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

SIXTEENTH CONGRESS
First Regular Session

House Bill No. 2418

Introduced by HON. LINABELLE RUTH R. VILLARICA
4TH DISTRICT, BULACAN

EXPLANATORY NOTE

There should be a relentless effort to fight poverty and its residual effect on the general
population. A successful program of government institutionalized for this purpose will effectively
decimate this social problem. The State, in coordination with the private sector, should be at the
forefront in this undertaking for this purpose.

Presently, however, instilling the spirit of entrepreneurship among the poor to motivate them to
initiate income-generating activities leaves much to be desired. For this purpose, the State can provide
for the appropriate environment for entrepreneurship to flourish. The private sector can facilitate the
conduct of entrepreneurial services to the poor. Each of them has a unique contribution for this
undertaking to be effectively implemented.

This proposed bill seeks to articulate entrepreneurship by implementing a micro-enterprise
development strategy which will empower the poor to achieve income security, among others. For this
purpose, a Micro Development Accreditation Centers (MICRODEVs) will be established.

Support for the enactment of this measure is earnestly requested.

Mile

REP. LINABELLE RUTH R. VILLARICA


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

SIXTEENTH CONGRESS
First Regular Session

House Bill No __ 2418

Introduced by HON. LINABELLE RUTH R. VILLARICA
_ _ 4TH DISTRICT, BULACAN ee
AN ACT GOVERNING THE CREATION AND ACCREDITATION OF MICROENTERPRISES
DEVELOPMENT INSTITUTIONS AND FOR OTHER PURPOSES

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

SECTION 1, Title. - This Act shall be known as the “Micro-enterprises Development
Institutions Act of 2013”.

SEC. 2. Declaration of Policy. - Iv is hereby declared 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 its minimum basic needs including income security, Pursuant to this policy, the
government shall support and work in partnership with qualified institutions in the private sector
providing general and other entrepreneurial services to the poor.

SEC. 3. Definition of Terms. - For purposes of implementing this Act, the following definitions
shall apply

(a) MICRODEY Accreditation Center refers to the entity created under Section 7 of this Act.

(b) Micro enterprises Development Strategy refers to a social reform program to empower the poor,
manage risks and vulnerabilities and thereby improve their asset base and expand access to micro-
finance services, such as micro-credit, micro-insurance, micro-savings, health care and micro-housing
through a broad package of financial, business and human development services and other non-
financial services, including education to enable them to live productive lives.

(c) Micro finance refers to the provision of a broad range of financial services exclusively for the poor
to improve the asset base of households and expand their access to savings and enable them to raise
their income levels and living standards.

(d) Networth refers to the difference between total assets and total liabilities of an entity.


(e) Poor refers to individuals and families whose income fall below the poverty threshold as defined by
the National Economic and Development Authority (NEDA) or those who cannot afford in a sustained.
manner to provide their minimum basic needs of food, health care, education, housing and other
essential amenities of life as defined by Republic Act No. 8425, otherwise known as the “Social
Reform and Poverty Alleviation Act”.

(D) Regulatory Authorities refer to the entities as designated under Section 9 of this Act.

(g) Social Reform refers to the continuing process of addressing the basic inequalities in Philippine
society through a systematic, unified and coordinated delivery of socio-econiomic programs or
packages

SEC. 4. Recognition of Micro-enterprises Development Institutions (MICRODEVs). -
MICRODEVs are hereby recognized as institutions mandated to implement a micro-enterprise
development strategy, MICRODEVs shall be operated as non-stock, non-profit corporations in
accordance with the Securities and Exchange Commission (SEC) rules and regulations and provisions
of Title XI (Non-Stock Corporations) of Batas Pambansa Blg, 68, otherwise known as “The
Corporation Code of the Philippines”. ‘These shall be governed by a Board of Trustees whose members
shall not receive compensation: Provided, That no part of the net income of MICRODEVs inure to the
benefit of the members, trustees, directors or officers: Provided, further, That the administrative
expenses shall in no case exceed thirty percent (30%) of the total expenses within a taxable year;
Provided, finally, That the administrative expenses shall conform with the rules and regulations to be
prescribed by the Department of Finance (DOF) upon the recommendation of the Bureau of Internal
Revenue (BIR).

SEC. 5. Powers and Functions of a MICRODEY. - A MICRODEY shall exercise such powers
and functions and undertake such activities in accordance with the policies, programs and services
provided in this Act. It shall:

(a) Provide the poor access to reasonable and affordable credit and related services including micro-
finance, micro-insurance, health care and micro-housing:

(b) Provide business development opportunities such as leadership training and entrepreneurial skills
training; and

(©) Provide human development services to help the poor achieve a level of sustainability and
empowerment and adopt measures to promote a spirit of generosity and selfless giving among
individuals and institutions that would help support all programs directly involved in poverty
eradication.

Any accredited MICRODEV shall not undertake deposit-taking activities, engage in the
insurance business and carry out fund management activities without the necessary license and
authority from the relevant regulatory agencies.


