FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
SENATE 
Senate Bill No. :2 9 71 
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SEP 21 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The national goal towards poverty alleviation and livelihood promotion entails an 
enormous responsibility and a long-term effort. With the wide range of social, 
economic and political aspects that need to be addressed, it takes more than the 
government to realize this goal. 
On one hand, the target beneficiaries themselves - or the poor and needy in our 
society - should help themselves and actively take part in this endeavor. One 
way to achieve this is through entrepreneurship, and it is the responsibility of the 
State to provide the most viable environment and opportunities for them. While 
financial resources is an indispensable factor, other forms of assistance that will 
help them engage in sustainable entrepreneurial activities such as leadership 
and skills training are also essential. However, the government alone cannot 
provide everything that is necessary to empower them. 
On the other hand, therefore, is the private sector, particularly qualified non-
government institutions who can be the government's partners in providing 
entrepreneurial services to the poor. 
This measure seeks to 
recognize the contributions of microenterprise 
development institutions (MICRODEVs) by mandating them to implement a 
microenterprise development strategy which will empower the poor and enable 
them to achieve income security, among others. The MICRODEV Accreditation 
Center shall be established to monitor and regulate MICRODEVs. Through this 
system, it is envisioned to maximize the contributions of MICRODEVs and more 
importantly, to fully realize the potentials of our rather helpless and dependent 
needy countrymen. 
In view of our continuing efforts to uplift the living conditions of our people, the 
passage of this measure is earnestly sought.1 
Senator 
1 This measure was already approved on third reading by the House of Representatives 


FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
SENATE 
Senate Bill No. 2 9 71 
'11 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
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GOVERNING 
THE 
CREATION 
AND 
ACCREDITATION 
OF 
MICROENTERPRISE DEVELOPMENT INSTITUTIONS AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled: 
1 
SECTION 1. 
Title. -
This Act shall be known as the "Microenterprise 
2 
Development Institutions Act of 2011". 
3 
4 
5 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to 
6 
pursue a program of poverty eradication wherein poor Filipino families shall be 
7 
encouraged to undertake entrepreneurial activities to meet its minimum basic 
8 
needs including income security. In pursuance of this policy, the government 
9 
shall support and work in partnership with qualified institutions in the private 
10 
sector providing general and other entrepreneurial services to the poor. 
11 
12 
13 
SEC. 3. 
Definition of Terms. -
For purposes of implementing this Act, the 
14 
following definitions shall apply: 
15 
16 
(a) M/CRODEV Accreditation Center refers to the entity created under 
17 
Section 7 of this Act. 
18 
19 
(b) Microenterprise Development Strategy refers to a social reform 
20 
program to empower the poor, manage risks and vulnerabilities and 
21 
thereby improve their asset base and expand access to microfinance 
22 
services, such as microcredit, microinsurance, microsavings, health care 
23 
and microhousing through a broad package of financial, business and 
24 
human development services and other nonfinancial services, including 
25 
education to enable them to live productive lives. 
26 
27 
(c) Microfinance refers to the provision of a broad range of financial services 
28 
exclusively for the poor to improve the asset base of households and 
29 
expand their access to savings and enable them to raise their income 
30 
levels and living standards. 
31 
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1 
(d) Net Worth refers to the difference between total assets and total liabilities 
2 
of an entity. 
3 
4 
(e) Poor refers to individuals and families whose income fall below the 
5 
poverty threshold as defined by the National Economic and Development 
6 
Authority or those who cannot afford in a sustained manner to provide 
7 
their minimum basic needs of food, health care, education, housing and 
8 
other essential amenities of life as defined by Republic Act No. 8425, 
9 
otherwise known as the "Social Reform and Poverty Alleviation Act". 
10 
11 
(f) Regulatory Authorities refer to the entities as designated under Section 
12 
9 of this Act. 
13 
14 
(g) Social Reform refers to the continuing process of addressing the basic 
15 
inequities in Philippine society through a systematic, unified and 
16 
coordinated delivery of socioeconomic programs or packages. 
17 
18 
19 
SEC. 4. Recognition of Microenterprise Development Institutions (MICRODEVs). 
