROM 
SECURING PRIOR BSP AUTHORIZATION FOR ENGAGING IN 
QUASI-BANKING ACTIVITIES AND SHALL NOT BE SUBJECT TO 
BSP SUPERVISION AND REGULATION FOR SUCH ACTIVITIES.” 
 
SEC. 13.A new subsection is hereby inserted after Section 11-B of the same Act, 
as amended, and numbered as Section 11-C to read as follows: 
“SEC. 11-C. STRATEGIC MANAGEMENT OF THE SB CORPORATION. 
– THE BOARD 
OF THE 
SB CORPORATION, THROUGH 
ITS 
CHAIRPERSON, 
SHALL 
BE 
FULLY 
RESPONSIBLE 
AND 
ACCOUNTABLE 
FOR 
THE 
PERFORMANCE 
OF 
THE 


13 
 
CORPORATION’S MANDATE. TO ENSURE THIS, THE BOARD SHALL 
BE CONSTITUTED AS A MANAGING BOARD, LED 
BY 
ITS 
CHAIRPERSON, TO CONCEPTUALIZE THE STRATEGIC PLANS AND 
POLICIES OF THE CORPORATION. 
“THE 
SB 
CORPORATION 
SHALL 
ADOPT 
A 
BALANCED 
SCORECARD  MANAGEMENT APPROACH, SUBJECT  TO 
THE 
REVIEW 
AND APPROVAL OF THE GOVERNANCE COMMISSION 
FOR 
GOCCs, TO ENABLE IT TO MANAGE ITS FINANCIAL 
PERFORMANCE 
WHILE 
PURSUING 
ITS 
PUBLIC 
POLICY 
OBJECTIVES OF SUPPORTING MICRO, SMALL AND MEDIUM 
ENTERPRISES DEVELOPMENT.” 
 
SEC. 14. Section 12 of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 12. Capitalization and Funding of the SB Corporation. – The 
SB Corporation shall have an authorized capital stock of Ten billion 
pesos (P10,000,000,000.00). 
The initial capital of One 
billion pesos 
(P1,000,000,000.00) shall be established from a pool of funds to be 
contributed in the form of equity investments in common stock by the 
Land Bank of the Philippines (LBP), the Development Bank of the 
Philippines (DBP), in the amount of Two hundred million pesos 
(P200,000,000.00) each. The Social Security System (SSS) and the 
Government Service Insurance System (GSIS) shall also set aside Two 
hundred million pesos (P200,000,000.00) each for the SB  
Corporation. 
Authorized capital stock 
of the [s]Small 
[b]Business 
[c]Corporation 
shall be divided into 80,000,000 common shares and 20,000,000 preferred 
shares with a par value of One hundred pesos (P100.00) per share: 
Provided, That the common shares which have been issued, including 
those issued against the assets of the KKK Guaranty Fund consolidated 
under the [s]Small [b]Business [c]Corporation by virtue of Executive 
Order No. 233, Series of 2000 and Executive Order No. 19, Series of 2001 
and including those already subscribed, shall form part of the 
capitalization of the corporation: Provided, further, That holders of 
preferred shares issued under Republic Act No. 6977, as amended, shall 
have the option to convert the same into common shares. Additional equity 
funding shall come from trust placements of excess and unused funds of 
existing 
government 
agencies, 
bilateral 
and 
multilateral official 
development assistance funds, subscriptions from government owned or 
controlled corporations 
AND 
THE 
NATIONAL 
GOVERNMENT 
THROUGH THE DEPARTMENT OF BUDGET AND 
MANAGEMENT 
(DBM), 
and 
investments 
of 
private 
financial 
institutions 
and 
corporations: Provided, finally, That any investment from the private sector 
shall only be in the form of preferred shares. 
“[To allow for capital build-up, SB Corporation shall be given a five (5) 
year grace period on dividend commitments beginning on the date of 
effectivity of this amendment. Thereafter, it] THE SB CORPORATION 
may [only] declare as dividend not more than thirty percent (30%) of its 
net income and the rest withheld as retained earnings.” 


14 
 
 
SEC. 15. Section 13 of the same Act, as amended, is hereby deleted. 
“[SEC. 13. The SB Corporation shall be subject to the supervision 
and examination of the Bangko Sentral ng Pilipinas taking into 
consideration its developmental objectives.”] 
 
