Republicofthephilippines
HOUSE OF REPRESENTATIVES
Quezon Cfty, Metro Manila
NINETEENTH CONGRESS
First Regular Session
HouseBillNo9°°°
Introduced by Representative Midy N. Cua
Lone District, Quirino
AN ACT FURTHER PROMOTING ENTREPRENEURSHIP BY STRENGTHENING,
EMPOWERING. AND ENHANCING THE FINANCING AND OTHER SUPPORT
PROGRAMS FOR MICRO, SMALL ANI) MEDIUM ENTERPRISES, AMENDING FOR
THE PURPOSE RIIPUBLIC ACT NO. 6977, AS AMENDED, OTHERWISE KNOWN AS
THH "MAGNA CARTA FOR MICRo SMALL AND MnDluM HNTBRPRISES (MSMlis)»
EXPLANATORY NOTE
The  micro,  small,  and  medium-sized  enterprise  (MSME)  sector  of the  Philippines  is  important  in
generating employment and entrepreneurship opportunities. The Philippine Statistics Authority (PSA)
recorded that 99.5% of business entelprises in the country are MSMEs. Furthermore, the Department
of Trade and Industry (DTI) reports that MSMEs comprise 99.5% of business establishments, 63°/o of
the country's workforce, and 40°/a of the country's GDP in the past years. Thus, MSMEs play a large
and significant role in the economy.
Through  MSMEs,   large  enterprises  become  strong  partners  and  support  service  providers,  thus
fostering  an  environment  to  be  a  training  ground  for  new  entrepreneurs  partnering  with   large
corporations with a determined vision.
As we recognize policies that aim to provide an envirorment of ceaseless development for the MSME
sector, we must also address the different concerns that limit the sector from achieving its maxfimum
potential.
This  legislative  agenda  recognizes  the  President's  instruction  in  pushing  for  the  best  interest  of
Filipino entrepreneurs to extend assistance in the easiest ways possible,  as they are big parts  ()f the
engines of economic growth.
This   measure   previously   passed   the   third   reading   in   the   l8'h   Coiigress.   It   was   proposed   by
Representatives Jocelyn Sy Limkaichong, Christian S. Unabia, Michael Odylon L. Romero, Eurico A.
Pineda, Joey Sarte Salceda, Rufus 8. Rodriguez, Tyrone D. Agabas, Teodorido T. Haresco, Jr. Vilma
Santos-Recto,  Jericho  Jonas  a.  Nograles,  Florencio  G.  Noel,  Eduardo  "Bro.  Eddie"  C.  Villan.ueva,
Domingo  C.  Rivera,  Christoper  V.P.  De  Venecia,  John  Marvin  "Yiil  Servo"  C.  Nieto,  Gerardo
"Genyboy" J. Espina, Jr., Sharon S. Garin, Rico a. Geron, Rogelio D. Pacquiao, Micaela S. Vi{tlago,
Angelo Marcos Barba, Raul V. Del Mar, "Kuya" Jose Antonio R. Sy-Alvarado, Josephnie Veronique
R.  Lacson-Noel,  Virgmo  S.  Lacson,  Na.  Lucille  L.  Nava,  M.D.,  Jonathan  Keith  T.  Flores,  Allan
Benedict S. Reyes, Lorna C.  Silverio, Janice Z.  Salimbangon, Rowena Nifia 0. Taduran, Jose "Jun"
L.  Ong, Jr.,  Camille A.  Villar, Adriano A.  Ebcas, Leonardo L.  Babasa,  Jr., Braeden John Q.  I}iron,
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Fernando  T.  Cabredo,  Edgar  S.  Sarmiento,  Romulo  "Kid"  Pefia,  Jr.,  Godofredo  N.  Guya,  Argel
Joseph   T.  Cabatbat,  Eric  G.  Yap,  Rose  Marie  "Baby"  J.  Arenas,  Jose  L.  Atienza,  Jr.,  Evelina  G.
Escudero, Ferdinand L. Hemandez, Rodante D. Marcoleta, Strike 8. Revilla. Deogracias Victor "DV"
8.  Savellano,  Kristine  Singson-Meehan,  Stella  Luz  A.  Quimbo,  Carlos  lsagain  T.  Zarate,  Elenita
Milagros "Eileen"  Ermita-Buhain,  Loma P.  Bautista-Bandigan,  Luis N.  Campos,  Jr.,  Junie  E.  CLia,
Luisa  Lloren  Cuaresma,  Paul  Ruiz  Daza,  Rudys  Cesar  G.  Farifias,  I,  Vincent  Franco  "Duke"  D.
Frasco,  Greg  a.  Gasataya,  Ed  Christopher  S.  Go,  Ruwel  Peter  S.  Gonzaga.  Sandro  L.  Gon.zalez,
Romeo M. Jalosjos, Jr., Corazon T. Nufiez-Malanyaon, Manuel T.  Sagarbarria, David "Jay-Jay" C.
Suarez,  Alfred  Vargas,  Manuel  F.  Zubiri,  Antonio  "Tonypet"  T.  Albano,  Alfel  M.  Bascug,  Jose
Francisco  "Kiko"  8.  Benitez,  Gabriel  H.  Bordado,  Jr.,  Carl  Nicolas  C.  Cari,  Sergio  C.  Dagooc,
Maximo  Y.  Dalog,  Jr.,  Alfred  C.  Delos  Santos,  Abdullah  D.  Dimaporo,  Mohammad  Kha]id  Q.
Dimaporo, Faustino "Inno" A. Dy, V, Faustino Michael Carlos T. Dy, Ill, Jocelyn F. Fortuno, Ramon
"Mom-Mon" V. Guico,  Ill, Eduardo "Eddie" R. Gullas, Ann K. Hofer, Cesar "Jawo" I. Jimenez, Jr.,
Glona G.  Labadlabad,  Maricel  G. Natividad-Nagaflo,   M.D.,  Pablo  C.  Ortega,  Joy Myra  Salvador-
Tambunting,  Alyssa  Sheena  P.  Tan,  John  Reynald  M.  Tiangco,  Diego  "Nonoy"  C.  Ty,  Samantha
Louise  Vargas  Alfonso,  Rosanna  "Ria"  Vergara,  Michael  T.  Defensor,  Sandra  Y.  Eriguel,  M.D.,
Ferdinand R.  Galte, Mark 0.  Go,  Florida "Rida" P.  Robes, Esterllita 8.  Suansing, Juliet Marie De
Leon Ferrer, Ruth Mariano-Hemandez, and Geraldine a. Roman as principal authors thereof.
In view of the foregoing, approval of this measure is earnestly sought.
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Republicoft`riephilippines
HOUSE 0F REPRESENTATIVES
Quezon City, Metro Manila
NINETEENTH CONGRESS
First Regular Session
HOuseBii]Noaooo
Introduced by Representative Midy N. Cua
Lone District, Quirino
AN ACT FURTHER PROMOTING E}NTREPRENEURSHIP BY STRENGTHBNING,
EMPOWERING. AND ENHANCING THE FINANCING AND OTHER SUPPORT
PROGRAMS FOR MICRO, SMALL AND MEDIUM ENTE}RPRISES, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDHD, OTHERWISE KNOWN AS
THE "MAGNA CARTA FOR MICRO. SMALL AND MEDIUM ENTERPRISES (MSMEs)"
Be it enacted by the Senate and House Of Representatives Of the Philippines in Congress a.ssembled:
1        SECTION  1.  Section 2 of Republic Act No.  6977, as amended, is hereby further amen.ded   read as
2        follows:
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"SEC.  2.  Dec/crrcr/j.o#  a/ Po/I.c};.  -  Recognizing  that  MSMEs  have   the
potential [for] TO GENERATE more employment [generation] and SPUR economic
growth and therefore can help provide a self-sufficient industrial foundation for the
country, it is hereby declared the policy of the State to promote, support, strengthen
and encourage the growth and development of MSMEs in all productive sectors of
the  economy  particularly  ruravagri-based.  MANUFACTURING,  FINANCE  AND
SERVICES enterpi.ises.  To this end, the  State shall recognize the specific needs of
the MSMEs and shall undertake to promote entrepreneurship, support entreprenelirs,
encourage  the  establishment of MSMEs  and  ensure  their  continuing viability  and
growth and thereby attain countryside industrialization by:
„x x x."
