Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _______ 
Introduced by HON. GUS S. TAMBUNTING 
AN ACT 
GOVERNING THE CREATION AND ACCREDITATION OF MICRO-ENTERPRISE DEVELOPMENT 
INSTITUTIONS, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
Section 9 of Article II of the 1987 Constitution declares as a state policy the freedom of the people from 
poverty through adequate social services by promoting full employment, a rising standard of living, and 
improved quality of life for all. In addition, Republic Act No. 8425, otherwise known as the "Social Reform and 
Poverty Alleviation Act", identifies the institution of the expansion of micro-credit and microfinance services 
as one of the measures in eradicating poverty.  
Microfinance has been proven to be one of the viable solutions in alleviating people from poverty. With a small 
loan, individuals are allowed to start a small business such that they have the means to augment the needs 
of their respective families. However, to capacitate them, accessibility to financial services should first be put 
in place. Thus, the establishment of micro-enterprise institutions will provide the ample support these 
individuals need to start-up businesses.  
In effect, people through microfinance gain income and employment. With the creation of jobs and 
entrepreneurs who provide wages, it will result in empowering women by giving them economic freedom and 
towards the improvement in health and education of people. More importantly, with the increase in income, 
business owners will be able to improve their housing conditions notwithstanding the positive offshoot of the 
creation of jobs. 
Because of the effectiveness of microfinance institutions in poverty alleviation, this bill is being filed to create 
micro-enterprise development institutions. These institutions will expand, enhance and promote the 
accessibility of micro-finance services such as savings, insurance, credit, and even health care by capacitating 
them with economic and productive opportunities. 
On behalf of the people of Parañaque City’s Second District, and for the common good of the Filipino people, 
the approval of the said measure is earnestly sought. 
REP. GUS S. TAMBUNTING 
2nd District, Parañaque City 
September 14, 2022
5:57 pm
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _______ 
Introduced by HON. GUS S. TAMBUNTING 
AN ACT 
GOVERNING THE CREATION AND ACCREDITATION OF MICRO-ENTERPRISE DEVELOPMENT 
INSTITUTIONS, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: 
SECTION 1. Title. – This Act shall be known and cited as the "Micro-Enterprise Development Institution Act 
of 2022."  
SECTION 2. Declaration of Policy. – It is hereby declared the policy of the State to pursue a more focused 
program of poverty eradication wherein every poor Filipino family shall be empowered to meet its minimum 
basic needs including income security.  
Pursuant thereto, the government shall work in partnership with qualified institutions in the private sector for 
the poor to have more access to micro-finance, micro-health care, micro-housing, business development, such 
as leadership training and entrepreneurial skills training, and human development services to help the poor 
entrepreneurs achieve a level of sustainability and empowerment and adopt measures to promote a spirit of 
generosity and selfless giving among individuals and institutions that would help support all programs directly 
involved in poverty eradication.  
SECTION 3. Coverage. – This Act shall apply to non-stock, non-profit Micro-Enterprise Development 
Institutions whose mission is focused on poverty eradication, and are duly accredited by the Securities & 
Exchange Commission (SEC), as the accrediting entity, and registered with the Bureau of Internal Revenue 
(BIR). 
SECTION 4. Definition of Terms. – For purpose of implementing this Act, the following definitions shall 
apply: 
a.) "Micro-Enterprise Development Institutions (MEDI)" - refers to a non-stock, non-profit corporation 
organized and operated to provide Micro-enterprise Development Strategy, as defined in letter (b) hereof, 
through the broad package of financial and human development services as well as other business 
development services to the poor to enable them to operate their productive economic activities; provided, 
no part of the net of income of the MEDI inures to the benefit of any private individual, and the 
administrative expenses of which, on an annual basis, conform with the rules and regulations to be 
prescribed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, 
but in no case to exceed thirty percent (30%) of the total expenses; 
b.) "Micro-Enterprise Development Strategy" - a social reform program exclusively for the poor to improve 
the asset base households and expand the access to micro-finance services, such as micro-credit, micro-
insurance, micro-savings and micro-health care for the poor through the broad package of business 
development services and other non-financial services as well as to the poor to enable them to operate 
their productive economic activities;  
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c.) "Poor" - refers to individuals and families whose income falls below the poverty threshold as defined 
by the National Economic and Development Authority and/or cannot afford in a sustained manner to 
provide their minimum basic needs of food, health care, education, housing and other essential amenities 
of life; 
 
d.) "Social Reform" - refers to the continuing process of addressing the basic inequities in Filipino society 
through a systematic, unified and coordinated delivery of socio-economic programs of packages; 
 