SEC. 16. Section 14 of the same Act, as amended, is hereby renumbered as Section 
13, and further amended to read as follows: 
“SEC. [14]13. Venture Capital and Micro Finance Trust Fund. – The 
SB Corporation may set aside an amount of money to encourage the setting 
up of a venture capital and micro finance trust fund for the purpose of 
promoting AVAILABLE business opportunities [available] to THE 
MSME sector. The Venture Capital Fund shall be used mainly for 
venture capital finance especially in technology-oriented industries. The 
micro finance trust fund shall be used to provide collateral-free fixed and 
working capital loans to micro and small enterprises run by those 
emerging out of poverty. THE INITIAL AMOUNT OF AT 
LEAST 
TEN 
PERCENT (10%) OF THE 
EQUITY 
CONTRIBUTION 
OF 
THE 
NATIONAL 
GOVERNMENT 
TO THE CAPITALIZATION OF THE 
SMALL 
BUSINESS 
CORPORATION, 
NOT 
TO EXCEED 
FIVE 
HUNDRED 
MILLION 
PESOS 
(P500,000,000.00), 
SHALL 
BE 
APPROPRIATED TO FUND THE VENTURE CAPITAL AND MICRO 
FINANCE TRUST FUND.” 
 
SEC. 17. Section 15 of the same Act, as amended, is hereby renumbered as Section 
14, and further amended to read as follows: 
“SEC. [15]14. Mandatory Allocation of Credit Resources to Micro, 
Small and Medium Enterprises. – For the period of ANOTHER ten (10) 
years from the date of the effectivity of this amendatory Act, all lending 
institutions [as defined under Bangko Sentral ng Pilipinas rules], whether 
public or private, shall set aside at least [eight percent (8%) for micro and 
small enterprises and at least two percent (2%) for medium enterprises] 
TEN PERCENT (10%) of their total loan portfolio based on their balance 
sheet as of the end of the previous quarter FOR MICRO, SMALL AND 
MEDIUM ENTERPRISES, and make it available for MSME credit as 
herein 
contemplated: PROVIDED, THAT A MAXIMUM OF ONE 
PERCENT (1%) THEREOF SHALL BE THE ALLOCATION FOR 
MEDIUM ENTERPRISES. 
“Compliance of this provision shall be: 
“a) actual extension of loans to eligible MSMEs; or 
“x x x; or 
“f) [subscribe] SUBSCRIPTION/purchase of liability instruments as 
may be offered by the SB Corporation. THE SAME SHALL NOT BE 
DEEMED AS QUASI-BANKING OPERATIONS, AND SHALL NOT 
REQUIRE A QUASI-BANKING LICENSE FROM THE BSP; OR 
“(G) EXTENSION OF LOANS TO MSME VALUE CHAIN ACTORS 
WHO ALLOW MSMEs TO PARTICIPATE IN ORGANIZED OR FORMAL 
VALUE CHAINS. VALUE 
CHAIN 
ACTORS 
INCLUDE, 
AMONG 


