14" CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
) 
) 
7 Jij1.J 30 7 7 '1.. ! 
First Regular Session 
) 
Introduced by Senator Ramon Bong Revilla, Jr. 
EXPLANATORY NOTE 
This bill strengthens R.A. No, 6977, the Magna Carta for Small Enterprises. The 
focus of the amendments of this bill rest on three points: guidelines, institutional support 
and organizational support. Guidelines refer to the specific asset size definition, 
appropriating a definite and regular amount for the Small and Medium Enterprises 
Development (SMED) Council and increase in the mandatory allocation to lending 
activities, Institutional support comprises of additional government agencies to 
coordinate SME efforts and formalization of the SME Development Plan. Lastly, 
organizational support to intensify the powers and increase capitalization of the Small 
Business and Guarantee Finance Corporation to complement the growing demands for 
financing. Other features of the bill include formalizing the celebration of the Micro, 
Small and Medium Enterprise (MSME) Week and recognition of outstanding MSMEs. 
R.A. No. 6977 was passed into law in 1991 to promote, develop and assist small 
and medium scale enterprises through the creation of a Small and Medium Enterprise 
Development (SMED) Council, and to rationalize government assistance, programs and 
agencies concerned with the development of small and medium enterprises. The passage 
of this law signaled awareness and recognition of a much-needed policy base to support 
the growth of SMEs. By outlining guidelines for institutional support to improve 
productivity, upgrade of technologies, lower the cost of doing business and expand access 
to financing, government has laid the foundation for a national agenda to economic 
progress. 
ARer fifteen (15) years, strengths and weaknesses are now apparent. Despite the 
growth of the sector due to the passage of RA No. 6977 in 1991, the sector still faces 
limitations in delivering expected benefits to the economy. Areas needing attention are 
lack of access to financing, inefficient operating practices, insufficient technology and 
technical knowledge and lack of access to markets. By providing an enabling 
environment to SMEs, the potential of the sector could be maximized. 
The sustainability of SMEs is a priority of government because of its significant 
contributions to income and employment generation, hence a lending sector in 
stimulating economic development. SMEs account for 69.1% of employment, comprise 
99.6% of all registered companies and contribute 32% value added to the economy, 
making these enterprises indispensable to overall growth. 
In view of the foregoing, the passage of this bill is 
estly requested. 
#fl,m.


~ 
Introduced by Senator Ramon Bong Revilla, Jr. 
-~ 
AN ACT 
TO 
PROMOTE 
ENTREPRENEURSEIP 
BY 
STRENGTHENING 
DEVELOPMENT AND ASSISTANCE PROGRAMS TO MICRO, SMALL AND 
MEDIUM SCALE ENTERPRISES, AMENDING FOR THE PURPOSE 
mPUBLIC ACT NO. 6977, AS AMENDED, OTHERWISE KNOWN AS THE 
"MAGNA CARTA FOR SMALL ENTERPRISES AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and the House of Representatives of the Republic of the 
Philippines in Conqess assembled: 
SECTION 1. Tifle. - This Act shall be known as the Magna Carta for MICRO, SMALL 
and medium Enterprises. 
SECTION 2. All references to Small and Medium Enterprises (SMEs) in this Act shall 
be changed accordingly to Micro, Small and Medium Enterprises (MSMSs). 
SECTION 3. Section 3 of Republic Act No. 6977 is hereby amended to read as follows: 
" SECTION 3. MICRO, Small and Medium Enterprise as Beneficiaries - 
'MICRO, Small and Medium Enterprise' shall be defined as any business activity 
or enterprise engaged in industry, agribusiness and/or services, whether single 
proprietorship, cooperative, partnership or corporation whose total assets, 
inclusive of those arising from loans but exclusive of the land on which the 
particular business entity's ofice, plant and equipment are situated, must have 
value falling under the following categories: 
Micro 
Medium 
"The above definitions shall be subject to review and adjustment [by the said 
Council] MOTU proprio BY THE MSMED COUNCILCREATED UNDER 
SECTION 6 OF THlS LAW or upon recommendation of sectoral organization(s) 
taking into account inflation and other economic indicators. The CounciI may use 
as variables the number of employees, equity capital and assert size." 
