1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
 HOUSE BILL NO.  2895 
Introduced by Representative JESUS R. MARQUEZ 
EXPLANATORY NOTE 
The 2023 List of Establishments of the Philippine Statistics Authority (PSA) 
recorded a total of 1,246,373 business enterprises operating in the country. Of these, 
1,241,733 (99.63%) are MSMEs. Collectively, these MSMEs generate a total of 6,351,466 
jobs or 66.97% of the country’s total employment. Micro enterprises produced the biggest 
share (33.95%) closely followed by small enterprises (26.26%) while medium enterprises 
lagged behind at 6.77%. These numbers show the dominant presence of MSMEs in our 
country and its vital role in our economic growth.  
MSMEs being the Philippine’s economic backbone, strengthening and enhancing 
its finance support programs with this proposed measurement, will certainly open more 
opportunities and generate rapid development for both entrepreneurs and our country 
reciprocally. Further amending R.A. 6977 will elevate the trading quality of our local 
MSMEs, aligning to international standards. Some of the original key highlights of this 
bill are as follows: limit the cost for the issuance of all permits, licenses, certifications, and 
other similar documents required for the conduct of business for registration, entitlement 
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, encourage owner or operator of private 
malls, supermarkets, shopping centers, and commercial selling establishments to provide 
free spaces, and exemption from royalty charges, goodwill charges, commission charges, 
percentage of sales, and other similar schemes. 
Given that MSMEs account for 99.6 % of all firms and almost 67 % of employment1, 
yet face persistent barriers in financing, digitization, skills, and market access, this bill 
provides a comprehensive, coordinated plan to unlock their growth potential.  
1
United 
Nations 
Development 
Programme. 
(n.d.). 
MSME 
Value 
Chain 
Rapid 
Response 
Survey. 
https://www.undp.org/philippines. 
https://www.undp.org/philippines/publications/msme-value-chain-rapid-
responsesurvey#:~:text=Micro%2C%20small%2C%20and%20medium%20enterprises,Gross%20Domestic%20Product%20(GDP). 
August 4, 2025
10:34 am


2 
By amplifying existing programs and adding new tools such as funding, capacity 
building, digital vouchers, and institutional oversight, this measure will empower 
MSMEs to drive resilient, inclusive, and sustainable development in the Philippines.   
In view of the foregoing, approval of this bill is highly sought. 
HON. JESUS “Jess” R. MARQUEZ


3 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
 HOUSE BILL NO.  2895 
Introduced by Representative JESUS R. MARQUEZ 
AN ACT  
FURTHER PROMOTING ENTREPRENEURSHIP BY STRENGTHENING, 
EMPOWERING, AND ENHANCING THE FINANCING AND OTHER 
SUPPORT PROGRAMS FOR MICRO, SMALL AND MEDIUM ENTERPRISES, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED, 
OTHERWISE KNOWN AS THE "MAGNA CARTA FOR MICRO, SMALL AND 
MEDIUM ENTERPRISES (MSMES)" 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 2 of Republic Act No. 6977, as amended, is hereby further 
1 
amended to read as follows: 
2 
"SEC. 2. Declaration of Policy. - Recognizing that MSMEs have the 
3 
potential [for] TO GENERATE more employment [generation) and 
4 
SPUR economic growth AND RECOVERY and therefore can help 
5 
provide a self-sufficient industrial foundation for the country, it is hereby 
6 
declared the policy of the State to promote, support, strengthen and 
7 
encourage the growth and development of MSMEs in all productive sectors 
8 
of the economy particularly rural/agri-based, MANUFACTURING, 
9 
FINANCE, AND SERVICES enterprises. To this end, the State shall 
10 
recognize the specific needs of the MSMEs and shall undertake to promote 
11 
entrepreneurship, support entrepreneurs, encourage the establishment of 
12 
MSMEs and ensure their continuing viability and growth and thereby 
13 
attain countryside industrialization by: 
14 
"x x x." 
15 
16 
SEC. 2. Section 3 of the same Act, as amended, is hereby further amended to read 
17 
as follows: 
18 
"SEC. 3. Micro, Small and Medium Enterprises (MSMEs) as 
19 
Beneficiaries. - MSMEs shall be defined as any business activity or 
20 
enterprise engaged in industry, agribusiness, [and/or] OR services, 
21 
whether single proprietorship, cooperative, partnership or corporation 
22 


4 
 
whose total assets, inclusive of those arising from loans but exclusive of the 
1 
land on which the particular business entity's office, plant and equipment 
2 
are situated, must have value falling under the following categories: 
3 
micro: not more than P3,000,000 
4 
small: P3,000,001 - P15,000,000 
5 
medium: P15,000,001 - P100,000,000 
6 
"The above definitions shall be subject to review EVERY THREE (3) 
7 
YEARS and adjustment, WHEN NECESSARY, by the Micro, Small and 
8 
Medium Enterprises Development (MSMED) Council under Section 6 of 
9 
this Act or upon recommendation of sectoral organizations concerned, 
10 
taking into account inflation and other economic indicators. x x x" 
11 
 
12 
SEC. 3. Section 4 of the same Act, as amended, is hereby further amended to read 
13 
as follows: 
14 
"SEC. 4. Eligibility for Government Assistance. - To qualify for 
15 
assistance, counseling, incentives and promotion under this Act, 
16 
businesses falling under the above definition must be: 
17 
"(a) duly registered with the appropriate agencies as presently 
18 
provided by law: Provided, That in the case of micro enterprises as defined 
19 
herein, registration with the office of the municipal or city treasurer shall 
20 
be deemed sufficient compliance with this requirement; 
21 
 
22 
"(b) one hundred percent (100%) owned, capitalized by Filipino 
23 
citizens, whether single proprietorship or partnership. If the enterprise is 
24 
a juridical entity, at least sixty percent (60%) of its capital or outstanding 
25 
stocks must be owned by Filipino citizens; 
26 
"xxx." 
27 
[“Eligible MSMEs shall be entitled to a share of at least ten percent 
28 
(10%) of total procurement value of goods and services supplied to the 
29 
Government, its bureaus, offices and agencies annually.] 
30 
[“The Department of Budget and Management shall monitor the 
31 
compliance of government agencies on the required procurement for 
32 
MSMEs and submit its report to the MSMED Council on a semestral basis 
33 
and to the Congress of the Philippines, through its appropriate committees 
34 
on a yearly basis.”] 
35 
 
36 
SEC. 4. A new section is hereby inserted after Section 4 of the same Act, as 
37 
amended, and numbered as Section 4-A to read as follows: 
38 
 
39 


5 
 
“SEC. 4-A. GOVERNMENT ASSISTANCE, INCENTIVES AND 
1 
BENEFITS FOR ELIGIBLE MSMEs. – ELIGIBLE MSMES SHALL 
2 
BE 
ENTITLED 
TO 
THE 
FOLLOWING 
GOVERNMENT 
3 
ASSISTANCE, INCENTIVES AND BENEFITS:  
4 
“(A) UPON RECEIPT OF THE APPLICATION OF AN MSME 
5 
FOR ANY PERMIT AND LICENSE FROM ANY LOCAL 
6 
GOVERNMENT UNIT (LGU), INCLUDING A BARANGAY, THE 
7 
LGU SHALL ISSUE A PROVISIONAL AUTHORITY EFFECTIVE 
8 
FOR SIX (6) MONTHS, SUBJECT TO THE FINAL APPROVAL OF 
9 
THE APPLICATION AND THE ISSUANCE OF THE PERMIT OR 
10 
LICENSE APPLIED FOR. 
11 
 
12 
“(B) THE COST FOR THE ISSUANCE OF ALL PERMITS, 
13 
LICENSES, 
CERTIFICATIONS, 
AND 
OTHER 
SIMILAR 
14 
DOCUMENTS REQUIRED FOR THE CONDUCT OF BUSINESS 
15 
FOR 
REGISTERED 
MICRO 
ENTERPRISES 
SHALL 
NOT 
16 
EXCEED FIVE HUNDRED PESOS (₱500.00) PER AGENCY. FOR 
17 
REGISTERED SMALL ENTERPRISES, THE COST SHALL NOT 
18 
EXCEED THREE THOUSAND PESOS (₱3,000.00) PER AGENCY 
19 
FOR A PERIOD OF FIVE (5) YEARS. 
20 
 
21 
“(C) THE NATIONAL GOVERNMENT, ITS BUREAUS, 
22 
OFFICES, AND AGENCIES SHALL ALLOCATE AT LEAST 
23 
TWENTY PERCENT (20%) OF ALL ITS PROCUREMENT 
24 
OPPORTUNITIES FOR GOODS AND SERVICES TO ELIGIBLE 
25 
MSMEs 
IN 
ACCORDANCE 
WITH 
THE 
APPLICABLE 
26 
PROCUREMENT LAW, RULES, AND REGULATIONS. 
27 
 
