EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
Second Regular Session 
)
SENATE 
S.B. No. 1646
RECEIVED
E-FILED
June 29 2020 m
date:
11:00 a.m
time:
Not X
Introduced by SEN. IMEE R. MARCOS
AN ACT
PROVIDING FOR GOVERNMENT FINANCIAL 
INSTITUTIONS UNIFIED INITIATIVES TO DISTRESSED 
ENTERPRISES FOR ECONOMIC RECOVERY 
(GUIDE)
EXPLANATORY NOTE
Article II, Section 20 of the 1987 Constitution provides that, "The State 
recognizes the indispensable roie of the private sector, encourages private enterprise, 
and provides Incentives to needed investments."
In order to contain the spread of the 2019 Coronavirus Disease (COVID-19) across 
the country, the National Government enforced a massive shutdown of economic 
activities, which adverseiy affected the economy, triggering an economic downturn. With 
the imposition of enhanced community quarantine in Luzon, and in several provinces, 
cities, and municipaiities in Visayas and Mindanao, only private estabiishments providing 
basic necessities and essential services were allowed to remain open.
Based on the iatest avaiiable data published by the Philippine Statistics Authority, a 
totai of 1,003,111 business enterprises were recorded as operating in the Phiiippines in 
2018. It is worth noting that 998,342, which accounts for 99.52% of these recorded 
businesses, are MSMEs. Micro enterprises constitute 88.45% with 887,272 of total MSME 
establishments, foiiowed by smaii enterprises at 10.58% with 106,175 establishments, 
and medium enterprises at 0.49% with 4,895 establishments. The top five (5) industry 
sectors according to the number of MSMEs in 2018 were: (1) whoiesale and retail trade; 
repair of motor vehicles and motorcycles (461,765); (2) accommodation and food service 
activities (144,535); (3) manufacturing (1 16,335); (4) other service activities (66, 162); 
and (5) finandai and insurance activities (46,033). These industries accounted for about 
83.62% of the totai number of MSME establishments. Together, these MSMEs generated


a total of 5.7 million jobs or 63.19% of the country's total employment. All these sectors 
were hard hit by the lockdown, as most of them fall under non-basic goods and services. 
In particular, accommodation and food service is strongly linked to the tourism industry, 
which suffered due to a lack of tourist activity.
However, MSMEs are not the only affected sector in the economy. In 2018, large 
enterprises generated 3.3 million jobs or 36.81% of the country's overall employment. 
Enterprises, whether MSMEs or large enterprises, were heavily impacted by the disruption 
in travel and transport of goods and services because of the COVID-19 outbreak. Some 
of these enterprises are strategically important to economic recovery and would require 
financial assistance in order to ensure their continued viability.
As such, government financial institutions must expand their credit programs to 
assist affected MSMEs and strategically important industries in meeting their liquidity 
needs. The Land Bank of the Philippines (LBP) and the Development Bank of the 
Philippines (DBP) need to expand their credit and rediscounting facilities to affected 
MSMEs and strategicaliy important enterprises in the agriculture. Infrastructure, and 
manufacturing industries. The Philippine Guarantee Corporation (PGC) also needs to 
expand Its credit guarantee facilities to MSMEs as well, to incentivize the private sector in 
lending money to distressed MSMEs.
The proposed measure seeks to strengthen the capacity of the following 
Government Rnancial Institutions, namely the PGC, the LBP, and the DBP, In order to 
provide the needed assistance to MSMEs and other strategically important companies.
Considering the state of the economy and the urgent need for assistance of MSMEs 
and other strategically important companies, the approval of this measure is earnestly 
sought.
. fVfxrcxK////^
IMEE R. MARCOS


