EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHIILIPPINES 
)
First Regular Session 
)
S. No.
SENATE
469
'19 JUL 15 WO 34
REC£ < 
1 ?
Introduced by Senator Ralph G. Recto
AN ACT
INSTITUTING REFORMS TO FURTHER PROTECT AND DEVELOP MICRO, 
SMALL 
AND 
MEDIUM 
ENTERPRISES, 
AMENDING 
FOR THE 
PURPOSE 
EXECUTIVE ORDER NO. 81, OTHERWISE KNOWN AS "THE 1986 REVISED 
CHARTER OF THE DEVELOPMENT BANK OF THE PHILIPPINES," AS AMENDED
EXPLANATORY NOTE
The Philippine Micro, Small and Medium Enterprise (MSME) sector is a critical 
driver of the country's economic growth1. The 2017 MSME Data from the Department of 
Trade and Industry reveals that some 99.56% of the 924,721 establishments in the 
country belong to the MSME Sector. During the same year, the MSMEs generated some 
4,922,251 jobs, which is about 62.9% of the total jobs generated in the country. Some 
35.7% of all value of goods and service produced in the country came from MSMEs2.
Despite its pivotal role in the economic well-being of millions of Filipinos, several 
factors constrain the performance of MSMEs like high cost of doing business, access to 
financing and markets, and low productivity and efficiency. With limited resources and 
capabilities, many MSMEs are not adequately equipped to respond to the challenges 
and opportunities posed by domestic and international markets.
The task of priming stronger and more competitive MSMEs rests on collaborative 
efforts between the government and the business sector. Apart from creating a 
favorable business environment and providing linkages to local and foreign markets, the 
government must be able to make business financing accessible to MSMEs. The 
Philippine Institute for Development Studies noted that financing obstacles is one of the 
four most serious problems that hamper business growth3. The MSME Development
1 National Economic and Development Authority. (2011). Philippine Development Plan 2011-2016. Pasig Q ty: National Economic and 
Development Authority
1 
Department 
of 
Trade 
and 
Industry. 
(2017). 
2017 
MSME 
Statistics. 
Accessed 
on 
14 
May 
2019 
from
httDS://www.dti.aov.ph/dti/index.DhD/2014-04-02-03-40-26/news-room/179-workshQD-on-market-access-for-MSMe-set
3 Aldaba, R. M. (2012 February). Small and Medium Enterprises' (SMEs) Access to Finance: Philippines. Discussion Paper Series No. 2012-05. 
Makati City: Philippine Institute for Development Studies


Plan 2011-2016 also observed that a number of issues restrict the capacity of MSMEs to 
maximize the utilization of available financing options in the Philippines, which include 
the lack of credit information among MSMEs, and the tendency of the banking industry 
to prioritize larger corporate borrowers due to higher gains, lower credit risk, higher 
repayment rates, and collateral availability4. To develop a MSME sector capable of 
contributing to the country's economic and social development, it is imperative that the 
government enact measures to enable MSMEs to bolster their productivity and 
empower them to be more responsive to rising economic exigencies.
As the government premier development bank, the Development Bank of the 
Philippines (DBP) is in the best position to close this financing gap. In 2017, the bank 
registered a comprehensive income of almost six billion pesos with a development loan 
portfolio worth P184.06 billion5. However, only 88.2 billion or 47.92% of this amount 
were extended to MSME's under the DBP Sustainable Enterprises for Economic 
Development and the Sustainable Agribusiness Financing Programs6.
Thus, this bill seeks to amend the Charter of the DBP, mandating it to devote 
eighty percent (80%) of its loan portfolio to programs, projects and initiatives of the 
MSMEs and local government units (LCDs). It reinforces the original purpose of the 
bank, which recognizes "a clear role for direct government participation in the banking 
system through a government development bank, particularly in servicing the medium 
and long-term requirements of agriculture, and small and medium scale industry, export 
development, and the government sector7." Such intervention is also in line with the 
idea of financial inclusion, a principle that promotes "universal access at a reasonable 
cost to a wide range of financial services for everyone needing them, provided by a 
diversity of sound and sustainable institutions8."
This bill serves two noble purposes: to protect the critical economic drivers of 
today, and to sustain our economic growth in the future. In view of the foregoing, 
approval of this bill is earnestly sought.
/mdg
4 MSMED Council. (2016). M iao, Small and Medium Enterprise Development Plan 2017-2022. Makati Q ty: DTI-Bureau o f M lao, Small and
Medium Enterprise Development.
5 Development Bank of the Philippines. (2017). 2017 Annual Report: Strong and Brillant @ 70. Makati: Development Bank of the Philippines.
6 Development Bank of the Philippines. (2017). 2017 Annual Report: Strong and Brillant @ 70. Makati: Development Bank of the Philippines.
7 Republic of the Philippines. (1986, December 3). Execubve Order Number 81, Providing fo r the 1986 Revised Charter o f the Development
Bank o f the Philippines
• Her Royal Highness Princess Maxima o f the Netherlands. (2011). Financial Inclusion: A Role for Each o f Us. In The 2011 Mobile Financial 
Services Development Report (pp. 33-35). Geneva: World Economic Forum