28 
 “THE GOVERNMENT PROCUREMENT POLICY BOARD 
29 
SHALL FORMULATE THE RULES FOR THE EFFECTIVE 
30 
IMPLEMENTATION 
OF 
THIS 
PROVISION 
AND 
ITS 
31 
TECHNICAL 
SUPPORT 
OFFICE 
SHALL 
MONITOR 
THE 
32 
COMPLIANCE 
OF 
GOVERNMENT 
AGENCIES 
ON 
33 
THEREQUIRED PROCUREMENT FOR MSMEs AND SUBMIT 
34 
ITS REPORT TO THE MSMED COUNCIL ON A SEMESTRAL 
35 
BASIS AND TO THE CONGRESS OF THE PHILIPPINES, 
36 
THROUGH ITS APPROPRIATE COMMITTEES ON A YEARLY 
37 
BASIS. 
38 
 
39 


6 
 
“(D) 
DULY 
REGISTERED 
MICRO 
AND 
SMALL 
1 
ENTERPRISES SHALL BE ENTITLED TO A DISCOUNT OF AT 
2 
LEAST TWENTY PERCENT 
(20%) ON SHIPPING AND 
3 
DELIVERY 
FEES 
FOR 
THEIR 
PRODUCTS 
AND 
RAW 
4 
MATERIALS, AS WELL AS FOR MAILING, FREIGHT, AND 
5 
OTHER SIMILAR SERVICES PROVIDED BY EITHER PUBLIC 
6 
OR PRIVATE COURIERS. 
7 
 
8 
“(E) THE OFFICIAL IN CHARGE WITH THE OPERATION 
9 
OF GOVERNMENT BUILDINGS, STRUCTURES, AND OPEN 
10 
AREAS, INCLUDING PUBLIC MARKETS, WHETHER WET OR 
11 
DRY, AIRPORTS, SEA PORTS, FISH PORTS, PARKS, ZOOS, 
12 
CONVENTION 
CENTERS, 
ENTERTAINMENT 
CENTERS, 
13 
TOURISM CENTERS, SCHOOLS, SCHOOL CAMPUSES, AND 
14 
OTHER SIMILAR STRUCTURES OR AREAS SUITABLE FOR 
15 
SELLING OR MARKETING, WHETHER PERMANENT OR 
16 
TEMPORARY, THAT CAN BE USED AS SELLING AREAS, 
17 
SHALL PROVIDE AN AUTHORIZED MSME STORE FREE 
18 
SPACE MEASURING AT LEAST ONE PERCENT (1%) OF THE 
19 
TOTAL SPACE AVAILABLE THEREIN. FOR PURPOSES OF 
20 
THIS ACT, FREE SPACE REFERS TO THE SPACE THAT MAY BE 
21 
USED FOR SELLING PURPOSES WITHOUT NEED FOR THE 
22 
PAYMENT 
OF 
RENT, 
GOODWILL 
FEES, 
ROYALTIES, 
23 
COMMISSION, PERCENTAGES ON SALES, NOR ANY OTHER 
24 
SIMILAR SCHEME. 
25 
 
26 
“(F) THE OWNER OR OPERATOR OF PRIVATE MALLS, 
27 
SUPERMARKETS, SHOPPING CENTERS, AND COMMERCIAL 
28 
SELLING ESTABLISHMENTS SHALL BE ENCOURAGED TO 
29 
PROVIDE FREE SPACE TO ANY AUTHORIZED MSME STORE. 
30 
 
31 
“THE MSMED COUNCIL OF THE CONCERNED CITY, 
32 
MUNICIPALITY, OR BARANGAY SHALL APPROVE THE MSME 
33 
STORE OF THE LOCAL OFFICE OF THE DEPARTMENT OF 
34 
TRADE AND INDUSTRY (DTI). THE FREE SPACE ALLOCATED 
35 
FOR THE MSME STORE SHALL BE PROVIDED IN THE 
36 
FOLLOWING ORDER OF PREFERENCE: 
37 
“(1) ONE TOWN, ONE PRODUCT STORE OR GO LOKAL! 
38 
STORE OF THE DTI; 
39 


7 
 
“(2) 
MSME 
KUMUNIDARAN 
PRODUKTO 
AT 
1 
RESONABLENG SERBISYO STORE (OR “KUMPARE STORE”); 
2 
OR 
3 
“(3) A LOCAL MICRO OR SMALL ENTERPRISE STORE. 
4 
“ONCE AN MSME STORE IS IN PLACE, ITS REMOVAL OR 
5 
REPLACEMENT SHALL NOT BE ALLOWED EXCEPT FOR 
6 
VALID CAUSE AND AFTER OBSERVANCE OF DUE PROCESS. 
7 
“THE APPROVAL AND THE REMOVAL OF THE MSME 
8 
STORE THAT WILL BE GIVEN FREE SPACE SHALL BE 
9 
REPORTED BY THE MSMED COUNCIL OF THE CONCERNED 
10 
CITY, 
MUNICIPALITY, 
OR 
BARANGAY 
TO 
THE 
11 
CONGRESSIONAL OVERSIGHT COMMITTEE ON MICRO, 
12 
SMALL AND MEDIUM ENTERPRISE DEVELOPMENT. 
13 
 
14 
“(G) THE OWNER OR OPERATOR OF PRIVATE MALLS 
15 
SHALL ALSO BE ENCOURAGED TO ALLOCATE TWENTY 
16 
PERCENT (20%) OF THEIR TOTAL RENTABLE SPACE TO 
17 
LOCAL MICRO AND SMALL ENTERPRISES WHICH SHALL BE 
18 
EXTENDED A TWENTY PERCENT (20%) DISCOUNT ON 
19 
RENTAL RATES. PRIVATE MALLS SHALL NOT CHARGE 
20 
ROYALTY CHARGES, GOODWILL CHARGES, COMMISSION 
21 
CHARGES, PERCENTAGE OF SALES, AND OTHER SIMILAR 
22 
SCHEMES UPON THE MSMEs. 
23 
 
24 
“(H) FREE BASIC CREDIT REPORT FOR MSMEs. – THE 
25 
CREDIT 
INFORMATION 
CORPORATION 
(CIC) 
SHALL 
26 
PROVIDE MSMEs WITH BASIC CREDIT REPORTS, FREE OF 
27 
CHARGE, ONCE PER YEAR. THE BASIC CREDIT REPORT 
28 
SHALL SERVE AS THE PRIMARY PROOF OF CREDIT 
29 
WORTHINESS OF MSMEs IN THEIR LOAN APPLICATIONS. 
30 
 
31 
“THE SECURITIES AND EXCHANGE COMMISSION (SEC) 
32 
SHALL ISSUE THE RULES AND REGULATIONS NECESSARY 
33 
FOR THE IMPLEMENTATION OF THIS SECTION WITHIN 
34 
THIRTY (30) DAYS UPON THE EFFECTIVITY OF THIS ACT.” 
35 
 
36 
SEC. 5. Section 5 of the same Act, as amended, is hereby further amended to read 
37 
as follows: 
38 


8 
 
“SEC. 5. Guiding Principles. – To set the pace for MSME development, 
1 
the State shall be guided by the following principles: 
2 
“(a) Minimal set of rules and simplification of procedures and 
3 
requirements. All government agencies having to do with MICRO, 
4 
[AND] small AND MEDIUM enterprises shall pursue the principles of 
5 
minimum regulation to ensure stability of rules and to encourage 
6 
entrepreneurial spirit among the citizenry. The agencies shall see to it that 
7 
procedural rules and requirements, within their respective offices in 
8 
coordination with other agencies, are minimized in the act of registration, 
9 
availment of financing and accessing other government services and 
10 
assistance. 
11 
 
12 
“(b) Role of the private sector. In order to hasten growth and 
13 
expansion of MICRO, small and medium enterprises, the private sector 
14 
throughout the country shall be encouraged to assist in the effective 
15 
implementation of this Act by participating in government programs for 
16 
MICRO, small and medium enterprises strictly in accordance with the 
17 
law, and consistent with the attainment of the purposes hereof. To 
18 
encourage private sector participation, the Council, in consultation with 
19 
the concerned sector, may recommend simplified procedure and localized 
20 
incentives to MICRO, [AND] small AND MEDIUM enterprises. The 
21 
Government shall encourage the organization and establishment of 
22 
MICRO, small and medium enterprise industry associations at the local 
23 
and 
regional 
levels 
preferably 
unified 
under 
a 
national 
24 
federation/association. 
25 
 