THE COUNCIL SHALL ENSURE THAT NOTWITHSTANDING THE PLANS 
AND PROGRAMS SET FOR MSMES AS A WHOLE, THERE SHALL BE 
SET AND IMPLEMENTED OTHER PLANS AND PROGRAMS VARIED 
AND DISTINCT FROM EACH OTHER, ACCORDING TO THE SPECIFIC 
NEEDS OF EACH SECTOR. 
: [less thanP1, 500,001 toP3,000,000 
: P15,OOO 001 to PIOO, 000,000 
Small 
: [PI, 500,001 -PIS, 000,0001 P3, 000,001 to P15, 000,000 
SECTION 4. Section 5 of Republic Act. No. 6977 is hereby to read as follows: 


“SECTION 5. Gui&ng principles. - To set the pace for MICRO, small and 
medium enterprises development, the State shall be guided by the following 
principles, 
xxx 
“(e) Coordination of Government efforts. - Government efforts shall be 
coordinated to achieve coherence in objectives. All appropriate offices, 
particularly those under the Departments of Trade and Industry, Finance, 
Budget and Management, Agriculture, Agrarian Reform, Environment and 
Natural Resources, Labor and Employment, Transportation and 
Communication, Public Works and Highways, Science and technology, 
INTERIOR AND Local Government and Tourism as well as the National 
Economic and Development Authority, PHEIPPINE IMFORMATION 
AGENCY and the Bangko Sentral ng Pilipinas, through their national, 
regional and provincial offices, shall to the best of their effort and in 
coordination with local government units, provide the necessary support 
and assistance to MICRO, small and medium enterprises. 
xxx 
SECTION 5. A new section, numbered Section 6 is hereby inserted after Section 5 of 
RA 6977, to read as follows: 
SECTION 
6. 
MZCRO, 
SMALL 
AND 
MEDIUM 
ENTERPRISES 
REPUBLIC OF THE PHILIPPINES SHALL APPROVE A ROLLING THREE- 
YEAR MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT 
PLAN PREPARED BY THE MICRO, SMALL AM) MEDIUM ENTERPRISE 
COUNCIL THROUGH THE DEPARTMENT OF TRADE AND INDUSTRY 
WHICH SHALL FORM PART OF THE MEiDIUM TERM PHlLIPPINE 
DEVELOPMENT PLAN (MTPDP). IT SHALL BE FORMULATED IN 
CONSULTATION WITH THE PRIVATE SECTOR, VALIDATED AND 
UPDATED SEMESTRALLY. 
DEVELOPMENT PLAN (1MSMEDP). - THE PRESIDENT OF THE 
SECTION 6. Section 6 of Republic Act No. 6977 is hereby amended to read as follows: 
“SECTION 7. [Creation of a Small and Medium Enterprise Development 
Council/ MICRO, SMALL AND MEDIUM EMTERPKISE COUNCIL - THE 
EXISTING SMALL AND MEDIUM ENTERPRSE DEVELOPMENT 
COUNCIL, WHICH WAS CREATED BY REPUBLIC ACT NO. 6977, AS 
AMENDED BY REPUI3LIC ACT NO. 8289, SHALL BE STRENGTHENED 
TO effectively spur the growth and development of small and medium enterprises 
throughout the country, and to carry out the policy declared in this Act, a Small 
and Medium Enterprise Development (SMED) Council is hereby created] 
SHALL NOW BE KNOWN AS THE MICRO, SMALL AND MEDIUM 
ENTERPRISE DEWLOPME” COUNCIL. The Council shall be attached tot 
eh department of trade and Industry and shall be constituted within sixty (60) days 
after the approval of this Act. 
xxx 
SECTION 7. Section 7 of republic Act no. 6977 is hereby amended to read as follows: 


“SECTION 8. COMPOSITION - The Council shall be headed by the Secretary 
of trade and Industry as chairman, and may elect fiom among themselves a Vice 
Chairman to preside over the Council meetings in the absence of the Chairman. 