15 
 
OTHERS, TRADERS, SUPPLIERS, PROCESSORS, AGGREGATORS 
WHO CONDUCT LINKED 
SEQUENCE 
OF 
VALUE 
ADDING 
ACTIVITIES 
INVOLVED 
IN BRINGING A PRODUCT TO FINAL 
CONSUMERS. 
“The  
Bangko Sentral  
ng Pilipinas 
AND 
THE 
SECURITIES 
AND EXCHANGE COMMISSION, IN CONSULTATION WITH THE 
MSMED COUNCIL AND THE DEPARTMENT OF TRADE AND 
INDUSTRY, shall formulate rules for the effective implementation of 
this provision: Provided, That the purchase of government notes, 
securities and other negotiable instruments shall not be deemed 
compliance with the foregoing provisions: Provided, further, 
That the 
Bangko  Sentral 
ng Pilipinas 
AND 
THE 
SECURITIES 
AND 
EXCHANGE 
COMMISSION, 
IN 
CONSULTATION 
WITH 
ALL 
STAKEHOLDERS, shall establish [an] A MEANINGFUL incentive 
[program] SYSTEM to encourage [lending to micro, small and 
medium industries beyond the mandatory credit  allocation  to  said  
enterprises,] COMPLIANCE WITH THIS PROVISION, such as possible 
reduction in bank’s reserve requirement[.]: PROVIDED, FINALLY,THAT 
THE 
BANGKO SENTRAL NG PILIPINASAND 
THE 
SECURITIES 
AND 
EXCHANGE COMMISSION SHALL 
ALIGN 
THEIR 
REGULATIONS 
ON THE PENALTIES FOR 
BANKS 
AND OTHER 
ENTITIES, FOR NONCOMPLIANCE WITH THE 
PROVISION 
FOR 
MANDATORY LENDING. 
“The MSMED Council shall set up the appropriate systems to monitor 
all loan applications of MSMEs in order to account for the absorptive 
capacity of the MSME sector. EACH LENDING INSTITUTION SHALL 
DESIGNATE 
A CHIEF 
COMPLIANCE 
OFFICER 
WHO 
WILL 
PREPARE 
AND 
SIGN 
THE REPORT ON COMPLIANCE AND 
NONCOMPLIANCE WITH THE MANDATORY CREDIT ALLOCATION, 
FOR SUBMISSION TO THE BANGKO SENTRAL NG PILIPINAS IN THE 
CASE OF BANKS, AND THE SECURITIES 
AND 
EXCHANGE 
COMMISSION 
IN 
THE 
CASE 
OF 
NON-BANK FINANCIAL 
INTERMEDIARIES. The Bangko Sentral ng Pilipinas IN THE CASE OF 
BANKS, AND THE SECURITIES AND EXCHANGE COMMISSION IN 
THE 
CASE OF NON-BANK 
FINANCIAL INTERMEDIARIES, shall 
furnish to the MSMED Council on a quarterly basis comprehensive reports 
on the [bank’s] LENDING ENTITY’S compliance[,] AND noncompliance 
[and penalties of] WITH the above provisions on the mandatory  credit  
allocation  for  MSMEs[.],  AND  SHALL  SUBMIT  AN 
ANNUAL REPORT, SIGNED BY AN OFFICER WITH THE RANK OF 
AT LEAST A MANAGING 
DIRECTOR, 
ON THE 
AMOUNTS
 OF THE 
PENALTIES 
FOR 
NONCOMPLIANCE 
WITH 
THE 
MANDATORY LENDING PROVISION OF THIS ACT. 
“ALL 
BANKS 
SHALL 
PROVIDE 
ACCESS 
TO 
DEPOSIT 
ACCOUNTS, SUCH AS SAVINGS, CHECKING AND DEBIT ACCOUNTS, 
TO REGISTERED MSMEs. FINANCIAL TECHNOLOGY SHALL 
BE 
PROVIDED TO MSMEs TO ENSURE THEIR FINANCIAL INCLUSION. 


16 
 
“ALL LENDERS SHALL REPORT CREDIT 
INFORMATION 
AND 
TRANSACTIONS OF MSMEs TO A NATIONAL CREDIT REGISTRY 
TO 
MONITOR 
PROPER 
COMPLIANCE 
AND 
EFFICIENT 
IMPLEMENTATION. 
“FOR 
EFFICIENT 
IMPLEMENTATION 
AND 
OPERATION, 
COOPERATIVES  EXCEPT  COOPERATIVE  BANKS  AND  
INSURANCE COOPERATIVES SHALL 
 
BE 
 
UNDER 
 
THE  
SOLE 
 
SUPERVISION 
 
AND 
EXAMINATION 
OF 
THE 
COOPERATIVE DEVELOPMENT AUTHORITY (CDA); 
ALL OTHER 
FINANCIAL 
ENTITIES, 
CORPORATIONS 
AND 
FINANCIAL 
INTERMEDIARIES, SUCH AS NON-GOVERNMENT ORGANIZATIONS, 
FINANCING COMPANIES, NON-STOCK SAVINGS 
AND 
LOAN 
ASSOCIATIONS, 
MICROFINANCE 
NON-GOVERNMENT 
ORGANIZATIONS,AND LENDING INVESTORS SHALL BE UNDER 
THE SECURITIES AND EXCHANGE COMMISSION (SEC); BANKS 
SHALL BE UNDER THE BANGKO SENTRAL NG PILIPINAS (BSP); AND 
INSURANCE COMPANIES SHALL BE UNDER THE INSURANCE 
COMMISSION (IC). FOR CLARITY, COOPERATIVE BANKS SHALL 
BE UNDER THE SUPERVISION AND EXAMINATION OF THE CDA 
AND 
BSP; 
WHILE INSURANCE 
COOPERATIVES 
SHALL 
BE 
UNDER THE SUPERVISION AND EXAMINATION OF THE CDA AND 
INSURANCE COMMISSION (IC). 
“Lending institutions which are not qualified to acquire or hold lands of 
the public domain in the Philippines shall be permitted to bid and take 
part in sales of mortgaged real property in case of judicial or extra-judicial 
foreclosure, as well as avail of receivership, enforcement and other 
proceedings, solely upon default of a borrower, and for a period not 
exceeding five (5) years from actual possession: Provided, That in no event 
shall title to the property be transferred to such lending institution. If the 
lending institution is the winning bidder, it may, during said five (5) 
year period, transfer its rights to a qualified Philippine national, 
without prejudice to a borrower’s rights under applicable laws.” 
 
