DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

CHAPTER 4: REPUBLIC ACT NO. 9501

Republic of the Philippines

Congress of the Philippines
Metro Manila

Fourteenth Congress
First Regular Session

Begun and held in Metro Manila, on Monday, the twenty-third day of July, two thousand seven.

REPUBLIC ACT NO. 9501

AN ACT TO PROMOTE ENTREPRENEURSHIP BY STRENGTHENING DEVELOPMENT AND ASSISTANCE

PROGRAMS TO MICRO, SMALL AND MEDIUM SCALE ENTERPRISES, AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 6977, AS AMENDED, OTHERWISE KNOWN AS THE “MAGNA CARTA FOR SMALL
ENTERPRISES” AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Section 1 of Republic Act No. 6977, as amended, is hereby further amended to read as
follows:

“SECTION 1. Title. — This Act shall be known as the Magna Carta for Micro, Small and Medium
Enterprises (MSMEs)”.

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

“SEC. 2. Declaration of Policy. — Recognizing that MSMEs have the potential for more
employment generation and economic growth and therefore can help provide a self-sufficient
industrial foundation for the country, it is hereby declared the policy of the State to promote,
support, strengthen and encourage the growth and development of MSMEs in all productive
sectors of the economy particularly rural/agri-based enterprises. To this end, the State shall
recognize the specific needs of the MSMEs and shall undertake to promote entrepreneurship,
support entrepreneurs, encourage the establishment of MSMEs and ensure their continuing
viability and growth and thereby attain countryside industrialization by:

a) “ intensifying and expanding programs for training in entrepreneurship and for skills
development for labor;
b) “facilitating their access to sources of funds;
c) “assuring to them access to a fair share of government contracts and related incentives and
preferences;
d) “complementing and supplementing financing programs for MSMEs and doing away with
stringent and burdensome collateral requirements that small entrepreneurs invariably find
extreme difficulty complying with;
e) “instituting safeguards for the protection and stability of the credit delivery system;
f) “raising government efficiency and effectiveness in providing assistance to MSMEs
throughout the country, at the least cost;
g) “promoting linkages between large and small enterprises, and by encouraging the
establishment of common service facilities;

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h) “making the private sector a partner in the task of building up MSMEs through the
promotion and participation of private voluntary organizations, viable industry associations,
and cooperatives; and
i) “assuring a balanced and sustainable development through the establishment of a feedback
and evaluation mechanism that will monitor the economic contributions as well as
bottlenecks and environmental effects of the development of MSMEs.”

SEC. 3. Section 3 of the same Act, as amended, is hereby further amended to read as follows:

“SEC. 3. Micro, Small and Medium Enterprises (MSMEs) as Beneficiaries. — MSMEs shall be
defined as any business activity or enterprise engaged in industry, agribusiness and/or services,
whether single proprietorship, cooperative, partnership or corporation whose total assets,
inclusive of those arising from loans but exclusive of the land on which the particular business
entity’s office, plant and equipment are situated, must have value falling under the following
categories:

micro : not more than P3,000,000

small : P3,000,001 - P 15,000,000
medium : P15,000,001 - P100,000,000

“The above definitions shall be subject to review and adjustment by the Micro, Small and
Medium Enterprises Development (MSMED) Council under Section 6 of this Act or upon
recommendation of sectoral organizations concerned, taking into account inflation and other
economic indicators. The Council may use other variables such as number of employees, equity
capital and assets size.

“The Council shall ensure that notwithstanding the plans and programs set for MSMEs as a
whole, there shall be set and implemented other plans and programs varied and distinct from
each other, according to the specific needs of each sector, encouraging MSMEs to graduate
from one category to the next or even higher category.”