The members shall be the following: 
“(a) Director General of the national Economic and Development Authority; 
“(b) Secretary of Agriculture; 
“(c) Secretary of Labor and Employment; 
“(d) Secretary of [Environment and Nafural Resources] INTERIOR AND 
LOCAL GOVERNMENT; 
“(e) Secretary of [Science and technology] E ” M E N T  AND NATURAL 
RESOURCES; 
‘‘(0 Secretary of [tourism] SCIENCE AND TECHNOLOGY; 
“(g) [Chairman of the Monetary Board] SECRETARY OF TOURISM; 
“(h) Chairman of [Small Business Guarantee and Finance Corporation] THE 
MONETARY BOARD: 
“(i) Chairman of [the small and medium enterprises promotion body which the 
President shall undertake to establish under this Act] SMALL BUSINESS 
GUARANTEE AND FINANCE CORPORATION; [and] 
“0) Three (3) representatives from the private sector at large, all Filipino citizens, 
to represent Luzon, Visayas, Mindanao, and one representative from the small and 
medium enterprises sector to be appointed by the President; AND 
“(k) A representative from the private banking sector to serve alternately among 
the Chamber of Thrift Bank; the Rural Bankers’ Association of the Philippines 
(RBAP); and the Bankers’ Association of the Philippines PAP). 
ALL MEME3ERS OF THE COUNCIL SO APPOINTED, EXCEPT FOR THE 
EX OFFICIO MEMBERS, SHALL SERVE FOR A TERM OF THREE (3) 
YEARS. THE PERSON SO APPOINTED TO REPLACE A MEMBER WHO 
HAS RESIGNED, DlED, OR REMOVED FOR CAUSE SHALL SERVE ONLY 
FOR THE UN-EXPIRED PORTION OF THE TERM 
“Cabinet-rank ex officio members of the Council shall designee an undersecretary 
or assistant secretary, and the Chairman of the monetary Board or his 
representatives, as their permanent representative in case they fail to attend 
meeting of the Council. 
“The private sector members of the Council shall [initially] receive per diem of 
[One] TWO thousand pesos [(PI, 0001 P2, 000 per meeting, for a maximum of 
twenty-four (24) meetings per year, which [per diem may be adjusted] AMOUNT 
SHALL BE DETERMINED by the Council: provided, that THE AMOUNT AND 
ANY [may such] adjustments hall take effect upon approval of the President. 
xxx 
SECTION 8. Section 8 of Republic Act No. 6077 is hereby amended to read as follows: 


“SECTION 9. POWERSAND FUNCTIONS. -The MICRO, Small and medium 
Enterprise Development Council shall have the following powers, duties and 
fuiictions: 
xxx 
k) to assist in the establishment of modern industrial estates outside urban centers; 
tandl 
1) generally, to exercise all powers and functions necessaly for the objectives and 
purpose of this Act [.I; AND 
M) TO APPROVE THE MSMEDP, COORDINATE, MONITOR AND ASSESS 
THE 
IMPLEMENTATION 
THEREOF, 
AND 
WHEN 
NECESSARY, 
INSTITUTE APPROPRIATE ADJUSTMENTS THEREON IN THE LIGHT OF 
CHANGING 
CONDITIONS 
IN 
BOTH 
THE 
DOMESTIC 
AND 
INTERNATIONAL ENVIRONMENT. 
SECTION 9. A new section, numbered Section 10 is hereby after Section 9 of RA 6977, 
which is now Section 9, to read as follows: 
“SECTION 10. APPROPRIATIONS, - FUNDING OF ACTIVITIES AND 
OPERATIONAL EXPENSES OF THE COUNCIL SHALL BE SUPPORTED 
BY CONTRIBUTIONS FROM THE GOVERNMENT AND THE PFUVATE 
SECTOR. THE AMOUNT OF CONTRIBUTION BY THE GOVERNlWENT 
WILL BE RECOMMENDED BY THE DEPARTMENT OF TRADE AND 
INDUSTRY, UPON CONSULTATION WITH THE DEPARTMENT OF 
BUDGET AND MANAGEMENT, AND APPROVED B THE PRESIDENT. 
THE ANNUAL CONTRIBUTIONS OF THE GOVERNMENT SHALL BE 
INCLUDED IN TI-IE ANNUAL GEmlZAL APPROPRIATIONS ACTS AFTER 
CONSULTATIONS WITH 
THE 
DEPARTMENT 
OFBUDGET 
AND 
MANAGEMENT. 
