Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEETH CONGRESS
First Regular Session

HOUSE BILLNO.__ 9583

Introduced by Representative Federico S. Sandoval II

EXPLANATORY NOTE

In 2002, Congress enacted Republic Act. No. 9178 with the purpose of hastening the
country's economic development by encouraging the formation and growth of Barangay
Micro Business Enterprises (BMBE) which effectively serve as seedbeds of Filipino
entrepreneurial talents, and integrating those in the informal sector with the mainstream
economy, through the rationalization of bureaucratic restrictions, the active intervention of
the government specially in the local level, and the granting of incentives and benefits to
generate much needed employment and alleviate poverty.

In this law, a barangay micro business enterprise is defined as any business enterprise
engaged in production, processing, or manufacturing of products, including agro-processing,
as well as trading and services, with total assets of not more than P3 million, Such assets shall
include those arising from loans but not the land on which the plant and equipment are
located

The law encourages the formation and growth of Barangay Micro Business Enterprises by
granting them incentives and other benefits. A registered BMBE can avail of incentives, such
as income tax exemption and exemption from the coverage of the minimum wage law.

Interestingly, despite the implementation of Republic Act No. 9178, not many enterprises
and local government units are able to implement and cover as much BMBE’s. This is either
because the P3 Million limit is no longer feasible or a number of local government units do
not effectively implement this law.

As to whether the law contributed in the reduction of poverty, it is well to note that in January
2005, Karin Schelzig, Social Development Specialist, Southeast Asia Department, Asian
Development Bank (ADB), in its “Poverty in the Philippines: Income, Assets, and Access”
reported that major causes of poverty in the Philippines fall into several broad categories
Two of these are weak macroeconomic management and employment issues.

To this date however and despite the implementation of the current Republic Act No. 9178,
these two categories remain big factors that affect Philippine economy.


For decades, reducing poverty has always been one of the top priorities of the government.
Short term anti-poverty policies and programs have been implemented to reduce the same as
well long term programs such as Republic Act No. 9178 and Republic Act 10693 or the
Microfinance Non-Government Organizations Act which promotes the policy of the State to
“pursue a program of poverty eradication, wherein poor Filipino families shall be encouraged
to undertake entrepreneurial activities to meet their minimum basic needs including income
security” as well as “to support and work in partnership with qualified NGOs in promoting
financially inclusive and pro-poor financial and credit policies and mechanisms, such as
microfinance and its allied services.”

Notwithstanding these pro poor legislations, there is a need to supplement, expand and
improve the coverage of micro businesses in the Philippines by increasing its limit from P3
Million to P 5 Million Pesos.

This threshoid is more consistent and reasonabie with the same purpose 1 encourage,
promote and strengthen the nation’s economic development and will surely increase the
coverage of barangay micro business enterprises which in turn is the backbone of small scale
Filipino enterprises that need to be integrated with mainstream economy, through the grant of
the aforesaid incentives and benefits, among others.

Expanding the coverage to PS Million Pesos will encourage Filipinos to engage in micro
businesses as they will be able to avail of 1.) income tax exemption from income arising
from the operations of the enterprise; 2.) and exemption from the coverage of the
minimum wage law. This will eventually help encourage equal employment opportunities
for all and in the process help allevi

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

ERICO’S. SANDOVAL IL
Representative, Lone District of Malabon City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEETH CONGRESS
First Regular Session

HOUSE BILL NO. 5582

—..]ss
Introduced by Representative Federico S. Sandoval II

AN ACT EXPANDING AND PROMOTING THE COVERAGE AND
ESTABLISHMENT OF BARANGAY MICRO BUSINESS
ENTERPRISES (BMBEs) PURSUANT TO REPUBLIC ACT NO. 9178
AND AMENDING FOR SAID PURPOSE SECTION 3 OF REPUBLIC
ACT NO. 9178

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

Sec. 3. Definition of Terms. — As used in this Act, the following terms shall mean: (a)
“Barangay ss. Enterprise,’ nafter referred to as BMBE, refers to any
business entity o or enterprise engaged in Production, processing or manufacturing of
products or commodities, including agro-processing, trading and services, whose total assets
including those arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Five Million Pesos
(P_5,000,000.00). The above definition shall be subject to review and upward adjustment by
the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act
No. 8289,

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

Approved,