Republic of the Philippines
HOUSE OF REPRESENTATIVES

‘Quezon City

TWENTIETH (207) CONGRESS
First Regular Session

HOUSE BILL No. __ 101

Introduced by KAMANGGAGAWA Partylist
Representative ELIJAH R. SAN FERNANDO

EXPLANATORY NOTE

Micro, small, and medium enterprises (MSMEs) are widely recognized as vital
contributors to inclusive growth. MSMEs, particularly those belonging to the micro and
small enterprise category, make up the majority of businesses and employ most of the
labor force. According to the 2023 List of Establishments released by the Philippines
Statistics Authority (PSA), microenterprises comprise 90.43% of all registered businesses,
while small enterprises account for 8.82%. Collectively, they employ approximately 60%
of the national labor force, playing a central role in ensuring local economic activity,
particularly in underserved communities and rural areas.

While various legal frameworks and programs exist to support MSMEs—
including the Magna Carta for MSMEs (Republic Act No. 6977, as amended by R.A.s 8289
and 9501), the Barangay Micro Business Enterprises (BMBE) Law (RA 9178), and the Go
Negosyo Act (RA 10644), among others, these programs have not sufficiently addressed
the sector’s core vulnerabilities including low productivity, and vulnerability to
economic disruptions. In addition, these businesses often operate with narrow margins
that constrain their capacity to offer fair and stable wages, leading to job insecurity and
informal labor practices.

This situation became evident during the COVID-19 pandemic, which severely
disrupted business operations and exposed the vulnerabilities of SMEs. While emergency
programs like the Small Business Wage Subsidy (SBWS) Program launched by the
Department of Finance (DOF) as part of the “Bayanihan to Recover As One Act” during
the COVID-19 pandemic provided temporary relief to over three million workers in 2020
and helped prevent permanent closure of affected small businesses during the ECQ, the
lack of a permanent, legislated subsidy scheme has left SMEs and their workers at risk in
the face of economic uncertainty.

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To address this gap, this bill proposes the creation of a Micro and Small
Enterprises (MSEs) Subsidy Program as a strategic and inclusive policy response. The
program is designed with the following objectives:

1) Provide business tax incentives, monthly wage support, rent subsidy, or
replacement of damaged equipment to qualified micro and small
enterprises registered under the BMBE or Go Negosyo Act during periods
of economic downturn or recovery, national state of calamity as declared
by the appropriate authority;

Strengthen formal employment practices by mandating compliance with
social protection systems (SSS, PhilHealth, Pag-IBIG); and

Prioritize highly vulnerable segments such as women-led businesses, agri-
based microenterprises, and those newly transitioned from informal to

2)

3)

formal status.

By cushioning a portion of monthly operating expenses during critical periods,
this measure intends not only to safeguard jobs and formal employment but also to
complement poverty alleviation programs like the Conditional Cash Transfer (4Ps).
Unlike one-time cash transfers, this targeted MSE support promotes sustainable
livelihoods, encourages formalization of unregistered/informal micro businesses, and
provides income security for the most marginalized workers. It is an investment in
inclusive growth and economic resilience, particularly for the entrepreneurial poor,
many of whom rely on microbusinesses as their pathway out of poverty.

In solidarity with the working class, the passage of this bill is earnestly sought.

ELIJAH, \N FERNANDO
Representative
KAMANGGAGAWA Parris

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AE
Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH (207) CONGRESS
First Regular Session

HOUSE BILLNO. 101

Introduced by KAMANGGAGAWA Partylist
Representative ELIJAH R. SAN FERNANDO.

AN ACT
ESTABLISHING A MICRO AND SMALL ENTERPRISES SUBSIDY PROGRAM TO
PROMOTE SUSTAINABLE EMPLOYMENT AND INCLUSIVE GROWTH,
PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the “Micro and Small Enterprises
(MSEs) Subsidy Act of 2025.”

SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State to support the
micro and small enterprise sector as a critical engine of national development. In line
with the Constitution’s mandate to promote full employment and inclusive economic
growth, the State shall provide support to help retain and formalize workers, promote
decent employment, and jumpstart long-term resilience of micro and small enterprises,
especially during times of national or regional economic distress

SEC. 3. Definition of Terms. — As used in this act, the following terms shall mean:

(a) Economic emergency refers to a situation, as determined by the President, involving
an actual or imminent abnormal disruption of the national market caused by
extraordinary circumstances, including but not limited to severe weather
conditions, natural disasters, catasrophic failure of energy supply, strikes, civil
unrest, war or military conflict, or other declared national emergencies, which:

1. Results in or poses a credible threat of a shortage or significant price
increase of commodities, and

2. Is likely to cause serious harm to the Philippine economy or to public
health, safety, or general welfare.

(b) Formal status refers to businesses that are registered with the government and
operate within existing legal frameworks.

