THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
s. No. s g! 
INTRODUCED BY HON. MANUEL B. VILLAR JR. 
EXPLANATORY NOTE 
The micro and cottage industries substantially contribute to the country's economic 
development. Being labor-intensive, this industry sector is one of the major job generators in the 
country. Its growth means new jobs for the more than three million unemployed and 12 million 
underemployed Filipinos. 
Yet the sector's growth is hampered by low productivity and level of technology. Its 
biggest problems are production-related. While marketing and financing aspects are being 
addressed sufficiently by the government, other production-related aspects have, over the years, 
been taken for granted. 
This bill seeks to expand and strengthen the Cottage Industry Technology Center (CITC) 
as the head agency to provide assistance to and address the production, technology and skills 
formation needs of micro and cottage industries. 
This measure strongly supports the government's strategy for an export-led balanced 
agri-industrialization strategy designed to address the production needs of the industry as well as 
the Medium-Term Development Plan's thrust on human capital investment. It is likewise aligned 
with the government's objective to create jobs, upgrade technology, promote technology transfer 
and develop the countryside. 
n 
Approval of this measure is recommended, 


THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
INTRODUCED BY HON. MANUEL B. VILLAR JR. 
AN ACT TO PROMOTE, DEVELOP AND ASSIST MICRO AND COTTAGE 
INDUSTRIES BY PROVIDING AN EFFECTIVE AND RATIONAL SYSTEM TO 
ADDRESS THEIR PRODUCTION AND TECHNOLOGY NEEDS 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assern bled: 
SECTION 1. 
Title. - This Act shall be known as the “Micro and Cottage Industries 
Development Act of 2004.” 
SEC. 2. Declaration of Policy. - Recognizing that the envisioned alleviation of poverty 
and the problem of massive unemployment particularly in the countryside cannot be 
realized without strong economic activities at the grassroots level and that micro and 
cottage industries, being highly labor-intensive and a primary users of indigenous raw 
materials, have the highest potential for employment, self-employment and livelihood 
opportunities, it is hereby declared the policy of the State to give preferential attention to 
the promotion and development of micro and cottage industries, including livelihood and 
self-employment activities. 
SEC. 3. Micro and Cottage Enterprises. - For the purpose of this Act, “micro and cottage 
enterprise” shall be defined as any business activity or enterprise, whether single 
proprietorship, partnership, cooperative or corporation, engaged in manufacturing, 
processing and other supporting industries whose total assets inclusive of those arising 
from loans but exclusive of land on which the particular business entity’s office, plant and 
equipment are situated, is less than One Million Five Hundred Thousand Pesos 
(P1,500,000.00) subject to the periodic review of the Small and Medium Enterprise 
Development Council (SMEDC). Included in this definition are projects which provide 
livelihood, self-employment and income-augmenting opportunities through production 
activities at home, schools, churches, community self-help projects and others of like 
nature. 


SEC. 4. Purpose. - This Act seeks to stimulate the establishment and sustain the growth of 
micro and cottage enterprises by addressing their production-related needs, The systematic, 
efficient and rational provision of assistance aimed at increasing productivity and 
availability of these enterprises will in turn generate more employment, exports and to 
achieve countryside industrialization. 
SEC. 5. Designation of the Cottage Industry Technology Center as Lead Agency for the 
Provision of Assistance to Address the Production, Technology and Skills Formation Needs 
of Micro and Cottage Industries. - To achieve the purposes of the Act, the Cottage Industry 
Technology Center (formerly the National Cottage Industries Development Authority) is 
hereby designated as the lead agency in the provision of government assistance which shall 
address the problems of existing and potential micro and cottage enterprises relating to 
production, technology and manufacturing skills. Its facilities in Marikina City shall serve 
as the Cottage Industry Technology Center (CITC) at the national level. It shall have the 
following duties and functions: 
(a) To directly provide, together with relevant industry associations, technology transfer 
projects and technical training to their production workers, supervisors, technicians and 
trainors at the basic, upgraded and advance levels; 
(b) To establish a technical consultancy services system whereby existing and potential 
micro and cottage entrepreneurs can be effectively advised on equipment selection and lay- 
out, productivity improvement measures and such other concerns designed to improve the 
competitiveness of their products either as subcontractors, direct or indirect exporters; 
(c) To fabricate and disseminate the use of labor-saving devices, quality tools and 
equipment; 
(d) To assist local government units in setting up their own cottage industries training 
systems by way of providing technical services, trainor’s trainings or the establishment, 
tooling and operation of satellite cottage industries technology centers at the provincial, 
district and municipal levels; and 
(e) To exercise and perform such other powers and functions necessary to accomplish the 
objectives and purposes of this Act. 
SEC. 6. Composition and Structure. - To effectively carry out its duties and 
responsibilities, the Cottage Industry Technology Center (CITC) shall retain its corporate 
status and shall be governed by a board of directors composed of the Undersecretary of 
Regional Development, Department of Trade and Industry (DTI) as chairman, the 
Administrator of the CITC to be appointed by the President upon the recommendation of 
the Secretary of the DTI as vice chairman, the Undersecretary for Planning, Department of 
Science and Technology (DOST), the Director General of Technical Education and Skills 
Development Authority (TESDA), the heads of the Small Business Guarantee and 