e.) "Utilization" by an accredited MEDI- shall refer to: 
(i) Any amount in cash or kind, including administrative expenses, paid or utilized by an accredited 
MEDI to accomplish one or more purposes for which it was created or organized; or 
(ii) Any amount paid to acquire an asset used, or held for use, directly in carrying out one or more 
purposes for which the accredited MEDI was created or organized; or 
(iii) Any amount in cash or in-kind invested in any poverty eradication activity related to the purpose 
for which it was created or organized; or  
(iv) Any amount set aside for a specific project which comes within one or more purpose or purposes 
for which the accredited MEDI was created, provided that the amount will be utilized for a specific 
project within a period not to exceed five (5) years, and the projects are the one which can be better 
accomplished by setting aside such amount than by immediate payments of funds;  
(v) Any amount in cash or kind invested in capital sustaining and generating activities such as but not 
limited to, government securities, endowment funds, trust funds, money market placement, shares 
of stock, and similar instruments: Provided, that any income derived from these investments shall be 
exclusively used in activities directly related to one or more purposed for which the accredited MEDI 
was created or organized. 
(vi) "Accrediting Entity"- shall refer to the Securities & Exchange Commission (SEC) and the Bureau 
of Internal Revenue (BIR), the regulatory powers of which shall be defined in the implementing rules 
and regulations of this Act.  
 
SECTION 5. Form of Organization. – A MEDI as defined in Section 4 (a) shall be established as a non-
stock non-profit corporation.  
 
SECTION 6. Capital Requirements. – A MEDI shall have a fund balance of not less than Fifty Million Pesos 
(P50,000,000.00). 
 
SECTION 7. Supervision and Accreditation. The Accrediting Entity established under this Act shall 
establish and operationalize a system of accreditation to determine the qualifications of the MEDI. It shall 
have the following functions and responsibilities: 
 
(a) Examine, evaluate and accredit the MEDI as a pre-requisite for its registration with the BIR for 
purposes of tax exemption under this Act. 
 
(b) Issue a Certificate of Accreditation to the MEDI upon a determination that it meets the criteria for 
accreditation; Provided, that the Certificate of Accreditation shall be valid for such period as may be 
prescribed by implementing rules and regulations. 
 
(c) Review and deny the application of any MEDI, which does not meet the criteria for accreditation. The 
MEDI shall be notified of the denial of its application, the reasons, therefore, and the evaluators' 
recommendation so that the MEDI may meet the criteria for accreditation. The procedure for 
reconsideration of and/or effecting any corrections or amendments to the application shall be provided in 
the implementing rules and regulations of this Act.  
 
SECTION 8. Monitoring and Verification of Annual Information Return. – The Accrediting Entity shall 
monitor the MEDIs and coordinate to ensure that the provisions of this Act are complied with.  
 
SECTION 9. Withdrawal of Certificate of Accreditation and Revocation of the Certificate of 
Registration. – The Accrediting Entity shall have the authority to withdraw the Certificate of Accreditation, 


which it used to register the MEDI upon a determination that the latter no longer meets the criteria for 
accreditation under Section 7 of this Act. 
 
SECTION 10. Exemption from the National and Local Taxes. – No taxes, local and national, shall be 
imposed on MEDIs duly accredited by the Accrediting Entity and registered with the BIR, In lieu thereof, two 
percent (2%) of the gross income derived by the MEDIs shall be remitted to the National Government. This 
two percent (2%) tax shall be entirely contributed to the National Government. This two percent (2%) tax 
shall be entirely contributed to the People's Development Trust Fund established under Republic Act No. 8425 
otherwise known as the "Social Reform and Poverty Alleviation Act". In addition, borrowers of the MEDIs shall 
not be subject to the documentary stamp tax imposed under Section 179 of the Tax Code, as amended. 
 
The term "gross income" means gross receipts fewer sales returns, allowances, discounts, and other costs of 
services. Interest expenses of a MEDI shall be deductible from gross receipts as part of the cost of services 
in arriving at gross income. The term gross income shall exclude donations. 
 
SECTION 11. Deductibility of Donations. – Donations to a MEDI shall be fully deductible from the gross 
income of the donor and shall be exempt from the donor's tax imposed under Sec. 98 of the Tax Code. 
 
SECTION 12. Implementing Rules and Regulations. – The SEC, in coordination with the BIR, shall 
formulate the implementing rules and regulations of this Act within sixty (60) days after its approval. Such 
rules and regulations shall take effect fifteen (15) days after their publication in a newspaper of general 
circulation in the Philippines. 
 
SECTION 13. Separability Clause. – If any provision of this Act or the application thereof to any person 
or circumstances is held invalid, the other provisions of this Act and the Application of such provisions to other 
persons or circumstances shall not be affected thereby. 
 
SECTION 14. Repealing Clause. – All internal revenue issuances, rules, and regulations or parts thereof, 
which are contrary to or inconsistent with this Act are hereby repealed, amended, or modified accordingly  
 
SECTION 15. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the Official 
Gazette or a newspaper of general circulation.  
 
Approved,