(©) Micro enterprise refers to any business entity or enterprise engaged in the
production, processing, or manufacturing of products or commodities, including

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agro-processing, trading, and services, with total assets not exceeding 3,000,000
and employing 1-9 workers, as defined in RA 9178.

For the purpose of this Act, "services" shall exclude those rendered by any person
duly licensed by the government after having passed a government licensure
examination, in connection with the exercise of one's profession.

(d) Public health emergency is declared by the President upon the recommendation of
the Secretary of Health, as provided under Section 7 of Republic Act No. 11332 or
the “Mandatory Reporting of Notifiable Diseases and Health Events of Public
Health Concern Act,” as triggered by an occurrence or imminent threat of an
illness or health condition that:

1. Is caused by epidemics or pandemics of infectious diseases, outbreaks of
communicable diseases, bioterrorist attacks, or highly fatal infectious
agents or biological toxins; and

2. Poses a high probability of causing a large number of deaths, serious or
long-term disabilities or widespread exposure to an infectious or toxic
agent that may pose a significant risk to public health.

(e) Qualified employers are enterprises registered in the Barangay Micro Business
Enterprise registry under Republic Act No. 9178 (BMBE Law) or the MSME
registry under Republic Act No. 10644 (Go Negosyo Act), or other legally
recognized MSME frameworks.

(Q) Small enterprises refers to any business entity or enterprise employing 10-99
workers and with assets between P3,000,001 to P15,000,000.

(g) State of calamity, as defined by Republic Act No. 10121, refers to “a condition
involving mass casualty and/or major damages to property, disruption of means
of livelihoods, roads, and normal way of life of people in the affected areas as a
result of the occurrence of natural or human-induced hazard.”

(h) Wage subsidy, for the purpose of this Act, is a form of government financial
assistance provided to micro and small enterprises to support employee wages
during periods of national emergency or economic downturn, or recovery.

SEC. 4. Creation of the MSEs Subsidy Program. — There is hereby created a Micro and Small
Enterprises Subsidy Program, which shall:

(a) Provide assistance to qualified micro and small enterprises in the form of subsidies
and privileges as stipulated under Section 8 of this Act;

(b) Strengthen the capacity of the MSEs to manage their business by requiring the

enterprises enrolled under the program to participate in training under the Go
Negosyo Act;

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(©) Activate during national economic downturns, states of calamity, or during
economic recovery phases as declared by the President or the National Disaster
Risk Reduction and Management Council (NDRRMC);

(d) Be administered by the Micro and Small Business Subsidy Program (MSBSP)
Committee as established under this Act; and

(e) Prioritize microenterprises, especially women-led businesses, agri-based MSEs,
and businesses newly transitioned from informal to formal status.

SEC. 5. Eligibility Criteria. — Qualified micro and small enterprise employers are eligible
to avail of the MSEs Subsidy Program if:

(a) Microenterpri

1. Is duly registered under the BMBE Act;

2. Has been in continuous operation for at least one (1) year at the time of
application;

3, Employs at least one (1) and no more than nine (9) workers with total assets
not exceeding P3,000,000; and

4, Is compliant with the regulations of the Social Security System (SSS),
Philippine Health Insurance Corporation (PhilHealth), and the Home
Development Mutual Fund (Pag-IBIG).

(b) Small enterprise:

1. Is duly registered under the Magna Carta for MSMEs;

2. Employs 10 to 99 workers with assets of more than P3,000,000 but not
exceeding P15,000,000;

3. Is compliant with the regulations of the Social Security System (SSS),
Philippine Health Insurance Corporation (PhilHealth), and the Home
Development Mutual Fund (Pag-IBIG); and

4, Is BIR-registered and has been consistently complying with tax obligations
since the start of its operations.

SEC. 6. Coverage. — Only micro and small enterprises (MSEs) that have been adversely
affected by a declared economic emergency, public health emergency, or state of
calamity, as officially proclaimed by the appropriate authority, shall be eligible to apply
for assistance under the program: Provided, That the affected micro or small enterprise
meets at least one of the following conditions, supported by the corresponding
documentation:

(a) Sustained Decline in Net Income — The enterprise has experienced a consistent
decline in net income of at least twenty-seven percent (27%) or the equivalent of
the total labor cost of enterprise operations in the last six (6) months immediately
preceding the declared emergency, as shown in its financial statements, income
tax returns, or bank-certified financial records showing comparative monthly net
income.