SECTION 10. Section 10 of Republic Act No. 6977 is hereby amended to read as 
follows: 
“SECTION 12 Rntionnliznt‘on of 
Existing MICRO, Small and Medium 
Enterprises Programs and Agencies. - The Council shall conduct continuing 
review of government programs, for micro, small and medium enterprises and 
submit to Congress and the President a report thereon together with its policy 
recommendations. 
[“the President is hereby also empowered to establish a small and medium 
enterprise promotion body which shall be the principal government agency that 
will formulate, implement, coordinate and monitor all non-financing government 
programs, including fee-based services, to support and promote micro, small and 
medium enterprises. It shall be attached tot eh department of Trade and Industry 
and shall be under the policy, program and administrative supervision of the 
SMED Council. The said office shall receive no less than fifty (50%) of the 
assets, and budgetary allocations of the agencies for promotions, development and 
financing of small and medium enterprises that nay be henceforth dissolved 
and/or abolished and absorbed, incorporated and integrated into the SMED 
Councii.”] 


SECTION 11. Section 11 ofRA no. 6977 is hereby amended to read as follows: 
“SECTION 13. 
Creation of Snzall Business Guarantee and Finance 
Curporntion. - There is hereby created a body corporate to be known as Small 
business Guarantee and Finance Corporation hereinafter referred to as the 
SMALL BUSINESS CORPORATION, which shall [source and adopt 
development initiatives for globally competitive small and medium enterprises in 
terms of finance, technology, production, management and business linkages, and 
provide, promote, develop and widen in both scope and service reach various 
alternative modes of financing for small and medium enterprises, including but 
not limited to, direct and indirect project lending venture capital, financial leasing, 
secondary mortgage and/or rediscounting of loan papers to small business, 
secondary/regional stock markets: Provided, that crop production financing shall 
not be serviced by the Corporation.] SERVE THE FOLLOWING FUNCTIONS 
AND DUTIES: 
A) SOURCE 
AND ADOPT 
DEVELOPMENT 
INITIATIVES 
FOR 
GLOBALLY COMPETITIVE MSMEs IN FINANCE AND BUSINESS 
TECHNOLOGIES. 
B) TO EXTEND ALL FORMS OF FINANCIAL ASSISTANCE THIS MAY BE 
IN THE FORM OF DIRECT LENDING, AND TECHNICAL ASSISTANCE 
TO QUALIFIED AND REGISTERED MSMEs. SB CORPORATION MAY 
ALSO ENGAGE IN WHOLESALE LENDING PROVIDED THAT IT 
SI-LALL NOT IN ANY GIVEN TIME BE MORE THAN FIFTY PERCENT 
(50%) OF ITS TOTAL AVAILABLE LOAN PORTFOLIO. 
C) GUARANTEE LOANS OBTAINED BY QUALIFIED MSMEs UNDER 
SUCH TERMS AND CONDITIONS ADOPTED BY THE [SB] SMALL 
BUSWESS CORPORATION BOARD OF DIRECTORS. 
[“The Corporation shall guarantee loans obtained by qualified small and medium 
enterprises, local and/or regional associations’ small enterprises and industries, 
private voluntary organizations and/or cooperatives, under such terms and 
conditions adopted by its Board. It may guarantee loans up to one hundred percent 
(100%0. It may also provide second level guarantee (i.e. reinsurance) on the 
credit and/or investment guarantees made by credit guarantee associations and 
other institutions in support of small entrepreneurs. 
[“The Corporation shall become liable under its guarantees upon proof that the 
loan has become past due under such terms and guidelines adopted by its Board 
and printed on the contract of guarantee.] 