26 
“(c) Coordination of government efforts. Government efforts shall be 
27 
coordinated to achieve coherence in objectives. All appropriate offices, 
28 
particularly those under the Departments of Trade and Industry, Finance, 
29 
Budget and Management, Agriculture, Agrarian Reform, Environment 
30 
and Natural Resources, Labor and Employment, Transportation [and 
31 
Communications], INFORMATION AND COMMUNICATIONS 
32 
TECHNOLOGY, Public Works and Highways, Science and Technology, 
33 
Interior and Local Government, and Tourism as well as the National 
34 
Economic and Development Authority, Philippine Information Agency, 
35 
SEC and the Bangko Sentral ng Pilipinas (BSP), through their national, 
36 
regional, and provincial offices shall, to the best of their efforts and in 
37 
coordination with local government units, provide the necessary support 
38 


9 
 
and assistance to MSMEs. THE DTI SHALL BE THE LEAD AGENCY 
1 
THEREFOR. 
2 
“x x x.” 
3 
 
4 
SEC. 6. Section 6 of the same Act, as amended, is hereby further amended to read 
5 
as follows: 
6 
“SEC. 6. Micro, Small and Medium Enterprises Development Plan 
7 
(MSMEDP). – The President OF THE PHILIPPINES shall approve a six-
8 
year micro, small and medium enterprises development plan prepared by 
9 
the [Department of Trade and Industry (DTI)] DTI which shall form part 
10 
of the [Medium Term] Philippine Development Plan ([MT]PDP). It shall 
11 
be formulated in consultation with the private sector AND ALL 
12 
RELEVANT STAKEHOLDERS, validated and updated semestrally. 
13 
Such plan shall include a component on a micro credit financing scheme.” 
14 
 
15 
SEC. 7. Section 7 of the same Act, as amended, is hereby further amended to read 
16 
as follows: 
17 
“SEC. 7. Micro, Small and Medium Enterprise Development 
18 
(MSMED) Council. – The existing Small and Medium Enterprise 
19 
Development Council, which was created by [Republic Act No.] RA 6977, 
20 
as amended [by Republic Act No. 8289], shall be strengthened to 
21 
effectively spur the growth and development of MSMEs throughout the 
22 
country, and to carry out the policy declared in this Act and shall now be 
23 
known as the Micro, Small and Medium Enterprise Development 
24 
(MSMED) Council. The Council shall be attached to the [Department of 
25 
Trade and Industry] DTI and shall be constituted within sixty (60) days 
26 
after the approval of this Act. 
27 
 
28 
“The Council shall be the primary agency responsible for the 
29 
promotion, growth and development of MICRO, small and medium 
30 
enterprises in the country by way of facilitating and closely coordinating 
31 
national efforts to promote the viability and growth of MICRO, small and 
32 
medium enterprises, including assisting relevant agencies in the tapping 
33 
of local and foreign funds for MICRO, small and medium enterprise 
34 
development, as well as promoting the use of existing programs, as well as 
35 
seeking ways to maximize the use of our labor resources.” 
36 
 
37 
SEC. 8. Section 7-A of the same Act, as amended, is hereby further amended to 
38 
read as follows: 
39 


10 
 
“SEC. 7-A. Composition of the Micro, Small and Medium Enterprises 
1 
Development (MSMED) Council. – The members of the Council shall be 
2 
the 
following 
OR 
THEIR 
DULY 
DESIGNATED 
3 
REPRESENTATIVE: 
4 
“(a) The Secretary of Trade and Industry as Chair; 
5 
“(b) The Secretary of Agriculture; 
6 
“(c) The Secretary of the Interior and Local Government; 
7 
“(D) THE SECRETARY OF FINANCE; 
8 
“(E) THE SECRETARY OF SCIENCE AND TECHNOLOGY; 
9 
“(F) THE SECRETARY OF TOURISM; 
10 
“(G) THE SECRETARY OF ENVIRONMENT AND NATURAL  
11 
RESOURCES; 
12 
“[(d)] (H) Three (3) representatives from the MSME sector, [to 
13 
represent Luzon, Visayas and Mindanao, with at least one (1) 
14 
representative from the microenterprise sector] TO BE NOMINATED 
15 
BY THE PHILIPPINE CHAMBER OF COMMERCE AND 
16 
INDUSTRY; AND 
17 
“[(e) One (1) representative from the women sector designated by the 
18 
Philippine Commission on Women;] 
19 
“[(f) One (1) representative from the youth sector designated by the 
20 
National Youth Commission; and] 
21 
“[(g)] (I) The [Chairman]PRESIDENT of THE Small Business 
22 
Corporation. 
23 
 
24 
“A. Advisory Unit. – There shall be an Advisory Unit to the Council, 
25 
which shall consist of the following OR THEIR DULY DESIGNATED 
26 
REPRESENTATIVE: 
27 
“(a) [The Secretary of Science and Technology] THE SECRETARY 
28 
OF 
29 
AGRARIAN REFORM; 
30 
“(b) The Governor of the [Bangko Sentral ng Pilipinas] BSP; 
31 
“(C) THE CHAIRPERSON OF THE SEC; 
32 
“[(c)] (D) The President of the Land Bank of the Philippines; 
33 
“[(d)] (E) The President of the Development Bank of the Philippines; 
34 
“[(e)] (F) The Director General of the National Economic and 
35 
Development Authority;  
36 
“(G) 
THE 
CHAIRPERSON 
OF 
THE 
COOPERATIVE 
37 
DEVELOPMENT AUTHORITY (CDA); 
38 


11 
 
“(H) THE PRESIDENT OF THE PHILIPPINE GUARANTEE 
1 
CORPORATION; 
2 
“(I) 
THE 
COMMISSIONER 
OF 
THE 
INSURANCE 
3 
COMMISSION (IC); 
4 
“(J) 
THE 
PRESIDENT 
OF 
THE 
PHILIPPINE 
CROP 
5 
INSURANCE 
6 
CORPORATION; 
7 
“(K) 
A 
REPRESENTATIVE 
OF 
A 
NATIONAL 
8 
ORGANIZATION REPRESENTING AND DOMINATED BY 
9 
MSMEs; 
10 
“[(f)] (L) One (1) representative from the labor sector, to be nominated 
11 
by accredited labor groups; 
12 
“[(g)] (M) A representative from the private banking sector to serve 
13 
[alternatively] ALTERNATELY [between] AMONG the [c]Chamber 
14 
of [t]Thrift    
15 
[b]Banks, [and] the Rural Banker’s Association of the Philippines 
16 
[(RBAP)], 
17 
AND THE BANKERS ASSOCIATION OF THE PHILIPPINES; 
18 
“[(h)] (N) A representative of the microfinance nongovernment 
19 
organizations (NGOs), DESIGNATED BY THE MICROFINANCE 
20 
NGO REGULATORY COUNCIL; 
21 
“[(i)] (O) A representative of the University of the Philippines-Institute 
22 
for Small Scale Industries (UP-ISSI); [and] 
23 
“[(j)] (P) The President of the [Credit Information Corporation.] CIC; 
24 
“(Q) ONE (1) REPRESENTATIVE FROM THE WOMEN 
25 
SECTOR 
26 
DESIGNATED BY THE PHILIPPINE COMMISSION ON 
27 
WOMEN; 
28 
“(R) ONE (1) REPRESENTATIVE FROM THE YOUTH 
29 
SECTOR 
30 
DESIGNATED BY THE NATIONAL YOUTH COMMISSION; 
31 
AND 
32 
“(S) A REPRESENTATIVE FROM NON-STOCK SAVINGS 
33 
AND 
34 
LOAN ASSOCIATIONS DESIGNATED BY THE ALLIANCE OF 
35 
NON STOCK SAVINGS AND LOAN INSTITUTIONS, INC. 
36 
(ANSLI). 
37 
“x x x.” 
38 
 
39 


12 
 
SEC. 9. Section 7-B of the same Act, as amended, is hereby further amended 
1 
to read as follows: 
2 
“SEC. 7-B. Powers and Functions. – A. have the following powers, 
3 
duties and functions: 
4 
“x x x; 
5 
The MSMED Council shall have the following powers, duties and 
6 
functions: 
7 
“x x x; 
8 
“(d) To review the existing policies of government agencies that would 
9 
affect the growth and development of MSMEs and recommend changes to 
10 
the President OF THE PHILIPPINES and Congress through the 
11 
Committee on Economic Affairs of the Senate and the Committee on [Small 
12 
Business and Entrepreneurship] MICRO, SMALL AND MEDIUM 
13 
ENTERPRISE Development of the House of Representatives, whenever 
14 
deemed necessary. This shall include efforts to simplify rules and 
15 
regulations, as well as review of the applicability and relevance of procedural 
16 
and documentary requirements in the registration, financing, and other 
17 
activities relevant to MSMEs the result shall be included in the annual 
18 
report to be submitted to Congress; 
19 
“x x x; 
20 
“(h) To promote the productivity and viability of MSMEs IN DTI’S 
21 
TOP PRIORITY INDUSTRIES FOR DEVELOPMENT by way of 
22 
directing [and/]or assisting relevant government agencies and institutions 
23 
at the national, regional and provincial levels towards the: 
24 
“x x x; 
25 
“(12) Through appropriate government agencies: 
26 
“x x x; 
27 
    “(f) Set-up new MSME NEGOSYO centers and revitalize already 
28 
established MSME NEGOSYO centers to provide MSMEs in the regions 
29 
easier access to services such as the following: 
30 
“x x x.” 
31 
 
