Republic of the Philippines
HOUSE OF Rt.."RESENTATIVES,
Quezo » City

FIFTEENTH (15) CONGRESS
1 Regular Session

1708

HB NO.

Introduced by REP. TOMAS V. APACIBLE

EXPLANATORY NOTE

The year 2002 underscored the need for policy initiatives to support micro business enterprises through
the enactment ino law of Republic Act No, 9178 otherwise known as the “Barangay Micro Business
Enterprises (BMBEs) Act of 2002.” This law was intended to spur development in the country's
barangays, the basic political unit in the country. However, it was seen in the implementation of RA
9178 that the intent of the law may have been negated by the very nature of the enterprise sought to be
supported. The delimitation in “labelling” the enterprise as barangay-based seems to have limited the
number of registrants since even the residence of the employees have been interpreted to be only within
the barangay. This thinking forestalls expansion to other barangays or even outside the municipality or
city. Moreover, the facility of access to credit was not adequate enough and even Bangko Sentral ng
Pilipinas issuances have confiised the BMBEs with micro enterprises under the purview of the Social
Reform and Poverty Alleviation Act. Considering that the maximum asset size of the BMBE according
to the law is Three Million Pesos (Php 3,000,000.00), itis highly likely that a BMBE, though starting
with a relatively smaller asset size, will expand outside the barangay where it is initially located. Also,
they will need more avenues for funding support

Although the current law higlights the existence of informal entrepreneurs and in fact encourages them
to be mainstreamed, most often than not, the maginalized entrepreneurs who remain informal in nature
are those with much smaller asset size and many of whom may fall under the category of micro
enterprises covered by the Social Reform and Poverty Alleviation Act., as stated above. On the other
hand, it is possible that those with larger asset size but remain informal do not have the adequate
information about the ben¢fits/incentives under the law. There are also instances that the concerned
local government units do not have policies to support the law. It is also distressing to note that even
with the provisions of RA 9178 providing for simplified registration, access to credit, technical
assistance, and exemptions to income tax, only around 1% of the potential registrants have actually
been listed.

However, even as incentives will continue to be made available to the micro business enterprises and
the proposed amendments mandate the local government units to support the MBEs through the MBE
Registry and an appropriate ordinance for the incentives, it is also recognized that incentives should
have a timeframe and also may have limitations. The proposal therefore, limits the effectivity of the
Certificate of Authority for the MBE to avail of the incentives under the law for a maximum of five (5)


years, Further, it provides that the Micro, Small and Medium Enterprises Development Council shall
issue a negative list on activities which cannot have incentives.

Notwithstanding the above limitations, the proposed law seeks to ensure that the appropriate agencies
in the executive and legislative branches monitor the implementation of the law, within their areas of
jurisdiction, The proposed law also updates the government support to micro business enterprises by
recognizing the recent amendment of the Magna Carta for Micro, Small and Medium Enterprises or
MSMES. Thus, we see that our overseas Filipino workers will also be encouraged to take their place in
entrepreneurship development in our country. It is hoped that with the support systems in place as well
as the firm rationalizing of why the “barangay” label has been eliminated, more enterprises will take
advantage of the benefits of the law, seek to grow and to participate in local and national development

In view thereof, approval of this bill is earnestly sought and recommended

Ged APACIBLE

‘epresentative
1" District - Batangas


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH (15™) CONGRESS
1* Regular Session

House pitt No.__ 1798

Introduced by the Honorable TOMAS V. APACIBLE

AN ACT
TO PROMOTE THE ESTABLISHMENT OF MICRO BUSINESS ENTERPRISES (MBEs),
PROVIDING INCENTIVES AND BENEFITS THEREFOR, AND FOR OTHER
PURPOSES, AMENDING FOR TILE PURPOSE REPUBLIC ACT NO. 9178,
OTHERWISE KNOWN AS THE BARANGAY MICRO BUSINESS ENTERPRISES ACT
OF 2002.

