Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINmEENTH cONGREss
First Regular Session
House Bill No. RE
DATE:I
RE£EivIB
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BY:-
Introduced by Hon. MARVIN C. RILI®
Represeritafiue, Fowhh lha±rict, Quezon Ctrty
EXPLANATORY NOTE
It has been emphasized by various statistics and researches that the role
of micro,  small  and  medium  enterprises  (MSMEs)  take  a  significant  role  as
providers of employment and drivers of the country's economic growth.  Micro-
enteaprises are important as they take hold a critical function in the economies
of the  nation  down  to the  local communities.  Microenterprises not only  help
improve  the quality of life  for ehtrepreneurs,  but they also add value to the
local economy. It offers jobs and create profits that bring outside money into a
local  economy.  The  income-generating  opportunities  they  provide  often  help
improve the quality of life for low-income groups.   They can boost purchasing
power, improve income, and create jobs.
Accordingly,  the Philippines through Department of Trade and industry
in  its  study  details  that  the  sheer  number  of  micro,  small  and  medium
enterprises (MSMEs) immensely impacts as they account for 98°/o or more of all
enterprises  in  most countries.  It  is  then  recorded  at  present that a  total  of
957,620  business  enterprises  operating  in  the  country.  Of  these,  952,969
(99.51°/o) are MSMEs and 4,651 (O.490/o) are large enterprises. Micro enterprises
constitute 88.77°/o (850,127)  of total MSME establishments,  followed by small
enterprises at 10.25% (98,126) and medium enterprises at 0.49% (4,716).1
Barangay Micro Business Enterprise  (BMBE)  A BMBE is defined  under
the BMBE Law,  RA.  9178 Act of 2002 as "any business enterprise engaged in
production,   processing,   or   manufacturing   of   products,   including   agro-
processing, as well as trading and services, with total assets of not more than
P3  million.  The  law  explicitly  declared  the  policy  of the  state  to  hasten  the
country's economic development by encouraging the fomiation and growth of
barangay   micro   business   enterprises   (BMBEs)   which   effectively   serve   as
seedbeds  of Filipino  entrepreneurial  talents.  The  law recognizes  this  sector's
role  in  economic  growth  and  employment  and  ensures  that  establishments
registered  as  BMBEs  are  provided  with  certain  incentives  such,  as  among
others, tax exemptions, exemptions from the Minimum Wage Law, and priority
lanes/windows for credit facilities with  financial institutions.2   Among all the
specific incentives and other relevant significant clause on the aforementioned,
I  Retrieved from:  :  https://www.dti.gov.ph/resources/msme-statistics/  (date last accessed  19
Sep 2022)
2    CL    registers    highest    number    of   barangay    enterprises    in    2017.    I?etn.euecz   /ron..
https: / /www.dti.gov. ph/ regions/ region-3 / region             3 -news/ cl-registers-highest-number-of-
barangay-enterprises-in-2017/ (date last accessed: September 19, 2022).
1


a relatively small number of micro businesses are registered as BMBEs. Based
on  the  latest report of the  Department of Trade  and  Industry  (DTI)  in  2018,
there were only 28,531  businesses registered as BMBE since the DTI started
accepting applications in January of 2016.
Hence,  a revisit of Republic Act No.  9178 is with enormous necessity to
ensure that its provisions are still relevant and reflect the present needs of the
BMBE industry most especially with the abrupt changes on the economic flow
as innovation and digitization brought by pandemic comes into play. Currently,
the micro-level entities are still in the path of recovering from the effects of the
pandemic  and  are  still enduring further business shocks because  of natural
calamities, such as typhoons, and global economic events, such as the Russia-
Ukralne  conflict,  unprecedented  global inflation and  rising fuel prices.  Thus,
amendments  to  the  law,  which  aim  to  provide  BMBEs  with  much  needed
support, concessions and incentives to register, partnerships to online payment
gateway are in order.