32 
“B. ADDITIONAL FUNCTIONS OF THE MSMED COUNCIL. 
33 
– AS PROVIDED FOR IN SECTION 10 OF RA 10644, OR THE “GO 
34 
NEGOSYO ACT”, THE MSMED COUNCIL SHALL HAVE THE 
35 
FOLLOWING ADDITIONAL FUNCTIONS: 
36 
 
37 
“(A) COORDINATING AND OVERSIGHT BODY FOR THE 
38 
MSME NEGOSYO CENTER. – THE MSMED COUNCIL SHALL, 
39 


13 
 
THROUGH THE DTI, ACT AS THE COORDINATING AND 
1 
SUPERVISING BODY FOR ALL THE AGENCIES INVOLVED IN 
2 
THE ESTABLISHMENT AND OPERATION OF THE MSME 
3 
NEGOSYO CENTERS. THE MSMED COUNCIL SHALL MONITOR 
4 
AND ASSESS THE PROGRESS OF THE MSME NEGOSYO 
5 
CENTERS, WHICH SHALL BE INCLUDED IN ITS ANNUAL 
6 
REPORT TO BE SUBMITTED TO THE CONGRESS; 
7 
 
8 
“(B) PROVISION OF A COMPLIANCE GUIDE. – FOR EACH 
9 
RULE OR GROUP OF RELATED RULES ISSUED BY ANY 
10 
GOVERNMENT AGENCY FOR COMPLIANCE BY MSMEs, THE 
11 
COUNCIL 
SHALL 
PUBLISH 
COMPLIANCE 
GUIDELINES 
12 
WHICH SHALL BE WRITTEN IN PLAIN LANGUAGE OR IN THE 
13 
LOCAL DIALECT, IF NECESSARY. 
14 
 
15 
“THE 
COUNCIL 
SHALL 
PREPARE 
SEPARATE 
16 
COMPLIANCE GUIDES COVERING GROUPS OR CLASSES OF 
17 
SIMILARLY AFFECTED MSMEs AND SHALL COOPERATE 
18 
WITH 
INDUSTRY 
ASSOCIATIONS 
TO 
DEVELOP 
AND 
19 
DISTRIBUTE SUCH COMPLIANCE GUIDES. THE PUBLICATION 
20 
OF EACH COMPLIANCE GUIDE SHALL INCLUDE THE POSTING 
21 
OF THE GUIDE IN A CONSPICUOUS LOCATION ON THE 
22 
WEBSITE OF THE AGENCY, AND DISTRIBUTION OF THE 
23 
GUIDE TO KNOWN INDUSTRY CONTACTS, SUCH AS SMALL 
24 
ENTITIES, 
ASSOCIATIONS 
OR 
INDUSTRY 
LEADERS 
25 
AFFECTED BY THE RULE. THE ISSUING GOVERNMENT 
26 
AGENCY 
SHALL 
PUBLISH 
AND 
DISSEMINATE 
THE 
27 
COMPLIANCE RULES WITHIN NINETY (90) DAYS FROM THE 
28 
DATE OF ISSUANCE; 
29 
“(C) 
CONDUCT 
OF 
RESEARCH 
ON 
WOMEN 
30 
ENTREPRENEURSHIP. – THE COUNCIL SHALL CONDUCT 
31 
RESEARCH TO SUPPORT WOMEN ENTREPRENEURSHIP 
32 
INCLUDING 
ENTREPRENEURIAL 
BEHAVIOR, 
BARRIERS, 
33 
PARTICIPATION AND CESSATION RATES, DISCRIMINATORY 
34 
PRACTICES 
AND 
CONTRIBUTION 
TO 
THE 
NATIONAL 
35 
ECONOMY 
AND 
GROWTH. 
AS 
DEFINED 
BY 
THE 
36 
INTERNATIONAL 
FINANCE 
CORPORATION, 
AND 
37 
RECOGNIZED AND ADOPTED BY THE MSMED COUNCIL, 
38 
WOMEN- OWNED BUSINESSES ARE BUSINESSES WHERE AT 
39 


14 
 
LEAST FIFTY-ONE PERCENT (51%) OF A COMPANY IS OWNED 
1 
BY A WOMAN OR WOMEN, AND WOMEN-LED BUSINESSES 
2 
ARE BUSINESSES WHERE AT LEAST TWENTY PERCENT (20%) 
3 
IS OWNED BY A WOMAN OR WOMEN AND AT LEAST ONE 
4 
WOMAN ACTS AS THE CHIEF EXECUTIVE OFFICER (CEO) OR 
5 
CHIEF OPERATING OFFICER (COO) OR PRESIDENT OR VICE 
6 
PRESIDENT, AND AT LEAST THIRTY PERCENT (30%) OF THE 
7 
BOARD OF DIRECTORS, WHERE A BOARD EXISTS, IS 
8 
COMPOSED OF WOMEN; 
9 
 
10 
“(D) 
POLICY 
FORMULATION 
ON 
WOMEN 
11 
ENTREPRENEURSHIP. – THE COUNCIL SHALL PROVIDE 
12 
POLICY DIRECTION TOWARDS RECOGNIZING WOMEN’S 
13 
APTITUDE AND TALENT IN ENTREPRENEURSHIP AS WELL AS 
14 
ESTABLISH 
LINKAGES 
THAT 
WILL 
ENABLE 
MORE 
15 
OPPORTUNITIES 
FOR 
WOMEN 
TO 
ENGAGE 
IN 
16 
ENTREPRENEURSHIP; AND 
17 
 
18 
“(E) DEVELOPMENT OF ENTREPRENEURIAL EDUCATION 
19 
AND TRAINING. – THE MSMED COUNCIL SHALL DEVELOP, IN 
20 
COORDINATION WITH THE DEPARTMENT OF EDUCATION, 
21 
TECHNICAL 
EDUCATION 
AND 
SKILLS 
DEVELOPMENT 
22 
AUTHORITY, AND COMMISSION ON HIGHER EDUCATION 
23 
(CHED), A COURSE CURRICULUM OR TRAINING PROGRAMS 
24 
IN 
ENTREPRENEURSHIP 
AND 
PERSONAL 
FINANCE, 
25 
INCLUDING DIGITAL FINANCIAL LITERACY, THAT WILL 
26 
PROMOTE 
ENTREPRENEURIAL 
CULTURE 
AND 
27 
COMPETENCE, AND ENCOURAGE THE USE OF DIGITAL 
28 
PLATFORMS 
IN 
FINANCIAL 
TRANSACTIONS. 
29 
ENTREPRENEURSHIP SHALL BE INTEGRATED IN THE 
30 
CURRICULUM 
OF 
EDUCATIONAL 
AND 
TRAINING 
31 
INSTITUTIONS IN ALL LEVELS. 
32 
“THE CHED SHALL HAVE A PROGRAM WHEREIN 
33 
GRADUATING COLLEGE AND POSTGRADUATE STUDENTS 
34 
SHALL ASSIST ENTREPRENEURS IN MAKING BANKABLE 
35 
FEASIBILITY 
STUDIES 
AS 
FULFILLMENT 
OF 
THEIR 
36 
ACADEMIC REQUIREMENTS.” 
37 
 
38 


15 
 
SEC. 10. A new section is hereby inserted after Section 7-B of the same Act, as 
1 
amended, and numbered as Section 7-C to read as follows: 
2 
 
3 
“SEC. 7-C. CITY, MUNICIPAL, AND BARANGAY MSMED 
4 
COUNCIL. – THERE SHALL BE CREATED A MSMED COUNCIL 
5 
IN EVERY CITY, MUNICIPALITY, AND BARANGAY WHICH 
6 
SHALL HAVE THE AUTHORITY TO PROPOSE POLICIES THAT 
7 
ARE GEARED TO ASSIST MSMEs IN THE AREAS OF 
8 
PRODUCTIVITY ENHANCEMENT, MARKETING, ACHIEVING 
9 
SUSTAINABILITY BY EXTENDING CREDIT TO CUSTOMERS, 
10 
AND 
IMPLEMENTING 
EFFICIENT 
LOAN 
COLLECTION 
11 
SYSTEMS, AMONG OTHER STRATEGIES. 
12 
 
