Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 1981 
Introduced by REPRESENTATIVE RICARDO S. CRUZ, JR. 
EXPLANATORY NOTE 
Persistence, optimism, and being hardworking are often associated with 
Filipino culture, and the same can be said when it comes to describing the 
characteristics of business owners in the Philippine setting. While Micro, Small, and 
Medium Enterprises may have access to affordable financing, the costs and interests 
related to it may be prohibitive. Business loans are an important accessory for 
getting funds to boost business, and the State should likewise institutionalize a 
micro-financing program with a simplified process that can provide members of the 
working class in need of capital with sufficient funds to start their own businesses.  
The Philippine Statistics Authority (PSA) in 2021 recorded a total of 
1,080,810 business enterprises operating in the country. Of these, 1,076,279 
(99.58%) are MSMEs and 4,531 (0.42%) are large enterprises. Micro enterprises 
constitute 90.54% (978,612) of total establishments, followed by small enterprises 
at 8.63% (93,230) and medium enterprises at 0.41% (4,437).1 In terms of value 
added, the MSME sector contributed 35.7% of the total with manufacturing 
contributing the largest share of 6.87%. Wholesale and retail trade and repair 
contributed 6.58% followed by financial intermediation with a share of 6%. Within 
the sector, small enterprises accounted for the largest share of 20.5%. Medium 
enterprises followed with a share of 10.3% while micro enterprises registered a 
share of 4.9%. Among small enterprises, wholesale and retail trade and repair 
contributed the most with a share of 4.07% followed by manufacturing with a share 
of 3.82% while financial intermediation was next with a share of 3.35%.2 
It is evident that MSMEs largely contribute to our country’s economic 
performance, however, our micro-entrepreneurs are not provided adequate 
assistance by the government. No other country has as extensive a grassroots 
2 https://www.dti.gov.ph/resources/msme-statistics/ 
1 https://www.dti.gov.ph/resources/msme-statistics/ 
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business like ours in terms of its social and economic system. Notably, there are 
some 1,300,000 sari-sari stores nationwide and are visited by 94% of the 
population.3 The sari-sari store is a common part of Filipino life in which it is an 
innovative business venture that generates income with a minimal capital outlay.  
The increasing number of micro enterprises in the country has significantly 
afforded livelihood opportunities especially for struggling Filipino households. 
Retail stores, widely known as sari-sari stores have flourished in the Philippines. 
Sari-sari stores are Micro Enterprises. Economic research shows that a robust MSME 
sector could bring higher income growth, greater employment of domestic 
resources, more gainful integration with global and regional trade and investment, 
and greater equity in access, distribution and development.4 In many countries who 
have exhibited exceptional economic growth in recent years, MSMEs are a big part of 
their economic success.5 
This is one program inspired and adopted by MSME programs by our 
neighboring Southeast Asian countries. The proposed measure further creates a 
comprehensive development and assistance program for MSMEs, which is national 
in scope but tailored fit for each administrative region. The goal of the program is to 
give access to capital to small proprietors, ensure the success of their MSMEs, and 
transform these MSMEs into five-star businesses by providing them with assistance 
and the necessary resources in order to help their businesses flourish. Puhunan 
Tungo sa Kaunlaran (PTK) Act embodies the Filipino Bayanihan spirit and sense of 
community where every Filipino would lend a hand to help each other out. Thus, 
collectively progressing economically. 
In view of the foregoing, approval of this bill is strongly recommended. 
RICARDO S. CRUZ JR. 
5 International Finance Corporation, MSMEs: International Comparisons, 2010.  
4 http://opinion.inquirer.net/12421/smes-for-inclusive-growth , last accessed 15 July 2019. 
3 https://app.adpc.net/news/never-too-small-for-hope-part-i-sari-sari-store/ 
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 1981 
Introduced by REPRESENTATIVE RICARDO S. CRUZ, JR. 
AN ACT INSTITUTIONALIZING MICROFINANCE PROGRAMS AND ACCESS TO 
CAPITAL TO SUPPORT AND GROW MICRO ENTERPRISES, APPROPRIATING 
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 “Puhunan Tungo sa 
Kaunlaran (PTK) Act.” 
SECTION 2. Declaration of Policy. – It shall be the policy of the State to 
promote genuine inclusive growth and alleviate poverty. It is likewise the policy of 
the State to promote a just and dynamic social order that shall ensure prosperity, 
promote  full employment, a rising standard of living and an improved quality of life 
for all. In  pursuit of this, the State shall endeavor to develop a program that will 
ensure that all  of its citizens are equipped with or can readily access the necessary 
capital to pursue opportunities and uplift their lives. 
All sectors of the economy and all regions of the country shall be given 
optimum opportunity to develop. The development of Micro, Small, and Medium 
Enterprises (MSMEs) in all productive sectors of the economy–private enterprises, 
including  corporations, cooperatives, and similar collective organizations–shall be 
encouraged  to create livelihood for Filipinos and create a broader tax base. 
Disadvantaged sectors  of the society and economy, such as public market vendors 
and owners of micro-enterprises, shall be priority targets of government assistance. 
SECTION 3. PTK Five-Star Program. – The Department of Trade and 
Industry (DTI), in coordination with the Department of Interior and Local 
Government (DILG), Department of Agriculture (DA), Department of Science and 
Technology (DOST), Department of Tourism (DOT), National Economic and 
Development Authority (NEDA), and the Technical Education and Skills 
Development Authority (TESDA), shall develop a comprehensive program for the 
development of micro, small and medium enterprises (MSMEs) in all regions of the 
country. The goal of the program is to give access to capital to small proprietors, 
ensure the success of their MSMEs, and transform these MSMEs into five-star 
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businesses by providing them with assistance and the necessary resources in order 
to help their businesses flourish.   
 