On  behalf  of  the  people  of  the  Fourth  District  of  Quezon  City,  the
V
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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
First Regular Session
House Bill Ho. 5 0 2 8
Introduced by REPRESENTATIVE MARVIN C. RILIO
"A)I ACT  PROVIDING FOR SUPPORT FOR THE GROWTII AND
DEHJELOPMENT        OF        BARANGAY        M ICR0        BUSINESS
ENTERPRISEs AMENDING F`OR THE puRpOsE REpuBLlc Ac`r
NO.  9178,  OTHERwlsE  KNOwN  As  THE  BARanGAy  rmcRO
BUSINESS  ENTERPRISES  ACT  OF  2002,  AHD  FOR  OTHER
PU-ES»
Be it enacted try the  Senate and Hoiuse Of Represe"±a;itve Of the Philippines in
Congress assembled:
SECTION  1. Seedori 2 a/Reprbz{c Act IVo.  9J 78, otherwise known as the
"Barangay Micro Business Enterprises Act of 2002" is hereby amended to read
as follows:
"SEX3 2. Deczanrdon a/I)ozzq/. -Pt is hereby declared to be the
.__1;___   _J`  JL1__   C`L_i_   i_   1__,_i_._   LL_   __..._i_.}_   ___.___.._   .I__._1_____i
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of   bureaucmtic    reotrictiono,    the   tictive   intervention   of   the
government   Specially   in   the   local   level,   and   the   granting   of
incentiveo and benefits to genemte much needed employment and
al]evinte poverty. I
THE STATE RECOGNIZES THAT BARANGAY MICRO BUSINESS
ENTERPRlsEs(BMBEis),  wlllLE THE smLLEST TypE OF ALL
ENTERPRISES ,          IS          AMONG          THE          SIGNIFICANT
ESTABLISHMENTS  IN  THE  COUNTRY,  AND  IS  ONE  OF  THE
BIGGEST   GENERATORs   OF   EMpl®yMENT.   THus,   IT   Is
HEREBY    DECLARED    THE    POLICY    OF    THE    STATE    T0
SUPPORT,  STRENGTIIEN AND  FACILITATE TIIE GROWTH  OF
BMBEis  TO   HELP  THIS   SECTOR  CONTINUE  T0   FLOURISH
AMIDST      PUBLIC      HEATH      EMERGENCIES,      NATURAL
cALAMITIEs AND  GIORAL  EcONormc  sHOcKs As WELL, As
AID THEM IN INNOVATING AND DIGITIZATION THROUGH THE
USE OF ONLINE PAYMENT GATEWAY FACILITIES."


SEC. 2.  Secti.ori 4 a/Repttbzfc Act IVo.  9J 78, is hereby amended to read as
follows:
"Section 4. RegtstncEtzorL and Fees. - The Office of the Treasurer
of  each   city   or   municipality   shall   register   [the   BI\ffiE's]   and
PROMFTILY issue a Certificate of Authority,  FREE OF CIIARGE,
TO AIL BMBEs wl'rlllN ITs OuRlsDlcTION UPON suBNIssloN
OF PROOF OF TOTAL ASSETS,  to enable the BMBE  to avail of
the   benefits   under   this   Act.   Any   such   application   shall   be
processed  I
I  NOT  LATER  TIIAN  FIVE  working
days  upon  submission  of  complete  documents.   Otherwise,  the
BMBEs  shall  be  deemed  registered.  'The  Municipal  or City  Mayor
may appoint a BMBE Registration Officer who shall be under the
Office   of   the   Treasurer.   I,ocal   government   units   (LGUs)   are
encouraged to establish a One-Stop-Business Registration Center
to     handle     the     efficient     registration     and     processing     of
permits/licenses of BMBEs.  Likewise, Iidus shall make a periodic
evaluation of the BMBEs' financial    status, AS WELL   AS       THE
NUMBER     OF     JOBS   IT   GEHERATES,   for   monitoring   and
reporting purposes.
|The  IIGUs  Shall  iooue  the  Certificate  of Authority  promptly  and
free of chcirge. However,I HolrVITHSTAHDmo     AHYTIDHG     TO
THE CONTRARY, to defray the administrative costs of registering
and  monitoring  the  BMBEs,   the  LGUs  may  charge  a  fee  not
exceeding One 'I`housand Pesos (P1,000.00).