SHC. 2. Section 4 of the same Act, as amended, is hereby further amended to read as follows:
"SEC. 4. Eligibility for Government Assistance. -  To qualify for assistance,
counseling,  incentives  and  promotion  under this  Act.  businesses  falling  under the
above definition must be:
"a) duly  registered with the appropriate agencies as presently  provided  by
law: Provi.decJ,  That in the case of micro enterprises as defined herein,  registration
with   the   office   of  the   municipal   or  city  treasurer  shall   be  deemed   sufficient
compliance with this requirement;
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"THE   APPLICATION   OF   AN   MSME   FOR   ANY   PERMIT   AND
LICENSE   FROM   ANY   LOCAL   GOVERNMENT   UNIT,   INCLUDING   A
BARANGAY, SHALL BE AUTOMATICALLY APPROVED PROVISIONALI,Y,
SUBJECT  TO  THE  FINAL  APPROVAL  OF  THE  APPLICATION  AND  THE
ISSUANCE OF THE PERMIT OR LICENSE APPLIED FOR.
"THE   TOTAL   COST   FOR   THE   ISSUANCE   OF   ALL   PERMITS.
LICENSES,     CERTIFICATIONS,     AND     OTHER     SIMILAR     REQUIRED
DOCUMENTATION FOR THE CONDUCT OF BUSINESS  FOR REGISTERED
MICRO   ENTERPRISES   SHALL   NOT   EXCEED   FIVE   HUNDRED   PESOS
(P500.00).  FOR  REGISTERED  SMALL  ENTERPRISES,  THE  TOTAL  COST
SHALL NOT EXCEED FIVE THOUSAND PESOS (P5.000.00) FOR A PERION
OF FIVE (5 YEARS.
"b)  one  hundred  percent  (100%)  owned,  capitalized  by  Filipino  citizens,
whether single proprietorship or partnership. If the enterprise is a juridical entity, at
least  sixty  percent  (60°/a)  of its  capital  or  outstanding  stocks  must  be  owned  by
Filipino citizens;
„x x x.
"[Eligible MSMEs shall be entitled to a share of at least ten percent (10%) of
total  procurement  value  of goods  and  services  supplied  to  the  Government,  its
bureaus,  offices  and  agencies  annually.]  THE NATIONAL  GOVERNMENT,  ITS
BUREAUS,  OFFICES  AND  AGENCIES  SHALL ALLOCATE AT LEAST TEN
PERCENT   (10%)   OF   ALL   ITS   PROCUREMENT   OPPORTUNITIES   FOR
GOODS  AND  SERVICES  TO  ELIGIBLE  MSMEs  lN  ACCORDANCE  WITH
THE PROVISIONS  OF REPUBLIC ACT NO.  9184,  OTHERWISE KNOWN AS
THE     `GOVERNMENT     PROCUREMENT     REFORM     ACT',     AND     ITS
IMPLEMENTING RULES AND REGULATIONS.
"The    [Department    of    Budget    and    Management]    GOVERNMENT
PROCUREMENT  POLICY  BOARD  (GPPB)  shall  FORMULATE  RULES  FOR
THE EFFECTIVE IMPLEMENTATION OF THIS PROVISION AND monitor the
compliance of government agencies on the  required  procurement for MSMEs  and
submit its report to the MSMED Council on semestral basis and to the Congress of
the Philippines, tlirough its appropriate committees on a yearly basis.
"DULY  REGISTERED  MICR0  AND  SMALL  ENTERPRISES  SHALL
BE ENTITLED  TO A  DISCOUNT OF  AT LEAST TWENTY  PERCENT (20%)
ON  SHIPPING  AND  DELIVERY  FEES  FOR  THEIR  PRODUCTS  AND  RAW
MATERIALS, AS WELL AS FOR MAILING. FREIGHT AND OTHER SIMILAR
SERVICES PROVIDED BY EITHER PUBLIC OR PRIVATE COURIERS.
"GOVERNMENT  BUILDINGS.   STRUCTURES  AND   OPEN  AREAS.
INCLUDING PUBLIC MARKETS, WHETHER WET OR DRY, AIRPORTS, SEA
PORTS,     FISH     PORTS,     PARKS,     ZOOS,     CONVENTION      CENTERS,
ENTERTAINMENT  CENTERS,  TOURISM  CENTERS,  SCHOOLS,  SCHcOL
CAMPUSES,  AND  OTHER  SIMILAR  STRUCTURES  OR  AREAS  SUITABLE
FOR     SELLING     OR     MARKETING,      WHETHER      PERMANENT     OR
TEMPORARY, THAT CAN BE USED AS SELLING AREAS, SHALL GIVE AN
AUTHORIZED  MSME  STORE  FREE  SPACE  MEASURING  AT  LEAST  ONE
PERCENT(1%)OFTHETOTALSPACEAVAILABLETHEREIN.
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"PRIVATE     MALLS,     SUPERMARKETS,     SHOPPING     CENTERS,
COMMERCIAL  SELLING  ESTABLISHMENTS,  STRUCTURES,  OR  AREAS
WITH   A   SELLING   AREA,   WHETHER   PERMANENT   OR   TEMPORARY,
MEASURING AT LEAST FIVE THOUSAND SQUARE METERS (5,000 SQM).
INCLUDING COMMON AREAS, BUT EXCLUDING PARKING SPACES AND
DRIVEWAYS, SHALL GIVE FREE SPACE OR AREA EQUIVALENT TO ONE
HALF OF ONE PERCENT (0.5°/o) OF THE SAID SELLING AREA FOR EVERY
FIVE   THOUSAND   SQUARE   METERS   (5,000   SQM)   OF   SELLING   AND
COMMON SPACE, TO ANY AUTHORIZED MSME STORE. AS USED IN THIS
ACT,  "FREE  SPACE"  SHALL  MEAN  SPACE  THAT  MAY  BE  USED  FOR
SELLING   PURPOSES   WITHOUT  NEED  FOR  THE  PAYMENT  OF  RENT,
GOODWILL FEES, ROYALTIES, COMMISSION, PERCENTAGES ON SALES,
NOR ANY OTHER SIMILAR SCHEME.
"THE      MSMED      COUNCIL      OF      THE      CONCERNED      CITY,
MUNICIPALITY  OR  BARANGAY  SHALL  APPROVE  THE  MSME  STORE
THAT WILL BE GIVEN FREE SPACE. UPON THE RECOMMENDATION OF
THE  LOCAL  OFFICE  OF  THEDEPARTMENT OF  TRADE  AND  INDUSTRY.
THE FREE SPACE ALLOCATED FOR THE MSME STORE SHALL BE GIVEN
IN THE FOLLOWING ORDER OF PREFERENCE:
I.    ONE  TOWN  ONE  PRODUCT  (OTOP)  STORE  OR  GO  LOKAL!
STORE OF THE DEPARTMENT OF TRADE AND INDUSTRY:
2.   NISME      KUMUNIDARAN      PRODUKTO      AT      RESONABLENG
SERBISYO STORE (OR " KUMPARE STORE'').. C)R
3.    A LOCAL MICRO OR SMALL ENTERPRISE STORE.
"ONCE    AN    MSME     STORE    IS     IN     PLACE,     REMOVAL    OR
REPLACEMENT  SHALL NOT BE ALLOWED  EXCEPT  FOR VALID  CAUSE
AND AFTER DUE PROCESS.
