Law Summary
Definition of Key Terms
- Act: Refers to the Barangay Micro Business Enterprises Act of 2002.
- Barangay Micro Business Enterprise (BMBE): Any business entity engaged in production, processing, manufacturing, trading or services (except professional services requiring government licensure), with total assets (excluding land) not exceeding PHP 3,000,000.
- BMBEs include individuals, partnerships, cooperatives, corporations, or associations registered with the local treasurer’s office.
- Certificate of Authority (CA): Document authorizing operation as a BMBE and entitlement to benefits.
- Assets: Properties owned/used by the BMBE for business operations, excluding land for tax exemption purposes.
- Registration: Inclusion in the local BMBE Registry.
- Financing: Borrowings by the BMBE after registration.
Registration Framework
- Registration is conducted by the Office of the Treasurer in the city or municipality where the principal business is located.
- Only one Certificate of Authority is issued per BMBE by the treasurer’s office in jurisdiction.
Eligibility for Registration
- Natural or juridical persons, cooperatives, or associations with assets not exceeding PHP 3 million excluding land.
- Must engage in qualifying business activities as per law definitions.
Registration Requirements and Procedures
- Submission of a completed BMBE application form (Form 01) signed by owner or manager.
- Application must be filed at the Municipal or City Treasurer's office.
- Processing period is fifteen (15) working days; deemed registered if unprocessed within this period.
- Certificate of Authority valid for two years and renewable every two years.
Fees and Charges
- Registration and issuance of the Certificate of Authority are generally free.
- Local Government Units (LGUs) may charge a maximum administrative fee of PHP 1,000 to cover monitoring costs.
Transfer of Business Ownership
- BMBEs must report ownership changes to their city or municipality.
- Original Certificate of Authority must be surrendered for notation of transfer.
Tax and Wage Regulations
- BMBEs are exempt from income tax on income generated from their operations.
- LGUs encouraged to reduce or exempt BMBEs from local taxes, fees, and charges.
- Exempt from the Minimum Wage Law but employees must receive equivalent benefits such as social security and healthcare.
Credit and Financing Support
- Establishment of special credit windows by government financial institutions (e.g., LBP, DBP, SBGFC, PCFC) to service BMBEs financing needs.
- GSIS and SSS to provide credit facilities to their members wishing to start BMBEs.
- Encouragement of wholesale lending through accredited private financial institutions and community organizations.
- Loans granted under the Act count as twice their amount for compliance with agri-agra and SME laws.
- Interest and commissions on loans by specified government institutions are exempt from gross receipts tax.
- Special guarantee windows to minimize credit risks operated by SBGFC and QUEDANCOR for respective sectors.
- Annual reporting by involved institutions to relevant Congressional committees.
- BSP tasked with rule formulation and incentives for credit delivery to BMBEs.
Technical Assistance and Training
- BMBEs entitled to avail technology transfer, production, management training, and marketing assistance from government agencies including DTI, DOST, TESDA, and others.
BMBE Development Fund
- A fund of PHP 300 million established with PAGCOR endowment to support BMBE technology, training, and marketing assistance.
- Fund administered by the Small and Medium Enterprise Development (SMED) Council and accessible by concerned agencies.
Trade and Investment Promotion
- Business registration data is available for use by private and non-government organizations for business matching and trade promotion.
One-Stop Business Registration
- LGUs are encouraged to establish one-stop centers to streamline BMBE registration and permit processing.
Information Dissemination
- The Philippine Information Agency (PIA) along with relevant agencies ensures wide dissemination about the benefits and provisions of the Act, particularly at barangay levels.
Penalties for Violations
- Willful violation or acts defeating the Act are punishable by a fine of PHP 25,000 to PHP 50,000 and imprisonment from six months to two years.
- Non-compliance with tax exemption provisions leads BSP to impose sanctions on government financial institutions including fines of no less than PHP 500,000.
Monitoring and Reporting
- DILG, DTI, and BSP required to submit annual reports to Congress on the Act’s implementation status.
Effectivity
- Rules and regulations take effect fifteen (15) days after publication in a newspaper of general circulation.