~tnutt, 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
) 
) 
) 
ItOl<, .ltl)_for",.la;" 
First Regular Session 
'13 
All) -8 P 2 :52 
SENATE 
S. No. 1254 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 20 provides that: 
SEC. 20. The State recognizes the indispensable role of the private sector, 
encourages private enterprise, and provides incentives to needed investments. 
Small and medium sized enterprises comprise the vast majority of the industries in our 
country. Time and again we have often expressed our support for these industries. They are 
essential to us because they are the source of livelihood for many of our countrymen and in many 
instances, the breeding ground for our rising entrepreneurs. 
As the government tries to reach out to them, more and more regulations are being 
issued. In many instances, due to their limited resources and expertise, our small and medium 
entities find themselves having a hard time complying with the government requirements. We 
need to exert certain efforts to make the rules and regulations accessible and easily understood. 
This way we will be to focus our efforts in assisting the businesses instead of policing them for 
failure to comply. By doing so, we can promote a culture of compliance with the regulation 
instead of avoiding the penalty. 
This bill seeks to mandate the Small and Medium Enterprise Development Council to 
prepare compliance guides for all regulations to assist our small and medium entities.' 
~~ ~k~~l~ 
pAII.MIRIAM DEF lISS0R siNTI!fJO 
• This bill was originally filed in the Fomteenth Congress, Second Regular Session. 
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SIXTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 1254 
Introduced by Senator Miriam Defensor Santiago 
°13 
AlWi -8 P2:52 
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AN ACT 
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AMENDING REPUBLIC ACT NO. 6977, OTHERWISE KNOWN AS THE MAGNA CARTA 
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FOR SMALL ENTERPRISES, TO PROMOTE COMPLIANCE AMONG SMALL AND 
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MEDIUM ENTERPRISES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SECTION I. Section 8 of Republic Act No. 6977, otherwise known as the Magna Carta 
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for Small Enterprises, is hereby amended to read as follows: 
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"Sec. 8. Powers and Functions. -
The Small and Medium Enterprise 
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Development (SMED) Council shall have the following powers, duties and 
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functions: 
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(a) 
to help establish the needed environment and opportunities conducive to 
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the growth and development of the small and medium sector; 
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(b) 
to recommend to the President and the Congress all policy matters 
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affecting small and medium sale enterprises; 
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(c) 
to formulate a comprehensive small and medium enterprise development 
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plan to be integrated into the National Economic and Development Authority 
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Development Plans; 
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(d) 
to coordinate and integrate various government and private sector 
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activities relating to small and medium enterprise development; 
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(e) 
to review existing policies of government agencies that would affect the 
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growth and development of small and medium enterprises and recommend 
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changes to the President and/or to the Congress whenever deemed necessary. This 
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shall include efforts to simplify rules and regulations as well as procedural and 
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documentary requirements in the registration, financing, and other activities 
relevant to small and medium enterprises; 
(f) 
to monitor and determine the progress of various agencies geared towards 
the development of the sector. This shall include overseeing, in coordination with 
local government units and the Depmiment of Local Government as well as 
private sector groups/associations, the developments among small and medium 
enterprises, particularly the cottage and micro-sized firms; 
(g) 
to 
promulgate implementing guidelines, progr3lllS, and operating 
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principles as may be deemed proper and necessary in the light of government 
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. policies and objectives of this Act; 
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(h) 
to provide the appropriate policy and coordinative framework in assisting 
relevant government agencies, in coordination with the National Economic and 
Development Authority and the Coordinating Council for the Philippine 
Assistance Progrmll, as may be necessary, in the tapping of local and foreign 
funds for small and medium enterprise development; 
(i) 
to promote the productivity and viability of small and medinm enterprises 
by way of directing and/or assisting relevant government agencies and institutions 
at the national, regional and provincial levels towards the: 
(I) 
prOVISIOn of business training courses, technical training for 
technicians and skilled laborers and continuing skills upgrading 
programs; 
(2) 
provision 
of labor-management 
guidance, 
assistance 
and 
improvement of the working conditions of employees in small and 
medium-sized firms; 
(3) 
provision 
of guidance 
and 
assistance 
regarding 
product 
quality/product development and product diversification; 
(4) 
provision of guidance and assistance for the adoption of improved 
production techniques and commercialization of appropriate technologies 
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for the product development alld for increased utilization of indigenous 
. raw' materials; 
(5) 
provision of assistance in marketing and distribution of products of 
small and medium scale enterprises through local supply-demand 