"THE  APPROVAL  AND  THE  REMOVAL  OF  THE  MSME  STORE
THAT  WILL  BE  GIVEN   FREE  SPACE  SHALL  BE  REPORTED  BY  THE
MSMED   COUNCIL   OF   THE   CONCERNED   CITY,   MUNICIPALITY   OR
BARANGAY   TO  THE  CONGRESSIONAL  OVERSIGHT  COMMITTEE  ON
MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT.
"PRIVATE  MALLs  SHALL  ALsO  ALLOcATE  TWENrv  PERCENT
(20%)   OF   THEIR  TOTAL   RENTABLE   SPACE   TO   LOCAL  MICRO   AND
SMALL    ENTERPRISES    WHICH    SHALL   BE   EXTENDED   A    TWENTY
PERCENT (20%) DISCOUNT ON RENTAL RATES. PRIVATE MALLS SHALL
NOT CHARGE ROYALTY CHARGES, GOODWILL CHARGES, COMMISSION
CHARGES,  PERCENTAGE  OF  SALES,  AND  OTHER  SIMILAR  SCHEMES
UPON THE MSMEs."
Snc. 3. Section 5 of the same Act, as amended, is liereby further amended to read as follows:
''SEC. 5. Guiding Principles. -  To set the pace for MSME development, the
State shall be guided by the following principles:
`.a. Minimal set Of rules and simplif i.cqti_pn_ _Of_pr.o`c.e_dunes .snd :equi.r_e_re_nLt_S`..
All  government agencies  having to  do  with  MICRO  AND  small  enterprises  shall
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pursue  the  principles  of minimum  regulation  to  ensure  stability  of  rules  and  to
encourage entrepreneurial spirit among the citizenry. The agencies shall see to it that
procedural  rules  and  requirements,  within  their  respective  offices  in  coordination
with other agencies, are minimized in the act of registration, availment of financing
and accessing other government services and assistance.
"b) Ro/e o//fee prl.vcr/e sec/or.  In order to hasten growth and expansion  of
MICRO.  small  and  medium  enterprises,  the  private  sector throughout the  country
shall   be   encouraged  to   assist  in  the  effective   implementation  of  this  Act  by
participating  in  goveminent programs  for MICRO,  small  and  medium  enterprises
strictly   in  accordance  with  the  law,  and  consistent  with  the  attainment  of  the
purposes   hereof.   To   encourage   private   sector   participation,   the   Council,   in
consultation with the  concerned sector.  may  recommend  simplified procedure  and
localized   incentives  to  MICRO  AND  small  enterprises.  The  Government  shall
encourage  the   organization   and   establishment  of  MICRO,   small   and   medium
enterprise  industry  associations  at the  local  and  regional  levels  preferably  unified
under a national federation/association.
"c)   Coordj.#cr#.o#   o/ gover#"e#/   ejrorts.   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  Communications],  INFORMATION
AND   COMMUNICATIONS   TECHNOLOGY,   Public   Works   and   Highways,
Science and Technology, Interior and Local Government, and Tourism as well as the
National  Economic  and  Development  Authority,  Philippine  Information  Agency,
SECURITIES   AND  EXCHANGE  COMMISSION  and  the  Ba#gfro  Se#/rcr/  ;7g
PJ./z.p!.#crs, through their national, regional and provincial offices shall, to the best of
their efforts and  in coordination with local government units, provide the necessary
support  and   assistance  to   MSMEs.   ThE  DEPARTMENT  0F   TRADE  AND
INDUSTRY SHALL BE THE LEAD AGENCY THEREFOR.
„x x x."
Snc. 4. Section 6 of the same Act, amended, is hereby further amended to read as follows:
"SEC.   6.   Micro.   Small   and   Medium   Enterprises   Development   Plan
/Msn4:EDP/. - The President OF THE PHILIPPINES shall approve a six-year micro,
small  and  medium  enterprises  development  plan  prepared  by  the  Department  of
Trade and Industry (DTl) which  shall  form part of the [Medium Tem]  Philippine
Development Plan (MT]PDP). It shall be formulated in consultation with the private
sector, validated and updated semestrally. Such plan shan include a component on a
micro credit financing scheme."
SEC. 5. Section 7 of the same Act. as amended, is hereby further amended to I.ead as follows:
"SEC.  7.  Micro,  Small  and  Medium  Enterprise  Development  (MSMED)
Council. - The existing Small and Medium Enterprise Development Council, which
was  created by  Republic Act No.  6977, as  amended  [by Republic  Act No.  8289].
shall  be  strengthened  to  effectively  spur the  growth  and  development of MSMEs
throughout the country, and to carry out the policy declared in this Act and shall now
be  known  as  the  Micro,  Small  and  Medium  Enterprise  Development  (MSMED)
Council. The Council shall be attached to the Department of Trade and Industry and
shall be constituted within sixty (60) days after the approval of this Act.
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"The  Council  shall  be  the  primary  agency  responsible  for the  promotion,
growth and development of MICRO, small and medium enterprises in the country by
way of facilitating and closely coordinating national efforts to promote the viability
and growth of MICRO, small and medium enterprises,  including assisting relevant
agencies  in the tapping of local and foreign funds for MICRO,  small and  medium
enterprise development, as well as promoting the use of existing programs, as well as
seeking ways to maximize the use of our labor resources."
SEC. 6. Section 7-A of the same Act, amended, is hereby further amended to read as follo'ws:
`CSBC.  7-AL.  Composition  Of  the  Micro,   Small  and  Medium  .Ep!erpris?s
Deve/opi#e#/  /n4Sn4EDJ   Cow#cl./.   -  The  members  of  the  Council   shall   be   the
following:
"(a) The Secretary of Trade and Industry as Chair;
"(b) The Secretary of Agriculture;
"(c) Tlie Secretary of the Interior and Local Government:
"(D) THE SECRETARY OF FINANCE;
"[(d)]  (E)  Three  (3)  representatives  from  the  MSME  sector,  [to  represent
Luzon,   Vjsayas   and   Mindanao,   with   at   least  one   (I)   representative   from   the
microenterprise     sector]      TO     BE     DESIGNATED      BY     A     NATIONAL
ORGANIZATION REPRESENTING AND DOMINATED BY MSMEs; AND
"I(e)  One  (1)  representative  from  the  women  sector  designated  by  the
Philippine Commission on Women;]
"[(I) One ( I ) representative from the youth sector designated by the National
Youth Commission; and]
"[(g)] (F) The[Chairman]PRESIDENT of TIIE Small Business Corporation.
"A. Advisory Unit. -There shall be an Advisory  Unit to the Council, which
shall consist of the following:
"(a) The Secretary of Science and Technology;
"(b) The Governor of the Bangko Sentral ng Pilipinas.,
"(C)  THE  COMMISSIONER  OF  THE  SECURITIES  AND  EXCIIANGE
COMMISSION;
"[(c)] (D) The President of the Land Bank of the Philippines;
"I(d)I (E) The President of the Development Bank of the Philippines;
"[(e)] (F) The Director General of the National Economic and Development
"(G)    THE     EXECUTIVE    DIRECTOR    0F    THE    COOPERATIVE
DEVELOPMENT AUTHORITY;
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"(H)   A   REPRESENTATIVE   OF   A   NATIONAL   ORGANIZATION
REPRESENTING AND DOMINATED BY MSMEs;
"I(D]  0)  One (1)  representative  from the  labor sector, to be nominated  by
accredited labor groups;
"I(g)]   (J)   A   representative   from   the   private   banking   sector   to   se.rve
[altematively] ALTERNATELY between the [c]Chanber of [t]Thrift [b]Banks, and
the Rural Banker's Association of the Philippines (RBAP);
"I(h)]     (K)    A     representative    of    the    microfinance    nongovemment
organizations    OVGOs),    DESIGNATED    BY    THE    MICROFINANCE    NGO
REGULATORY COUNCIL;
"[(i)]  (L) A  representative of the  University of the Philippines-Institute  for
Small Scale Industries qup-ISSI); [and]
"[¢)] (M) The President of the Credit Information Corporation[.];
"OV)   ONE   (I)   REPRESENTATIVE   FROM   THE   WOMEN   SECTOR
DESIGNATED BY THE PHILIPPINE COMMISSION ON WOMEN;
"(0)   ONE   (1)   REPRESENTATIVE   FROM   THE   YOUTH   SECTOR
DESIGNATED BY THE NATIONAL YOUTH COMMISSION; AND
"(P) A REPRESENTATIVE FROM NONSTOCK SAVINGS AND LOAN
ASSOCIATIONS    DESIGNATED    BY    THE    ALLIANCE    OF   NON-STOCK
SAVINGS AND LOAN INSTITUTIONS, INC. (ANSLI).