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

“SEC. 4. Eligibility for Government Assistance. — To qualify for assistance, counseling, incentives
and promotion under this Act, businesses falling under the above definition must be:

a) “duly registered with the appropriate agencies as presently provided by law: Provided, That
in the case of micro enterprises as defined herein, registration with the office of the
municipal or city treasurer shall be deemed sufficient compliance with this requirement;
b) “one hundred percent (100%) owned, capitalized by Filipino citizens, whether single
proprietorship or partnership. If the enterprise is a juridical entity, at least sixty percent
(60%) of its capital or outstanding stocks must be owned by Filipino citizens;
c) “a business activity within the major sectors of the economy, namely: industry, trade,
services, including the practice of one’s profession, the operation of tourism-related
establishments, and agri-business, which for purposes of this Act refers to any business
activity involving the manufacturing, processing, and/or production of agricultural produce;
and
d) “it must not be a branch, subsidiary or division of a large scale enterprise.

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“However, this requirement shall not preclude MSMEs from accepting subcontracts and
entering into franchise partnership with large enterprises or from joining in cooperative
activities with other MSMEs.

“Programs of the Small Business Corporation (SB Corporation) as provided in subsequent

provisions of this Act shall be exclusively delivered and directed to bonafide MSMEs.

“Any MSME, its directors, officers or agents, found to have committed fraud or
misrepresentation for the purpose of availing the benefits under this Act shall be immediately
disqualified as a beneficiary, without prejudice to any administrative, criminal or civil liability
under existing laws.

“Eligible MSMEs shall be entitled to a share of at least ten percent (10%) of total procurement
value of goods and services supplied to the Government, its bureaus, offices and agencies
annually.

“The Department of Budget and Management shall monitor the compliance of government
agencies on the required procurement for MSMEs and submit its report to the MSMED Council
on a semestral basis and to the Congress of the Philippines, through its appropriate committees
on a yearly basis.”

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

“SEC. 5. Guiding Principles. — To set the pace for MSME development, the State shall be guided
by the following principles:

“x x x.”

“c) Coordination of government efforts. Government efforts shall be coordinated to achieve

coherence in objectives. All appropriate offices, particularly those under the Departments of
Trade and Industry, Finance, Budget and Management, Agriculture, Agrarian Reform,
Environment and Natural Resources, Labor and Employment, Transportation and
Communications, Public Works and Highways, Science and Technology, Interior and Local
Government and Tourism as well as the National Economic and Development Authority,
Philippine Information Agency and the Bangko Sentral ng Pilipinas, through their national,
regional and provincial offices shall, to the best of their efforts and in coordination with local
government units, provide the necessary support and assistance to MSMEs.

“x x x.”

SEC. 6. A new section, numbered Section 6 is hereby inserted after Section 5 of the same Act, to read as
follows:

“SEC. 6. Micro, Small and Medium Enterprises Development Plan (MSMEDP). — The President
shall approve a six-year micro, small and medium enterprises development plan prepared by the
Department of Trade and Industry (DTI) which shall form part of the Medium Term Philippine
Development Plan (MTPDP). It shall be formulated in consultation with the private sector,
validated and updated semestrally. Such plan shall include a component on a micro credit
financing scheme.”

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SEC. 7. Section 6 of the same Act is hereby renumbered as Section 7 and further amended to read as
follows:

“SEC. 7. Micro, Small and Medium Enterprise Development (MSMED) Council. — The existing
Small and Medium Enterprise Development Council, which was created by Republic Act No.
6977, as amended by Republic Act No. 8289, shall be strengthened to effectively spur the
growth and development of MSMEs throughout the country, and to carry out the policy
declared in this Act and shall now be known as the Micro, Small and Medium Enterprise
Development (MSMED) Council. The Council shall be attached to the Department of Trade and
Industry and shall be constituted within sixty (60) days after the approval of this Act.”

“x x x.”

SEC. 8. Section 7 of the same Act, as amended, is hereby renumbered as Section 7-A and further
amended to read as follows:

“SEC. 7-A. Composition. — The Council shall be headed by the Secretary of Trade and Industry as
Chairman, and may elect from among themselves a Vice-chairman to preside over the Council
meetings in the absence of the Chairman. The members shall be the following:

a) “Secretary of Agriculture;
b) “Secretary of the Interior and Local Government;
c) “Secretary of Science and Technology;
d) “Secretary of Tourism;
e) “Chairman of Small Business Corporation;
f) “Three (3) representatives from the MSME sector to represent Luzon, Visayas and
Mindanao;
g) “One representative from the labor sector, to be nominated by accredited labor groups; and
h) “A representative from the private banking sector: to serve alternately among the Chamber
of Thrift Banks; the Rural Bankers’ Association of the Philippines (RBAP); and the Bankers’
Association of the Philippines (BAP).