The Certificate of Authority shall be effective for a period of [tT,I,'c (2)I
TIIREE  (3)  years,  renewable  for  ANorHER  period  of  [two  (2)]
TIRED (3| YEARS UPON lyearo for every renewal.I COHPLIAHCE
wlTH THE REQulREMENrs.
[Ao much a8 poooible,I  IN ALL CASES, BREEs shall be subject to
minimal   bureaucratic   requirements   and   reasonable   fees   and
charges."
SEC. 3.  Sectr.on 5 a/Repttbz{c Act IVo.  9J 78, is hereby amended to read as
follows:
"Section 5. Who are Bugible 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
BMBE.   RICH   LOU   SHALL   MAINTAIN   A)TD   CONTINUOUSLY
UPDATE A DATABASE CONTAINING AIL REGISTERED BMBEs
UNDER ITS .URISDICTION."
SEC. 4.  Secfron 7 o/Repttbzie Act IVo.  9] 78 is hereby amended to read as
follows:
"Section 7. Eicen'[ptzori /hem rtzices arLd Fees. - All BMBEs shall
be exempt from tax for income arising from the operations of the
enterprise.
4


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taxeo, feeo and chargeo.I
FIRST  TIME  BMBE  REGlsTRArms  SEIALL,  IN  ADDITION,  BE
EXEMFT FROM IOCAL TAXES, FEES AND CHARGES FOR THE
F`IRST TIIREE (3) TEARs oF opERATloN suB`rECT To SEMI-
ANNUAL     suBrmssloH     oF     pRooF     oF     EMplo¥MENT
GENERA'I`ED IN THE IOCAIITY"
SEC. 5. Secfron 9 o/Repttb#c Act IVo.  9] 78 is hereby amended to read as
follows:
"Section 9. Credft DeltlierI/ -Upon the approval of this Act, the
I.and Bank of the Philippines (LBP), the Development Bank of the
Philippines  (DBP),  the  [Small  Bu®ineco  Guamntee  and  Finance
Corpomtion   (SBGFC)I   SHALL   BUSENBSS   CORPORATION   (SB
CORPORATION), and the Pcople's Credit and Finance Corporation
(PCFC)  shall  set up  a special credit window that will  service  the
financing  needs  of  BMBEs  registered  under  this  Act  consistent
with  the  Bangko  Sentral  ng  Filipinas  (ESP)  policies;  rules  and
regulations. The Government Service Insurance System (GSIS) and
Social Security System (SSS)  shall likewise set up a special credit
window  that  will  serve  the  financing  needs  of  their  respective
members who wish to establish a BMBE. The concerned financial
institutions (ms)  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 BMBEs.
All loans from whatever sources granted to BMBEs under this Act
shall be considered as part of [altemcitive] TIE OTIER HODE#
OF comphance  to  [Pkedidentinl  Decree  No.  717,  otherwise  lmown
cLs the Agri Agm Lew,I  REPUBLIC ACIT HO.11901,  OThERVISB
KNOWN   AS   THE   AGRICULTURE,    FISHERIES,   AND   RUAL
DRELopMENT FINANclNG Ac`r oF 2o22, AND sucH OTHER
APPLICABLE LAW PROVIDING A LIMIT FOR LOANS GRANTED
TO MlcRO, SMALL AND MEDluM ENTERPRIsrs qusMEs) ha
to  Republic  Act.  No.  6977,  lmown  ao the  MQgnci  Carta for  Small
and    Medium    Enterpriceo,    as    amended].    For    purposes    of
compliance with [FTesidential Decree No. 717 and Republic Act No.