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
Second Regular Session 
)
SENATE 
S.B. No.1646
RECEIVED
E-FILED
Ui 
June 29
<f>
TtMPV. 11:00 a.m.
WDEX
Introduced by SEN. IMEE R. MARCOS
AN ACT
PROVIDING FOR GOVERNMENT FINANCIAL 
INSTITUTIONS UNIFIED INITIATIVES TO DISTRESSED 
ENTERPRISES FOR ECONOMIC RECOVERY 
(GUIDE)
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
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Section 1. Title. - This Act shall be known as the "Government Financial
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Institutions (GFIs) Unified Initiatives to Distressed Enterprises for Economic Recovery
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(GUIDE) Act."
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Section 2. Declaration of Policy. - It is hereby declared the policy of the
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state to protect empioyment and assist distressed enterprises to reinvigorate the
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economy. The State recognizes the roie of these businesses composed of micro, smali
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and medium enterprises (MSMEs) and strategicaiiy important companies in providing
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employment to the Filipino people and in supporting the Phiiippine economy. Thus, it
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is essential that these enterprises are given necessary access to credit and financial
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assistance.
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Section 3. Definition of Terms. - As used in this Act:
(a)Agribusiness value chain refers to a set of actors/piayers, such as farmers, 
fisherfolk, traders, suppiiers, processors, and aggregators, who make up the 
linked sequence of value-adding activities undergone by an agricuiturai product 
when converted from raw material to the final form it is presented to the 
consumers;


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(b) Community Quarantine (CQ) refers to the enhanced community quarantine 
imposed in the entire Luzon area under Presidential Proclamation No. 929 dated 
16 March 2020, as may be extended or modified pursuant to such other laws, 
presidential proclamations or executive orders that may be subsequently issued 
or promulgated for the purpose of containing the spread of COVID-19;
(c) Criticaiiy impacted businesses refer to non-essential businesses that have been 
directly and adversely impacted by the COVID-19 outbreak such that (i) their 
liabilities have become more than their assets, or (ii) they have experienced at 
least a [50%] decline in gross receipts for at least one calendar quarter, and in 
either instance, are generally unable to pay or perform their obligations as they 
fall due in the ordinary course of business, as a result of the COVID-19 
outbreak. 3 For purposes of this Act, Critically-Impacted Business shall include 
the air transport industry, tourism industry, and export-import industry, but 
shall exclude banks and other financial institutions under the supervision of the 
Bangko Sentral ng Pilipinas (BSP);
(d) Micro, Smaii and Medium Enterprises (MSMEs) refer to 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 office, plant and equipment are situated, must have 
value falling under the following categories:
Micro
Small
Medium
not more than Php3,000,000.00 
Php3,000,000.00 - Phpl5,000,000.00 
Phl5,000,000.00 - Phpl00,000,000.00
/e) Non-essential businesses refer to refer to business entities engaged in 
businesses which are not allowed to operate during the CQ under applicable 
laws, presidential proclamations or executive orders issued or promulgated for 
the purpose of containing the spread of COVID-19. The term excludes business 
entities allowed to operate during CQ such as those related to (i) the production 
and sale of goods, or provision of services related to food, medicine, health 
supplies, such as public markets, supermarkets, groceries, convenience stores, 
hospitals, medical clinics, pharmacies, and drug stores, (ii) food preparation 
and delivery services, water refilling stations, manufacturing and processing 
plants of basic food products and medicines, (iii) banks and financial institutions 
under the supervision of the BSP, and (iv) utility services involving power, 
energy, water and telecommunications;