[“The Small Business Guarantee and Finance Corporation shall:] 
[“(a) be attached to the Department of Trade and Industry and shall be under the 
policy, program and administrative supervision of the SMED Council;] 
[“(b) have its principal place of business in metro manila and endeavor to have 
one or more branch offices in every province of the country;] 
[“(c) exercise its general powers conferred by law upon corporation under the 
Corporation Code as are incidental or conducive to the attainment of the 
objectives of this Act;] 


[“(d) have a board of directors upon to which the powers of the Corporation shall 
be vested, to be composed of nine (9) members including:] 
[“(I) three (3) members of the private sector appointed by the President 
upon recommendation of the SMED Council and from among whom the 
Chairman of the board shall be appointed by the President to serve on full- 
time basis;] 
r(2) the Secretary of Trade and Industry or his Undersecretary; and] 
[“(3) a representative from each of the five (5) government financial 
institutions mandated in this Act to provide the initial capital of the 
Corporation, who shall be designated , under guidelines agreed upon by 
the Board chairmen of the said institutions;] 
[“(e) Notwithstanding the provisions of republic Act No. 6758, and 
comprehensive Circular No. 10 Series of 1989 issued by the Department 
of Budget and Management, the Board of Directors of SBGFC have the 
authority to extend to the employees and personnel thereof the allowance 
and fringe similar to those extended to and currently enjoyed by the 
employees and personnel of other government financial institutions.”] 
SECTION 12. There shall be incorporated after Section 11 of Republic Act No. 6977, 
and renumbered as Section 13 in this bill, new sections to read as follows: 
“SECTION 
14. 
CORPORATE POWERS. 
The 
SMALL BUSINESS 
CORPORATION SHALL BE ADMINSTRATrVELY ATTACHED TO THE 
DEPARTMENT OF TRADE AND INDUSTRY AND SHALL BE UNDER THE 
POLICY AND PROGRAM SUPERVISION OF THE MSMED COUNCIL. IT 
SHALL HAVE ITS PRINCIPAL OFICES IN METRO MANILA AND 
WHENEVER NECESSARY, ESTABLISH BRANCH OFFICES IN THFi 
PROVINCES. 
THE SMALL BUSINESS CORPORATION SHAL EXERCISE ALL THE 
GENERAL POWERS EXPRESSLY CONFERRED BY LAW UPON 
CORPORATIONS UNDER THE CORPORATION CODE, INCLUDING 
THOSE OWNERS THAT ARE INCIDENTAL OR NECESSARY TO THE 
ATTAlNMENT OF THE OBJECTIVES OF THIS ACT. 
FOR THIS PURPOSE, THE SMALL BUSINESS CORPORATION MAY 
ALSO: 
A) HOLD, PURCHASE, LEASE OR OTHERWISE ACQUIiW AND 
OWN REAL AND PERSONAL PROPERTY, INTRODUCE 
NECESSARY IMPROVEMENTS THEREON AND TO SELL, 
MORTGAGE, ENCUMBER OR OTHERWlSE DISPOSE OF THE 
SAME AS MAY BE NECESSARY IN THE NORMAL COURSE OF 
BUSINESS. 
B) APPLY FOR, RECEIW AND ACCEPTS GRANTS AND 
DONATIONS FROM SOURCES WITKIN AND OUTSIDE THE 
COUNTRY ; 
C) HOLD, OWN, PURCHASE, ACQUIRE, SELL, MORTGAGE, 
DISPOSE OR OTHERWISE INVEST OR RE-INVEST IN STOCKS, 
BONDS, TREASURY BILLS, DEBENTURES, SECURITIES AND 


SlMlLAR FORMS OF INDEBTEDNESS OF THE GOVERNMENT, 
ITS 
AGENCIES 
AND 
INSTRUMENTALITIES OR 
ANY 
GOVERNMENT FINANCIAL INSTITUTIONS. 
SECTION 13. There shall be incorporated after the inserted Section 14 a new section to 
read as follows: 
SECTION 15. COMPOSZTION, POWERS AND AUTHORZTY. THE [SB] 
SMALL BUSINESS CORPORATION CORPORATE POWRS SHALL BE 
VESTED ON A BOARD DIRECTOR COMPOSED OF ELEVEN (11) 
MEMBERS WHICH SHALL INCLUDE THE FOLLOWING: 
A) SECRETARY OF TRADE AND INDUSTRY 
B) SECRETARY OF FINANCE 
C) A PRIVATE SECTOR REPRESENTATIVE TO BE APPOINTED 
BY THE, PRESIDENT OF THE PHILE'PINES UPON THE 
RECOMMENDATION OF THE MSMED COUNCIL; 
D) SEVEN (7) REPRESENTATIVES OF [SB] SMALL BUSINESS 
CORPORATION COMMON STOCKS; AND 
E) PRESIDENT OF [SB] SMALL BUSINESS CORPORATION AS EX 
OFFICIO MEMBER AND TO SERVE AS VICE CHAIRMAN OF 
THEBOARD. 