20 
- MICRODEVs are hereby recognized as institutions mandated to implement a 
21 
microenterprise development strategy. MICRODEVs shall be operated as non-
22 
stock and non-profit corporations in accordance with the Securities and 
23 
Exchange Commission (SEC) rules and regulations and provisions of Title XI 
24 
(Non-Stock Corporations) of Batas Pambansa Big. 68, otherwise known as "The 
25 
Corporation Code of the Philippines". These shall be governed by a Board of 
26 
Trustees whose members shall not receive compensation: Provided, That no 
27 
part of the net income of MICRODEVs inure to the benefit of the members, 
28 
trustees, directors or officers: 
Provided, further, That the administrative 
29 
expenses shall in no case exceed thirty percent (30%) of the total expenses 
30 
within a taxable year; Provided, finally, That the administrative expenses shall 
31 
conform with the rules and regulations to be prescribed by the Department of 
32 
Finance (DOF) upon the recommendation of the Bureau of Internal Revenue 
33 
(BIR). 
34 
35 
36 
SEC. 5. Powers and Functions of a MICRODEV. - A MICRODEV shall exercise 
37 
such powers and functions and undertake such activities in accordance with the 
38 
policies, programs and services provided in this Act. It shall: 
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(a) 
Provide the poor access to reasonable and affordable credit and 
41 
related services including microfinance, microinsurance, health care 
42 
and microhousing; 
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(b) 
Provide business development opportunities such as leadership 
44 
training and entrepreneurial skills training; and 
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(c) 
Provide human development services to help the poor achieve a 
46 
level of sustainability and empowerment and adopt measures to 
47 
promote a spirit of generosity and selfless giving among individuals 
48 
and institutions that would help support all programs directly involved 
49 
in poverty eradication. 
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51 
Any accredited MICRODEV shall not undertake deposit-taking activities, engage 
52 
in the insurance business and carry out fund management activities without the 
53 
necessary licenses and authority from the relevant regulatory agencies. 
54 
55 
For the purpose of implementing this provision, deposit-taking does not include 
56 
taking of funds from current or prospective borrowers for the purpose of equity 
57 
build-up of an individual borrower's own loans. A MICRODEV shall be a net 
2 


1 
lender at all times, wherein net loans mean total loans minus total equity build-
2 
up. 
3 
4 
5 
SEC. 6. Capital Requirements. - A MICRODEV shall have a net worth of Twenty 
6 
million pesos (P20,000,000.00), or in the case of newly organized MICRODEVs, 
7 
an initial net worth of Ten million pesos (P1 0,000,000.00). 
8 
9 
10 
SEC. 7. Creation and Composition of the Accrediting Entity. - An accrediting 
11 
entity to be known as the MICRODEV Accreditation Center shall be created 
12 
under the National Anti-Poverty Commission (NAPC) to perform the functions 
13 
provided herein. It shall be composed of the following: 
14 
15 
(a) The President of the NAPC or designated representative; 
16 
(b) The Secretary of the DOF or designated representative; 
17 
(c) The Secretary of the Department of Trade and Industry (DTI) or 
18 
designated representative; 
19 
(d) The Governor of the Sangko Sentral ng Pilipinas (BSP) or designated 
20 
mpresentative; 
21 
(e) The Chairperson of the SEC or designated representative; and, 
22 
(f) The President of the Microfinance Council of the Philippines (MFCP) 
23 
or designated representative. 
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The MICRODEV Accreditation Center shall be assisted by a Secretariat in the 
26 
performancE~ of its functions. Funding for its operation shall be sourced from the 
27 
two percent (2%) tax proceeds from MICRODEVs to be remitted to the People's 
28 
Development Trust Fund established under Republic Act No. 8425, as provided 
29 
for in subparagraph (a) of Section 10 of this Act. 
30 
31 
32 
SEC. 8. Powers and Functions of the Accrediting Facility. - The MICRODEV 
33 
Accreditation Center established under this Act shall have the following functions 
34 
and responsibilities: 
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(a) Institute and operationalize a system of accreditation for MICRODEVs; 
37 
(b) Issue certificate of accreditation as a MICRODEV to a non-stock and 
38 
non-profit corporation applicant: 
Provided, That the certificate of 
39 
accreditation shall be valid only for such period as may be prescribed 
40 
under the implementing rules and regulations of this Act: Provided. 
41 
further, That no application shall be processed for accreditation as a 
42 
MICRODEV unless the applicant enterprise secures a valid 
43 
registration or license with the government agency that exercises 
44 
regulatory function over such corporation; 
45 
(c) Monitor the performance of MICRODEVs to ensure compliance with 
46 
the provisions of this Act and its implementing rules and regulations; 
47 
(d) Suspend or revoke any certificate of accreditation upon determination 
48 
that a MICRODEV no longer meets the criteria for accreditation; 
49 
(e) Require regular submission of reports by MICRODEVs; 
50 
(f) Collect reasonable accreditation and monitoring fees from a 
51 
MICRODEV which shall be used for the accrediting entity's operational 
52 
requirements; 
53 
(g) Submit an annual report to the President of the Philippines and the 
54 
concerned committees of both Houses of Congress; and, 
55 
(h) Perform such other functions as may be necessary to accomplish the 
56 
purposes and objectives of this Act. 