(k x x."
SEC. 7. Section 7-8 of the same Act, as amended, is hereby further amended to read as follows:
"SEC. 7-a. Powers and Functions. - A. The MSMED Council shall have the
following powers, duties and functions:
`k x x;
"d) To review the existing policies of government agencies that would affect
hegrowthanddevelopmentofMSMEsandrecommendchangestothePresidentand
Congress  through  the  Committee  on  Economic  Affairs  of  the  Senate  and   the
Committee   on   [Small   Business   and  Entrepreneurship]   MICRO,   SMALL  AND
MEDIUM ENTERPRISE  Development of the House of Representatives, whenever
deemed  necessary.  This  shall  include  efforts  to  simplify  rules  and  regulations,  as
well  as  I.eview  of the  applicability  and  relevance  of procedural  and  documentary
requirements  in the registration, financing,  and other activities relevant to MSMEs
the result shall be included in the amual report to be submitted to Congress;
`k x x;
" 12) Through appropriate government agencies :
`k x x;
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"f)  Set-up  new  MSME  rvEGOsro  centers  and  revitalize  already
established  MSME  JVEGOSHO  centers  to  provide  MSMEs  in  the
rectons easier access to services such as the following:
"8.  ADDITIONAL  FUNCTIONS  0F  THE  MSMED  COUNCIL.  -  AS
PROVIDED FOR IN SECTION 10 0F REPUBLIC ACT NO.10644, OTHERWISE
KNOWN  AS  THE  "GO  NEGOSYO  ACT",  THE  MSMED  COUNCIL  SHALL
HAVE THE FOLLOWING ADDITIONAL FUNCT
"(A)  COORDINATING  AND  OVERSIGHT  BODY  FOR  THE  MSME
NEGOSY0 CENTER. - THE MSMED COUNCIL, THROUGH THE DTI, SHALL
ACT  AS  THE  COORDINATING  AND  SUPERVISING  BODY  FOR ALL  THE
AGENCIES  INVOLVED  IN  THE  ESTABLISHMENT  AND  OPERATION  OF
THE   MSME  NEGOSY0   CENTERS.   FURTHER,   THE   MSMED   COUNCIL
SHALL MONITOR AND ASSESS THE PROGRESS 0F THE MSME NEGOSYO
CENTERS,   WHICH   SHALL   BE   INCLUDED   IN   ITS   ANNUAL   REPORT
SUBMITTED TO THE CONGRESS:
"(8) PROVISION OF A COMPLIANCE GUIDE.- FOR EACH RULE OR
GROUP  0F  RELATED  RULES  ISSUED  BY  ANY  GOVERNMENT AGENCY
FOR    COMPLIANCE    BY    MSMES,    THE    COUNCIL    SHALL    PUBLISH
COMPLIANCE   GUIDELINES   WHICH   SHALL   BE   WRITTEN   IN   PLAIN
LANGUAGE OR IN THE LOCAL DIALECT. IF NECESSARY.
"THE    COUNCIL    SHALL    PREPARE    SEPARATE    COMPLIANCE
GUIDES  COVERING  GROUPS  OR  CLASSES  OF  SIMILARLY  AFFECTED
MSMES  AND  SHALL  COOPERATE  WITH  INDUSTRY  ASSOCIATIONS  TO
DEVELOP     AND     DISTRIBUTE     SUCH     COMPLIANCE     GUIDES.     THE
PUBLICATION  0F  EACH   COMPLIANCE  GUIDE   SHALL  INCLUDE   THE
POSTING   OF   THE   GUIDE   IN   A   CONSPICUOUS   LOCATION   ON   THE
WEBSITE  OF  THE  AGENCY,  AND  DISTRIBUTION  OF  THE  GUIDE  TO
KNOWN      INDUSTRY      CONTACTS,      SUCH     AS      SMALL     ENTITIES,
ASSOCIATIONS OR INDUSTRY LEADERS AFFECTED BY THE RULE. THE
ISSUING  GOVERNMENT  AGENCY  SHALL  PUBLISH  AND  DISSEMINATE
THE COMPLIANCE RULES  WITHIN NINETY (90) DAYS  FROM THE DATE
OF ISSUANCE:
"(C) CONDUCT OF RESEARCH ON WOMEN ENTREPRENEURSHIP. -
THE   COENCIL   SHALL   CONDUCT   RESEARCH   TO   SUPPORT   WOMEN
ENTREPRENEURSHIP     INCLUDING     ENTREPRENEURIAL     BEHAVIOR,
BARRIERS, PARTICIPATION AND CESSATION RATES, DISCRIMINATORY
PRACTICES  AND  CONTRIBUTION  TO  THE  NATIONAL  ECONOMY  AND
GROWTH;
"(D)  POLICY  FORMULATION ON  WOMEN  ENTREPRENEURSHIP.  -
THE    COUNCIL    SHALL    PROVIDE    POLICY    DIRECTION    TOWARDS
RECOGNIZING        WOMEN'S        PROPENSITY        AND        TALENT        IN
ENTREPRENEURSHIP  AS  WELL  AS  ESTABLISH  LINKAGES  THAT  WILL
ENABLE    MORE    OPPORTUNITIES    FOR    WOMEN    TO    ENGAGE    IN
ENTREPRENEURSHIP; AND
"(E)  DEVELOPMENT  OF   ENTREPRENEURIAL  EDUCATION  AND
TRAINING.      -      THE      MSMED      COUNCIL      SHALL      DEVELOP,      IN
COORDINATION WITH THE DEPARTMENT 0F EDUCATION, TECHNICAL
EDUCATION      AND      SKILLS      DEVELOPMENT      AUTHORITY,      AND
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COMMISSION  ON  HIGHER  EDUCATION,  A  COURSE  CURRICULUM  OR
TRAINING  PROGRAM  IN  ENTREPRENEURSHIP  THAT  WILL  PROMOTE
ENTREPRENEURIAL CULTURE AND COMPETENCE. ENTREPRENEURSHIP
SIIALL  BE  INTEGRATED  IN THE CURRICULUM OF EDUCATIONAL AND
TRAINING INSTITUTIONS IN ALL LEVELS.
SEC.  8.  A  new  subsection  is  of the  hereby  inserted  after  Section  7-8  same  Act,  amended,  and
numbered as Section  7-C to read as follows:
"SEC.    7-C.    CITY,    MUNICIPALITY,   AND   BARANGAY    MSMED
COUNCIL. -   THERE SHALL BE CREATED A MSMED COUNCIL IN EVERY
LOCAL GOVERNMENT ENIT WHICH SHALL HAVE THE AUTHORITY TO
PROPOSE  POLICIES   THAT  ARE  GEARED   TO   ASSIST  MSMEs   IN  THE
AREAs  oF  pRODucTlvlrv  ENHANCEMENT,  MARKETING,  ACHiEvlNG
SUSTAINABILITY    BY    EXTENDING    CREDIT    TO    CUSTOMERS,    AND
IMPLEMENTING   EFFICIENT   LOAN   COLLECTION   SYSTEMS,   AMONG
OTHER STRATEGIES.
