cIp."I'-$: .," 
>t,( ;.: ,:-' ->;?+, 
FOURTEENTH CONGRESS OF THE REPUBLIC) 
Second Regular Session 
OF THE PHILIPPINES 
1 
1 
3 .~IRM 15 pz:.17 
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 oflen 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 complymg 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. 
1 


6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
,. ~. ... . 
i.J‘-.;.:t 
,).. 
~ 
{:ri.$, 
.i,&,{<,, 
FOURTEENTH CONGRESS OF THE REPUBLIC) 
Second Regular Session 
OF THE PHILIPPINES 
1 
1 
52 
JAM 1s P Z  2?7 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
AMENDING REPUBLIC ACT NO. 6977, OTHERWISE KNOWN AS THE MAGNA 
CARTA FOR SMALL ENTERPRISES AS AMENDED, TO PROMOTE 
COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 8 of RA 6977, otherwise known as the Magna Carta for 
Small Enterprises, as amended, is hereby amended to read as follows: 
“Sec. 8. Powers and Functions. - The Small and Medium Enterprise 
Deveuopment (SMED) Council shall have the following powers, duties and functions: 
(a) to help establish the needed environment and opportunities conducive to the 
growth and development of the small and medium sector; 
(b) to recommend to the President and the Congress all policy matters affecting small 
and medium sale enterprises; 
(c) to formulate a comprehensive small and medium enterprise development plan to 
be integrated into the National Economic and Development Authority 
Development Plans; 
(d) to coordinate and integrate various government and private sector activities 
relating to small and medium enterprise development; 
(e) to review existing policies of government agencies that would affect the growth 
and development of small and medium enterprises and recommend changes to the 
1 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
President and/or to the Congress whenever deemed necessary. This shall include 
efforts to simplify rules and regulations as well as procedural and 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 govermnent units and the Department of Local Government as well as 
private sector groupsiassociations, the developments among small and medium 
enterprises, particularly the cottage and micro-sized firms; 
(g) to promulgate implementing guidelines, programs, and operating priiiciples as 
may be deemed proper and necessary in the light of government policies and 
objectives of this Act; 
(11) 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 Program, 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 medium enterprises by way 
of directing and/or assisting relevant government agencies and institutions at the 
national, regional and provincial levels towards the; 
(1) 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; chan robles virtual law library 
(3) provision of guidance and assistance regarding product qualityiproduct 
development and product diversification; 
(4) provision of guidance and assistance for the adoption of improved 
production techniques and commercialization of appropriate technologies 
2 


4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
for the product development and 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 and provincial profiles, overseas marketing promotion, domestic 
market linkaging and the establishment of common service facilities such 
as common and/or cooperative bonded warehouse, grains storage, agro- 
processing and drymg facilities, ice plants, refrigerated storage, 
cooperative trucking facilities, etc.; 
(6) intensification of assistance and guidance 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 guarantee associations, including setting 
up of credit records and information systems and to decentralize loan 
approval mechanisms; 
(7) provision of concessional interest rates, lower financing fees, which may 
include incentives for prompt credit payments, arrangements tying 
amortizations to business cash flows, effective substitution of government 
guarantee cover on loans 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, and the establishment of 
measures such as insurance against extraordinary disaster; 
(9) intensification 
of 
information 
dissemination 
campaigns 
and 
entrepreneurship education activities; 
(10) easier access to and availment of tax credits and other tax and duty 
incentives as provided by the Omnibus investment Code and other laws; 
3 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
(1 1) 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; 
(j) 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; 
(1) 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 and 
purposes of this Act. 
SECTION 2. Section 9-A of RA 6977 is hereby inserted after Section 9 to read as 
follows: 
“Sec. 9-A. Compliance Guide. For each rule or group of related 
rules issued by any government agency for compliance by any 
small and medium sector, the Council, through the Secretariat 
shall publish one or more guides to assist small and medium 
entities in complying with the rule and shall entitle such 
publications “small and medium entity compliance guides”. 
The Council shall, in its sole discretion, taking into account the 
subject matter of the rule and the language of relevant statutes, 
ensure that the guide is written using sufficiently plain language 
likely to be understood by affected small and medium entities. 
The Council may prepare separate guides covering groups or 
4 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
IS 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
classes o f  similarly affected small entities and may cooperate with 
associations o f  small entities to develop and distribute such 
guides. The Council may prepare guides and apply this section 
with respect to a rule or a group of related rules. 
Each guide shall explain the actions a small or medium entity is 
required to take to comply with a rule. The explanation shall 
include a description of actions needed to meet the requirements 
of a rule, to enable a small or medium entity to lmow when such 
requirements are met; and if determined appropriate by the 
agency, may include a description of possible procedures, such as 
conducting tests, that may assist a small or medium entity in 
meeting such requirements. 
The publication of each guide shall include the posting of the 
guide in an easily identified location on the website of the agency; 
and distribution o f  the guide to known industry contacts, such as 
small entities, associations, or industry leaders affected by the 
iule.” 
SECTION 3. Separability Clause. - If any provision, or part hereof is held invalid 
or unconstitutional, the remainder of the law or the provision not otherwise affected shall 
remain valid and subsisting. 
SECTION 4. Repealing CZause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, iule or regulation contrary to 
or inconsistent with, the provisions of this Act is hereby repealed, modified, or amended 
accordingly. 
SECTION 5. Efectivity Clause. - This Act shall take effect fifteen (15) days after 
its publication in at least two (2) newspapers of general circulation. 
Approved. 
lapm122208 
S