The DTI shall be guided by the following principles in the development of the 
PTK Five-Star Program: 
 
a.​ The Program shall be national in scope but shall be tailored fit to the 
business environment, market demands and available resources of each 
administrative region; 
 
b.​ The DTI shall create a registry of all MSMEs per region based on their size 
category (i.e., micro, small or medium) and business area (i.e., agriculture, 
livestock, fisheries, food processing, fabric and clothing, eco-tourism 
activities, pottery and handicrafts, furnitures and hardwood, information 
and technology, etc.); 
 
c.​ Each region shall choose a maximum of five (5) priority business areas to 
develop in order to reap the benefits of efficiency and specialization; 
 
d.​ As much as possible, each region shall be encouraged to choose a 
diversified priority business portfolio in order to hedge for risks brought 
about by natural calamities and changing market demands;  
 
e.​ To facilitate the implementation of this Act, each region shall establish a 
proprietor’s guild for each of their priority business areas;   
f.​ Free technical and administrative support, including, but not limited to, 
product development, skills and leadership training, packaging and design, 
quality control, market promotion, client or supplier matching, and 
financial literacy and planning, shall be made available to MSMEs falling 
under the five (5) priority business areas in their respective regions; 
 
g.​ Every year, the five (5) top-performing enterprises per size and category in 
each region shall receive a Five-Star award and shall be eligible for grants, 
not less than ten percent (10%) of their current capital, to be used solely 
for further business capitalization; 
 
h.​ Every medium-sized enterprise that evolves into a large enterprise 
through the help of the PTK Five-Star Program shall likewise be eligible for 
a one-time grant of Twenty-Five Thousand Pesos (Php 25,000) to be used 
solely for further business capitalization; and 
 
i.​ There shall be a mandatory review of the PTK Five-Star program every 
three (3) years in order to ensure that the program meets the present 
market demands. 
 