6977,  as  amended,]  THE  roREG0ING  LAWS,  loans  granted  to
BMBEs  under this Act shall be computed at  [twice]  TWO AND A
IIALF TIMES (2.5) the amount of the face value of the loans.
To minimize the risks in lending to the BMBEs,  [SBGFC and  the
Quedan `and  Ruml  Credit Gucirantee  Corpomtion  (QUEDANCOR)I
THE            PHILIPPINE            GUARANTEE            CORPORATION
tpIHfluARAHTBB) under the Department of Agriculture, in once
of agribuoineco activitieo,I shall set up a special guarantee window
to  provide  the  necessary  credit  guarantee  to  BMBEs  under their
respective guarantee programs.
5


The       LBP,       DBP,       PCF`C,       [SBGFC]       SB       CORPORATION,
PHILGUARANTEE,   SSS,   AND   GSIS   I,   and   QUEDAICOR]   shau
annually report to  the appropriate  Committee  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   and   shall   likewise   establish   incentive   programs   to
encourage and improve credit delivery to the BMBEs.
TO FACILITATE THE GROWTII AND RECOVERY 0F BMBEs, A
BMBE  REGlsTERED  UNDER  THls  Ac`r  sllALL  BE  ENTITLED
To  INTEREs`r-F`REB roANs  FROM THE CREDIT wlNDow oF
THE  LBP,  DBP,  SMALL  BUSINESS  CORPORATION  AND  PCFC;
pROvlDED, THAT THE roAN AMOuNT SHALL (Ii NOT ExcRED
ONE  MILLION  PESOS  P1,000,000.cO),  qu|  NOT  REQUIRE  A
COLLATERAL, AND (Ill) BE PAYABLE UP TO TIIREE (3) YEARS;
PROVIDED, FURTHER, THAT IN THE EVENT THAT SUCH LOAN
IS      GRANTED     TO     ACCREDITED      PRIVATE     F`INANCIAL
IN STITUTIONS ,           INCLUDING           COMMUNITY           BASED
oRGANIZATloNs    sucH    As    coopERATrvEs,    NGos   AND
pEopLB's oRGANlzATloNs  ENGAGED IN GRADrTING CREDIT,
TIIAT IN TURN RELEND SUCH AMOUNT TO BMBEs, ONLY THE
IOAN  GRANTED  TO  THE  BMBE  SIIALL  BE  INTEREST-FREE
AND   ANY   SUCH   INTEREST   FOREGONE   BY   THE   PRIVATE
FINANCIAL  INSTITUTION  SEIALL  BE  DEDUCTED  FROM  THE
INTEREST DUE ON ITS LOAN PROVIDED BY THE CONCERRED
GOVERNMENT FINANCIAL INSTITUTION; PROVIDED, F`INAILY,
THAT IN ORDER TO pROpERLy IMplraMENT THE pROVIsloN
OF THIS SECTION,  AN AMOUNT OF FIVE HUNDRED MILLION
PESOS (P5cO,OOO,000| SIIALL BE APPROPRIATED TO ANSWER
FOR THE INTEREST SUBSIDY PROVIDED UNDER TIIIS ACT."
SEC. 6. Secfron JO o/Reprbdic Act IVo. 9J 78 is hereby amended to read as
follows:
"Section     10.     Technology     Ira;nsifer.,     Production     and
Management Ira;ining,  and marketing Asststa:nco - A BMBE
Development  Fund  shall be  set up with  an  endowment of Three
Hundred   Mimon   pesos   (P300,000,000.00)   from   the   Philippine
Amusement  and   Gaming  Corporation   (PAGCOR)   and   shall   be
administered by the SMED 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    pup   ISSI),    Cooperative
Development  Authority   (CDA),   Technical   Education   and   Skills
Development  Authority  (TESDA),  and  Technology  and  Livelihood
Resource Center (TLRC) may avail of the said Fund for technology
transfer,   production  and  management  training  and  marketing
assistance to BMBEs.