"THE  LOCAL  MSMED  COUNCIL,  IN  THE  CASE  0F  A  CITY  OR
MUNICIPALITY,   SHALL  BE  COMPOSED  OF  THE  CITYOR  MUNICIPAL
BUSINESS  PERMIT  AND  LICENSING  OFFICER  AS  CHAIRPERSON,  ThE
PRESIDENT   OF   THE   ASSOCIATION   OF   BARANGAY   CAPTAINS,   THE
PRESIDENT  OF  THE   SANGGUINIANG   KABATAAN   FEDERATION,   THE
TOURISM OFFICER, AND THE CITY ORMUNICIPAL AGRICULTURIST OR
THE CITY PLANNING OFFICER.
"THE  BARANGAY  MSMED  COUNCIL  SHALL  BE  COMPOSED  OF
THE   PUNONG   BARANGAY   AS   CHAIRPERSON,   THE   SANGGUNIANG
KABATAAN   CHAIRPERSON,    A    REPRESENTATIVE    OF    THE    LADIES
BRIGADE OR LADIES' SECTOR, A REPRESENTATIVE 0F THE BARANGAY
PUBLIC   SAFETY  OFFICE,  AND  A   REPRESENTATIVE  OF  THE  SENIOR
CITIZENS.
"T0   ENSURE  THEIR   CONTINUED  FINANCIAL   VIABILITY,   THE
CITY,    MUNICIPAL,    AND    BARANGAY    MSMED    COUNCILS    SHALL
COORDINATE AND FORMULATE MEASURES TO ENSURE OPERATIONAL
AND       FINANCIAL       VIABILITY       WITHIN       THEIR       TERRITORIAL
JURISDICTION,     TAKING     INTO     CONSIDERATION     THE     RELEVANT
FACTORS AFFECTING ThE CAPACITIES OF TIIE MSMEs."
SFC. 9. Section 8 of the same Act. as amended, is hereby further amended to read as follows:
"SEC. 8. Designation of the Bureau of Micro, Small and Medium Enterprise
Developinent as Council Secretariat. -x x x:
"1) to prepare, in coordination with local government units and/or associations of local
government officials, and recommend annual as well as medium-term MICRO, small
and medium enterprise development plans for approval of the Council;
`k x x;
"3) to assist the Council in coordinating and monitoring MICRO, small and medium
enterprise policies and programs and activities of all government agencies with respect
to MICRO, small and medium enterprises;
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§i           ¥:§ii:%:OM:jTi:TOO:::ii::EE\:TT;i¥MENB#:L;§i%Ev¥p;E;i:A:::A:E:¥¥;TDri:#E¥§
"4)  to  prepare,  collate  and  integrate  all  inputs  to  the  Council's  yearly  report  on  the
status of MICRO, small and medium enterprises in the country;
(k x x.„
SEC.10. Section 11 of the same Act, as amended, is hereby further amended to read as follows:
"SBC.  \1.  Creation  Of  THE  Small  Business   [Guarantee  and  Tina_nce].
Corpora/z.o#. - There  is hereby created a body coiporate to be known as the Small
Business [Guarantee and Finance] Corporation, hereinafter referred to as the [Small
Business   Corporation   (SB   Corporation)]   SB   CORPORATION,   which   shall   Oe
charged with the primary responsibility of implementing comprehensive policies and
programs  to  assist  MSMEs  in  all  areas,  including  but  not  limited  to  finance  zmd
information services, training and marketing."
Suc.11. Section 1 I-A of the same Act, as amended, is hereby further amended to read as follows:
•.EEC.\\-A.CompositionOftheBoardOfDirectorsandi_i:I?rers=The.SB.
Coxporation   [coxporate  powers  shall   be  vested  on  SHALL  HAVE  a  Board   of
Directors composed of [eleven (11)] THIRTEEN (13) members which shall include
the following:
"a)   The   Secretary   of  Trade   and   Industry,   WHO   SHALL   ACT   AS
CHAIRPERSON OF THE BOARD UNTIL SUCH TIME THAT THE PRESIDENT
0F  THE  PHILIPPINES  SHALL  HAVE  APPOINTED  THE  CHAIRPERSON  OF
THE BOARD FROM AMONG ITS MEMBERS;
"b) The Secretary of Finance;
"C) THE PRESIDENT OF THE GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS);
"D) THE PRESIDENT OF THE SOCIAL SECURITY SYSTEM (SSS);
"[c] E) A private sector representative to be appointed by the President OF
THE PHILIPPINES upon the rec{)mmendation of the MSMED Council;
"[d]  F)  Seven  (7)  representatives  of the  SB  Corporation  common  stock
shareholders who shall be elected based on proportional  distribution,  in accordance
with Section [24] 23 of the REVISED Corporation Code; and
"[e)]  G)The president of the  SB  Corporation  as  ex-officio  member and  to
serve as vice chairman of the Board.
"The   President   OF   THE   PHILIPPINES   shall   appoint   the   [chaiman]
CHAIRPERSON of the Board from among its members.
"All members of the Board so appointed, except for the ex-officio members,
shall  serve  for a ten of three (3) years  [without reappointment.]  AND  MAY .BE
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person [so] appointed to replace a member who has resigned, died, or been removed
for cause shall serve only for the unexpired portion of the tern.
"The  Board  of Directors  shall  have,  among  others,  the  following  specific
powers and authorities:
`tx x x; and
"a   INotwithstanding   the   provisions   of  Republic   Act   No.   6758   and
Compensation Circular No.  ]0,  Series of 1989  issued by the Department of Budget
and   Management   the   Board   shall   have   the   authority   to   p]Provide   for   the
organizational structure,  [and]  stafflng pattern [of SB  Colporation and to extend to
the employees and personnel thereof salaries, allowances and fringe benefits similar
to  those  extended  to  and  currently  enjoyed  by  employees  and  personnel  of other
government  financial   institutions.I   AND  COMPENSATION  OF  EMPLOYEES
AND PERSONNEL OF THE SB CORPORATION, FOR SUBMISSION T0 THE
GOVERNANCE COMMISSION FOR GOCCs."
SEC.12. Section 11 -a is of the same Act, as amended, hereby father amended, to read as follows:
"SEC.   I I-8.  Corporate  Structure  and  Powers.  -"A.  The  SB  Colporation
shall:
{k x x.
"8.  For this  pulpose,  the  SB  Corporation  [subject to  compliance with  the
rules and regulations to be issued by the Bcngho Se#trcr/ #g Pj/i.pl.#crs /ESP/ and the
Securities  and  Exchange  Commission,]   shall  have  the  following  functions  €ind
duties:
"a)   Source   and   adopt   development  initiatives   for   globally   competitive
MSMES in finance and business technologies;
"b)  [To]  [e]Extend  all  forms  of financial  assistance,  EXCEPT  GRANTS
AND  SUBSIDIES.  to  eligible  MSMEs[.],  AND  NOT  TO  PRECLUDE  RETAIL
LENDING IN AREAS WHERE PRIVATE BANKS ARE NOT ABLE TO SERVE,
SUBJECT TO CONSULTATION WITH PRIVATE BANKS.  SB Colporation may
also engage in wholesale lending. The SB Corporation shall be given two (2) years
from the effectivity of this Act to comply with this requirement;
"c)[Guarantee  loans  obtained  by  qualified  MSMEs  under  such  terms  and
conditions  adopted  by  the  SB  Corporation Board  of Directors;]  ESTABLISH  AN
ENTERPRISE REHAB ILITATION FEND FOR CALAMITY-STRICKEN MSMEs
NOT  TO  EXCEED  FIVE  HINDRED  MILLION  PESOS  (P500,000.000.00)  AS
PART   OF   SB   CORPORATION'S   CAPITALIZATION   BY   THE  NATIONAL
GOVERNMENT;
`k x x;
"f) Apply for, receive and accept grants and donations from sources within
and outside the country; [and]
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"g) Hold, own, purchase, acquire, sell, mortgage, dispose or otherwise invest
or re-invest in stocks, bonds, treasury bills, debentures, securities and similar foms
of  indebtedness   of  the   government,   its   agencies   and   instrumentalities   or   any
government financial institution[.] ; AND
"H) SUBMIT AN At`INUAL REPORT TO THE MSMED COUNCIL, THE
CONGRESS OF THE  PHILIPPINES AND THE GOVERNANCE COMMISSION
FOR  GOCCs  ON  THE  PERFORMANCE  AND  FINANCIAL  CONDITION  OF
THE CORPORATION.