“All members of the Council so appointed, except for the ex officio members, shall serve for a
term of three (3) years. The person so appointed to replace a member who has resigned, died,
or been removed for cause shall serve only for the unexpired portion of the term.

“The private sector members of the Council shall receive per diem of Two thousand pesos
(P2,000) per meeting, for a maximum of twenty-four (24) meetings per year, which per diem
may be adjusted by the MSMED Council as appropriate.

“The Council may call upon the participation of any national or local government agency,
association of local government officials or private sector organization in its deliberations
especially when such agency or private sector organization is directly or indirectly concerned
with and/or affecting the growth and development of MSMEs in any particular area or manner.

“The Council may create an Executive Committee of five (5) members elected by the Council
from among themselves or their designated permanent representatives, with at least two (2)
members representing the private sector, and with authority to act for and on behalf of the
Council during intervals of council meetings, and within the specific authority granted by the
Council.”

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SEC. 9. Section 8 of the same Act, as amended, is hereby renumbered as Section 7-B and further
amended to read as follows:

“SEC. 7-B. Powers and Functions. — The MSMED 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 MSME sector;
b) “To recommend to the President and the Congress all policy matters affecting MSMEs;
c) “To coordinate and integrate various government and private sector activities relating to
MSME development;
d) “To review existing policies of government agencies that would affect the growth and
development of MSMEs and recommend changes to the President and Congress through
the Committee on Economic Affairs of the Senate and the Committee on Small Business and
Entrepreneurship Development of the House of Representatives, whenever deemed
necessary. This shall include efforts to simplify rules and regulations, as well as review of the
applicability and relevance of procedural and documentary requirements in the registration,
financing, and other activities relevant to MSMEs the result shall be included in the annual
report to be submitted to Congress;
e) “To monitor and determine the progress of various agencies geared towards the
development of the sector. This shall include overseeing, in coordination with local
government units and the Department of Interior and Local Government as well as private
sector groups/associations, the development among MSMEs;
f) “To promulgate implementing guidelines, programs, and operating principles as may be
deemed proper and necessary in the light of government policies and objectives of this Act;
g) “ To provide the appropriate policy and coordinative framework in assisting relevant
government agencies, in coordination with the NEDA and the Coordinating Council for the
Philippine Assistance Program, as may be necessary, in the tapping of local and foreign
funds for MSME development;
h) “To promote the productivity and viability of MSMEs 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 MSMEs;
3) “Provision of guidance and assistance regarding product quality/product
development and product diversification;
4) “Provision of guidance and assistance for the adoption of improved production
techniques and commercialization of appropriate technologies for the product
development and for increased utilization of indigenous raw materials;
5) “Provision of assistance in marketing and distribution of products of MSMEs 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 drying facilities, ice plants, refrigerated storage,
cooperative trucking facilities, etc;
6) “Intensification of assistance and guidance to enable greater access to credit
through a simplified multi-agency financing program; to encourage development of
other modes of financing such as leasing and venture capital activities; to provide
effective credit guarantee systems, and encourage the formation of credit