The   DTI,   in   coordination   with   the   private   sector   and   non-
government organization  (NGOs),  shall explore the possibilities of
linking  or  matching-up  BMBEs  with  small,  medium  and  large
enterprises and likewise establish incentives therefor. THE DTI, IN
6


COORDINATION   WITH   THE   DEPARTMENT   OF   INTERIOR  AND
LOCAL  GOVERNMENT  (DILG),  SHALL  ENACT  PROGRAMS  THAT
PROVIDE   BMBEs   WITH   MARKETING   ASSISTANCE,   SUCH   AS,
BUT    NOT    LIMITED,    TO    BUSINESS    MATCHING    ACTIVITIES,
TRADE    FAIRS,    OVERSEAS    MARKETING    PROMOTIONS,    AND
BUSINESS           DEVELOPMENT          ACTIVITIES ,           INCLUDING
ENTREPRENEURSHIP AND  SKILLS  DEVELOPMENT,  AND  OTHER
RELATED ACTIVITIES.
THE  DEPARTMENT  OF`  SCIENCE  AND  TECHNOLOGY  (DOST),  IN
COORDINATION    WITH    THE    DILG    AND    OTHER    RELEVANT
GOVERNMENT AGENCIES, SHALL ALSO IMPLEMENT PROGRAMS
GEARED   TOWARDS   PROVIDING   BMBEs   WITH   APPROPRIATE
TECHNOLOGY   INTERVENTIONS   WHICH   CAN   HELP   IMPROVE
THEIR PRODUCTION PROCESSES, ACCOUNTING SYSTEMS, AND
OTHER AREAS OF BUSINESS OPERATIONS.
The  DTI,  in  behalf of the  DOST,  UP ISSI,  CDA.  TESDA and TLRC
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 BMBEs."
SEC. 7. A new Secfron JO-A is hereby inserted to read as follows:
"SEC.  10-A.  BMBE EDUCATION AND TRAINING.  - THE DTI,  IN
COORDINATION   VITH   THE   DEPARTMENT   OF   EDUCATION
( DEPED) ,         TECHNICAL         EDUCATION         AND         SKILLS
DEVELOPMENT  AUTHORITY  (TESDA),  AND  COMMISSION  ON
HIGHER     EDUCATION     (CHED|,     SIIALL     PROVIDE     FREE
TRAININGS,      COURSES,      AND      OTHER      DRELOPMENT
PROGRAMS FOR OWNERS AND EMPLOREES 0F REGISTERED
BMBEs  TO  IMPROVE  THEIR  BUSINESS  PRACTICES  AND  TO
ENABLE     THEM     TO     INNOVATE     IN     LIGHT     OF     RAPID
TECHNOLOGICAL CIIANGES. "
SEC.  8.  Appropr!atforis.  -  In  addition  to  the  amount  provided  under
Section  5  of this  Act,  amending  Section  9  of the  Barangay  Micro  Business
Enterprises Act of 2002, the sums necessary for the implementation of this Act
shall  be  charged  against  the  responsible  agency's  current  appropriations.
Thereafter,  such sums as necessary for the continued implementation of this
Act shall be included in the annual General Appropriations Act.
SEC. 9. Jmpzementing Rttzes arid Regz4Zat!oris. - Within sixty (60) days
from  the  effectivity  of this  Act,  the  DILG  and  DTI,  upon  consultation  with
appropriate government agencies and other stakeholders, shall promulgate the
necessary rules and regulations to effectively implement this Act.
SEC.  10.  Sepanc[b!l!ty Chaitse. - If, for any reason, any part, section or
provision   of  this   Act   is   held   invalid   or   unconstitutional,   the   remaining
provisions not affected thereby shall continue to be in full force and effect.
7


SEC.  11.  Repealing  Chat.se.  -All laws,  presidential decrees,  executive
orders, rules and regulations, or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed, amended, or modified accordingly.
SEC.  12. E#ecttuttE/. -This Act shall take effect fifteen ( 15) days after its
publication in the Official Gazette or in a newspaper of general circulation.
Approved.
8