THE PRESIDENT OF THE PHILIPPINES SHALL APPOINT THE 
CHAIRMAN OF THE BOARD FROM AMONG ITS MEMBERS. 
ALL MEMBERS OF THE BOARD, EXCEPT FOR EX-OFFICIO MEMBERS, 
SHALL SERVE FOR A TERM OF THREE (3) YEARS WITHOUT 
REAPPOINTMENT. THE PERSON SO APPOINTED TO REPLACE A 
MEMBER WHO HAS RESIGNED, DIED, OR REMOVED FOR CAUSE 
SHALL SERVE ONLY FOR THE UN-EXPIRED PORTION OF THE TERM. 
THE BOARD OF DIRECTORS SHALL HAVE, AMONG OTHERS THE 
FOLLOWING SPECIFIC POWERS AND AUTHORITIES. 
A) 
TO 
FORMULATE POLICIES NECESSARY 
TO 
CARY 
OUT 
EFFECTIVELY THE PROVISIONS OF THIS CHARTER AND TO 
PRECRIBE, AMEND AND REPEAL BY-LAWS, RULES AND 
REGULATIONS FOR THE EFFECTIVE OPERATIONS OF SB 
CORPORATION: 
B) 
ESTABLISHED SUCH BRANCHES, AGENCIES AND SUBSIDIARLES 
AS MAY BE DEEMED NECESSARY AND CONVENIENT; 
COMF'ROMISE OR RELEASE, IN WHOLE OR IN PART, ANY CLAIM 
OR LIABILITY WHATSOEVER FOR OR AGAINST THE [SB] SMALL 
BUSINESS CORORTATION, INCLUDING INTEREST, PENALTIES, 
FEES AND/OR OTHER CHARGES IN ACCORDANCE TO ITS OWN 
C) 
BY-LAWS AND BANGKO SENTRAL NG PILIPINAS RULES; 
D) FIX THE FEATURES OF NON-VOTING PREFERRED SHARES 
WHICH SHALL BE PRINTED ON THE STOCK CERTIFICATE 
EVIDENCING THE SAME; 


E) EXERCISE ALZ OTHER SUCH POWERS AS MAY BE NECESSARY 
OR INCIDENTAL TO CARRY OUT [SB] SMALL BUSINESS 
CORPORATION PURPOSES. 
SECTION 14. Section 12 of Republic Act No. 6977, as amended, is hereby amended to 
read as follows: 
“SECTION 16. Capitalization and Funding [SB] SMALL BUSINESS 
CORPORATION. - The [Small Business Guarantee and Finance] [SB] Small 
Business Corporation shall have an unauthorized capital stock of [Five] TEN 
billion pesos (F’ [5] 10, 000,000,000. 00). The initial capital of One billion pesos 
(PI, 000,000,000.00) shall be established from a pool of funds to be contributed 
in the form of equity investments in common stock by the Land Bank of the 
Philippines (LBP), the Philippine National Bank (PNB) , the Development Bank 
of the Philippines (DBP) [in the amount of Two hundred million pesos 
(P200,000,000.00). LBP AND DBP SHALL EACH CONTRIBUTE FOUR 
” D R E D  MILLION PESOS (P4, 000,000,000.00), WHILE PNB S W L  
CONTRIBUTE TWO HUNDRED MILLION PESOS ($200, 000,000.00). THE 
TEN BILLION PESOS AUTHORIZED CAPITAL STOCK OF THE SMALL 
BUSINESS CORPORATION SHALL BE DIVIDED INTO 80, 000,000 
COMMON SHARES AND 20,000,000 PREFERRED SHARES WITH A PAR 
THAT THE COMMON SHARES WHICH HAVE BEEN ISSUED, 
INCLUDING THOSE ISSUED AGAINST THE ASSETS OF THE KKI< 
GAUARANTY FUND CONSOLIDATED UNDER THE SMALL BUSINESS 
CORPORATION BY VIRTUE OF EXECUTIVE ORDER NO. 233, SERIES OF 
2000 AND EXECUTIVE ORDER NO. 19, SERIES OF 2001 AND ICLUDING 
THOSE ALREADY SUBSCRIBED, SHALL FORM PART OF THE 
CAPITALIZATION OF THE ORPORATION PROVIDED UNDER, THAT 
PREFERRRED SHARES ALREADY ISSUED UNDER REPUBLIC ACT NO. 