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(b) Reduction in Operations, Workforce, or Business Activity — The enterprise has
significantly reduced its business operations, employee count, or activity levels as
a direct consequence of the emergency verified through barangay or local
government certification, affidavits of closure or downsizing, employee
termination records, or payroll documents showing the decline in employee
count.

(c) Damage to Essential Physical Assets — The enterprise has incurred damage to
physical assets, such as, but not limited to, equipment, machinery, inventory, or
facilities, which are vital for business continuity, as evidenced by photographs or
videos of the damage, insurance assessment reports, inspection reports from the
LGU or DTI, or affidavits from authorized personnel or property owners.

Employers enrolling under the wage subsidy program shall ensure that employees are
not presently recipients or have been recipients in the last three (3) months of other
government subsidy programs such as, but not limited to, the Pantawid Pamilyang
Pilipino Program (4Ps), the Ayuda sa Kapos Ang Kita Program (AKAP), and the Tulong
Panghanapbuhay Sa Ating Disadvantaged/Displaced Workers (TUPAD), or other
government programs similar in nature.

SEC. 7. Micro and Small Business Subsidy Program Committee. — A Micro and Small
Business Subsidy Program (MSBSP) Committee is hereby created to be headed by the
DIL

The MSBSP shall have, as members, representatives from the DTI, DOLE, DRRMC, BIR,
and DSWD, which shall have the following functions:

(a) Receive, evaluate, validate, and process applications in the MSEs Subsidy
Program, which shall not exceed one (1) month starting from the date of receipt of
the application;

(b) Determine the appropriate assistance for eligible applicants;

(c) Supervise and monitor compliance of the beneficiaries in the MSEs Subsidy
Program;

(d) Conduct monitoring and assessment of the implementation of the program;

(e) Publish a full report of the program implementation that shall be submitted to
Congress in the first quarter of every year; and

(8) Coordinate with the Bangko Sentral ng Pilipinas (BSP) and the Department of
Finance (DOF) to ensure synergy with other financial assistance programs for
SMEs.

SEC. 8. Subsidies and Duration. — Qualified micro and small enterprises shall be entitled
to one or more of the following forms of assistance and relief under this Act, subject to
the recommendation of the Micro and Small Business Subsidy Program (MSBSP)
Committee:

(a) Employee Wage Support — Employee wage subsidy of Eight thousand pesos

(P8,000.00) per month for a period not exceeding six (6) months per subsidy cycle
that shall be renewable for one (1) additional consecutive subsidy cycle per

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officially declared economic emergency, public health emergency, or state of
calamity, as determined by the appropriate authority. The subsidy amount shall
be credited directly to eligible employees or through the employer's payroll
system, whichever is deemed more appropriate by the MSBSP Committee. Wage
support subsidy shall cover:

1. All employees of microenterprises; and
2. Up to fifty (60) employees or two-thirds (2/3) of the total number of
employees, whichever is higher, for small enterprises.

The MSBSP Committee shall conduct an evaluation of the micro and small
enterprise beneficiary upon completion of the first subsidy cycle to assess the
enterprise's eligibility for a second subsidy cycle.

(b) Temporary Business Tax Exemption — Exemption from business taxes for a
minimum period of six (6) months and up to a maximum of twelve (12) months,
or until such time the MSBSP Committee deems the enterprise to have sufficiently
recovered from the adverse impact of the emergency.

(c) Rent Subsidy — A rental subsidy covering payment of the enterprise’s place of
business for a maximum of six (6) months and not exceeding Two hundred
thousand pesos (P200,000): Provided, That the approved subsidy amount shall be
transferred to the eligible enterprise's official business deposit account on a
monthly basis.

(d) Asset-Based Cash Assistance — A one-time cash grant of not more than One
hundred fifty thousand pesos (P150,000.00) credited to the eligible enterprise's
official business deposit account to cover the replacement or repair of damaged
equipment and/or physical assets essential to business operations. The amount
shall be determined based on the latest appraised value of the affected assets
required to ensure business continuity.