For the purpose of implementing this provision, deposit-taking does not include taking of funds
from current pr prospective borrowers for the purpose of equity build-up of an individual borrower's
own loans. A MICRODEV shall be a net lender at all times, wherein net loans mean total loans minus
total equity build-up

SEC. 6. Capital Requirements. - A MICRODEV shall have a net worth of twenty million pesos
(Php 20,000,000,00), or in the case of newly organized MICRODEVs, an initial net worth of ten
million pesos (Php 10,000,000.00),

SEC. 7. Creation and Composition of the Accrediting Emity. - An accrediting entity to be
known as the MICRODEV Accreditation Center shall be created under the National Anti-Poverty
Commission (NAPC) to perform the functions provided herein. It shall be composed of the following:

(a) The President of the NAPC or designated representative;
(b) The Secretary of the DOF or designated representative;

(c) The Secretary of the Department of Trade and Industry (DTI) or designated representative;

(d) The Governor of the Banko Sentral ng Pilipinas (BSP) or designated representative;

(e) The Chairperson of the SEC or designated representative; and

(f) The President of the Micro-Finance Council of the Philippines (MFCP) or designated representative

‘The MICRODEV Accreditation Center shall be assisted by a Secretariat in the performance of
its functions, Funding for its operation shall be sourced from the two percent (2%) tax proceeds from
MICRODEVs to be remitted to the People's Development Trust Fund established under Republic Act
No, 8425, as provided for in Sub-paragraph (a), Section 10 of this Act.

SEC. 8. Powers and Functions of the Accrediting Facility, - The MICRODEV Accreditation
Center established under this Act shall have the following functions and responsibilities:

(a) Institute and operationalize a system of accreditation for MICRODEVs,

(b) Issue certificate of accreditation as a MICRODEV to a non-stock and non-profit corporation
applicant: Provided, That the certificate of accreditation shall be valid only for such period as may be
prescribed under the implementing rules and regulations of this Act: Provided, further, That no
application shall be processed for accreditation as 2 MICRODEV unless the applicant enterprise
secures a valid registration or license with the government agency that exercises regulatory function
over such corporation;

(c) Monitor the performance of MICRODEVs to ensure compliance with the provisions of this Act and
its implementing rules and regulations;

(d) Suspend or revoke any certificate of accreditation upon determination that a MICRODEY no longer
meets the criteria for accreditation;

(e) Require regular submission of reports by MICRODEVs,

(f) Collect reasonable accreditation and monitoring fees from a MICRODEV which shall be used for
the accrediting entity's operational requirements;

rs


(g) Submit an annual report to the President of the Philippine and the concerned committees of both
Houses of Congress; and

(h) Perform such other functions as may be necessary to accomplish the purposes and objectives of this
Act,

SEC. 9. Power of the Regulatory Authorities to Examine MICRODEVs. - The BSP and the
Insurance Commission, in coordination with the accrediting entities, shall have the power to examine
the operations of MICRODEVs, solely for the purpose of determining that MICRODEVs are not
engaged in unauthorized undertakings or activities which are subject to their respective regulations

SEC. 10. Taxation of Accredited MICRODEVs. - The taxation of MICRODEVs shall be as
follows:

(a) The MICRODEY shall be deemed within the coverage of Section 30(G) of Republic Act No. 8424,
as amended, otherwise known as the “National Internal Revenue Code (NIRC) of 1997”,

(b) The MICRODEVs shall pay two percent (2%) of the gross income from its activities conducted for
profit in lieu of all national and local taxes which shall be remitted to the National Government. The
tax proceeds shall form part of the disbursable portion of the People's Development Trust Fund
established under Republic Act No, 8425. The term “gross income” shall mean gross receipts less sales
returns, allowances, discounts and other costs and expenses necessarily incurred to provide the services
required by the customers and clients including salaries and employee benefits of personnel,
consultants and specialists directly rendering the service and cost_ of supplies. Interest expenses on
borrowings for ending services of a MICRODEV shall be deductible from gross receipts as part of cost
of services in arriving at gross income, The term gross income shall exclude donations;

(c) Donations to the MICRODEY shall be fully deductible from the gross income of the donor subject
to the conditions of Section 34 (c) of Republic Act No. 8424, as amended, Provided, however, That the
accreditation of the MICRODEV by the accrediting entity under this Act shall be sufficient;

(d) Donations to the MICRODEY shall be exempt from donor's tax subject to the qualifications of
Section 101 of Republic Ac No. 8424, as amended. Provided, That for purposes of utilization,
accreditation granted under this Act shall be sufficient; and

(e) Transactions of the MICRODEYV and its clients shall be exempt from documentary stamp tax,

SEC. 11, Implementing Rules and Regulations. - The NAPC, in coordination wht the DOF, BIR,
BSP, DTI, and MFCP, shall formulate the implementing rules and regulations (IRR) of this Act, within
ninety (90) days after its approval. The IRR shall take effect fifteen (15) days after its publication in a
newspaper of general circulation in the Philippines

SEC. 12. Penalty Clause - If the BSP or the Insurance Commission finds, pursuant to its power
under Section 9 of this Act, MICRODEVs engaging in unauthorized undertakings or activities, the
BSP or the Insurance Commission, may impose administrative sanctions including, but not limited to
issuance of an order requiring the MICRODEV and/or the directors and/or officers concerned to cease
and desist from the indicated practice or violation, and may further order that immediate action be

4


taken to correct the conditions resulting from such violation. The cease and desist order shall be
immediately effective upon service of such order to the respondents.

Further, MICRODEVs and/or its directors and/or officers found to be engaged in unauthorized
undertakings and activities shall be subject to criminal and administrative fines as provided for under
Sections 36 and 37 of Republic Act No. 7653 or the New Central Bank Act, and in case of unauthorized
activities regulated by the Insurance Commission, be liable under the applicable insurance laws.

SEC. 13. Separability Clause. - The provisions of this Act are hereby declared to be separable
If any provisions of this Act shall be held unconstitutional, the remainder of the Act not otherwise
affected shall remain in full force and effect.

SEC. 14. Repealing Clause. - All executive orders, rules and regulations or parts thereof which
are contrary to or inconsistent with this Act are hereby repealed, amended or modified accordingly.

SEC. 15. Effectivity Clause. - This Act shall take effect after fifteen (15) days from its
publication in at least two (2) newspapers of general circulation

Approved,