13 
“THE CITY OR MUNICIPAL MSMED COUNCIL SHALL BE 
14 
COMPOSED OF THE CITY OR MUNICIPAL BUSINESS PERMIT 
15 
AND 
LICENSING 
OFFICER 
AS 
CHAIRPERSON, 
THE 
16 
PRESIDENT OF THE ASSOCIATION OF BARANGAY CAPTAINS, 
17 
THE 
PRESIDENT 
OF 
THE 
SANGGUNIANG 
KABATAAN 
18 
FEDERATION, THE TOURISM OFFICER, AND THE CITY OR 
19 
MUNICIPAL AGRICULTURIST OR THE CITY PLANNING 
20 
OFFICER, AS MEMBERS. 
21 
 
22 
“THE 
BARANGAY 
MSMED 
COUNCIL 
SHALL 
BE 
23 
COMPOSED OF THE PUNONG BARANGAY AS CHAIRPERSON, 
24 
THE 
SANGGUNIANG 
KABATAAN 
CHAIRPERSON, 
A 
25 
REPRESENTATIVE OF THE WOMEN’S BRIGADE OR WOMEN’S 
26 
SECTOR, A REPRESENTATIVE OF THE BARANGAY PUBLIC 
27 
SAFETY OFFICE, AND A REPRESENTATIVE OF THE SENIOR 
28 
CITIZENS, AS MEMBERS. 
29 
 
30 
“THE 
CITY, 
MUNICIPAL, 
AND 
BARANGAY 
MSMED 
31 
COUNCILS 
SHALL 
COORDINATE 
AND 
FORMULATE 
32 
MEASURES TO ENSURE THE OPERATIONAL AND FINANCIAL 
33 
VIABILITY 
OF 
MSMEs 
WITHIN 
THEIR 
TERRITORIAL 
34 
JURISDICTION, 
TAKING 
INTO 
CONSIDERATION 
THE 
35 
RELEVANT FACTORS AFFECTING THE CAPACITIES OF THE 
36 
MSMEs.” 
37 
 
38 


16 
 
SEC. 11. Section 8 of the same Act, as amended, is hereby further amended to read 
1 
as follows: 
2 
“SEC. 8. Designation of the Bureau of Micro, Small and Medium 
3 
Enterprise Development as Council Secretariat. – x x x: 
4 
“(1) to prepare, in coordination with local government units and/or 
5 
associations of local government officials, and recommend annual as 
6 
well as medium-term MICRO, small and medium enterprise 
7 
development plans for approval of the Council; 
8 
“x x x; 
9 
“(3) to assist the Council in coordinating and monitoring MICRO, 
10 
small and medium enterprise policies and programs and activities of 
11 
all government agencies with respect to MICRO, small and medium 
12 
enterprises; 
13 
“(4) to prepare, collate and integrate all inputs to the Council’s yearly 
14 
report on the status of MICRO, small and medium enterprises in the 
15 
country; 
16 
“x x x.” 
17 
 
18 
SEC. 12. Section 11 of the same Act, as amended, is hereby further amended to 
19 
read as follows: 
20 
“SEC. 11. Creation of THE Small Business [Guarantee and Finance] 
21 
Corporation. – There is hereby created a body corporate to be known as the 
22 
Small Business [Guarantee and Finance] Corporation, hereinafter referred 
23 
to 
as 
the 
[Small 
Business 
Corporation 
(SB 
Corporation)] 
SB 
24 
CORPORATION, which shall be charged with the primary responsibility 
25 
of implementing comprehensive policies and programs to assist MSMEs in 
26 
all areas, including but not limited to finance and information services, 
27 
training and marketing.” 
28 
 
29 
SEC. 13. Section 11-A of the same Act, as amended, is hereby further amended to 
30 
read as follows: 
31 
“SEC. 11-A. Composition of the Board of Directors and its Powers. – 
32 
The SB Corporation [corporate powers shall be vested on] SHALL HAVE 
33 
a Board of Directors composed of [eleven (11)] THIRTEEN (13) members 
34 
which shall include the following: 
35 
“(a) The Secretary of Trade and Industry, WHO SHALL ACT AS 
36 
CHAIRPERSON OF THE BOARD UNTIL SUCH TIME THAT THE 
37 
PRESIDENT OF THE PHILIPPINES SHALL HAVE APPOINTED 
38 


17 
 
THE CHAIRPERSON OF THE BOARD FROM AMONG ITS 
1 
MEMBERS; 
2 
 
3 
“(b) The Secretary of Finance; 
4 
“(C) THE PRESIDENT OF THE GOVERNMENT SERVICE 
5 
INSURANCE SYSTEM (GSIS); 
6 
“(D) THE PRESIDENT OF THE SOCIAL SECURITY SYSTEM 
7 
(SSS); 
8 
“[c] (E) A private sector representative to be appointed by the 
9 
President OF THE PHILIPPINES upon the recommendation of the 
10 
MSMED Council; 
11 
“[d] (F) Seven (7) representatives of the SB Corporation common stock 
12 
shareholders who shall be elected based on proportional distribution, in 
13 
accordance with Section [24] 23 of the REVISED Corporation Code; and 
14 
“[e)] (G) The president of the SB Corporation as ex officio member and 
15 
to serve as vice [chairman] CHAIRPERSON of the Board. 
16 
“The President OF THE PHILIPPINES shall appoint the 
17 
[chairman] CHAIRPERSON of the Board from among its members. 
18 
“All members of the Board so appointed, except for the e x officio 
19 
members, shall serve for a term of three (3) years [without reappointment.] 
20 
AND MAY BE REAPPOINTED TO ANOTHER TERM UNLESS 
21 
EARLIER REVOKED. IF THE TERM OF THE INCUMBENT 
22 
MEMBER HAS EXPIRED, THE MEMBER SHALL CONTINUE TO 
23 
FUNCTION 
IN 
A 
HOLDOVER 
CAPACITY 
UNTIL 
A 
24 
REPLACEMENT HAS BEEN APPOINTED AND QUALIFIED. 
25 
[The]ANY person [so] appointed to replace a member who has resigned, 
26 
died, or been removed for cause shall serve only for the unexpired portion 
27 
of the term. 
28 
“The Board of Directors shall have, among others, the following 
29 
specific powers and authorities: 
30 
“x x x; and 
31 
“(f) [Notwithstanding the provisions of Republic Act No. 6758 and 
32 
Compensation Circular No. 10, Series of 1989 issued by the Department of 
33 
Budget and Management, the Board shall have the authority to p]Provide 
34 
for the organizational structure, [and] staffing pattern [of SB Corporation 
35 
and to extend to the employees and personnel thereof salaries, allowances 
36 
and fringe benefits similar to those extended to and currently enjoyed by 
37 
employees and personnel of other government financial institutions.] AND 
38 
COMPENSATION OF EMPLOYEES AND PERSONNEL OF THE SB 
39 


18 
 
CORPORATION, FOR SUBMISSION TO THE GOVERNANCE 
1 
COMMISSION FOR GOVERNMENT-OWNED OR -CONTROLLED 
2 
CORPORATIONS (GCG).” 
3 
 
4 
SEC. 14. Section 11-B of the same Act, as amended, is hereby further amended, to 
5 
read as follows: 
6 
“SEC. 11-B. Corporate Structure and Powers. - “A. The SB 
7 
Corporation shall: 
8 
“x x x. 
9 
“B. For this purpose, the SB Corporation [subject to compliance with 
10 
the rules and regulations to be issued by the Bangko Sentral ng Pilipinas 
11 
(BSP) and the Securities and Exchange Commission,] shall have the 
12 
following functions and duties: 
13 
“(a) Source and adopt development initiatives for globally competitive 
14 
MSMES in finance and business technologies; 
15 
“(b) [To] [e]Extend all forms of financial assistance, EXCEPT 
16 
GRANTS, to eligible MSMEs. THE SB Corporation may also engage in 
17 
wholesale lending. The SB Corporation shall be given two (2) years from the 
18 
effectivity of this Act to comply with this requirement; 
19 
“(c) [Guarantee loans obtained by qualified MSMEs under such terms 
20 
and conditions adopted by the SB Corporation Board of Directors;] 
21 
ESTABLISH AN ENTERPRISE REHABILITATION FUND FOR 
22 
CALAMITY-STRICKEN 
MSMEs 
NOT 
TO 
EXCEED 
FIVE 
23 
HUNDRED MILLION PESOS (P500,000,000.00) AS PART OF 
24 
THE SB CORPORATION’S CAPITALIZATION BY THE NATIONAL 
25 
GOVERNMENT; 
26 
“x x x; 
27 
“(f) Apply for, receive and accept grants and donations from sources 
28 
within and outside the country; [and] 
29 
“(g) Hold, own, purchase, acquire, sell, mortgage, dispose or otherwise 
30 
invest or re-invest in stocks, bonds, treasury bills, debentures, securities and 
31 
similar forms of indebtedness of the government, its agencies and 
32 
instrumentalities or any government financial institution[.]; AND 
33 
“(H) SUBMIT AN ANNUAL REPORT TO THE MSMED 
34 
COUNCIL, THE CONGRESS OF THE PHILIPPINES AND THE 
35 
GCG ON THE PERFORMANCE AND FINANCIAL CONDITION OF 
36 
THE CORPORATION.  
37 
“THE SB CORPORATION SHALL BE EXEMPT FROM 
38 
SECURING PRIOR BSP AUTHORIZATION FOR ENGAGING IN 
39 