SEC. 18. Sections 16 and 17 of the same Act, as amended, are hereby renumbered 
as Sections 15 and 16, respectively, to read as follows: 
“SEC. [16]15. Micro, Small, and Medium Enterprise Week. – x xx.” 
“SEC. [17]16. Presidential Awards for Outstanding MSME. – x xx.” 
 
SEC. 19. Section 18 of the same Act, as amended, is hereby renumbered as Section 
17, and further amended to read as follows: 
“SEC. [18]17. Congressional Oversight Committee. – To monitor and 
oversee the implementation of this Act, there shall be a Congressional 
Oversight 
Committee 
on 
Micro, 
Small and 
Medium 
Enterprise 
Development (COC-MSMED) composed of the chairpersons of the Senate 
Committee on Economic Affairs and the House Committee on [Small 
Business and Entrepreneurship Development] MICRO, 
SMALL AND 
MEDIUM ENTERPRISE DEVELOPMENT as chairperson and co-
chairperson, respectively; x x x .” 


17 
 
 
SEC. 20. Section 19 of the same Act, as amended, is hereby renumbered as Section 
18, and further amended, to read as follows: 
“SEC. [19]18. Penal Clause. – The Bangko Sentral Ng Pilipinas IN 
THE CASE OF BANKS, AND THE SECURITIES AND EXCHANGE 
COMMISSION IN 
THE 
CASE 
OF 
NON-BANK 
FINANCIAL 
INTERMEDIARIES, 
shall 
impose administrative sanctions and other 
penalties on the lending institutions for non[-]compliance with THE 
provisions of this Act [including a fine of not less than Five hundred 
thousand 
pesos (P500,000.00)]. 
 
THE 
 
MINIMUM 
 
AMOUNT  
FOR 
 
THE 
 
PENALTY 
 
FOR NONCOMPLIANCE IS FIVE 
HUNDRED THOUSAND PESOS (P500,000.00) AND THE MAXIMUM 
PENALTY IS FIVE MILLION PESOS (P5,000,000.00), IN PROPORTION 
TO THE BANK’S OR OTHER ENTITY’S LEVEL OF COMPLIANCE:  
PROVIDED,  THAT  IN  CASE  OF  FAILURE  OF  THE 
MANDATED ENTITIES TO COMPLY WITH THE MANDATORY 
CREDIT ALLOCATION SET OUT IN SECTION 14 OF THIS ACT, AN 
ADDITIONAL PENALTY EQUIVALENT TO TWENTY PERCENT (20%) 
PER ANNUM OF THE TOTAL AMOUNT OF NON-COMPLIANCE 
SHALL BE IMPOSED. 
“Penalties on noncompliance shall be directed to the development of 
the MSME sector. Ninety percent (90%) of the penalties collected [should] 
SHALL go to the [MSMED Council Fund] “START-UP FUND” AS 
PROVIDED UNDER 
REPUBLIC ACT 
NO. 
10644, 
OTHERWISE 
KNOWN AS THE “GO NEGOSYO ACT”, while the remaining ten percent 
(10%) [should] SHALL be [given] 
REMITTED to 
the BSP, 
THE 
SECURITIES 
AND 
EXCHANGE 
COMMISSION, 
OR 
THE 
APPROPRIATE 
AGENCY 
THAT 
EXERCISES 
REGULATORY 
JURISDICTION OVER SUCH LENDING ENTITY, to cover for 
administrative expenses. 
“THE MSMED COUNCIL SHALL SUBMIT TO THE CONGRESS OF 
THE PHILIPPINES 
AN ANNUAL REPORT ON THE 
STATUS OF 
THE PENALTIES REMITTED AND HOW THE SAME WERE USED 
OR ARE BEING USED IN RELATION TO THE IMPLEMENTATION 
OF SERVICES TO MSMEs IN THE AREAS OF CAPACITY BUILDING, 
TECHNOLOGY INFORMATION, INFORMATION COLLECTION AND 
DISSEMINATION, AND 
OTHER 
INTERVENTIONS 
FOR 
MSME 
DEVELOPMENT, GROWTH AND SUSTAINABILITY.” 
 