(e) Loan Moratorium for SB Corporation Borrowers — A mandatory loan
moratorium shall be imposed for a period of six (6) months on all loan repayments
due from borrowers of the Small Business Corporation (SB Corp.) under its
regular lending and Pondo sa Pagbabago at Pag-asenso (P3) loan programs,
during which:

1. Borrowers availing of this subsidy scheme shall automatically qualify upon
application for a loan moratorium under this Act;

2. No interest, penalties, or late fees shall accrue;

. The loan term shall be extended accordingly; and

4, Further extensions may be granted subject to assessment by the MSBSP
Committee and approval of the appropriate regulatory agencies.

»

SEC. 9. Responsibilities of Beneficiary Enterprises. — Enterprises availing of the subsidy
shall:

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(a) Submit quarterly payroll records and proof of wage payments;
(b) Retain employment levels and comply with labor standards; and
(c) Agree to random compliance audits by the MSBSP Committee.

Failure to comply shall result in suspension or revocation of subsidy eligibility and
recovery of misused funds.

SEC. 10. Conditions for Granting Subsidies. — Qualified MSEs receiving subsidies and cash
grants under this Act shall provide:

(a) Employment Security — Employers shall not terminate employees receiving
wage subsidies without just cause during the period of wage support;

(b) Liquidation Requirement — MSE beneficiaries of asset-based cash assistance
shall submit a complete liquidation report, including official receipts or equivalent
proof of purchase, to the MSBSP Committee;

(©) Regulatory Compliance — Enterprises shall maintain active registration with
DTI, Securities and Exchange Commission (SEC), Bureau of Internal Revenue,
Social Security System, Philippine Health Insurance Corporation (PhilHealth),
Pag-IBIG Fund, and other government regulatory agencies and social protection
programs, if applicable, and shall submit periodic compliance reports as required
by the MSBSP Committee; and

(d) Capacity Building Participation — Employers shall actively participate in
training, education, and capacity-building programs provided by the DTI through
Go Negosyo Centers, and other relevant programs designed to support enterprise
recovery, resilience, and growth.

SEC. 11. Monitoring and Compliance. — The Micro and Small Business Subsidy Program
(MSBSP) Committee, in coordination with the LGUs and other relevant agencies, shall
conduct periodic monitoring of SMEs availing of the subsidy program to ensure:

(a) Compliance with this Act, other legal frameworks for MSMEs, and with labor
laws;

(b) Retention of workforce levels as reported at the time of application;

(c) Accuracy of disbursement and utilization of subsidy funds;

(d) Financial disclosures of beneficiary MSEs; and

(c) Disclosure of other important information relative to the implementation of this
Act.

SEC. 12. Reporting. — The DTI and DOLE, through the Micro and Small Business Subsidy

Program (MSBSP) Committee, shall submit a full annual report to Congress in the first
quarter of every year.

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SEC. 13. Joint Congressional Oversight Committee. — A Joint Congressional Oversight
Committee (JCOC) is hereby constituted to oversee, monitor, and evaluate the
implementation of this Act.

The JCOC shall be composed of five (5) members each from the House of Representatives
and from the Senate, which shall be co-chaired by the Chairpersons of the House
Committee on Trade and Industry and the Senate Committee on Trade, Commerce and
Entrepreneurship. This JCOC shall review the implementation of this Act and determine
the necessary remedial legislation or executive measures to strengthen the law.

SEC. 14. Implementing Rules and Regulations. — Within sixty (60) days from the effectivity
of this Act, the Secretary of the Department of Trade and Industry, in coordination with
the Department of Interior and Local Government (DILG), DOLE, Department of Budget
Management (DBM), DOF, and the BSP Governor, shall promulgate the necessary rules
and regulations to carry out the provisions of this Act.

SEC. 15. Penalties. — Any person found to have committed fraud or misuse of subsidy
funds under this Act shall refund the full amount received and may be disqualified from
future government programs. Responsible government officers shalll be held liable under
existing civil and criminal laws.

SEC. 16. Appropriations. — An initial Fifteen billion pesos (P15,000,000,000.00) is hereby
appropriated out of any funds actually available in the National Treasury of the
Philippines not otherwise appropriated, the unutilized MSME support funds, and
international grants. Thereafter, the subsequent amounts necessary for the full
implementation of this Act shall be included in the annual General Appropriations Act.

SEC. 17. Separability Clause. - If any provision of this Act is declared unconstitutional or
invalid, the remaining provisions shall remain in full force and effect.

SEC. 18. Repealing Clause. ~ All laws, decrees, executive orders, rules, and regulations
inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 19. Effectivity. - This Act shall take effect sixty (60) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved,

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