SEVENTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE
Senate B ill No. 1549
Senate
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Introd uced by Senator Juan M iguel Zubiri
AN ACT
REDEFINING THE COVERAGE AND EXTENDING THE MANDATORY CREDIT 
ALLOCATION TO MICRO, SMALL AND MEDIUM ENTERPRISES, AMENDING 
FOR THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6977, AS 
AMENDED, OTHERWISE KNOWN AS THE "MAGNA CARTA FOR SMALL 
ENTERPRISES" AND FOR OTHER PURPOSES
Explanatory Note
Republic Act No. 6977 otherwise known as the Magna Carts for Micro Small and 
Medium Enterprises (MSMEs) was first enacted in 1991 to promote, encourage, support 
and strengthen the growth and development of MSMEs. Recognizing the critical role 
MSMEs play in reducing poverty and achieving inclusive growth, the Magna Carta for 
MSME was further amended in 1997 by Republic Act No. 8289.
According to data from the DTI-Bureau of Small and Medium Enterprise 
Development, there are 946,988 establishments in the Philippines as of July 2016 of 
which, 99.57% are MSMEs. Of the total MSMEs, 89.94% are micro enterprises, 9.22% 
and 0.41% are small and medium enterprises, respectively. In terms of job generation, 
MSMEs provided a total of 4,891,836 jobs or 62.8% of the total jobs generated by all 
types of business establishments in the country. Of the total value of goods and 
services produced in the country, 35.7% came from MSMEs according to 2015 data 
from DTI.
Despite their contribution, various challenges continue to hinder the growth and 
competitiveness of MSMEs. Lack of access to financing, sustainable markets and 
training to acquire the needed mindset and skills to ultimately grow and sustain a 
business are just few of the constraints faced by MSMEs.
To address these concerns, this bill proposes to redefine the coverage of micro 
enterprises, extend the mandatory lending provisions to MSMEs, and increase the 
penalties for noncompliance thereof. It is hoped that with these amendments the 
MSMEs will gain better access to financing to make them truly dynamic, resilient and 
globally competitive.
In view of the foregoing, immediate approval of this bill is earnestly requested.
GUEL F. ZU B IR I


SEVENTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
SENATE
Senate Bill No. 1549
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AUG 14 
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RECEIVLD BV.
Introduced by Senator Juan Miguel Zubiri
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AN ACT
REDEFINING THE COVERAGE AND EXTENDING THE MANDATORY CREDIT 
ALLOCATION TO MICRO, SMALL AND MEDIUM ENTERPRISES, AMENDING 
FOR THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC 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 House o f Representatives o f the Phiiippines in 
Congress assembled:
SECTION 1. Section 3 of Republic Act No. 6977, as amended, is hereby further 
amended to read as follows:
"SEC. 3. Micro, Small and Medium Enterprises (MSMEs) as Beneficiaries. — 
MSMEs 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 office, plant and equipment are situated, must have value falling under 
the following categories:
Micro 
: 
Less than [P3,000,000] P5,000,000
Small 
: 
[P3,000,001] P5,000,001 - P15,000,000
Medium 
: 
P15,000,001 - PlOO,000,000
"The above definitions shall be subject to review and adjustment by the MICRO, 
Small and Medium Enterprises Development (MSMED) Council under Section 6 of 
this Act EVERY FIVE (5) YEARS or upon 
recommendation of sectoral 
organizations concerned, taking into account inflation and other economic 
indicators. The Council may use other variables such as number of employees, 
equity capital and assets size.
X X X.