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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 disasters;
9) “Intensification of information dissemination campaigns and entrepreneurship
education activities;
10) “Availment of and easier access to tax credits and other tax and duty incentives as
provided by the Omnibus Investment Code and other laws;
11) “Provision of support for product experimentation and research and development
activities as well as access to information on commercialized technologies; and
12) “Through appropriate government agencies:
“a) Provide more infrastructure facilities and public utilities to support operations of
MSMEs;
“b) Establish, operate, and administer a small business incubation program in
coordination with academic institutions, Department of Science and Technology and
other appropriate government entities that will provide space for start-up and
expanding firms, shared use of equipment and work areas, daily management
support services essential to high-quality commercial operations, technical
assistance and other services to develop innovative and deserving MSMEs;
“c) Conduct a nationwide information campaign with the Philippine Information
Agency that shall inform the public of all programs and services, government and
non-government, available to MSMEs;
“d) Provide local and international network and linkages for MSME development;
“e) Compile and integrate statistical databank on Philippine MSMEs;
“f) Set-up new MSME centers and revitalize already established MSME centers to
provide MSMEs in the regions easier access to services such as, but not limited to,
the following:
“i. Accept and act on all registration applications of MSMEs;
“ii. Streamline registration process and facilitate speedy registration for the
establishment of business enterprises in the country;
“iii. Provide all information and referral services it shall deem necessary or
essential to the development and promotion of MSMEs;
“iv.Conduct other programs or projects for entrepreneurial development in
their respective areas; and
“v. Provide courses and development programs, training, advice, consultation
on business conceptualization and feasibility, financing, management, capacity
building, human resources, marketing, and such other services to support the
needs of MSMEs;
“g) To submit to the President and the Congress through the Oversight Committee
as defined under this Act, a yearly report on the status of MSMEs in the country,
including the progress and impact of all relevant government policies, programs and
legislation as well as private sector activities;
“h) To coordinate, monitor and assess the implementation of the MSMEDP, and
when necessary, institute appropriate adjustments thereon in the light of changing
conditions in both domestic and international environment; and

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“i) Generally, to exercise all powers and functions necessary for the objectives and
purposes of this Act.”

SEC. 10. Section 9 of the same Act, as amended, is hereby renumbered as Section 8 and amended to
read as follows:

“SEC. 8. Designation of the Bureau of Micro, Small and Medium Enterprise Development as
Council Secretariat. — The Bureau of Small and Medium Business Development (BSMBD)
hereinafter referred to as the Bureau of Micro, Small and Medium Enterprise Development
(BMSMED) is hereby designated to act as the Council Secretariat and shall have the following
duties and functions:

“xxx”

SEC. 11. A new section is hereby inserted after Section 9 of the same Act, as amended, and numbered as
Section 9 to read as follows:

“SEC. 9. Appropriations. — To finance its activities and operational expenses, the Council shall
have a separate annual appropriation approved by the Department of Trade and Industry (DTI)
which shall be provided in the General Apropriations Act starting in the fiscal year immediately
following the approval of this Act. The Council may also accept contributions from the private
sector.”

SEC. 12. Section 10 of the same Act, as amended, is hereby further amended to read as follows:

“SEC. 10. Rationalization of Existing MSME Programs and Agencies. - The MSMED Council shall
conduct continuing review of government programs for MSMEs and submit to Congress and the
President a report thereon together with its policy recommendations.”

SEC. 13. Section 11 of the same Act, as amended, is hereby further amended to read as follows:

“SEC. 11. Creation of Small Business Guarantee and Finance Corporation. — There is hereby
created a body corporate to be known as the Small Business Guarantee and Finance
Corporation, hereinafter referred to as the Small Business Corporation (SB Corporation), which
shall be charged with the primary responsibility of implementing comprehensive policies and
programs to assist MSMEs in all areas, including but not limited to finance and information
services, training and marketing.”

SEC. 14. A new sub-section is inserted after Section 11 of the same Act, as amended, to read as follows:

“SEC. 11-A. Composition of the Board of Directors and its Powers. — The SB Corporation
corporate powers shall be vested on a Board of Directors composed of eleven (11) members
which shall include the following:
a) “The Secretary of Trade and Industry;
b) ‘The Secretary of Finance;
c) “A private sector representative to be appointed by the President upon the
recommendation of the MSMED Council;
d) “Seven (7) representatives of the SB Corporation common stock shareholders who shall be
elected based on proportional distribution, in accordance with Section 24 of the Corporation
Code; and

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e) “The president of the SB Corporation as ex-officio member and to serve as vice chairman of
the Board.

“The President shall appoint the chairman of the Board from among its members.

“All members of the Board so appointed, except for the exofficio members, shall serve for a
term of three (3) years without reappointment. The person so appointed to replace a member
who has resigned, died, or been removed for cause shall serve only for the unexpired portion of
the term.