19 
 
QUASI-BANKING ACTIVITIES AND SHALL NOT BE SUBJECT 
1 
TO 
BSP 
SUPERVISION 
AND 
REGULATION 
FOR 
SUCH 
2 
ACTIVITIES.” 
3 
 
4 
SEC. 15. A new section is hereby inserted after Section 11-B of the same Act, as 
5 
amended, and numbered as Section 11-C to read as follows: 
6 
“SEC. 11-C. STRATEGIC MANAGEMENT OF THE SB 
7 
CORPORATION. – THE BOARD OF THE SB CORPORATION, 
8 
THROUGH 
ITS 
CHAIRPERSON, 
SHALL 
BE 
FULLY 
9 
RESPONSIBLE AND ACCOUNTABLE FOR THE PERFORMANCE 
10 
OF THE CORPORATION’S MANDATE. FOR THIS PURPOSE, THE 
11 
BOARD SHALL BE CONSTITUTED AS A MANAGING BOARD TO 
12 
CONCEPTUALIZE THE STRATEGIC PLANS AND POLICIES OF 
13 
THE CORPORATION. 
14 
 
15 
“THE SB CORPORATION SHALL ADOPT A BALANCED 
16 
SCORECARD MANAGEMENT APPROACH, SUBJECT TO THE 
17 
REVIEW AND APPROVAL OF THE GCG, TO ENABLE IT TO 
18 
MANAGE ITS FINANCIAL PERFORMANCE WHILE PURSUING 
19 
ITS PUBLIC POLICY OBJECTIVES OF SUPPORTING MICRO, 
20 
SMALL AND MEDIUM ENTERPRISES DEVELOPMENT.” 
21 
 
22 
SEC. 16. Section 12 of the same Act, as amended, is hereby further amended to 
23 
read as follows: 
24 
“SEC. 12. Capitalization and Funding of the SB Corporation. – The SB 
25 
Corporation shall have an authorized capital stock of [Ten] FIFTY billion 
26 
pesos [(P10,000,000,000.00)] (P50,000,000,000.00), WHICH SHALL 
27 
BE DIVIDED INTO 400,000 COMMON SHARES AND 100,000 
28 
PREFERRED SHARES WITH A PAR VALUE OF ONE HUNDRED 
29 
PESOS (P100.00) PER SHARE. The initial capital of One billion pesos 
30 
(P1,000,000,000.00) [shall be] established from a pool of funds [to be] 
31 
contributed in the form of equity investments in common stock by the Land 
32 
Bank of the Philippines (LBP), the Development Bank of the Philippines 
33 
(DBP), in the amount of Two hundred million pesos (P200,000,000.00) 
34 
each [.The] AND ALSO BY THE Social Security System (SSS) and the 
35 
Government Service Insurance System (GSIS) [shall also set aside] IN THE 
36 
AMOUNT OF Two hundred million pesos (P200,000,000.00) each [for the 
37 
SB Corporation] SHALL REMAIN PART OF THE CAPITALIZATION 
38 
OF THE SB CORPORATION. [Authorized capital stock of the [s]Small 
39 


20 
 
[b]Business [c]Corporation shall be divided into 80,000,000 common 
1 
shares and 20,000,000 preferred shares with a par value of One hundred 
2 
pesos (P100.00) per share]: Provided, That the common shares which have 
3 
been issued, including those issued against the assets of the KKK Guaranty 
4 
Fund consolidated under the [s]Small [b]Business [c]Corporation by virtue 
5 
of Executive Order No. 233, Series of 2000 and Executive Order No. 19, 
6 
Series of 2001 and including those already subscribed, shall [form] 
7 
LIKEWISE REMAIN part of the capitalization of the corporation: 
8 
Provided, further, That holders of preferred shares issued under [Republic 
9 
Act No.] RA 6977, as amended, shall have the option to convert the same 
10 
into common shares. Additional equity funding shall come from trust 
11 
placements of excess and unused funds of existing government agencies, 
12 
bilateral 
and 
multilateral 
official 
development 
assistance 
funds, 
13 
subscriptions from government-owned or -controlled corporations AND 
14 
THE NATIONAL GOVERNMENT THROUGH THE DEPARTMENT 
15 
OF BUDGET AND MANAGEMENT, and investments of private 
16 
financial institutions and corporations: Provided, finally, That any 
17 
investment from the private sector shall only be in the form of preferred 
18 
shares. 
19 
“NATIONAL 
GOVERNMENT 
EQUITY 
TO 
THE 
20 
CORPORATION SHALL BE INCLUDED IN THE ANNUAL 
21 
GENERAL APPROPRIATIONS ACT. 
22 
“[To allow for capital build-up, SB Corporation shall be given a five (5) 
23 
year grace period on dividend commitments beginning on the date of 
24 
effectivity of this amendment. Thereafter, it] THE SB CORPORATION 
25 
may [only] declare as dividend not more than thirty percent (30%) of its net 
26 
income and the rest withheld as retained earnings.” 
27 
 
28 
SEC. 17. Section 13 of the same Act, as amended, is hereby further amended to 
29 
read as follows: 
30 
“SEC. 13. The SB Corporation shall NOT be subject to the supervision 
31 
and examination of the Bangko Sentral ng Pilipinas taking into 
32 
consideration its developmental objectives.” 
33 
 
34 
SEC. 18. Section 14 of the same Act, as amended, is hereby further amended to 
35 
read as follows: 
36 
“SEC. 14. Venture Capital and Micro Finance Trust Fund . – The SB 
37 
Corporation may set aside an amount of money to encourage the setting up 
38 
of a venture capital and micro finance trust fund for the purpose of 
39 


21 
 
promoting AVAILABLE business opportunities [available] to THE 
1 
MSME sector. The Venture Capital Fund shall be used mainly for venture 
2 
capital finance especially in technology-oriented industries. The micro 
3 
finance trust fund shall be used to provide collateral-free fixed and working 
4 
capital loans to micro and small enterprises run by those emerging out of 
5 
poverty. THE INITIAL AMOUNT OF AT LEAST TEN PERCENT 
6 
(10%) OF THE EQUITY CONTRIBUTION OF THE NATIONAL 
7 
GOVERNMENT TO THE CAPITALIZATION OF THE SMALL 
8 
BUSINESS CORPORATION, NOT TO EXCEED FIVE HUNDRED 
9 
MILLION 
PESOS 
(P500,000,000.00), 
SHALL 
BE 
10 
APPROPRIATED TO FUND THE VENTURE CAPITAL AND 
11 
MICRO FINANCE TRUST FUND.” 
12 
 
13 
SEC. 19. Section 15 of the same Act, as amended, is hereby further amended to 
14 
read as follows: 
15 
“SEC. 15. Mandatory Allocation of Credit Resources to Micro, Small 
16 
and Medium Enterprises . – For [the] AN ADDITIONAL period of ten (10) 
17 
years from the date of the effectivity of this amendatory Act, all lending 
18 
institutions [as defined under Bangko Sentral ng Pilipinas rules], whether 
19 
public or private, shall set aside at least [eight percent (8%) for micro and 
20 
small enterprises and at least two percent (2%) for medium enterprises] 
21 
TEN PERCENT (10%) of their total loan portfolio based on their balance 
22 
sheet as of the end of the previous quarter FOR MICRO, SMALL AND 
23 
MEDIUM ENTERPRISES, and make it available for MSME credit as 
24 
herein contemplated: PROVIDED, THAT A MAXIMUM OF THREE 
25 
PERCENT (3%) THEREOF SHALL BE THE ALLOCATION FOR 
26 
MEDIUM ENTERPRISES. 
27 
“Compliance of this provision shall be: 
28 
“(a) actual extension of loans to eligible MSMEs; or 
29 
“x x x; or 
30 
“(f) [subscribe/] SUBSCRIPTION OR purchase of liability 
31 
instruments as may be offered by the SB Corporation. THE SAME SHALL 
32 
NOT BE DEEMED AS QUASI-BANKING OPERATIONS, AND 
33 
SHALL NOT REQUIRE A QUASI-BANKING LICENSE FROM THE 
34 
BSP; OR 
35 
“(G) EXTENSION OF LOANS TO MSME VALUE CHAIN 
36 
ACTORS WHICH ALLOW MSMEs TO 
PARTICIPATE IN 
37 
ORGANIZED OR FORMAL LOCAL AND FORMAL VALUE 
38 
CHAINS. FOR PURPOSES OF THIS ACT, VALUE CHAIN ACTORS 
39 