"THE  SB  CORPORATION  SHALL  BE  EXEMPT  FROM  SECURING
PRIOR   BSP   AUTHORIZATION   FOR   ENGAGING   IN    QUASI-BANKING
ACTIVITIES  AND  SIIALL  NOT  BE  SUBJECT  TO  BSP  SUPERVISION  AND
REGULATION FOR SUCH ACTIVITIES."
SEC.  13. A new subsection  is hereby  inserted after Section  11-a  of the same Act,  as amended,  and
numbered as Section I I-C to read as follows:
"SEC.  1 I-C. STRATEGIC MANAGEMENT OF THE SB CORPORATION
- THE BOARI) OF THE SB CORPORATION, THROUGH ITS CIIAIRPERSON,
SHALL    BE    FULLY    RESPONSIBLE    AND    ACCOUNTABLE    FOR    THE
PERFORMANCE OF THE CORPORATION'S  MANDATE.  TO ENSURE THIS,
THE BOARD SHALL BE CONSTITUTED AS A MANAGING BOARD, LED BY
ITS  CHAIRPERSON,  TO  CONCEPTUALIZE  THE  STRATEGIC  PLANS  AND
POLICIES OF THE CORPORATION.
`THE     SB     CORPORATION     SHALL     ADOPT     A     BALANCED
SCORECARD MANAGEMENT APPROACH, SUBJECT TO THE REVIEW AND
APPROVAL   OF   THE   GOVERNANCE   COMMISSION   FOR   GOCCs,   T0
ENABLE    IT    TO    MANAGE    ITS    FINANCIAL    PERFORMANCE    WHILE
PURSUING  ITS  PUBLIC  POLICY  OBJECTIVES  OF  SUPPORTING  MICRO.
SMALL AND MEDIUM ENTERPRISES DEVELOPMENT."
SEC.14. Section 12 of the same Act, as to amended, is hereby further amended read as follows:
"SEC.  12.  Capitalization  and  Funding .Of. the  SP  Co.rpo_ratior:„-.   The  SB
Corporation    shall    have    an    authorized    capital    stock    of   Ten    billion    pesos
(Plo,000,000,000.00).  The  initial  capital  of One  billion  pesos  (P1,000,000,000.00)
shall  be  established  from  a pool  of funds  to  I)e  contributed  in the  form  of equity
investments  in  common  stock  by  the  Land  Bank  of the  Philippines  qBP),  the
DevelopinentBankofthePhilippines@BP),intheamountofTwohundredmimon
pesos   (P200,000,000.00)   each.    The    Social    Security    System   (SSS)    and    the
Government  Service  Insurance  System  (GSIS)  shall  also  set  aside  Two  hundred
million  pesos  (P200,000,000.00)  each  for  the  SB  Corporation.  Authorized  capital
stock of the  [s]Small  [b]Business  [c]Corporation  shall  Oe  divided  into  80,000,000
common  shares  and 20,000,000 .preferred shares with a par value of One hundred
pesos  (P100.00)  per  share:  Prov..ded,  That  the  common  shares  which  have  been
issued,   including  those   issued   against  the   assets  of  the  KKK   Guaranty  Fund
consolidated  under the  [s]Small  [b]Business  [c]Corporation by virtue  of Executive
Order No.  233,  Series  of 2000  and  Executive  Order No.  19.  Series  of 2001   and
including  those  already  subscribed,  shall  fom  part  of  the  capitalization  of  the
corporation:  Provl.ded,  rtyr/frer,   That  holders  of     preferred  shares  issued  under
Republic Act No. 6977, as amended, shall have the option to convert the same into
common  shares.  Additional  equity  funding  shall  come  from  trust  placements  of
13


;         iii!is;:Fi?aii::!i:n:s£!:D!;E;ije¥!siv,ii|#;£;:;ijEijjj;o;in;'ii!iaEfjfa;¥eiimgiE;
6                      from the private sector shall only be in the form of preferred shares.
i               gna::dpm:;[l;t: :;|°e¥evfifr::ip,::iHi=::Ei-:sfjssb:egciF;:ia;]i#[a:b:eyog£[V:e#,e;c]t:'v:I:tyc(,5:)rfeyt¥
a`i-+ia-;;a not more than -thirty percent (30%) of its net income and the rest withheld
as retained earnings."
SI]C.15. Section 13 of the same Act, as amended, is hereby deleted.
"[SEC.   13.  The  SB  Corporation  shall  be  subject  to  the  supervision  zmd
examination   of  the   B¢#gfo  Se#trcr/  ng  Pj/j.pi.#as   taking   into   consideration   its
developmental objectives."]
SEC.16.  Section  14  of the same Act,  as amended,  is hereby renumbered  as  Section  13,  and further
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"SEC.  [14]13.  Venture  Capital  and  Micro  Finance  Trust  Fund.-    The  SB
Corporation  may  set  aside  an  amount of money  to  encourage  the  setting  up  of a
venture   capital   and   micro   finance   trust   fund   for  the   purpose   of  promoting
AVAILABLE business opportunities [avallable] to THE MSME sector. The Vent.lire
Capital   Fund   shall   be   used   mainly   for   venture   capital   finance   especially   in
technology-oriented industries. The micro finance trust fund shall tie used to provide
collateral-free fixed and working capital loans to micro and small enterprises run by
those  emerging  out  of poverty.  THE  INITIAL  AMOUNT  OF  AT  LEAST  TEN
PERCENT  (10%)  OF  THE  EQUITY  CONTRIBUTION  0F  THE  NATIONAL
GOVERNMENT  TO   THE  CAPITALIZATION  OF  THE   SMALL  BUSINESS
coRpoRATloN,  NOT  To   ExcEED   FlvE   HUNDRED  MrLLloN   pESos
(P500,000,000.00),  SHALL  BE  APPROPRIATED  TO  FUND  THE  VENTURE
CAPITAL AND MICRO FINANCE TRUST FUND."
Snc.17.  Section  15  of the same Act,  amended, as  is hereby renumbered  as  Section  14,  and  further
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"SEC;. L\ 5)14.  Mandatoi.y  Allocatio_n _of _C_I..e±± Resqyr^:es  to  ¥i_c:_o:`_S_":?!l_
c7#dMedi."~E#/erprj.Ses.-FortheperiodofANOTHERten(10)yearsfromthedate
of the effectivity of this  anendatory Act all lending institutions  [as defined under
Ba#gho gen/raJ #g P!./i.pi.nag rules], whether public or private, shall set aside at least
[eight percent (8°/o) for micro and small enterprises and at least two percent  (2%) for
medium  enterprises]  TEN  PERCENT (10%)  of their total  loan  portfolio  based  on
their balance sheet as of the end of the previous quarter FOR MICRO, SMALL AND
MEDIUM  ENTERPRISES,  and  make   it  available  for  MSME  credit  as  herein
contemplated:  PRoprtDED,  THAT  A  MAXIM"   OF  ONE  PERCENT  (1%)
THEREOF SHALL BE THE ALLOCATION FOR MEDIUM ENTERPRISES.