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(f) Senior executive officers refer to top management officials exercising 
responsible and critical roles, as may be determined in the implementing rules 
and regulations.
CHAPTER 1
Philippine Guarantee Corporation
Section 4. Loan Guarantee Expansion by PGC. - To ensure that non- 
essential businesses are able to fulfill their loan obligations, whether existing, 
outstanding or new loans, to banks, lending or financing institutions, and to help 
strengthen the liquidity and financial position of these non-essential businesses 
towards expediting the country's economic recovery, the Philippine Guarantee 
Corporation (PGC) shall:
a. Issue an expanded government guarantee program for non-essential businesses 
by increasing the maximum loan guarantee coverage per borrower, widening the 
coverage of guarantees to loans provided by non-bank financial institutions and 
lending and financing companies supervised by the Securities and Exchange 
Commission (SEC), reducing eligibility requirements and guarantee fees, waiving 
the right of excussion under the guarantee, relaxing the guidelines on claims by 
allowing lenders to call on the guarantee when there is an occurrence of payment 
default, and any other measures necessary to give non-essential businesses and 
MSME+ access to better terms of credit.
b. Ease its current rules and regulations and give preference to critically impacted 
businesses and MSME, including those in the informal sector, in issuing 
government guarantees to help achieve the policy objectives of this Act.
c. PGC is mandated to implement a loan portfolio guarantee scheme whereby it can 
guarantee a specified loan portfolio of partner financial institutions which cover 
eligible MSME loans subject to the criteria set under the Implementing Rules and 
Regulations. The criteria for accrediting partner financial institutions shall 
likewise be stipulated therein.
For the efficient and faster implementation of the Section, the PGC may require 
assistance, such as facilities and personnel resources, from other government financial 
institutions. The PGC shall also implement measures aimed at the digital 
transformation of its guarantee application and enrollment process. The PGC shall 
coordinate with the DICT, Bangko Sentral ng Pilipinas (BSP), and solicit assistance 
from the private sector for the proper implementation of this Section. The guarantee 
program of PGC should meet the applicable standards and regulations of the BSP.


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Section 5. Trust Fund of PGC. - For the implementation of Section 4 hereof, 
a trust fund in the amount of Twenty Billion Pesos (PhP20,000,000,000.00) is hereby 
established. The PGC may retain the guarantee fee from loans as administrative fee.
The PGC may process and grant loan guarantees to qualified businesses within 
a period of three (3) years from the effectivity of this Act unless the President of the 
Philippines extends it for a period of not more than three (3) years. Upon the maturity 
of all the loans, the PGC shall start to wind up its activities, which shall be completed 
within a period of two (2) years. The remaining amount of the fund shall be returned 
to the National Treasury.
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CHAPTER 2
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Development Bank of the Philippines
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Section 6. DBP Loan Assistance Program. - The Development Bank of the
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Philippines (DBP) shall introduce an interest-free loan program available to MSMEs to
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assist and encourage them to continue investing in their businesses: Provided, That
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the interest-free loans shall be granted in accordance with the following guidelines
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and such other conditions as may be imposed under the implementing rules that will
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be issued by the Department of Finance (DOF) and the BSP:
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(a) The loan shall be payable within three (3) to five (5) years: Provided, further,
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That priority shall be given to infrastructure, services, and manufacturing
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business.
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(b)The loans to eligible MSMEs should meet the applicable standards and
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regulations of the BSP.
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Notwithstanding the foregoing, the President of the Philippines shall have the
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power to (i) declare moratorium on the payment of loans of MSME; (ii) make available
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emergency loans to MSMEs in critically-impacted businesses for additional capital
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outlay under this Section; and (iii) ease regulations to ensure that MSMEs have
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facilitated access to the loan facility provided herein.
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Section 7. DBP Rediscounting and other Programs. - Subject to
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applicable standards and regulations of the BSP, DBP may rediscount loans and other
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credit accommodations to enterprises enumerated in Section 6(a) above granted by
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BSP-supervised Financial Institutions (BSFIs), Small Business Corporation (SBC), and
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those granted pursuant to credit programs of the Department of Agriculture