22 
 
INCLUDE, 
AMONG 
OTHERS, 
TRADERS, 
SUPPLIERS, 
1 
PROCESSORS OR AGGREGATORS WHO CONDUCT LINKED 
2 
SEQUENCE OF VALUE ADDING ACTIVITIES INVOLVED IN 
3 
BRINGING A PRODUCT TO FINAL CONSUMERS; OR 
4 
“(H) 
SUSTAINABLE 
FINANCE 
FOR 
PROJECTS 
OR 
5 
ACTIVITIES THAT WILL BENEFIT MSMEs; OR 
6 
“(I) 
INNOVATION 
DEVELOPMENT 
CREDIT 
FOR 
7 
PURPOSES OF DEVELOPING NEW TECHNOLOGIES, PRODUCT 
8 
INNOVATION, PROCESS INNOVATION, ORGANIZATIONAL 
9 
INNOVATION, AND MARKETING INNOVATION IN MSMEs; OR 
10 
“(J) FINANCING FOR COMPANIES THAT MAINTAIN AND 
11 
OPERATE 
ELECTRONIC 
PLATFORMS 
THAT 
FACILITATE 
12 
VALUE 
CHAIN 
AND 
SUPPLY 
CHAIN 
FINANCING 
13 
TRANSACTIONS WITH MSMEs, MSME DIGITALIZATION, OR 
14 
WHICH OFFER/PROVIDE TECHNOLOGY-BASED SOLUTIONS 
15 
TO MSMEs FOR PURPOSES OF PROMOTING E-COMMERCE, 
16 
INCLUDING ALTERNATIVE DATA CREDIT SCORING, DIGITAL 
17 
ACCOUNTING AND BOOKING APPLICATIONS, PRODUCTION, 
18 
MARKETING AND DISTRIBUTION, AND TAX COMPLIANCE 
19 
ONLINE TOOLS; OR 
20 
“(K) INVESTMENTS IN MSMEs BY WAY OF PURCHASE OF 
21 
THEIR SECURITIES THROUGH AN ORGANIZED MARKET, 
22 
INITIAL PUBLIC OFFERING, FOLLOW-ON OFFERING, OR 
23 
THROUGH 
REGISTERED 
CROWDFUNDING 
24 
INTERMEDIARIES, 
INCLUDING 
INVESTMENT 
IN 
THE 
25 
EQUITIES OF MSME STARTUPS; OR 
26 
“(L) LOANS TO, OR INVESTMENTS IN FINANCIAL 
27 
INSTITUTIONS THAT PROVIDE SUPPLY CHAIN FINANCING, 
28 
VALUE 
CHAIN 
FINANCING, 
TRADE 
FINANCING 
OR 
29 
GUARANTEES FOR MSMEs.  
30 
“MSME FINANCING THAT MEETS THE ELIGIBILITY 
31 
CRITERIA UNDER RA 11901, OR “THE AGRICULTURE, 
32 
FISHERIES 
AND 
RURAL 
DEVELOPMENT 
FINANCING 
33 
ENHANCEMENT ACT OF 2022” AND RA 11293, OR THE 
34 
“PHILIPPINE INNOVATION ACT” SHALL BE RECOGNIZED AS 
35 
COMPLIANCE 
WITH 
THE 
MANDATORY 
CREDIT 
36 
REQUIREMENT UNDER THESE LAWS. 
37 
“ALL 
LENDING 
INSTITUTIONS 
SHALL 
ACTIVELY 
38 
SUPPORT AND PARTICIPATE IN PROGRAMS THAT FORM 
39 


23 
 
PART OF THE PRIORITY INITIATIVES UNDER THE NATIONAL 
1 
STRATEGY FOR FINANCIAL INCLUSION 2022 TO 2028 THAT 
2 
PROMOTE 
ACCESS 
TO 
FINANCE 
FOR 
MSMEs 
WHILE 
3 
ENSURING THAT THEY HAVE ADEQUATE AND EFFECTIVE 
4 
CREDIT RISK MANAGEMENT SYSTEMS. 
5 
“LENDING INSTITUTIONS SHALL ALSO ADOPT CASH 
6 
FLOW-BASED LENDING WHICH PLACES EMPHASIS ON THE 
7 
CAPACITY TO PAY OF AN MSME RATHER THAN COLLATERAL. 
8 
WHEN GRANTING MSME CREDIT, LENDING INSTITUTIONS 
9 
SHALL UTILIZE SIMPLIFIED LOAN APPLICATION FORMS AND 
10 
REQUIRE STREAMLINED DOCUMENTARY REQUIREMENTS. 
11 
LENDING 
INSTITUTIONS 
SHALL 
ALSO 
CONSIDER 
12 
ALTERNATIVE DATA AS WELL AS AVAILABLE CREDIT RISK 
13 
INFORMATION IN DETERMINING AN MSME BORROWER’S 
14 
CAPACITY TO PAY. FOR PURPOSES OF MITIGATING CREDIT 
15 
RISK, LENDING INSTITUTIONS SHALL ACCEPT MOVABLE 
16 
COLLATERAL AS A FORM OF CREDIT RISK MITIGANT FOR 
17 
MSME EXPOSURES, IN ADDITION TO PHYSICAL COLLATERAL 
18 
(LIKE REAL ESTATE), FINANCIAL GUARANTEES, AND OTHER 
19 
INSTRUMENTS. 
20 
“The [Bangko Sentral ng Pilipinas] BSP AND THE SEC, IN 
21 
CONSULTATION WITH THE MSMED COUNCIL AND THE DTI, 
22 
shall formulate rules for the effective implementation of this provision: 
23 
Provided, That the purchase of government notes, securities and other 
24 
negotiable instruments shall not be deemed compliance with the foregoing 
25 
provisions: Provided, further, That the [Bangko Sentral ng Pilipinas ] BSP 
26 
AND 
THE 
SEC, 
IN 
CONSULTATION 
WITH 
ALL 
27 
STAKEHOLDERS, shall establish [an] A MEANINGFUL incentive 
28 
[program] SYSTEM to encourage [lending to micro, small and medium 
29 
industries beyond the mandatory credit allocation to said enterprises,] 
30 
COMPLIANCE WITH THIS PROVISION, such as possible reduction 
31 
in bank’s reserve requirement[.]: PROVIDED, FINALLY, THAT THE 
32 
BSP AND THE SEC SHALL ALIGN THEIR REGULATIONS ON 
33 
THE PENALTIES FOR BANKS AND OTHER ENTITIES, FOR 
34 
NONCOMPLIANCE WITH THE PROVISION FOR MANDATORY 
35 
LENDING. 
36 
 
37 
“The MSMED Council shall set up the appropriate systems to monitor 
38 
all loan applications of MSMEs in order to account for the absorptive 
39 