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S. No.
)
SENATE
469
l i i i : .
y . C f l '. i ' o ' I ' ; ’
*19 JUL 15 AlO -34
RFCti'. Li' L____ ^2=
Introduced by Senator Ralph G. Recto
AN ACT
INSTITUTING REFORMS TO FURTHER PROTECT AND DEVELOP MICRO, 
SMALL AND 
MEDIUM 
ENTERPRISES, 
AMENDING 
FOR THE 
PURPOSE 
EXECUTIVE ORDER NO. 81, OTHERWISE KNOWN AS "THE 1986 REVISED 
CHARTER OF THE DEVELOPMENT BANK OF THE PHILIPPINES," AS AMENDED
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. Section 2 of Executive Order No. 81, otherwise known as "The 1986
2 
Revised Charter of the Development Bank of the Philippines," as amended, is hereby
3 
further amended to read as follows:
4 
"Sec. 2. Name, Purpose and Domicile. The Development Bank of
5 
the Philippines, hereinafter called the Bank, operating under the provisions
6 
of Republic Act No. 85, as amended, shall henceforth operate under the
7 
provisions of this 1986 Revised Charter. The Bank shall be a body
8 
corporate and shall exist for a period of fifty years.
9 
"The primary purpose of the Bank shall be to provide banking
10 
services principally to service the medium and long term needs of
11 
agricultural and industrial enterprises, particularly in the countryside and
12 
preferably for MICRO, small and medium scale enterprises; Provided,
13 
however, that the pursuit of these objectives shall be undertaken within
14 
the context of financially viable and stable banking institutions; Provided,
15 
further, that the Bank shall continue to be classified as a development
16 
bank; Provided, finally, that unless otherwise provided herein, the Bank
17 
may perform all other functions of a UNIVERSAL [th rift] bank.
18 
"The Bank's principal office and place of business shall be in the
19 
National Capital Region, also known as Metro Manila. It may open and
20 
maintain branches, agencies or other offices at such places in the
21 
Philippines as its Board of Directors may deem advisable, with the prior
22 
approval of the Monetary Board of the [Central Bank of the Philippines]
23 
BANGKOSENTRALNG PILIPINAS."


1 
Sec. 2. Section 3 of Executive Order No. 81, as amended, is hereby further
2 
amended to read as follows:
3 
"Sec. 
3. 
Corporate Powers. The Development Bank of the
4 
Philippines shall have the power;
5 
" x  X x;
6 
(b) To grant loans for the establishment, development and
7 
expansion of any agricultural or industrial enterprise AND TO LOCAL
8 
GOVERNMENT UNITS (LGUS): PROVIDED, THAT THE TOTAL
9 
AMOUNT OF LOANS GRANTED FOR PROGRAMS AND PROJECTS
10 
OTHER THAN THOSE UNDERTAKEN BY MICRO, SMALL, AND
11 
MEDIUM 
ENTERPRISES AND 
LGUS SHALL 
NOT 
EXCEED
12 
TWENTY PERCENT (2 0% ) OF THE BANK'S TOTAL LOAN
13 
PORTFOLIO;
14 
"X X X."
15 
Sec. 3. Validity o f Existing Contracts, Agreements and Obligations. -  Nothing in
16 
this Act, shall affect the validity or legality of any right, duty, or obligation created by or
17 
in respect of the Bank by virtue of its loan operations prior to this Act. Any receivables
18 
pertaining to loans granted prior to this Act, which might be affected by this Act, shall
19 
be valid and enforceable upon the terms and conditions under which the loans were
20 
made, including the pledge of collateral against which they were issued, and all loans
21 
made and security or collateral therefore held by the bank shall remain enforceable
22 
according to the terms unless they may be lawfully terminated in accordance with this
23 
Act, nor shall this Act supersede the operation of any law protecting or preserving
24 
vested contractual rights or be construed to change the terms of any legal contract
25 
between the bank and any third party or to impose any new conditions thereon, or to
26 
dispense with any condition expressed or authorized in any such contract entered into
27 
and taking effect prior to this Act.
28 
Sec. 4. 
Transition Period. -  The Development Bank of the Philippines (DBP) shall
29 
have a period of ten (10) years from the effectivity of this Act to restructure its loan
30 
portfolio. The transition milestones shall be identified in the Implementing Rules and
31 
Regulations to be promulgated pursuant to Section 5 of this Act.
32 
Sec. 5. 
Implementing Rules and Regulations. -  Within ninety (90) days from
33 
effectivity of this Act, the Department of Finance (DOF) shall, in coordination with the
34 
DBP, promulgate the rules and regulations to effectively implement the provisions of
35 
this Act.


1 
Sec. 6. Separability Clause. -  If, for any reason, any provision of this Act or any
2 
part thereof shall be held unconstitutional and invalid, the other parts or provisions of
3 
this Act, which are not affected thereby, shall remain in full force and effect.
4 
Sec. 7. Repealing Clause. -  All laws, decrees, orders, rules and regulations or parts
5 
thereof inconsistent with any of the provisions of this Act are hereby repealed,
6 
amended or modified accordingly.
7 
Sec. 8. Effectivity. -  This Act shall take effect fifteen (15) days after its complete
8 
publication in at least two (2) newspapers of general circulation or in the Official
9 
Gazette.
Approved,