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Agricultural Credit Policy Council (DA-ACPC) to MSMEs affected by the Coronavirus
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Disease 2019 (COVID-19) pandemic engaged in infrastructure, service industry,
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and/or manufacturing business.
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DBP may undertake other similar activities for purposes of this Act as may be
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provided under the implementing rules and regulations to be issued.
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Section 8. Trust Fund of DBP. - For the implementation of Chapters 2 and 
4 hereof, a trust fund in the amount of Fifteen Billion Pesos (PhP15,000,000,000.00) 
is hereby established. The DBP may retain the amount equivalent to one per centum 
(1%) of collections from loans as administrative fee.
The DBP may process and grant loans and rediscounting to qualified businesses 
within a period of three (3) years from the effectivity of this Act unless the President 
of the Philippines extends it for a period of not more than three (3) years. Upon the 
maturity of all the loans, the DBP shall start to wind up its activities, which shall be 
completed within a period of two (2) years. The remaining amount of the fund shall 
be returned to the National Treasury.
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CHAPTER 3
Land Bank of the Philippines
Section 9. LBP Loan Assistance Program. - The Land Bank of the 
Philippines (LBP) shall introduce an interest-free loan program available to MSMEs 
engaged in activities in the agribusiness value chain encourage them to continue 
investing in their businesses: Provided, That the interest-free loans shall be granted 
in accordance with the following guidelines and such other conditions as may be 
imposed under the implementing rules that will be issued by the DOF and the BSP:
(a) The loan shall be payable within three (3) to five (5) years: Provided, further, 
That priority shall be given to agri-fishery businesses, and non-essential 
businesses that are small and medium enterprises.
(b) The loans to eligible MSMEs should meet the applicable standards and 
regulations of the BSP.
Notwithstanding the foregoing, the President of the Philippines shall have the 
power to (i) declare moratorium on the payment of loans of MSME; (ii) make available 
emergency loans to MSME in critically-impacted businesses for additional capital outlay


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under this Section; and (iii) ease regulations to ensure that MSME have facilitated 
access to the loan facility provided herein.
Section 10. LBP Rediscounting and other Programs. - Subject to 
applicable standards and regulations of the BSP, LBP may rediscount loans to eligible 
MSMEs engaged in activities in the agribusiness value chain granted by BSFIs, SBC, 
and those granted pursuant to credit programs of the DA-ACPC to MSMEs affected by 
the COVID-19 pandemic.
LBP may undertake other similar activities for purposes of this Act as may be 
provided under the implementing rules and regulations to be issued.
Section 11. Trust Fund of LBP. - For the implementation of Chapters 3 and 
4 hereof, a trust fund in the amount of Thirty-Five Billion Pesos 
(PhP35,000,000,000.00) is hereby established. The LBP may retain the amount 
equivalent to one per centum (1%) of collections from loans as administrative fee.
The LBP may process and grant ioans and rediscounting to quaiified businesses 
within a period of three (3) years from the effectivity of this Act uniess the President 
of the Philippines extends it for a period of not more than three (3) years. Upon the 
maturity of ail the loans, the DBP shall start to wind up its activities, which shali be 
completed within a period of two (2) years. The remaining amount of the fund shail 
be returned to the National Treasury.
CHAPTER 4
Strategically Important Companies
Section 12. Loans to Strategically Important Companies. - To ensure 
that strategically important companies remain solvent, LBP and DBP are hereby 
authorized to offer interest-free loans to facilitate the rehabilitation of strategically 
important companies affected by the COVID-19 pandemic which are experiencing 
soivency issues, such as those with considerable impact on the economy including 
those from the agriculture, infrastructure, service industry, and manufacturing 
industries and other industries to be identified in the impiementing rules and 
regulations, subject to the foiiowing conditions:
(a) The debtor company must not reduce the number of empioyees beyond 
the percentage prescribed by the loaning institution, as may be determined 
in the implementing ruies and regulations;