“The Board of Directors shall have, among others, the following specific powers and authorities:

a) “Formulate policies necessary to carry out effectively the provisions of this charter and to
prescribe, amend and repeal by-laws, rules and regulations for the effective operations of
the small business corporation;
b) “Establish such branches, agencies and subsidiaries as may be deemed necessary and
convenient;
c) “Compromise or release, in whole or in part, any claim or liability whatsoever for or against
the SB Corporation, including interest, penalties, fees and/or other charges in accordance to
its own bylaws and Bangko Sentral ng Pilipinas rules;
d) “Fix the features of non-voting preferred shares which shall be printed on the stock
certificates evidencing the same;
e) “Exercise all such other powers as may be necessary or incidental to carry out the SB
Corporation’s purposes; and
f) “Notwithstanding the provisions of Republic Act No. 6758 and Compensation Circular No.
10, Series of 1989 issued by the Department of Budget and Management, the Board shall
have the authority to provide for the organizational structure and staffing pattern of SB
Corporation and to extend to the employees and personnel thereof salaries, allowances and
fringe benefits similar to those extended to and currently enjoyed by employees and
personnel of other government financial institutions.”

SEC 15. A new sub-section is hereby inserted after Section 11 of the same Act, as amended, to read as
follows:

“SEC. 11-B. Corporate Structure and Powers. — The SB Corporation shall:

a) “be administratively attached to the Department of Trade and Industry and shall be under
the policy and program supervision of the MSMED Council;
b) “have its principal offices in Metro Manila and whenever necessary, establish branch office
in the provinces; and
c) “exercise all the general powers expressly conferred by law upon corporations under the
Corporation Code, including those powers that are incidental or necessary to the attainment
of the objective of this Act.

“For this purpose, the SB Corporation subject to compliance with the rules and regulations to be
issued by the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission,
shall have the following functions and duties:

a) “Source and adopt development initiatives for globally competitive MSMES in finance and
business technologies;

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b) “To extend all forms of financial assistance to eligible MSMEs. SB Corporation may also
engage in wholesale lending. The SB Corporation shall be given two (2) years from the
effectivity of this Act to comply with this requirement;
c) “Guarantee loans obtained by qualified MSMEs under such terms and conditions adopted by
the SB Corporation Board of Directors;
d) “Hold, purchase, lease or otherwise acquire and own real and personal property, introduce
necessary improvements thereon and to sell, mortgage, encumber or otherwise dispose of
the same as may be necessary in the normal course of business;
e) “Formulate means and methods of accepting alternative collaterals and implementing
alternative loan evaluation models;
f) “Apply for, receive and accept grants and donations from sources within and outside the
country; and
g) “Hold, own, purchase, acquire, sell, mortgage, dispose or otherwise invest or re-invest in
stocks, bonds, treasury bills, debentures, securities and similar forms of indebtedness of the
government, its agencies and instrumentalities or any government financial institution.”

SEC. 16. Section 12 of the same Act, as amended, is hereby further amended to read as follows:

“SEC. 12. Capitalization and Funding of the SB Corporation. — The SB Corporation shall have an
authorized capital stock of Ten billion pesos (P10,000,000,000.00). The initial capital of One
billion pesos (P1,000,000,000.00) shall be established from a pool of funds to be contributed in
the form of equity investments in common stock by the Land Bank of the Philippines (LBP), the
Development Bank of the Philippines (DBP), in the amount of Two hundred million pesos
(P200,000,000.00) each. The Social Security System (SSS) and the Government Service Insurance
System (GSIS) shall also set aside Two hundred million pesos (P200,000,000.00) each for the SB
Corporation. Authorized capital stock of the Small Business Corporation shall be divided into
80,000,000 common shares and 20,000,000 preferred shares with a par value of One hundred
pesos (P100.00) per share: Provided, That the common shares which have been issued, including
those issued against the assets of the KKK Guaranty Fund consolidated under the small business
corporation by virtue of Executive Order No. 233, Series of 2000 and Executive Order No. 19,
Series of 2001 and including those already subscribed, shall form part of the capitalization of the
corporation: Provided, further, That holders of preferred shares issued under Republic Act No.
6977, as amended, shall have the option to convert the same into common shares. Additional
equity funding shall come from trust placements of excess and unused funds of existing
government agencies, bilateral and multilateral official development assistance funds,
subscriptions from government owned or controlled corporations, and investments of private
financial institutions and corporations: Provided, finally, That any investment from the private
sector shall only be in the form of preferred shares.