6977, AS AMENDED, SHALL BE CONVERTED INTO COMMON SHARES. 
Additional EQUITY funding shall come from trust placements of excess and 
unused hnds of existing government agencies, bilateral and multilateral oMicial 
development assistance funds, subscriptions from 
government owned or 
controlled corporations, and investments of private financial institutions and 
corporations, PROVIDED, THAT ANY INWSTMENT FROM THE PRIVATE 
SECTOR SHALL ONLY BE IN THE FORM OF PREFERRED SHARES. 
VALUE OF ONE HUNDRED PESOS (pi00.00) PER SHARE: PROVIDED, 
TO ALLOW FOR CAPITAL BUILD-UP, [SB] SMALL BUSINESS 
CORPORATION SHALL BE GIVEN A FIlE (5) YEAR GRACE PERIOD ON 
DIVIDEND 
COMMITMENTS 
BEGINNING 
ON 
THE 
DATE 
OF 
EFFECTIVITY OF THE AMENDMENT. THEREAFTER IT MAY ONLY 
DECLARE AS DIVIDEND NOT MORE THAN 30% OF ITS NET INCOME 
AND THE REST WITHKELD AS RETAINED EARNINGS. 
SECTION 15. There shall be incorporated after the Section 12 of R.A. No. 6977, and 
renumbered as Section 16, a new section to read as follows: 
“SECTION 17. ORGANIZATIONAL STRUCTURE. THE BOARD OF 
DIRECTORS SHALL HAVE THE AUTHORITY TO PROVIDE FOR AN 
ORGANIZATIONAL STRUCTURE AND STAFFING PATTERN FOR 
OFFICERS AND EMPLOYEES OF THE [SB] 
SMALL BUSNESS 
CORPORATION. 


ALL POSITIONS IN THE [SB] SMALL BUSINESS CORPOATION SHALL 
BE GOVERENE!,D BY THE SALARY STANDARDIZATION LAW. 
SECTION 16. There shall be incorporated after the inserted Section 17 a new section to 
read as follows: 
ORDER TO INSTITUTE CONTINUING AWARENESS OF THE PRIMACY 
EMPROVEMENT, ANI> TO CELEBRATE AND SPOUSE THE FIRM 
COMMITMENT OF THE STATE IN THE PROMOTION, GROWTH AND 
DEVELOPMENT OF SMALL BUSINESS, THE SECOND W E K  OF JULY 
OF EVERY YEAR SHALL BE DECLARED AS TWE “MICRO, SMALL AND 
MEDUIM ENTERPRISE DEVELOPMENT WEEIC THE MICRO, SMALL 
AND 
MEDIUM 
ENTERPRISE 
DEVELOPMENT 
COUNCIL, 
THE 
DEPARTMENT OF TRADE AND INDUSTRY, AND THE SMALL 
BUSINESS [GUARANTEE AND FINANCE] CORPORATION SHALL BE 
JOINTLY ESPONSBLE IN ORGANIZING ACTIVITIES FOR THE EVENT. 
OF SMALL BUSINESS IN NATION-BUILDING AND IN PEOPLE 
SECTION 17. There shall be incorporated aRer the the inserted Section 18 a new section 
to read as follows: 
“SECTION 19. PRESIDENTIAL A WARDS FOR OUTSTANDING MSMEs. 
PRESIDETIAL AWARDS FOR OUTSTANDING MSMEs, CONSISTING OF 
REWARDS IN CASH OR IN KTNO SHALL BE GRANTED TO 100% 
FILIPINO-OWNED COMPANIES DURING THE MSME DEVELOPMENT 
WEEK. 
SECTION 18. Section 13 of Republic Act No.6977 is hereby to read as follows: 
“SECTION 20. Mandatory Allocation of Credit Resource to Small and Medium 
Enterprises. - For a period often (10) years from the date ofthe effectivity of this 
Act, all tending institutions as defined under Bangko SentraE ng Pilipinas rules, 
whether public or private, shall se aside at least [six] EIGHT percent ([6] 8%) for 
MICRO AND small enterprises and at least two percent (2%) for [small and] 
medium enterprises, [respectively] of their total loan portfolio based on their 
baIance sheet as of the end of the pervious quarter, and make it available for 
[small and medium enterprises] MSMEs credit as herein contemplated. 