"Compliance of this provision shall be:
"a) actual extension of loans to eligible MSMEs; or
`k x x; Or
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"I) [subscribe] SUBSCRIPTION/purchase of liability instruments as may be
offered  by  the  SB  Corporation.  THE  SAME  SHALL  NOT  BE  DEEMED  AS
QUASI-BANKING  OPERATIONS,  AND  SHALL  NOT  REQUIRE  A  QUASI-
BANKING LICENSE FROM THE ESP; OR
"(G)  EXTENSION  OF  LOANS  TO  MSME  VALUE  CHAIN  ACTORS
WHO  ALLOW  MSMEs  TO  PARTICIPATE  IN  ORGANIZED  OR  FORMAL
vALun  cHAINs.  VALUE  CHAIN  ACTORs  INCLUDE.  AMONG  oTHERs,
TRADERS,  SUPPLIERS,  PROCESSORS,  AGGREGATORS    WII0  CONDUCT
LINKED   SEQUENCE   OF   VALUE   ADDING   ACTIVITIES   INVOLVED   IN
BRINGING A PRODUCT TO FINAL CONSUMERS.
`The   Bc7ngko   gen/r4/   ng   Pj./I.p!.nag   AND   THE   SECURITIES    AND
EXCHANGE   COMMISSION,   IN   CONSULTATION   WITH   "E   MSRED
COUNCIL  AND   THE  DEPARTMENT  OF  TRADE  AND  INDUSTRY,  shall
formulate rules for the effective implementation of this pi.ovision: Provj.cJed, That the
purchase of government notes, securities and other negotiable instruments shall not
be  deemed  compliance  with  the  foregoing  provisions:  Provided,  further,  That  the
Bc7#gfo   Se„frcr/   #g   PI./j.p[.#as   AND   THE   SECURITIES   AND   EXCHANGE
COMMISSION,   IN   CONSULTATION   WITH   ALL   STAKEHOLDERS,   shall
establish   [an]   A   MEANINGFUL   incentive   [program]   SYSTEM   to   encourage
[lending  to   micro,   small   and   medium   industries  beyond   the   mandatory  credit
allocation to said enterprises,]  COMPLIANCE WITH THIS  PROVISION, such  as
possible reduction in bank's reserve requirement[.I : PRoprtDED,  FAVZI££y,  THAT
THE   ji4jvGKo   sEIvrRIz,   IVG   pJ[zpavj4s  AND   THE   sEcuRITIES   AND
EXCRANGE COMMISSION  SHALL ALIGN THEIR REGULATIONS ON THE
PENALTIES  FOR  BANKS  AND OTHER ENTITIES,  FOR NONCOMPLIANCE
WITI+ TIIE PROVISION FOR MANDATORY LENDING.
`.The  MSMED  Council  shall  set up  the  appropriate  systems  to  monitor  all
loan  applications of MSMEs  in order to account for the absorptive capacity of the
MSME sector.  EACH LENDING INSTITUTION SHALL DESIGNATE A CHIEF
COMPLIANCE OFFICER WHO WILL PREPARE AND SIGN THE REPORT ON
COMPLIANCE AND NONCOMPLIANCE WITH THE MANDATORY CREDIT
ALLOCATION, FOR SUBMISSION TO THE 84^/GKO SEIV7lRI£ IVG PJ4JPJNZIS
IN   THE   CASE   OF   BANKS,   AND   THE   SECURITIES   AND   EXCHANGE
COMMISSION      IN      THE      CASE      OF      NON-      BANK      FINANCIAL
INTERMEDIARIES. The Bc!#gfro Se#/rcr/ ng P!./I.pj.#crs IN THE CASE OF BANKS,
AND THE  SECURITIES  AND  EXCHANGE COMMISSION  IN  THE CASE OF
NON-BANK   FINANCIAL   INTERMEDIARIES,   shall   furnish   to   the   MSMED
Council  on  a  quarterly  basis  comprehensive  reports    on  the  [bank's]  LENDING
ENTITY'S  compliance[,]  AND noncompliance  [and penalties  of]  WITH the above
provisions   on   the   mandatory   credit   allocation   for   MSMEs[.],   AND   SHALL
SUBMIT AN ANNUAL REPORT, SIGNED BY AN OFFICER WITH THE RANK
OF  AT  LEAST  A  MANAGING  DIRECTOR,  ON  THE  AMOUNTS  OF  THE
PENALTIES  FOR NONCOMPLIANCE  WITH  THE  MANDATORY  LENDING
PROVISION OF THIS ACT.
"ALL  BANKS  SHALL PROVIDE ACCESS  TO DEPOSIT ACCOUINTS,
SUCH AS SAVINGS, CHECKING AND DEBIT ACCOUNTS, T0 REGISTERED
MSMEs.  FINANCIAL TECHNOLOGY SHALL BE PROVIDED TO MSMEs TO
ENSURE THEIR FINANCIAL INCLUSION.
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"ALL   LENDERS   SHALL   REPORT   CREDIT   INFORMATION   AND
TRANSACTIONS  OF  MSMEs  TO  A  NATIONAL  CREDIT  REGISTRY  T0
MONITOR PROPER COMPLIANCE AND EFFICIENT IMPLEMENTATION.
"'FOR       EFFICIENT       IMPLEMENTATION       AND       OPERATION,
COOPERATIVES    EXCEPT    COOPERATIVE    BANKS    AND    INSURANCE
COOPERATIVES    SHALL   BE   UNDER   THE   SOLE   SUPERVISION   AND
EXAMINATION   OF   THE   COOPERATIVE   DEVELOPMENT   AUTHORITY
(CDA);    ALL    OTHER    FINANCIAL    ENTITIES,    CORPORATIONS    AND
FINANCIAL       INTERMEDIARIES,       SUCH       AS       NON-GOVERNMENT
ORGANIZATIONS,  FINANCING  COMPANIES, NON-STOCK  SAVINGS  AND
LO AN          A S SOC IATIONS ,          MICROFINANCE          N ON-G OVERNM ENT
ORGANIZATIONS.AND  LENDING   INVESTORS   SHALL  BE  UNDER  THE
SECURITIES  AND  EXCHANGE  COMMISSION  (SEC);  BANKS  SHALL  :BE
UNDER  THE  BJ4jvGKO  SEIV"Z,  NG  P/I/P"S  (BSP);  AND  INSURANCE
COMPANIES SHALL BE UNDER THE INSURANCE COMMISSION (IC).
FOR  CLARITY,  COOPERATIVE  BANKS   SI:TALL  BE  UNDER  THE
SUPERVISION   AND   EXAMINATION   OF   THE   CDA   AND   BSP;   WHILE
INSURANCE COOPERATIVES  SHALL BE UNDER THE SUPERVISION AND
EXAMINATION 0F THE CDA AND INSURANCE COMMISSION (IC).
"Lending institutions which are not qualified to acquire or hold lands of the
public domain in the Philippines  shall be permitted to bid and take   part in sales of
mortgaged real  property in case of judicial or extra-judicial  foreclosure,  as well  as
avail  of receivership, enforcement and  other pi.oceedings,  solely upon default of a
borrower,  and  for  a  period  not  exceeding  five  (5)  years  from  actual  possession:
Provj.ded, That in no event shall title to the property be transferred to such lending
institution.  If the  lending institution  is the wirming bidder,  it may,  during said five
(5) year period, transfer its rights to a qualified Philippine national, without prejudice
to a borrower's rights under applicable laws."