SEC. 21. A new section, numbered Section 19, is hereby inserted after re-
numbered 
Section 18 of the same Act, as amended, to read as follows: 
“SEC. 
 
19. 
 
OTHER 
VIOLATIONS. 
– 
EXCEPT 
 
FOR  
SECURITIES COVERED UNDER  
THE 
SECURITIES  
REGULATIONS CODE 
OR REPUBLIC ACT NO. 8799, ENTITIES 
SHALL SECURE THE NECESSARY APPROVAL OF THE SECURITIES 
AND 
EXCHANGE 
COMMISSION 
PRIOR 
TO 
RECEIVING 
INVESTMENTS 
AS 
WELL 
AS 
GIFTS, 
ITEMS 
OR 
OTHER 


18 
 
COMMODITIES, EITHER IN THE FORM OF CASH OR ITS 
EQUIVALENT CASH VALUE IN CONSIDERATION OF RETURN OF 
PROFIT, BENEFIT, OR BLESSINGS COMING FROM MORE THAN 
TWENTY (20) INDIVIDUALS, OR SUFFER THE PENALTY OF 
THIRTY 
(30) 
TO 
ONE 
HUNDRED 
EIGHTY 
(180) 
DAYS 
IMPRISONMENT, OR A FINE OF NOT LESS THAN TEN THOUSAND 
PESOS 
(₱10,000.00) 
BUT 
NOT 
EXCEEDING ONE 
HUNDRED 
THOUSAND PESOS (₱100,000.00) OR BOTH, AT THE DISCRETION 
OF THE COURT. 
“ANY PERSON, WHETHER NATURAL OR JURIDICAL, WHO 
FAILS TO ACQUIRE THE APPROVAL OF THE FOOD AND DRUGS 
AUTHORITY (FDA) AND THE DEPARTMENT OF TRADE AND 
INDUSTRY (DTI) FOR SELLING, MARKETING,  AND DISTRIBUTING 
PRODUCTS AND SERVICES THAT ARE REGULATED BY THE FDA 
SHALL SUFFER THE PENALTY OF THIRTY (30) DAYS TO ONE 
HUNDRED EIGHTY (180) DAYS IMPRISONMENT, OR A FINE OF 
NOT LESS THAN TEN THOUSAND PESOS (₱10,000.00) BUT NOT 
EXCEEDING ONE HUNDRED THOUSAND PESOS (₱100,000.00) OR 
BOTH, AT THE DISCRETION OF THE COURT. “ 
 
SEC. 22. Implementing Rules and Regulations (IRR). – The Department of 
Trade and Industry, through the Bureau of Micro, Small and Medium Enterprise 
Development and in consultation with the Bangko Sentral ng Pilipinas in the 
case of banks, and the Securities and Exchange Commission in the case of 
non-bank financial intermediaries, and other concerned government agencies, 
nongovernment organizations and private sector agencies involved in the 
promotion of MSMEs, shall formulate the rules and regulations (IRR) 
necessary to implement the provisions of this Act within ninety (90) days from 
the approval of this Act: Provided, That the IRR shall be reviewed yearly: 
Provided, further, That the IRR shall be approved by the MSMED Council. 
 
SEC. 23. Separability Clause. – The provisions of this Act are hereby declared to 
be separable. If any provision of this Act shall be held unconstitutional, the 
remainder of this Act not otherwise affected shall remain in full force and effect. 
 
SEC. 24. Repealing Clause. – Section 22 of Republic Act No. 8367 is hereby 
repealed. All laws, decrees, proclamations, issuances, or ordinances that 
are contrary to or inconsistent with the provisions of this act are hereby 
amended, repealed or modified accordingly. 
 
SEC. 25. Effectivity. – This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation.  
 
Approved,