24 
 
capacity of the MSME sector. EACH LENDING INSTITUTION SHALL 
1 
DESIGNATE AN OFFICER WHO SHALL PREPARE AND SIGN 
2 
THE REPORT ON COMPLIANCE AND NONCOMPLIANCE WITH 
3 
THE MANDATORY CREDIT ALLOCATION, FOR SUBMISSION 
4 
TO THE BSP IN THE CASE OF BANKS, AND THE SEC IN THE 
5 
CASE OF NON-BANK FINANCIAL INTERMEDIARIES. The 
6 
[Bangko Sentral ng Pilipinas ] BSP IN THE CASE OF BANKS, AND 
7 
THE 
SEC 
IN 
THE 
CASE 
OF 
NON-BANK 
FINANCIAL 
8 
INTERMEDIARIES, shall furnish to the MSMED Council on a quarterly 
9 
basis comprehensive reports on the [bank’s] LENDING ENTITY’S 
10 
compliance[,] AND noncompliance [and penalties of] WITH the above 
11 
provisions on the mandatory credit allocation for MSMEs[.], AND SHALL 
12 
SUBMIT AN ANNUAL REPORT, SIGNED BY AN OFFICER WITH 
13 
THE RANK OF AT LEAST A MANAGING DIRECTOR, ON THE 
14 
AMOUNTS OF THE PENALTIES FOR NONCOMPLIANCE WITH 
15 
THE MANDATORY LENDING PROVISION OF THIS ACT. 
16 
“ALL BANKS SHALL PROVIDE ACCESS TO DEPOSIT 
17 
ACCOUNTS, SUCH AS SAVINGS, CHECKING AND DEBIT 
18 
ACCOUNTS, 
TO 
REGISTERED 
MSMEs. 
FINANCIAL 
19 
TECHNOLOGY SHALL BE PROVIDED TO MSMEs TO ENSURE 
20 
THEIR FINANCIAL INCLUSION. 
21 
“ALL LENDERS SHALL REPORT CREDIT INFORMATION 
22 
AND TRANSACTIONS OF MSMEs TO THE CIC TO MONITOR 
23 
PROPER COMPLIANCE AND EFFICIENT IMPLEMENTATION. 
24 
“FOR EFFICIENT IMPLEMENTATION AND OPERATION, 
25 
COOPERATIVES 
EXCEPT 
COOPERATIVE 
BANKS 
AND 
26 
INSURANCE COOPERATIVES SHALL BE UNDER THE SOLE 
27 
SUPERVISION AND EXAMINATION OF THE CDA; ALL OTHER 
28 
FINANCIAL ENTITIES, CORPORATIONS AND FINANCIAL 
29 
INTERMEDIARIES, 
SUCH 
AS 
NON- 
GOVERNMENT 
30 
ORGANIZATIONS (NGOs), FINANCING COMPANIES, NON-
31 
STOCK SAVINGS AND LOAN ASSOCIATIONS, MICROFINANCE 
32 
NGOs, AND LENDING INVESTORS SHALL BE UNDER THE SEC; 
33 
BANKS SHALL BE UNDER THE BSP; AND INSURANCE 
34 
COMPANIES SHALL BE UNDER THE IC. 
35 
“FOR CLARITY, COOPERATIVE BANKS SHALL BE UNDER 
36 
THE SUPERVISION AND EXAMINATION OF THE CDA AND 
37 
BSP; WHILE INSURANCE COOPERATIVES SHALL BE UNDER 
38 
THE SUPERVISION AND EXAMINATION OF THE CDA AND IC. 
39 


25 
 
“Lending institutions which are not qualified to acquire or hold lands 
1 
of the public domain in the Philippines shall be permitted to bid and take 
2 
part in sales of mortgaged real property in case of judicial or extra-judicial 
3 
foreclosure, as well as avail of receivership, enforcement and other 
4 
proceedings, solely upon default of a borrower, and for a period not 
5 
exceeding five (5) years from actual possession: Provided, That in no event 
6 
shall title to the property be transferred to such lending institution. If the 
7 
lending institution is the winning bidder, it may, during said five (5) year 
8 
period, transfer its rights to a qualified Philippine national, without 
9 
prejudice to a borrower’s rights under applicable laws.” 
10 
 
11 
SEC. 20. Section 18 of the same Act, as amended, is hereby further amended to 
12 
read as follows: 
13 
“SEC. 18. Congressional Oversight   Committee. – To monitor and 
14 
oversee the implementation of this Act, there shall be a Congressional 
15 
Oversight Committee on Micro, Small and Medium Enterprise 
16 
Development (COC-MSMED) composed of the chairpersons of the Senate 
17 
Committee on Economic Affairs and the House Committee on [Small 
18 
Business an Entrepreneurship Development] MICRO, SMALL AND 
19 
MEDIUM ENTERPRISE DEVELOPMENT as chairperson and co-
20 
chairperson, respectively; x x x .” 
21 
 
22 
SEC. 21. Section 19 of the same Act, as amended, is hereby further amended, to 
23 
read as follows: 
24 
“SEC. 19. Penal Clause. – PENALTIES SHALL BE IMPOSED ON 
25 
THE VIOLATION OF THE FOLLOWING PROHIBITED ACTS: 
26 
“(a) The [Bangko Sentral ng Pilipinas ] BSP IN THE CASE OF 
27 
BANKS, AND THE SEC IN THE CASE OF NON-BANK FINANCIAL 
28 
INTERMEDIARIES, shall impose administrative sanctions and other 
29 
penalties on the lending institutions for non[-]compliance with THE 
30 
[provisions] MANDATORY LENDING AS PROVIDED UNDER 
31 
SECTION 14 of this Act [including a fine of not less than Five hundred 
32 
thousand pesos (P500,000.00)]. PENALTIES ON NONCOMPLIANCE 
33 
OR UNDERCOMPLIANCE SHALL BE COMPUTED AT ONE-HALF 
34 
OF 
ONE 
PERCENT 
(0.5%) 
OF 
NONCOMPLIANCE 
OR 
35 
UNDERCOMPLIANCE, OR AT RATES PRESCRIBED BY THE BSP 
36 
MONETARY BOARD. 
37 
“Penalties on noncompliance shall be directed to the development of 
38 
the MSME sector. Ninety percent (90%) of the penalties collected [should] 
39 


26 
 
SHALL go to the MSMED Council Fund, while the remaining ten percent 
1 
(10%) [should] SHALL be [given] REMITTED to the BSP, THE SEC, OR 
2 
THE APPROPRIATE AGENCY THAT EXERCISES REGULATORY 
3 
JURISDICTION OVER SUCH LENDING ENTITY, to cover for 
4 
administrative expenses. 
5 
“THE CHAIRPERSON OF THE MSMED COUNCIL SHALL 
6 
SUBMIT TO THE CONGRESS OF THE PHILIPPINES AN 
7 
ANNUAL REPORT ON THE STATUS OF THE PENALTIES 
8 
REMITTED INCLUDING ITS UTILIZATION IN RELATION TO 
9 
THE IMPLEMENTATION OF SERVICES TO MSMEs IN THE 
10 
AREAS 
OF 
CAPACITY 
BUILDING, 
TECHNOLOGY 
11 
INFORMATION, 
INFORMATION 
COLLECTION 
AND 
12 
DISSEMINATION, AND OTHER INTERVENTIONS FOR MSME 
13 
DEVELOPMENT, GROWTH AND SUSTAINABILITY. 
14 
“(b) EXCEPT FOR SECURITIES COVERED UNDER RA 8799, 
15 
OR “THE SECURITIES REGULATION CODE”, ENTITIES SHALL 
16 
SECURE THE NECESSARY APPROVAL OF THE SEC PRIOR TO 
17 
RECEIVING INVESTMENTS AS WELL AS GIFTS, ITEMS OR 
18 
OTHER COMMODITIES, EITHER IN THE FORM OF CASH OR 
19 
ITS EQUIVALENT CASH VALUE IN CONSIDERATION OF 
20 
RETURN OF PROFIT OR BENEFIT COMING FROM MORE THAN 
21 
TWENTY (20) INDIVIDUALS. THE PRESIDENT, MANAGER OR 
22 
OFFICER OF ANY ENTITY WHO FAILS TO SECURE SUCH 
23 
APPROVAL 
SHALL 
SUFFER 
THE 
PENALTY 
OF 
24 
IMPRISONMENT OF NOT LESS THAN THIRTY (30) DAYS BUT 
25 
NOT MORE THAN ONE HUNDRED EIGHTY (180) DAYS, OR A 
26 
FINE OF NOT LESS THAN TEN THOUSAND PESOS (₱10,000.00) 
27 
BUT NOT MORE THAN ONE HUNDRED THOUSAND PESOS 
28 
(₱100,000.00), OR BOTH, AT THE DISCRETION OF THE 
29 
COURT.” 
30 
 
31 
SEC. 22. Implementing Rules and Regulations (IRR). – The DTI, through the 
32 
Bureau of Micro, Small and Medium Enterprise Development and in consultation with 
33 
the BSP in the case of banks, and the SEC in the case of non-bank financial intermediaries, 
34 
and other concerned government agencies, nongovernment organizations and private 
35 
sector agencies involved in the promotion of MSMEs, shall formulate the rules and 
36 
regulations (IRR) necessary to implement the provisions of this Act within ninety (90) 
37 
days from the approval of this Act: Provided, That the IRR shall be reviewed yearly: 
38 
Provided, further, That the IRR shall be approved by the MSMED Council. 
39 


27 
 
 
1 
SEC. 23. Separability Clause. – The provisions of this Act are hereby declared to 
2 
be separable. If any provision of this Act shall be held unconstitutional, the remainder of 
3 
this Act not otherwise affected shall remain in full force and effect. 
4 
 
5 
SEC. 24. Repealing Clause. – Section 22 of RA 8367, or the “Revised Non-Stock 
6 
Savings and Loan Association Act of 1997”, is hereby repealed. All laws, decrees, 
7 
proclamations, issuances, or ordinances that are contrary to or inconsistent with the 
8 
provisions of this Act are hereby amended, repealed or modified accordingly. 
9 
 
10 
SEC. 25. Effectivity. – This Act shall take effect fifteen (15) days after its 
11 
publication in the Official Gazette or in a newspaper of general circulation. 
12 
 
Approved,