COMPLIANCE OF THIS PROVISION SHALL BE: 
A) ACTUAL EXTENSION OF LOANS TO QUALIFIED AND REGISTERED 
B) ACTUAL SUBSCRIPTION OF PREFERED SHARES OF SHOCK OF [SB] 
MICRO, SMALL AND MEDIUM ENTERPRISES; OR 
SMALL BUSINESS CORPORATION. 
The Bangko Sentral ng PzZzpznas,[in consultation with the Council,] MAY 
PRESCRZBE ALTERNAIVE FORMS OF COMPLIANCE SUBJECT TO THE 
APPRVAL OF THE MSMED CONCIL. FU RTHER THE BANGKO SENTRAL 


NG PILIPINAS shall formulate rules for the effective implementation of this 
provision: Provided, That the purchase of government notes, securities and other 
negotiable instruments, [with the exception of such instruments as may be offered 
by the SBGFC which do not pay market rates], shall not be deemed compliance 
with the foregoing provisions: Provzded, further, that the Bungko SenfruZ ng 
Pilipinas shall establish an incentive program to encourage lending to [small and 
medium] MSMEs industries beyond the mandatory credit allocation to said 
enterprises, such as possible reduction in bank's reserve requirement. 
The [SMED] MSMED Council shall set up the appropriate systems to monitor all 
loan applications of [small and medium enterprises] MSMEs in order to account 
for the absorptive capacity of the small and medium enterprise sector. 
The Bungko SentruZ ng Pilipinus shall [require lending institutions covered by this 
Act to] furnish to the [Small and Medium Development Council] MSMED 
Council on a quarterly basis [regular] COMPREHENSIVE reports [on their 
compliance with the above provisions on the mandatory credit allocation for 
small and medium enterprises and expeditious act on the Council's reports of non- 
compliance therewith.] 
ON 
THJ3 
BANK'S 
COMPLIANCE, 
NON- 
COMPLIANCE p;NI> PENALTlES OF THE ABOVE PROVISION ON THE 
MANDATORY CREDIT ALLOCATION FOR MSMEs. 
SECTION 19. A new Section, numbered Section 13 in R.A. No. 6977 and renumbered 
as Section 20 is hereby inserted after Section 19. 
SECTION 21. IMPLELWBNTING RULES AND REGULATIONS. - THE 
DEPARTMENT OF TRADE AND INDUSTRY, THROUGH BSMED AND IN 
CONSULTATION 
WITH 
OTHER 
CONCERNED 
GOVERNMENT 
SECTOR NVOLVED IN THE PROMOTION OF MICRO, SMALL AND 
MEDUIM ENTERPRISES, SHALL FORMULATE THE IMPLEMENTING 
RULES AND REGULATIONS (IRR) NECESSARY TO IMPLEMENT THE 
PROVISION OF THIS ACT WITHIN NINETY (90) DAYS FROM THE 
APPROVAL OF THIS ACT. THE IRR ISSUED PURSUANT TO THIS 
SECTION 
SHALL 
TAKE 
EFFECT 
THIRTY 
(30) 
DAYS 
AFTER 
PUBLICATION 
IN 
A 
NATIONAL 
NEWSPAPER 
OF 
GENERAL 
CIRCULATION. 
AGENCIES, NON-GUVERJII@ENT 
ORGANIZATIONS AND PRIVATE 
SECTION 20. Separability Clause. - Any portion or provision of this Act that may be 
declared unconstitutional or invalid shall not have the effect of nullifying other portions 
and provisions hereof as long as such remaining portion or provision can still subsist and be 
given effect in their entirety. 
SECTION 21. Repealing Clause. - All other laws, decrees, executive orders, 
proclamations and administrative regulations, or parts thereof inconsistent herewith are 
hereby replicated or modified accordingly. 
SECTION 22. Efiectivity. - This Act shall take effect fifteen (15) days after its 
proclamation in at least two (2) national papers of general circulation. 
Approved,