PRELIMINARY PROVISIONS

SECTION 1. Section 1 of Republic Act No. 9178 is hereby amended to read as follows:

“Section. 1. Short Title. — This Act shall be known as the “[Barangay] Micro Business

Enterprises ([B]MBEs) Act of 200[2]9”.”

SEC. 2. Section 2 of the same Act is hereby amended to read as follows:

“SEC. 2. Declaration of Policy. - \t is hereby declared to be the policy of the State to hasten the
country’s economic development by encouraging the formation and growth of [barangay] micro
business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, [and

integrating those i

the informal sector with the mainstream economy,} through the rationalization
of bureaucratic restrictions, the active intervention of the government specially in the local level,
and the granting of incentives and benefits to generate much-needed employment and alleviate

poverty.


SEC: 3, Section 3 of the same Act is hereby amended to read as follows:
SEC. 3. Definition of Terms. ~ As used in the Act, the following ‘terms shall mean

(a) “[Barangay] Micro Business Enterprise,” hereinafter referred to as [B]MBE, refers to
any business entity or enterprise engaged in the production, processing or manufacturing of
products or commodities, including agro-processing, trading and services, whose total assets
including those arising from loans but exclusive of the land on which the particular business
entity’s office, plant and equipment are situated, shall not be more than Three Million Pesos
(P3,000,000.00). The above definition shall be subject to review and upward adjustment by the
MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT (MSMED) Council, as
mandated under Republic Act No. 6977, as amended [by Republic Act No. 8289].

For the purpose of the Act, “services” shall exclude those rendered by any one, who is duly
licensed by the government after having passed a government licensure examination, in
connection with the exercise of one’s profession. THE MSMED COUNCIL SHALL
LIKEWISE ISSUE A NEGATIVE LIST WHICH SHALL CONTAIN AN INVENTORY OF
SPECIFIC ACTIVITIES THAT CANNOT QUALIFY FOR INCENTIVES UNDER THIS
ACT, DULY SUPPORTED BY STUDIES CONDUCTED BY CONCERNED AGENCIES

(b) “Certificate of Authority” is the certificate issued granting the authority to the
registered [B]MBE to operate and be entitled to the benefits and

lleges accorded thereto.
(c.)“Assets” refers to all kinds of properties, real or personal, owned by the [BJMBE and
used for the conduct of its business as defined by the MSMED Council: Provided, That for the
purpose of exemption from taxes and fees under the Act, this term shall mean all kinds of
properties, real or personal, owned and/or used by the [B]MBE for the conduct of its business as
defined by the MSMED Council
(D) “MBE REGISTRY’ REFERS TO THE DATABASE OF MBEs IN THE
CITY/MUNICIPALITY WHICH IS TO BE UPDATED ANNUALLY.
* (©) {(@)] “Registration” refers to the inclusion of the [B]MBE in ‘the [B]MBE Registry of a
city or municipality. .
(F) [(©] “Financing” refers to all borrowings of the [BJMBE from all sources after
registration


REGISTRATION AND OPERATION OF [B]MBEs

SEC. 4. Section 4 of the same Act is hereby amended to read as follows:

C. 4. Registration and Fees. - The BUSINESS PERMIT AND LICENSING Office [of the
Treasurer] of each city or municipality shall register the [BJMBEs and issue a Certificate of
Authority to enable the [B]MBE to avail of the benefits under this Act, Any such application shall
be processed within fifteen (15) working days upon submission of complete documents.
Otherwise, the [B]MBEs shall be deemed registered. The Municipal or City Mayor may appoint a
[B]MBE Registration Officer [who shall be under the Office of the Treasurer]. Local government
units (LGUs) are encouraged to establish a One-Stop-Business Registration Center to handle the
efficient registration and processing of permits/licenses of [B]MBEs. Likewise, LGUs shall make
4 periodic evaluation of the [B]MBEs’ financial status for monitoring and reporting purposes.