Financing Corporation (SBGFC), Philippine Chamber of Commerce and Industry (PCCI), 
University of the Philippines - Institute of Small Scale Industries (UP-ISSI), Chamber of 
Furniture Industries of the Philippines (CFIP), the Philippine Chamber of Handicraft 
Industries (PCHI) and the People’s Economic Council (PEC), as members. The CITC shall 
have the following organizational structure: 
(a) An administrator, assisted by a deputy administrator who shall be appointed by the 
President. 
(b) The technical and operations group which shall consist of a planning and program 
development and delivery office. 
(c) The support services group which shall consist of the finance and administrative offices 
to service both national and regional cottage industry centers. 
SEC. 7. General Powers. - To effectively discharge its functions, the Cottage Industry 
Technology Center is authorized: 
(a) To acquire and hold assets of all types and kinds resulting directly from operations 
authorized by this Act or as essential or incidental to the proper conduct of such operations; 
(b) To accept donations or development aids, to enter into contracts, own, lease, sell or 
dispose its real properties and to make necessary expenditures as may be required in 
carrying out its functions as mandated by this Act; 
(c) To establish subsidiary corporations and/or institutional mechanisms deemed necessary 
to attain its objectives in accordance with existing laws, rules and regulations; and 
(d) To sue and be sued. 
SEC. 8. Duties and Remuneration of the Board. - The Board of Directors shall have the 
following duties and remuneration: 
(a) Enunciate policies, allocate resources and provide general directions to the operations 
of the Center; 
(b) Review and approve the annual and other supplemental or special budgets; 
(c) Review and approve corporate plans and annual programs; 
(d) Evaluate and assess the performance of the Center on a yearly basis; 
(e) To hire technical staff and other employees of the Center, determine their composition 
in accordance with the Civil Service Law, and 
(f) Members of the Board of Directors shall receive a per diem at rate to be determined by 
the Department of Budget and Management (DBM) pursuant to existing rules and 
regulations. 
SEC. 9. Duties and Functions of the Administrator. - The Administrator shall have the 
following duties and functions: 
(1) To administer the affairs of the Center under the general policy directions of the Board; 


(2) To appoint subordinate officials and employees as may be provided for by the plantilla 
or budget necessary for the proper discharge of functions; 
(3) To submit to the Board for review and approval its annual corporate budget and 
accomplishment; and 
(4) To perform such other acts necessary in the exercise of the duties of the office and such 
other acts as may be assigned by the Board of Directors. 
SEC. 10. Funding. - To carry out the purposes of this Act, the CITC is hereby authorized to 
appropriate all the former assets of the National Cottage Industry Development Authority, 
including funds for guarantees and other similar capital, after which subsidies to augment 
its income from operations shall be included in the General Appropriations Act. 
SEC. 11 .Micro and Cottage Industry Technology Center. - The CITC shall utilize the 
existing training centers of TESDA, DOLE, SMEDC and Kabuhayan Centers nationwide 
which shall serve as venues for the development and transfer of required technologies, the 
formation of critical skills, sources of improved production techniques, product 
development, quality and/or diversification. The facilities of these centers shall be made 
available for common usage by micro and cottage enterprises as well as incubators for new 
business. 
SEC. 12. Loanable Fund. - To carry out the purpose of this Act and in order for CITC to 
effectively exercise its mandate, the SBGFC and other government agencies shall provide 
the special financing needs of the micro and cottage industry. 
SEC. 13. Information Dissemination. - The DTI, through the CITC, in coordination with 
the Department of Interior and Local Government (DILG), DECS through the TESDA, the 
Philippine Information Agency (PIA) and other concerned agencies shall ensure the proper 
and adequate information dissemination of the contents and benefits of this Act to the 
general public especially to the target sectors. In addition, the concerned agencies shall 
conduct the necessary training of personnel who shall ensure the effective and efficient 
implementation of the law. 
SEC. 14.Implementing Rules and Regulations. - The Secretary of the DTI through the 
CITC in consultation with the secretaries of DILG, DOST, DECS through TESDA, the 
heads of PCCI, UP-ISSI, LBP, SBGFC, CFIP, PEC and other concerned agencies shall 
formulate the necessary rules and regulations to implement the provisions of this Act within 
ninety (90) days after its approval. 
SEC. 15.SeparabiZity Clause. - Should any provision of this Act be declared 
unconstitutional, the remaining provisions not otherwise affected shall remain in full force 
and effect. 
SEC. 16.RepeaZing Clause. - All laws, executive orders, rules and regulations or parts 
thereof which are inconsistent herewith are hereby repealed or modified accordingly. 


SEC. 17.Effectivity Clause. - This Act shall take effect after thirty (30) days following its 
full publication in at least two (2) newspapers of general circulation in the Philippines. 
Approved,