information, industry alld provincial profiles, overseas marketing 
promotion, domestic market Iinkaging and the establishment of common 
service facilities such as common alld/or cooperative bonded warehouse, 
grains storage, agro-processing and drying facilities, ice plants, 
refrigerated storage, cooperative trucking facilities, etc.; 
(6) 
intensification of assistallce and guidallce to enable greater access 
to credit through a simplified multiagency financing program; to 
encourage development of other models of financing such as leasing and 
venture capital activities; to provide effective credit guarantee systems, 
and encourage for formation of credit guaralltee associations, including 
setting up of credit records and information systems alld to decentralize 
loan approval mechanisms; 
(7) 
provision of concessional interest rates, lower finallcing fees, 
which may include incentives for prompt credit payments, arrangements 
tying amortizations to business cash flows, effective substitution of 
government guarantee cover on 10alIS for the borrower's lack of collateral; 
(8) 
provision .of bankruptcy preventive measures through the setting 
up of a mutual relief system for distressed enterprises, alld the 
establishment of measures such as insurallce against extraordinary 
disaster; 
(9) 
intensification of information dissemination campaigns and 
entrepreneurship education activities; 
(10) 
easier access to alld availment of tax credits alld other tax alld duty 
incentives as provided by the Omnibus investment Code and other laws; 
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(11) 
of support for product experimentation and research and 
development activities as well as access to information on commercialized 
technologies; and 
(12) 
provision of more infrastructure facilities and public utilities to 
support operations of small and medium enterprises; 
TO FORMULATE A COMPLIANCE GUIDE AS PROVIDED IN 
SECTION 9-A OF THIS ACT; 
(k) 
to submit to the President and the Congress a yearly report on the status of 
small and medium enterprises in the country, including the progress and impact of 
all relevant government policies, programs and legislation as well as private 
sectors activities; 
(I) 
to assist in the establishment of modern industrial estates outside urban 
. centers; and 
(m) 
generally, to exercise all powers and functions necessary for the objectives 
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and purposes of this Act." 
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SECTION 2. The same Act is hereby amended by inserting Section 9-A after Section 9 to 
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read as follows: 
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"Sec. 9-A. Compliance Guide. - For each rule or group of related rules 
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issued by any government agency for compliance by any small and medium 
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sector, the Council, tbrough the Secretariat shall publish one or more guides to 
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assist small and medium entities in complying with the rule and shall entitle such 
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publications 'small and medium entity compliance guides.' 
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The Council shall, in its sole discretion, taking into account the subject 
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matter of the rule and the language of relevant statutes, ensure that the guide is 
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written using sufficiently plain language likely to be understood by affected small 
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and medium entities. The Council may prepare separate guides covering groups or 
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classes of similarly affected small entities and may cooperate with associations of 
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small entities to develop and distribute such guides. The Council may prepare 
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guides and apply this section with respect to a rule or a group of related rules. 
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Each guide shall explain the actions a small or medium entity is required 
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to take to comply with a rule. The explanation shall include a description of 
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actions needed to meet the requirements of a rule, to enable a small or medium 
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entity to know when such requirements are met; and if determined appropriate by 
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the agency, may include a description of possible procedures, such as conducting 
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tests, that may assist a small or medium entity in meeting such requirements. 
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The publication of each guide shall include the posting of the guide in an 
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easily identified location on the website of the agency; and distribution of the 
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guide to known industry contacts, such as small entities, associations, or industry 
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leaders affected by the rule." 
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SECTION 3. Separability Clause. - If any provision or part hereof is held invalid or 
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unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
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valid and subsisting. 
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SECTION 4. Repealing Clause. - Any law, presidential decree or issuance, executive 
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order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent 
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with the provisions of this Act is hereby repealed, modified, or amended accordingly. 
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SECTION 5. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
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publication in at least two (2) newspapers of general circulation. 
Approved, 
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