The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to
defray the administrative costs of registering and monitoring the [B]MBEs, the LGUs may charge
a fee not exceeding [One Thousand Pesos (P1,000.00)] FIVE HUNDRED (PS00.00) PESOS.

‘The Certificate of Authority shall be effective for a period of ONE (1) [two (2)] year[s},
renewable [for a period of two (2) years for every renewal], EVERY YEAR FOR A MAXIMUM
OF 5 YEARS.

As much as possible, [B]MBEs shall be subject to minimal bureaucratic requirements and
reasonable fees and charges.

SEC. 5. Section 5 of the same Act is hereby amended to read as follows

“SEC. 5 Who are Eligible to Register. ~ Any person, natural or juridical, or cooperative, or
association, having the qualifications as defined in Section 3(a) hereof may apply for registration
as [B]MBE.”

SEC. 6. Section 6 of the same Act is hereby amended to read as follows:

“SEC. 6. Transfer of Ownership. — [The] [B]MBE shall report to the city or municipality of any

change in the status of its ownership structure, and shall surrender the original copy of the


[B]MBE Certificate of Authority for notation of the transfer.”

SEC. 7. There shall be incorporated after Section 6 of the same Act a new section to read as

follows:

SEC.7. MONITORING OF MBEs. THE DILG SHALL SUBMIT AN ANNUAL REPORT TO
THE MSMED COUNCIL, ON THE IMPLEMENTATION OF THIS ACT BY THE LOCAL,
GOVERNMENT UNITS (LGUs). SUCH REPORT SHALL CONTAIN, AMONG OTHERS,
THE FOLLOWING:

A. THE NAMES AND ADDRESSES OF MBEs REGISTERED FOR THE PERIOD;
THEIR LINE OF BUSINESS; THEIR OWNERS OR STOCKHOLDERS; AND KEY
OFFICERS; AND THEIR ASSET BASE;

B. THE AMOUNT OF INCOME FOR WHICH EXEMPTION FROM INCOME TAX
WAS AVAILED OF;

C. THE ANNUAL GROSS INCOME DERIVED BY THE MBEs,

D. THE ACCESS TO CREDIT PROBLEMS FACED BY THE MBEs WITHIN THE
“JURISDICTION OF THE LGUs AND POSITIVE STEPS IF ANY WHICH HAVE BEEN
“TAKEN BY THE LGUs TO PROVIDE A FACILITATIVE POLICY ENVIRONMENT,

WITHIN THEIR MANDATES, TO CREDIT CONDUITS. :

INCENTIVES AND BENEFITS

SEC. 8. Section 7 of the same Act is hereby renumbered as Section 8, and is amended to read as

follows:

SEC. [7]8. Exemption from Taxes and Fees. — NOTWITHSTANDING EXISTING TAX
LAWS, All [B]MBEs shall be exempt from income tax for income arising from the operations of
the enterprise.

‘The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed
or to exempt the [B]MBEs from local taxes, fees and charges. THE LOCAL SANGGUNIAN
SHALL ISSUE AN ORDINANCE FOR THE EFFECTIVE IMPLEMENTATION OF THIS ACT
WITHIN THIRTY (30) DAYS FROM ITS APPROVAL.


SEC. 9. Section 8 of the same Act is hereby renumbered as Section 9, and is amended to read as

follows:

SEC. [8] 9. Exemption from the Coverage of the Minimum Wage Lene. - The [B]MBEs shall be
exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered
under this Act shall be entitled to the same benefits given to any regular employee such as social

security and healthcare benefits.