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SEC. 2. Section 13 of the same Act, as amended, is hereby further amended to 
read as follows:
"SEC. 13. Mandatory Allocation o f Credit Resources to Micro, Small and Medium 
Enterprises. — [For the period of ten (10) years from the date of the effectivity 
of this Act,] All lending institutions as defined under Bangko Sentral ng Pilipinas 
rules, whether public or private, shall set aside at least [six] TEN PERCENT ([6] 
10%) [and at least two percent (2%) for small and medium enterprises, 
respectively,] of their total loan portfolio based on their balance sheet as of the 
end of the previous quarter, and make it available for MICRO, small and medium 
enterprises credit as herein contemplated FOR A PERIOD OF TEN (10) YEARS 
FROM THE EFFECTIVITY OF THIS ACT: PROVIDED, THAT NO MORE THAN TWO 
PERCENT (2%) OF THE MANDATORY ALLOCATION SHALL BE MADE AVAILABLE 
TO MEDIUM ENTERPRISES.
"The Bangko Sentral ng Pilipinas shall, IN CONSULTATION WITH THE SMALL 
BUSINESS 
CORPORATION 
AND 
SUBJECT TO THE 
APPROVAL OF THE 
SECRETARY OF TRADE AND INDUSTRY, formulate rules for the effective 
implementation of this provision: Provided, That the purchase of government 
notes, securities and other negotiable instruments[, with the exemptions 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; 
Provided, 
further. That the Bangko Sentral ng Pilipinas, IN CONSULTATION WITH ALL 
STAKEHOLDERS, shall establish AN incentive [program] SYSTEM to encourage 
[lending to micro, small and medium industries beyond the mandatory credit 
allocation to said enterprises,] COMPLIANCE WITH THESE PROVISIONS, such as 
possible reduction in bank's reserve requirement.
"ANY BANK OR LENDING INSTITUTION FOUND TO HAVE VIOLATED THE 
MANDATORY LENDING PROVISIONS UNDER THIS SECTION SHALL SUFFER A 
FINE OF NOT LESS THAN FIVE HUNDRED THOUSAND PESOS (P500,000.00) BUT 
NOT MORE THAN FIVE MILLION PESOS (P5,000,000.00) IN THE CASE OF 
UNIVERSAL AND COMMERCIAL BANKS, AND A FINE OF NOT LESS THAN ONE 
HUNDRED THOUSAND PESOS (P100,000.00) BUT NOT MORE THAN FIVE 
HUNDRED THOUSAND PESOS (P500,000.00) IN THE CASE OF THRIFT, RURAL 
AND COOPERATIVE BANKS. 
THE BANGKO SENTRAL NG PILIPINAS SHALL


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FORMULATE THE RULES AND REGULATIONS ON THE RANGE AND AMOUNT OF 
FINES TO BE IMPOSED IN PROPORTION TO THE AMOUNT OF NONCOMPLIANCE 
OF BANKS AND OTHER LENDING INSTITUnONS; AND THAT SUCH AMOUNTS 
MAY BE ADJUSTED PERIODICALLY FOR INFLATION.
'The MSMED Council shall set up the appropriate systems to monitor all loan 
applications of MICRO, small and medium enterprises in order to account for the 
absorptive capacity of the MICRO, small and medium enterprises sector.
'The Bangko Sentral ng Pilipinas shall [require lending institutions covered by 
this Act to] furnish to the MICRO, Small and Medium Enterprise Development 
(MSMED) Council on a quarterly basis regular reports on the[ir] compliance 
AND/OR NONCOMPLIANCE OF BANKS AND OTHER LENDING INSTITUTIONS, 
AND PENALTIES IMPOSED FOR ANY VIOLATION OF [with] the above provisions 
on the mandatory credit allocations for MICRO, small and medium enterprises[, 
and expeditiously act on the Council’s reports of non-compliance therewith]."
SEC. 3. Separability Clause. — The provisions of the Act are hereby declared to 
be separable. If any provision of this Act shall be held unconstitutional, the remainder 
of the Act not otherwise affected shall remain in full force and effect.
SEC. 4. Repealing Clause. — All laws, executive orders, rules and regulations, or 
parts thereof, inconsistent herewith are hereby repealed or modified accordingly.
SEC. 5. Effectivity Clause. — This Act shall take effect within fifteen (15) days 
from its publication in at least two (2) national newspapers of general circulation.
Approved,