SECTION 4. PTK Assistance Program. – In addition to the PTK Five-Star 
Program, the DTI, in consultation with the National Anti-Poverty Commission 
(NAPC) and the Bangko Sentral ng Pilipinas (BSP), shall develop a cash assistance 
program catering exclusively to micro-enterprises in need of capital, whether or not 
they fall under the priority business areas of their respective regions under the 
previous section. 
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​
The DTI shall be guided by the following principles in the implementation of 
the program:  
 
a.​ The assistance shall be extended only to beneficiaries who have satisfied 
the requirements under this Act; 
 
b.​ Each cash assistance shall be from Five Thousand Pesos (Php 5,000) to 
Fifty Thousand Pesos (Php 50,000), depending on the number of 
employees, number of years in business, financial hardship, and such other 
criteria as determined by the DTI. The DTI is hereby authorized to amend 
these amounts, after the mandatory review provided in this Act, in order 
to meet present market demands; 
 
c.​ Priority shall be given to micro-enterprises falling under the priority 
business areas of their respective regions, particularly the public market 
vendors to strengthen their financial capabilities and improve public 
services; 
 
d.​ There shall be a mandatory review of the program every three (3) years in 
order to ensure that the program meets the present market demands. 
 
In the pursuit of inclusive growth and poverty alleviation, pertinent rules and 
regulations promulgated in the implementation of this Act shall provide for the 
details, conditionalities, and other schemes in the operationalization of the program, 
such as, but not limited to, penalty rates upon default and the dispensation of the 
proceeds from the program.   
 
SECTION 5. Eligibility for Financial Assistance Program. – To qualify for 
the program under this Act, the beneficiary must be: 
 
a.​ At least eighteen (18) years of age; 
 
b.​ Each natural person shall receive financial assistance under this Act only 
once, notwithstanding the number of businesses owned; 
 
c.​ A member in good standing of the duly-registered cooperative or 
association, or a resident of the local government unit (LGU), from which 
he/she intends to avail of the financial assistance; 
 
d.​ Delivery of the program shall be through partner institutions which are 
cooperatives and/or associations that are registered with the Cooperative 
Development Authority (CDA), or the Securities and Exchange Commission 
(SEC), and the DTI. In the absence of such participating partner 
institutions in the area, government institutions, centers or facilities, now 
existing or may be created by law, which are dedicated to the promotion of 
inclusive growth and anti-poverty objectives, are mandated to implement 
the program; 
 
e.​ The partner institution shall have a mechanism, whereby cash assistance 
are made on a weekly or monthly basis; 
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f.​ Willing to state under oath the facts establishing the foregoing;  
 
g.​ Comprehensive feasibility study of the business proposal; and 
 
e. Has attended a DTI-accredited livelihood seminar, as evidenced by a 
certificate of participation, and possesses credit-worthiness, as likewise 
proven by a certificate issued by the DTI for that purpose. 
 
SECTION 6. Registration of Cooperatives and Associations. – The DTI shall 
keep a registry of all participating cooperatives and associations for monitoring and 
record keeping purposes. Cooperatives and associations which are eligible to 
participate in programs provided for in this Act must register to be included in the 
database. 
 
SECTION 7. Local Government Unit Participation. – Local Government 
Units may partner with the DTI for the efficient implementation of this Act. 
 
Any law, executive order, department order, ordinance and the like, to the 
contrary notwithstanding, local government units, through the local sanggunian, as 
defined in the 1991 Local Government Code, are hereby authorized to provide a 
financial assistance program in cooperation with the cooperatives/ associations, 
non-governmental organizations, and peoples’ organizations that are providing  
assistance to MSMEs within their jurisdiction. 
 
Provided, that in cities or municipalities where there are no such 
cooperatives/ associations, the local government unit shall, within one year from the 
effectivity of this Act, require the municipal/city social welfare and development 
office or the local trade and industry office or livelihood development office in the 
city or municipal government concerned, to develop and implement a cash 
assistance program consistent with the provisions of this Act, under the supervision 
of the DTI. 
 
Provided, further, that each participating LGU must prepare a comprehensive 
feasibility study for the development of a financial assistance program. Each LGU 
must fund, from its internal revenue allotment, at least Five Million Pesos (Php 
5,000,000), where possible and practicable, or Thirty Percent (30%) of the total 
funding cost related to small business improvement, agricultural improvement, 
institutional advancement and consumer protection, whichever is higher. Likewise, 
for this purpose, the LGU shall maintain a separate and dedicated office which shall 
be responsible for the over-all implementation of the program in the locality. 
 