SEC. 10. Section 9 of the same Act is hereby renumbered as Section 10, and is amended to read as

follows:

SEC. [9] 10. Credit Delivery. - Upon the approval of the Act, the Land Bank of the Philippines
(LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance
Corporation (SBGFC), and the People’s Credit and Finance Corporation (PCFC) shall set up a
special credit window that will service the financing needs of [B]MBEs registered under the Act
consistent with the Bangko Sentral ng Pilipinas (BSP) policies, rules and regulations. The
Government Service Insurance System (GSIS) [and], Social Security System (SSS) AND.
OVERSEAS WORKERS WELFARE ADMINISTRATION (OWWA) shall likewise set up a

special credit window that will serve the financing needs of their respective members who wish to

establish a [BJMBE. The concerned financial institutions (Fis) are encouraged to wholesale the
funds to accredited private financial institutions including community-based organizations such as
credit, cooperatives, non-government organizations (NGOs) and people’s organizations, which will
in turn, directly provide credit support to [B]MBEs.

All loans from whatever sources granted to [BJ]MBEs under the Act shall be considered as part
of alternative compliance to Presidential Decree No. 717, otherwise known as the Agri-Agra Law,
of to Republic Act No, 9501, known as the Magna Carta for Small and Medium Enterprises, as
amended. For purposes of compliance with Presidential Decree No. 717 and Republic Act No.
9501, as amended, loans granted to [B]MBEs under this Act shall be computed at twice the amount
of the face value of the toans.

Any existing laws to the contrary notwithstanding, interests, commissions and discounts derived
from the loans by the LBP, DBP, PCFC and SBGFC granted to (BJMBEs as well as loans extended

by the GSIS and SSS to their respective member- employees under the Act shall be exempt from


gross receipts tax (GRT).
To minimize the risks in lending to the [BJMBEs, the SBGFC [and], THE OWWA FOR
OVERSEAS CONTRACT WORKERS AND the Quedan and Rural Credit Guarantee Corporation
(QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall set
up a special guarantee window to provide the necessary credit guarantee to [B]MBEs under their
respective guarantee programs,
‘The LBP, DBP, PCFC, SBGFC, SSS, GSIS, OWWA and QUEDANCOR shall annually report

to the appropriate Committees of both Houses of Congress on the status of the implementation of

this provision

‘The BSP shall formulate the rules for the implementation of this provision, SUBJECT TO THE
APPROVAL OF THE:MSMED COUNCIL and shall likewise establish incentive programs to
encourage and improvecredit delivery to the [B]MBEs

SEC. 11. Section 10 of the same Act is hereby renumbered as Section 11, and is amended to read as
follows:

SEC.

Assistance. - A [B]MBE Development Fund shall be set up with an endowment of Three Hundred

[10] 11, Rechnology Transfer; Production and Management Training, and Marketing

Million Pesos (P300,000,000.00) from the Philippine Amusement and Gaming Corporation
(PAGCOR) and shall be administered by the MSMED Council

The Department of Trade and Industry (DTI), the Department of Science and Technology
(DOST), the University of the Philippines Institute for Small Scale Industries (UP ISSN,
Cooperative Development Authority (CDA), Technical Education and Skills Development
Authority (TESDA), [and] Technology and Livelihood Resource Center (TLRC) AND THE
WORKERS IN THE INFORMAL SECTOR OF THE NATIONAL ANTO POVERTY
COMMISSION (NAPC-WISC) may avail of the said Fund for technology transfer, production and
management training and marketing assistance to [B]MBEs.

‘The DTI, in coordination with the private sector and non-government organizations (NGOs),
shall explore the possibilities of linking or matching-up [B]MBEs with small, medium and large
enterprises, and likewise establish incentives therefor.

The DTI, in behalf of the DOST, UP ISSI, CDA, TESDA [and], TLRC AND NAPC-WISC shall
be required to furnish the appropriate Committees of both Houses of Congress a yearly report on
the development and accomplishments of their projects and programs in relation to technology

transfer, production and management training and marketing assistance extended to [B]MBEs.