SEC.18. Sections  16 and  17 of the same Act. as amended, are hereby renumbered as Sections  15 and
16, respectively, to read as follows:
"SEC. [16] 15. Micro, Small, and Medium Enterprise Week. -x x x."
"SEC. [17] 16. Presidential Awards for Outstanding MSME. -x x x."
SEC.19.  Section  18  Of the same Act, as amended,  is hereby renumbered as  Section  ]7,  and further
41        amended to read as follows:
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!!         ;:;#iiiii:iij:iiii:i;jo|:fi#ji:;S:::i;:cefilai!jifio;3nicfi:i,ialj;ia;i!iiii:t:c;oi:i::!
49                       chairperson, respectively; x x x."
Snc. 20.  Section  19 of the same Act, as amended,  is hereby renumbered as Section  18,  and further
52        amended, to read asfollows:
"SEC.  [19]18.  Penal  Clause.  -The  Bangko  Sentro/ Ivg  Pj./jp!.#4S  IN  THE
CASE OF BANKS, AND THE  SECURITIES AND EXCHANGE COMMISSION
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IN THE  CASE  OF NON-BANK  FINANCIAL  INTERMEDIARIES,  shall  impose
administrative  sanctions  and  other  penalties  on  the  lending  institutions  for  non[-
]compliance with THE provisions of this Act [including a fine of not less than Five
hundred  thousand  pesos  Q'500,000.00)].  THE  MINIMUM  AMOUNT  FOR  TI-IE
PENALTY FOR NONCOMPLIANCE IS FIVE HUNDRED THOUSAND PESOS
(P500,000.00)  AND  THE  MAXIMUM  PENALTY  IS  FIVE  MILLION  PESOS
(P5,000,000.00),  IN  PROPORTION  TO  THE  BANK'S  OR  OTHER  ENTITY'S
LEVEL OF COMPLIANCE: PROPTDED, THAT IN CASE OF FAILURE OF THE
MANDATED  ENTITIES  TO  COMPLY  WITH  THE  MANDATORY  CREDIT
ALLOCATION  SET OUT IN  SECTION  14  0F  THIS  ACT,  AN ADDITIONAL
PENALTY  EQUIVALENT  TO  TWENTY  PERCENT  (20%)  PER  ANNUM  OF
THE TOTAL AMOUNT 0F NON-COMPLIANCE SHALL BE IMPOSED.
"Penalties  on  noncompliance  shall  be  directed  to  the  development  of the
MSME sector. Ninety percent (90%) of the penalties collected  [should]  SHALL go
to  the  [MSMED  Council  Fund]  "START-UP  FUND"  AS  PROVIDED  INDER
REPUBLIC  ACT NO.  10644,  OTHERWISE  KNOWN AS  THE  "Go NEGOSYO
ACT",   while   the   remaining   ten   percent   (10%)   [should]   SHALL   be   [given]
REMITTED  to  the  ESP,  THE  SECURITIES  AND  EXCHANGE  COMMISSION,
OR   THE   APPROPRIATE    AGENCY    THAT   EXERCISES    REGULATORY
JURISDICTION  OVER  SUCH  LENDING  ENTITY,  to  cover  for  administrative
expenses.
"THE  MSMED  COUNCIL  SHALL  SUBMIT  TO  THE  CONGRESS  OF
THE   PHILIPPINES   AN   ANNUAL   REPORT   ON   THE   STATUS   OF   THE
PENALTIES REMITTED AND HOW THE SAME WERE USED OR ARE BEING
USED IN RELATION TO THE IMPLEMENTATI0N OF SERVICES TO MSMEs
IN THE AREAS OF CAPACITY BUILDING, TECENOLOGY INFORMATION,
INFORMATION    COLLECTION    AND    DISSEMINATION,    AND    OTHER
INTERVENTIONS      FOR      MSME      DEVELOPMENT,      GROWTH      AND
SUSTAINABILITY."
SEC. 21. A new section, numbered Section  19, is hereby inserted after re-numbered Section  18 of the
34       sameAct, asamended,to read as follows:
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"SEC.     19.    OTHER    VIOLATIONS.-    EXCEPT    FOR    SECURITIES
COVERED UNDER THE SECURITIES REGULATIONS CODE OR REPUBLIC
ACT NO. 8799, ENTITIES SHALL SECURE THE NECESSARY APPROVAL OF
THE  SECURITIES  AND  EXCHANGE  COMMISSION  PRIOR  T0  RECEIVING
INVESTMENTS  AS  WELL  AS  GIFTS,  ITEMS  OR  OTHER  COMMODITIES.
EITHER  IN  THE FORM  OF  CASH  OR  ITS  EQUIVALENT  CASH VALUE  IN
CONSIDERATION   OF   RETURN   OF   PROFIT,   BENEFIT,   OR   BLESSINGS
COMING  FROM  MORE  THAN  TWENTY  (20)  INDIVIDUALS,  OR  SUFF.ER
THE PENALTY  OF  THIRTY  (30)  TO  ONE  HUNDRED  EIGHTY  (180)  DAYS
IMPRISONMENT, OR A FINE OF NOT LESS THAN TEN THOUSAND PESOS
(Plo,000.00)  BUT  NOT  EXCEEDING  ONE  HUNDRED  THOUSAND  PESOS
(P100,000.00) OR BOTH, AT THE DISCRETION OF THE COURT.
"ANY  PERSON,  WHETHER NATURAL OR JURIDICAL,  WHO  FAILS
TO  ACQUIRE  THE  APPROVAL  OF  THE FOOD  AND  DRUGS  AUTHORITY
(FDA)  AND  THE  DEPARTMENT  OF  TRADE  AND  INDUSTRY  (DTD  FOR
SELLING, MARKETING, AND DISThlBUTING PRODUCTS AND SERVICES
THAT ARE REGULATED BY THE FDA SHALL SUFFER THE PENALTY OF
THIRTY     (30)     DAYS     TO     ONE     HINDRED     EIGHTY     (180)     DAYS
IMPRISONMENT, OR A FINE 0F NOT LESS THAN TEN THOUSAND PESOS
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(Plo,000.00)  BUT  NOT  EXCEEDING  ONE  HUNDRED  THOUSAND  PESOS
(P100.000.00)ORBOTHATTHEDISCRETIONOFTRECOURT."
SEC. 22. /mp/e"e##.#g Rw/es c}#cZ jiegr/cIJj.o#s. - The Department of Trade and Industry, through the
Bureau of Micro,  Small  and Medium Enterprise Development and  in consultation with the Bangko
Sentral ng Pilipinas in the case of tlanks, and the Securities and Exchange Commission in the case of
non-bank   financial   intermediaries,   and   other   concerned   government   agencies,   nongovernment
organizations and private sector agencies involved in the promotion of MSMEs, shall fomulate the
rules and regulations (IRR) necessal.y to implement the provisions of this Act within ninety (90) days
fromtheapprovalofthisAct:ProvJ.dedThattheIRRshallbereviewedyearly:ProvJ.dec7,/wrffoer,That
the IRR shall be approved by the MSMED Council.
SEC. 23. Separcl6j.Ji.ty C/cl%Se.  - Section 22  of Republic Act No.  8367  is hereby repealed. All  laws,
decrees,proclamations,issuances,orordinancesthatarecontrarytoorinconsistentwiththeprovisions
of this act are  hereby amended, repealed or modified accordingly.
SEC.  24.  Repe¢/I.ng  CJcrwse.  -  All  laws,  decrees,  executive  orders,  rules  and  regulations  or  parts
thereof,whichareinconsistentwiththisAct,areherebyrepealed,amendedormodifledaccordingly.
SEC. 25. E#ec/i.vj.ty. -This Act shall take effect fifteen (15) days after its publication in the O#cz.a/
Gc]ze//e or in a newspaper of general circulation.
Approved,
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