Barangay Micro Business Enterprises Act

Key definitions and asset rule

Section 3(a) defines a Barangay Micro Business Enterprise (BMBE) as any business entity or enterprise engaged in production, processing or manufacturing of products or commodities (including agro-processing), trading, and services.
Section 3(a) sets the BMBE asset cap at Three Million Pesos (P3,000,000.00) total assets, including assets arising from loans, and excluding the land where the BMBE’s office, plant, and equipment are situated.
Section 3(a) subjects the BMBE definition to review and upward adjustment by the SMED Council, mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.
Section 3 defines “services” to 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.
Section 3 defines “Certificate of Authority” as the certificate granting the registered BMBE authority to operate and enjoy the Act’s benefits.
Section 3 defines “Assets” as all properties, real or personal, owned by the BMBE and used for its business as defined by the SMED Council, and for purposes of tax and fee exemptions under the Act, “Assets” means all lands and properties, real or personal, owned and/or used by the BMBE for its business as defined by the SMED Council.
Section 3 defines “Registration” as inclusion of the BMBE in the BMBE Registry of a city or municipality.
Section 3 defines “Financing” as all borrowings of the BMBE from all sources after registration.

Registration, eligibility, and transfer

Section 4 assigns BMBE registration and issuance of the Certificate of Authority to the Office of the Treasurer of each city or municipality.
Section 4 requires that applications be processed within fifteen (15) working days upon submission of complete documents; otherwise, the BMBEs are deemed registered.
Section 4 allows the Municipal or City Mayor to appoint a BMBE Registration Officer under the Office of the Treasurer.
Section 4 encourages LGUs to establish a One-Stop-Business Registration Center for efficient handling of BMBE permits/licenses, and requires LGUs to conduct periodic evaluation of BMBEs’ financial status for monitoring and reporting.
Section 4 makes LGU issuance of the Certificate of Authority prompt and free of charge, while permitting LGUs to charge a registration and monitoring fee not exceeding One Thousand Pesos (P1,000.00).
Section 4 states that the Certificate of Authority is effective for two (2) years and is renewable for two (2) years for every renewal.
Section 5 permits any person (natural or juridical), cooperative, or association that qualifies under Section 3(a) to apply for registration as a BMBE.
Section 6 requires the BMBE to report any change in ownership structure to the city or municipality and to surrender the original BMBE Certificate of Authority for notation of the transfer.

Tax and wage-related incentives

Section 7 exempts all BMBEs from income tax for income arising from operations of the enterprise.
Section 7 encourages LGUs to reduce local taxes, fees and charges or exempt BMBEs from local taxes, fees and charges.
Section 8 exempts BMBEs from the coverage of the Minimum Wage Law.
Section 8 requires that employees covered under the Act receive the same benefits as regular employees, including social security and healthcare benefits.

Credit delivery and loan treatment

Section 9 requires Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), Small Business Guarantee and Finance Corporation (SBGFC), and People’s Credit and Finance Corporation (PCFC) to set up a special credit window for BMBEs consistent with Bangko Sentral ng Pilipinas (BSP) policies, rules, and regulations.
Section 9 requires the Government Service Insurance System (GSIS) and Social Security System (SSS) to set up a special credit window for their respective members who wish to establish a BMBE.
Section 9 encourages the concerned financing institutions to wholesale funds to accredited private financial institutions, including community-based organizations such as credit, cooperatives, non-government organizations (NGOs), and people’s organizations, which must directly provide credit support to BMBEs.
Section 9 treats loans granted to BMBEs under the Act as part of alternative compliance to Presidential Decree No. 717 (the Agri-Agra Law) or Republic Act No. 6977 (the Magna Carta for Small and Medium Enterprises), as amended.
Section 9 mandates that, for compliance purposes, loans granted to BMBEs under the Act are computed at twice the amount of the face value of the loans.
Section 9 exempts from gross receipts tax (GRT) the interests, commissions and discounts derived from loans by LBP, DBP, PCFC and SBGFC granted to BMBEs, and also exempts loans extended by GSIS and SSS to their member-employees under the Act.
Section 9 directs SBGFC and Quedan and Rural Credit Guarantee Corporation (QUEDANCOR), for agribusiness activities, to set up a special guarantee window under their respective guarantee programs to provide credit guarantee to BMBEs.
Section 9 requires the LBP, DBP, PCFC, SBGFC, SSS, GSIS, and QUEDANCOR to annually report to the appropriate committees of both Houses of Congress on the status of implementation of the credit-delivery provisions.
Section 9 tasks the BSP to formulate rules for implementation and to establish incentive programs to encourage and improve credit delivery to BMBEs.

Training, marketing, and technology support

Section 10 establishes a BMBE Development Fund with an endowment of Three Hundred Million Pesos (P300,000,000.00) from PAGCOR and administers it through the SMED Council.
Section 10 authorizes DTI, DOST, UP ISSI, CDA, TESDA, and TLRC to use the Fund for technology transfer, production and management training, and marketing assistance to BMBEs.
Section 10 requires DTI, in coordination with the private sector and NGOs, to explore linking or matching BMBEs with small, medium and large enterprises and to establish incentives therefor.
Section 10 requires DTI (in behalf of DOST, UP ISSI, CDA, TESDA and TLRC) to furnish to the appropriate committees of both Houses of Congress a yearly report on development and accomplishments of projects and programs involving technology transfer, production and management training, and marketing assistance to BMBEs.

Trade and business matching use of data

Section 11 requires that data gathered from business registration be made accessible to, and utilized by, private sector organizations and NGOs for business matching, trade, and investment promotion.

Public information dissemination

Section 12 requires the Philippine Information Agency (PIA), in coordination with DOLE, DILG, and DTI, to ensure proper and adequate information dissemination of the contents and benefits of the Act to the general public, especially intended beneficiaries in the barangay level.

Penalties and administrative sanctions

Section 13 penalizes any person who willfully violates any provision of the Act or who commits any act to defeat any provision: upon conviction, the person faces a fine of not less than Twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand Pesos (P50,000.00), and imprisonment of not less than six (6) months but not more than two (2) years.
Section 13 authorizes the BSP to impose administrative sanctions and other penalties on the concerned government financial institutions in case of non-compliance with Section 9.
Section 13 mandates a fine of not less than Five Hundred Thousand Pesos (P500,000.00) for such non-compliance, imposed by the BSP on the concerned government financial institutions.

Implementation rules and reports

Section 14 requires DILG, DTI, and BSP to submit an annual report to Congress on the status of implementation of the Act.
Section 15 directs the Secretary of the Department of Trade and Industry, in consultation with the Secretaries of DILG, DOF, and the BSP Governor, to formulate the necessary implementing rules and regulations within ninety (90) days after approval.
Section 15 provides that rules and regulations take effect fifteen (15) days after publication in a newspaper of general circulation.

Separability, amendment, and effectivity operation

Section 16 provides a separability rule: invalid or unconstitutional provisions do not affect the validity and subsistence of the remainder.
Section 17 amends, modifies, supersedes, or repeals existing inconsistent laws, presidential decrees, executive orders, proclamations, or administrative regulations accordingly.

Consolidation and legislative approval

Republic Act No. 9178 is a consolidation of Senate Bill No. 1855 and House Bill No. 4871.
The Senate finally passed the consolidated measure on October 24, 2002, and the House of Representatives finally passed it on October 23, 2002.
The Act was approved on November 13, 2002 by the President of the Philippines, Gloria Macapagal-Arroyo.