SEC. 12. Section 11 of the same Act is hereby renumbered as Section 12, and is amended to read as
follows’

SEC, [11] 12. Trade and Investment Promotion. - The data gathered from business registration
shall be made accessible to and shall be utilized by private sector organizations and non-

government organizations for purposes of business matching, trade and investment promotion.

INFORMA‘

IN DISSEMINATION

SEC. 13. Section 12 of the same Act is, hereby renumbered as Section 13, and is amended to read

as follows:

SEC. [12] 13. Information Dissemination. - The Philippine Information Agency (PIA), in
coordination with the Department of Labor and Employment (DOLE), the DILG, the DOR, THE
NAPC-WISC and the DTI, shall ensure the proper and adequate information dissemination of the
contents and benefits of the Act to the general public especially to its intended beneficiaries
specifically at the barangay level. THE PIA, IN COORDINATION WITH DILG, DOLE, DOF,
NAPC-WISC AND DTI, SHALL MEET AT THE REGIONAL LEVEL, TO PREPARE AN
ACTION PLAN TO ENSURE PROPER DISSEMINATION OF THE LAW TO THE GENERAL,
PUBLIC, MOST ESPECIALLY THE BENEFICIARIES AT THE LOCAL LEVEL.

PENALTY

SEC. 14. Section 13 of the same Act is hereby renumbered as Section 14, and is amended to read

as follows:

SEC. [13] 14. Penalty. - Any person who shall willfully violate any provision of this Act or who

shall in any manner commit any act to defeat any provisions of this Act shall, upon conviction, be
punished by a fine of not less than [Twenty-five Thousand Pesos (P25,000.00)] FIFTY
THOUSAND PESOS (P50,000.00) but not more than [Fifty Thousand Pesos (P50,000. 00)] ONE
HUNDRED FIFTY THOUSAND PESOS (P150,000.00) and suffer imprisonment of not less

than six (6) months but not more than two (2) years


In case of non-compliance with the provisions of Section 9 of the Act, the BSP shall impose
administrative sanctions and other penalties on the concerned government financial institutions,
including a fine of not less than [Five Hundred Thousand Pesos (P500,000.00)] ONE MILLION

PESOS (P1,000,000.00).

MISCELLANEOUS PROVISIONS

SEC. 15. Section14 of the same Act is hereby renumbered as Section 15, and is amended to read.

as follows:

SEC. [14] 15. Anmual Report. - The DILG DTI, DOF, DOLE and BSP shall submit an annual
report to the COMMITTEE ON ECONOMIC AFFAIRS OF THE SENATE AND THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP DEVELOPMENT OF
THE HOUSE OF REPRESENTATIV!
Act.

'S [Congress] on the status of the implementation of the

SEC. 16. Section 15 of the same Act is hereby renumbered as Section 16, and is amended to read

as follows:

SEC. [15] 16. Implementing Rules and Regulations. - The Secretary of the Department of Trade
and Industry, in consultation with the Secretaries of the DILG, DOF, and the BSP Governor shall

formulate the necessary rules and regulations to implement the provi

(90)] ONE HUNDRED TWENTY (120) days after its approval. The rules and regulations issued

jons of the Act within [ninety

pursuant to this section shall take effect fifteen (15) days after its publication in a newspaper of

general circulation.
SEC. 17. Section 16 of the same Act is hereby renumbered as Section 17.

SEC. [16] 17. 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,

SEC. 18. Section 17 of the same Act is hereby renumbered as Section 18.


SEC[17] 18, Repealing Clause. - Existing laws, presidential decrees, executive orders,
proclamations or administrative regulations that are inconsistent with the provisions of the Act are
hereby amended, modified, superseded or repealed accordingly.

SEC. 19. Section 18 of the same Act is hereby renumbered as Section 19.

SEC. [18] 19. Effectivity. - The Act shall take effect fifteen (15) days after its publication in the

Official Gazette or in at least two (2) newspapers of general circulation,

Approved,