SECTION 8. Tax Exemption for Private Support. – Any person or corporate 
entity may donate funds, equipment, materials or services for the improvement of 
the PTK Five-Star and/or PTK Assistance program. Such donations shall be done 
through a memorandum of agreement between the cooperative or association, LGU, 
and the donor. The agreement shall expressly state the value of the donated funds, 
materials, or services.  
 
All income, legacies, gifts, and donations for the benefit of the program shall 
be exempt from the payment of all forms of taxes, fees, assessments, and other 
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charges of the government, its branches, and subdivisions. Subject to the issuance of 
the appropriate revenue regulations by the Bureau of Internal Revenue, the value of 
the donation shall also be deductible as an expense in the determination of the 
taxable income of any donor. 
 
SECTION 9. Funding. – The total amount of One Hundred Billion Pesos (Php 
100,000,000,000) for the next two (2) years upon implementation of this Act, or 
Fifty Billion Pesos (Php 50,000,000,000) per year for the next two years upon 
implementation of this Act, shall be appropriated for the initial implementation of 
the PTK Five-Star Program and the PTK Assistance Program. Said amount shall at all 
times be divided equitably among each administrative region of the country. 
Thereafter, such sums as may be necessary shall be included in the General 
Appropriations Act. 
 
In addition, the amount of Five Hundred Million Pesos (Php 500,000,000) is 
hereby appropriated as a Special Development Fund to generally support the initial 
implementation of this Act. 
 
The funds shall be held in trust by the DTI in collaboration with the 
Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP) and 
other government financial institutions. The DTI may likewise allocate a portion of 
the funds to the People’s Development Trust Fund (PDTF) under Republic Act No. 
8425, provided that the funds to be allocated to the PDTF shall be used solely for 
microfinance-related organizing activities. 
SECTION 10. Primary Implementing Government Agency. – The DTI shall 
be the lead agency, which shall ensure the implementation of this Act.  
 
SECTION 11. Role of Government Financial Institutions. – All government 
financial institutions (GFIs) shall set aside funding for microfinance operations to 
complement the purposes of this Act. Participating government financial institutions 
shall include the DBP, LBP, and other GFIs. 
 
SECTION 12. PTK Task Force. – There shall be a PTK Task Force in charge of 
coordinating with banks and financial institutions on their existing programs on 
microfinancing. This shall be consolidated and submitted to DTI to be taken into 
consideration for the PTK Assistance Program. 
 
SECTION 13. Reports. – The DTI Secretary shall submit to the President of 
the Philippines, the President of the Senate and the Speaker of the House of 
Representatives, an annual accomplishment report on projects covered in this Act, 
detailing the amount of appropriations released by end of the calendar year, the 
extent of the work accomplished, further work to be done, and any 
recommendations for additional appropriations or charges thereof.  
 
SECTION 14. Full Financial Disclosure, Accountability and Transparency. 
– The DTI, as lead agency of the program, and the LGU concerned shall quarterly 
publish, print, and disseminate at no cost to the public and in an accessible form, in 
conjunction with Republic Act No. 9485, otherwise known as the “Anti-Red Tape Act 
of 2007”, and through their websites, timely, true, accurate, and updated key 
information relating to the program. Likewise, they shall endeavor to translate key 
information and present them in popular form and means. 
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SECTION 15. Implementing Rules and Regulations. – The DTI, in 
consultation with relevant government agencies, shall prepare such rules and 
regulations for the proper and effective implementation of this Act, within sixty (60) 
days from the date of publication.  The DTI shall publish such rules and regulations 
once a week for two (2) consecutive weeks in two newspapers of general circulation. 
 
SECTION 16. Separability Clause. – If any provision of this Act is declared 
unconstitutional, the same shall not affect the validity and effectivity of the other 
provisions hereof. 
 
SECTION 17. Repealing Clause. – All laws, decrees, orders, issuances or 
portion thereof, which are inconsistent with the provisions of this Act are hereby 
repealed or modified accordingly. 
 
SECTION 18. Effectivity – This Act shall take effect fifteen (15) days after its 
publication in two (2) newspapers of general circulation. 
 
 
​
Approved, 
8