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(b) The debtor company shall not, without prior authority from the loaning 
institution, be allowed to issue stock dividends and repurchases during the 
term of the loan;
(c) The debtor company shall not issue cash dividends during the term of the 
loan;
(d) The debtor company must not increase the salaries, benefits and other 
forms of remuneration of its senior executive officers and members of its 
board;
(e) The debtor company shall not provide or grant senior executive officers and 
members of its board separation pay or retirement pay: Provided, That any 
amount received by the senior executive officers and members of the board 
which is in violation of the foregoing shall be returned;
(f) The debtor company shall not incur irregular, unnecessary, excessive, 
extravagant or unconscionable expenditures such as entertainment, 
events, office/facility renovations, aviation/transportation services and 
other activities.
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CHAPTER 5
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Incentives and Exemption Priviieges of DBP and LBP,
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Section 13. Tax Exemptions and Fee Priviieges. - Any existing law to the
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contrary notwithstanding and in order to ensure the effective implementation of the
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purposes of this Act, the following transactions of DBP, LBP, shall be exempt from
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documentary stamp tax, capital gains tax, creditable withholding income tax, value-
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added tax, gross receipts tax, and such other taxes that may be imposed under
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Republic Act No. 8424, as amended, or the "National Internal Revenue Code of 1997,"
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whichever is applicable pursuant to the regulations to be issued by the DOF, upon the
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recommendation of the Bureau of Internal Revenue (BIR):
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(a) Loan Assistance Program, Rediscounting, and other Programs of DBP and
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LBP under Chapters 2 and 3 of this Act, respectively, including dation in
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payment {dacion en pago) by the borrower or by a third party in favor of
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DBP and LBP.
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The abovementioned transfers shall also be subject to the following, in lieu of
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the applicable fees:


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(a) Fifty percent (50%) of the filing fees for any foreclosure initiated by DBP 
and LBP in relation to Loan Assistance and Rediscounting Programs as 
prescribed by the Rules of Court; and
(b) Fifty percent (50%) of the land registration fees prescribed under the 
existing circulars of the LRA.
All sales or transfers of rediscounted loans/other credit accommodations, 
including transfers by way of dation inpaymentby the borrower or by a third party to 
DBP and LBPshall be entitled to the privileges enumerated herein for a period of not 
more than three (3) years from the date of effectivity of the applicable implementing 
rules and regulations or of the applicable revenue regulations, whichever comes later: 
Provided, That the Secretary of Finance may extend such period by a maximum of 
three (3) years.
CHAPTER 6
Miscellaneous Provisions
Section 14. Appropriations. - The amount of Seventy Billion Pesos (PhP 
70,000,000,000.00) is hereby appropriated from the funds in the National Treasury 
not otherwise appropriated to implement the provisions of this Act.
Section 15. Implementing Rules and Regulations. - Within thirty (30) 
days from the effectivity of this Act, the DOF, acting as chairperson, the BIR, the BSP, 
the PGC, the DBP, and the LBP shall jointly promulgate the necessary rules and 
regulations for the effective implementation of this Act: Provided, That the DOF may 
call upon any agency to provide information or assistance in the drafting of the rules 
and regulations: Provided, Further, That within thirty (30) days from the effectivity of 
this Act, the DOF, upon recommendation of the BIR, shall promulgate the revenue 
regulations implementing the fiscal incentives under this Act.
Section 16. Oversight Committee. - There is hereby created a Joint 
Congressional Oversight Committee (JCOC) to oversee, monitor, and evaluate the 
implementation of this Act. The JCOC shall be composed of five (5) members each 
from the House of Representatives and from the Senate. The JCOC shall be co-chaired 
by the Chairpersons of the House Committee on Banks and Financial Intermediaries 
and the Senate Committee on Banks, Financial Institutions and Currencies, with the 
Senate and House of Representatives Chairpersons of the Committees on Economic 
Affairs, Trade, Commerce and Entrepreneurship, Cooperatives, and one member each 
from the minority as members.


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Section 17. Reports. - The PGC, LBP, and DBP shall submit reports to the
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DOF, DTI, and the JCOC regarding the implementation of this Act.
CHAPTER 7 
Final Provisions
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Section 18. Separability Clause. - If, for any reason or reasons, any part
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or provision of this Act shall be declared as unconstitutional or invalid, the other parts
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or provisions hereof which are not affected thereby shall continue to be in full force
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and effect.
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Section 19. Repealing Clause. - All provisions of existing laws, orders, rules
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and regulations or parts thereof which are in conflict or inconsistent with the provisions
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of this Act are hereby repealed, amended, or modified accordingly.
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Section 20. Effectivity. - This Act shall take effect immediately upon its
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publication in the Official Gazette or in a newspaper of general circulation in the
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Philippines.
Approved,