“To allow for capital build-up, SB Corporation shall be given a five (5) year grace period on
dividend commitments beginning on the date of effectivity of this amendment. Thereafter, it
may only declare as dividend not more than thirty percent (30%) of its net income and the rest
withheld as retained earnings.”

SEC. 17. New sections are hereby inserted after Section 12 of the same Act, as amended, to read as
follows:

“SEC. 13. The SB Corporation shall be subject to the supervision and examination of the Bangko
Sentral ng Pilipinas taking into consideration its developmental objectives.”

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“SEC. 14. Venture Capital and Micro Finance Trust Fund. — The SB Corporation may set aside an
amount of money to encourage the setting up of a venture capital and micro finance trust fund
for the purpose of promoting business opportunities available to MSME sector. The Venture
Capital Fund shall be used mainly for venture capital finance especially in technology-oriented
industries. The micro finance trust fund shall be used to provide collateral-free fixed and
working capital loans to micro and small enterprises run by those emerging out of poverty.”

SEC. 18. Section 13 of the same Act, as amended, is hereby renumbered as Section 15, and further
amended to read as follows:

“SEC. 15. Mandatory Allocation of Credit Resources to Micro, Small and Medium Enterprises. —
For the period of ten (10) years from the date of the effectivity of this amendatory Act, all
lending institutions as defined under Bangko Sentral ng Pilipinas rules, whether public or private,
shall set aside at least eight percent (8%) for micro and small enterprises and at least two
percent (2%) for medium enterprises of their total loan portfolio based on their balance sheet as
of the end of the previous quarter, and make it available for MSME credit as herein
contemplated.

“Compliance of this provision shall be:

a) “actual extension of loans to eligible MSMEs; or
b) “actual subscription of preferred shares of stock of the SB Corporation; or
c) “wholesale lending to Participating Financial Institutions (PFIS) for on-lending to MSMEs; or
d) “purchase/discount of MSMEs receivables; or
e) “loans granted to export, import, and domestic traders subject to compliance with Section 3
of this Act; or
f) “subscribe/purchase of liability instruments as may be offered by the SB Corporation.

“The Bangko Sentral ng Pilipinas shall formulate rules for the effective implementation of this
provision: Provided, That the purchase of government notes, securities and other negotiable
instruments shall not be deemed compliance with the foregoing provisions: Provided, further,
That the Bangko Sentral ng Pilipinas shall establish an incentive program to encourage lending to
micro, small and medium industries beyond the mandatory credit allocation to said enterprises,
such as possible reduction in bank’s reserve requirement.

“The MSMED Council shall set up the appropriate systems to monitor all loan applications of
MSMEs in order to account for the absorptive capacity of the MSME sector.

“The Bangko Sentral ng Pilipinas shall furnish to the MSMEDCouncil on a quarterly basis
comprehensive reports on the banks’ compliance, noncompliance and penalties of the above
provisions on the mandatory credit allocation for MSMEs.

“Lending institutions which are not qualified to acquire or hold lands of the public domain in the
Philippines shall be permitted to bid and take part in sales of mortgaged real property in case of
judicial or extra-judicial foreclosure, as well as avail of receivership, enforcement and other
proceedings, solely upon default of a borrower, and for a period not exceeding five (5) years
from actual possession: Provided, That in no event shall title to the property be transferred to
such lending institution. If the lending institution is the winning bidder, it may, during said five
(5) year period, transfer its rights to a qualified Philippine national, without prejudice to a
borrower’s rights under applicable laws.”