57 
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1 
2 
SEC. 9. Power of the Regulatory Authorities to Examine MICRODEVs. - The 
3 
BSP and the Insurance Commission, in coordination with the accrediting entities, 
4 
shall have the power to examine the operations of MICRODEVs, solely for the 
5 
purpose of determining that MICRODEVs are not engaged in unauthorized 
6 
undertakings or activities which are subject to their respective regulations. 
7 
8 
9 
SEC. 10. Taxation of Accredited MICRODEVs. - The taxation of MICRODEVs 
10 
shall be as follows: 
11 
12 
(a) The MICRODEVs shall pay two percent (2%) of the gross income in 
13 
lieu of all national and local taxes which shall be remitted to the 
14 
National Government. 
The tax proceeds shall form part of the 
15 
disbursable portion of the People's Development Trust Fund 
16 
established under Republic Act No. 8425. The term "gross income" 
17 
shall mean gross receipts less sales returns, allowances, discounts 
18 
and other costs and expenses necessarily incurred to provide the 
19 
services required by the customers and clients including salaries and 
20 
employee benefits of personnel, conSUltants and specialists directly 
21 
rendering the service and cost of facilities directly utilized in providing 
22 
the service and cost of supplies. Interest expenses on borrowings for 
23 
lending services of a MICRODEV shall be deductible from gross 
24 
receipts as part of cost of services in arriving at gross income. The 
25 
term gross income shall exclude donations; 
26 
(b) Donations to the MICRODEV shall be fully deductible from the gross 
27 
income of the donor subject to the conditions of Section 34(c) of 
28 
Republic Act No. 8424, as amended, otherwise known as the 
29 
"National Internal Revenue Code of 1997": Provided, however, That 
30 
the accreditation of the MICRODEV by the accrediting entity under 
31 
this Act shall be sufficient; 
32 
(c) Donations to the MICRODEV shall be exempt from donor's tax 
33 
subject to the qualifications of Section 101 of Republic Act No. 8424, 
34 
as amended, otherwise known as the "National Internal Revenue 
35 
Code of 1997": 
Provided, That for purposes of utilization, 
36 
accreditation granted under this Act shall be sufficient; and. 
37 
(d) Transactions of the MICRODEV and its clients shall be exempt from 
38 
documentary stamp tax. 
39 
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SEC. 11. Implementing Rules and Regulations. - The NAPC, in coordination 
42 
with the DOF, the BIR, the BSP, the DTI and the MFCP, shall formulate the 
43 
implementing rules and regulations (lRR) of this Act within ninety (90) days after 
44 
its approval. The IRR shall take effect fifteen (15) days after its publication in a 
45 
newspaper of general circulation in the Philippines. 
46 
47 
48 
SEC. 12. 
Penalty Clause. -
If the BSP or the Insurance Commission finds, 
49 
pursuant to its power under Section 9 of this Act, MICRODEVs engaging in 
50 
unauthorized undertakings or activities, the SSP or the Insurance Commission 
51 
may impose administrative sanctions including, but not limited to, issuance of an 
52 
order requiring the MICRODEV and/or the directors andlor officers concerned to 
53 
cease and desist from the indicated practice or violation, and may further order 
54 
that immediate action be taken to correct the conditions resulting from such 
55 
violation. The cease and desist order shall be immediately effective upon service 
56 
of such order to the respondents. 
57 
4 


1 
Further, MICRODEVs and/or its directors and/or officers found to be engaged in 
2 
unauthorized undertakings and activities shall be subject to criminal and 
3 
administrative fines as provided for in Sections 36 and 37 of Republic Act No. 
4 
7653 or the New Central Bank Act, and in case of unauthorized activities 
5 
regulated by the Insurance Commission, be liable under the applicable insurance 
6 
laws. 
7 
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9 
SEC. 13. Separability Clause. - The provisions of this Act are hereby declared 
10 
to be separable. If any provision of this Act shall be held unconstitutional, the 
11 
remainder of the Act not otherwise affected shall remain in full force and effect. 
12 
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SEC. 14. Repealing Clause. - All executive orders, rules and regulations or 
15 
parts thereof which are contrary to or inconsistent with this Act are hereby 
16 
repealed, amended or modified accordingly. 
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SEC. 15. Effectivity Clause. - This Act shall take effect after fifteen (15) days 
20 
from its publication in at least two (2) national newspapers of general circulation. 
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Approved, 
5