Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

House Bill No. 1209

INTRODUCED BY HON. MARCELINO “MARCY” R. TEODORO.

EXPLANATORY NOTE

In the year 2001, a new poverty reduction thrust was initiated by the
government. In sum, the country’s new national strategy directly put poverty
alleviation at the center of governance and development work.

This direction was solidly founded on the lessons of the past and built on
the legacy of gains as well as gaps of previous poverty programs. Aptly, the said
poverty reduction framework considers poverty as a multi-dimensional problem
and requires a multidimensional approach, and that it is linked to and
determined largely by inequitable asset distribution.

To achieve the goal of poverty reduction, therefore, the government must
mobilize innovative and significant means. Among these, micro finance can play
a crucial role because it helps the poor to look beyond mere survival-and build a
future of dignity. Thus, the government has declared micro finance as the
cornerstone in the Philippines’ fight against poverty.

Microfinance means providing poor families with a broad range of services
including savings, loans and micro-insurance to help them engage in productive
activities or grow their small businesses.

However, millions of poor households in the Philippines still do not have
access to microfinance services, and rely on self-finance or informal sources of
finance, limiting their ability to participate in and benefit from development
opportunities and income-generating activities. Of the 4.2 million poor
households in the Philippines, only 2.5 million have access to microfinance
services.

This measure seeks to provide greater financial services to marginalized
sectors of the economy and encourage private entities to play a major role in
poverty alleviation efforts through the promotion and development of
microfinance non-government organizations.

In view of the foregoing, approval of this bill is earnestly sought.

MARCELINO “MARCY” R. TEODORO

Representative, 1° District
City of Marikina


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

House Bill No. 1200

INTRODUCED BY HON. MARCELINO “MARCY” R. TEODORO

AN ACT
TO PROMOTE AND HASTEN THE DEVELOPMENT OF MICROFINANCE,
NGOs IN THE PHILIIPINES

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

Section 1. Title. This Act shall be known as the “Microfinance NGOs
Development Act of 2010".

Section 2. Declaration of Policy. It is hereby declared the policy of the
State to put priority on the alleviation of poverty in the country. In view hereof,
providing greater access to financial services is a vital instrument in improving
the living conditions of the disadvantaged sectors of the economy. The
government shall, therefore, continue to pursue a liberalized and market-oriented
economy where private entities such as non-government organizations (NGOs)
play a major role and where the government provides the enabling environment
to these entities for them to contribute more effectively to poverty to poverty
alleviation efforts.

Section 3. Objectives. - This Act aims to enhance the role of
microfinance NGOs in poverty alleviation efforts through the provision of tax
incentives which will contribution to their institutional growth and sustainability as
well as support their investments and cost in social intermediation and social
development. Furthermore, this Act seeks to rationalize the processes required
microfinance NGOs seeking a donor institution status.

Section 4, Coverage. This law shall apply to non-stock, non-profit BIR
accredited non-government organizations (NGOs) or foundations engaged
primarily in the provision of microfinance services. Provided, that these NGOs for
foundations are qualified to gain a donee institution status subject to Section 8 of
this Act.

Section 5. Definition of Terms. Whenever used in this Act, the following
terms shall have their respective meanings;

a) “Microfinance” — A credit and saving mobilization program exclusively for the
poor to improve the asset base of households and expand the access to saving
of the poor. It involves the use of viable alternative credit schemes and saving
programs including the extension of small loans, simplified loan application
procedures, group character loans, collateral-free arrangements, alternative loan
repayments, minimum requirements for savings and small denominated savers’
instruments and insurance schemes;


b) “Non-government Organization”- Refers to duly registered non-stock , non-
profit organization focusing on the upliftment of the basic or disadvantaged sector
of society by providing advocacy training, community organizing, research ,
access to resources, and other similar activities;

¢) “Microfinance NGO"- A non-government organization or foundation with the
primary business of providing microfinance services and acts as financial
intermediary

d) “Donee institution” — a non-stock, non-profit corporation or non-government
organization, to which donations are wholly tax deductible from gross income of
the donor or exempt from donor's tax in accordance with Section 34(h) and 101
of Republic Act 8424.

Section 6. Exemption from Liability for Unremitted Taxes. A general
amnesty on all taxes past due and unremitted, including penalties thereof, as of
the date of approval of this Act is hereby granted to non-stock, nonprofit BIR
accredited microfinance NGOs or foundations.

Section 7. Donee Institutions Status. Microfinance NGOs or
foundations shall automatically be given a Donee Institution Status upon
accreditation by the Philippines Council on NGO Certification (PCNC) and the
Bureau of Internal Revenue (BIR).

Donations to BIR-accredited, non-stock, non-profit microfinance NGOs or
foundations shall be fully tax deductible from the gross income of the donor for
the period of ten (10) years under this tax incentives. Provided that after the 10-
year period, any new donations shall be subject to the regular Donor’s tax.

Section 8. The Department of Finance shall set the guidelines for
screening evaluation and approval of tax incentives for microfinance NGOs
based on established industry standards for microfinance operations. The DOF
shall likewise determine performance criteria which serve as conditions for
withdrawing the tax incentives as well as the donee institution status from
microfinance NGOs. Moreover, it may deputize private sector tertiary
organizations for assistance in carrying out its functions.

Section 9. The Bureau of Internal Revenue (BIR) shall issue a certification
of donee institution status, as well as a certificate of tax amnesty/exemption form
liability as may be applicable, to these NGOs or corporation arms.

Section 10. Separability Clause. The provisions of this act are hereby
declared separable and in the event any such provision is declared
unconstitutional invalid or unenforceable the other provisions will remain in force
and effect.

Section 11. Repealing Clause. The pertinent provisions of Republic Act
8425, and all other laws, decrees, rules and regulations or parts thereof which
are inconsistent with the provisions of this Act are hereby repealed, amended or
modified accordingly.

Section 12. Effectivity Clause. This Act shall take effect immediately
within 30 days after its publication in the Official Gazette or in at least two (2)
national newspapers of general circulation.

Approved,