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SEC. 19. New sections to be numbered as Sections 16, 17 and 18 are hereby inserted after Section 13 of
the same Act, as amended, to read as follows:

“SEC. 16. Micro, Small, and Medium Enterprise Week. — In order to institute continuing
awareness of the primacy of small business in nation-building and in people empowerment, and
to celebrate and espouse the firm commitment of the State in the promotion, growth and
development of small business, the second week of July of every year shall be declared as the
“Micro, Small, and Medium Enterprise Development Week”. The MSMED Council, the
Department of Trade and Industry, and the SB Corporation shall be jointly responsible in
organizing activities for the event.”

‘SEC. 17. Presidential Awards for Outstanding MSME. — Presidential awards for outstanding
MSMEs and good MSME practices, consisting of rewards in cash or in kind shall be granted to
one hundred percent (100%) filipino-owned companies and development partners during the
MSME development week.”

“SEC. 18. Congressional Oversight Committee. — To monitor and oversee the implementation of
this Act, there shall be a Congressional Oversight Committee on Micro, Small and Medium
Enterprise Development (COC-MSMED) composed of the chairpersons of the Senate Committee
on Economic Affairs and the House Committee on Small Business and Entrepreneurship
Development as chairperson and co- chairperson, respectively; five (5) members of each of the
Senate and House of Representatives to include the chairpersons of the Senate committees on
Trade and Commerce; and Banks, Financial Institutions and Currencies; and the chairpersons of
the House committees on Trade and Industry, Banks and Financial Intermediaries, and
Appropriations: Provided, That two (2) of the five Senators and two (2) of the five House
Members shall be nominated by the respective minority leaders of the Senate and the House of
Representatives.

“The COC-MSMED shall set the guidelines and overall framework for the monitoring of the
implementation of this Act and shall adopt its internal rules of procedure. The Secretariat of the
COCMSMED shall be drawn from the existing personnel of the Senate and House of
Representatives committees comprising the COCMSMED.”

SEC. 20. Section 14 of the same Act, as amended, on Penal Clause is hereby renumbered as Section 19,
and further amended, to read as follows:

“xxx”

“Penalties on noncompliance shall be directed to the development of the MSME sector. Ninety
percent (90%) of the penalties collected should go to the MSMED Council Fund, while the
remaining ten percent (10%) should be given to the BSP to cover for administrative expenses.”

SEC. 21. A new section is hereby inserted after Section 14 of the same Act, to read as follows:

“SEC. 20. Implementing Rules and Regulations. — The Department of Trade and Industry,
through the Bureau of Micro, Small and Medium Business Development and in consultation with
other concerned government agencies, nongovernment organizations and private sector
involved in the promotion of MSMEs, shall formulate the Implementing Rules and Regulations
(IRR) necessary to implement the provisions of this Act within ninety (90) days from the
approval of this Act. The IRR issued pursuant to this Section shall take effect thirty (30) days
after publication in a national newspaper of general circulation.”

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 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

SEC. 22. Separability Clause. — The provisions of the Act are hereby declared to be separable. If any
provision of this Act shall be held unconstitutional, the remainder of the Act not otherwise affected shall
remain in full force and effect.

SEC. 23. Repealing Clause. — All laws, executive orders, rules and regulations, or parts thereof,
inconsistent herewith are hereby repealed or modified accordingly.

SEC. 24. Effectivity Clause. — This Act shall take effect within fifteen (15) days from its publication in at
least two (2) national newspapers of general circulation.

Approved,

(Sgd.) PROSPERO C. NOGRALES (Sgd.) MANNY VILLAR

Speaker of the House of President of the Senate
Representatives

This Act which is a consolidation of Senate Bill No. 1646 and House Bill No. 1754 was finally passed by
the Senate and the House of Representatives on March 3, 2008 and February 27, 2008, respectively.

(Sgd.) MARILYN B. BARUA-YAP (Sgd.) EMMA LIRIO-REYES

Secretary General Secretary of Senate
House of Representatives

Approved: May 23, 2008

(Sgd.) GLORIA MACAPAGAL-ARROYO

President of the Philippines

PROGRAMS AND POLICIES IN ENTEPRISE DEV’T (2021-2022) MA. JENALYN G. FLORES, MBA 12