Implementing Rules of Philippine Innovation Act

Policy, purpose, and constitutional basis

These rules are promulgated to foster innovation as a vital component of national development and sustainable economic growth.
These rules adopt science-and-technology priorities under Section 10, Article XIV of the Constitution recognizing science and technology as essential for national development and progress and giving priority to research and development, invention, innovation, and utilization.
Innovation is placed at the center of development policy through long-term goals that harness innovation efforts to help the poor and marginalized, enable MSMEs to join domestic and global supply chains, and catalyze Philippine industrial and local economy growth.
The State adopts a culture of strategic planning and innovation that promotes inclusivity, competitiveness, and results-oriented development, and ensures knowledge creation, acquisition, dissemination, and use by individuals, enterprises, organizations, and communities.
Investments in education, science, technology, and innovation are guided toward strengthening knowledge-based economic development that benefits all, with innovation starting from a skilled, talented, and creative people base.
These rules recognize innovation ecosystem needs and require a “whole of government” approach to ensure policy coherence, alignment of priorities, and effective coordination.
Governance is recognized as indispensable; the State must establish efficient institutions with authority to remove regulatory, informal, and other obstacles to innovative undertaking.
The rules recognize the value of national sources of innovation such as traditional knowledge, traditional cultural expressions, and genetic resources, and require protection from misappropriation (misappropriation includes misuse or exploitation).
These rules direct government to work and cooperate with business, academe, scientific community, and research institutions to encourage innovation-driven efforts of businesses and collaboration.

Key definitions governing implementation

These rules define innovation as the creation of new ideas resulting in development of new or improved products, processes, or services that are spread or transferred across markets.
These rules define inclusive innovation as new ideas leading to new or improved products, processes, or services that create value to society and improve welfare of lower-income groups (as defined by the Philippine Statistics Authority) and marginalized groups.
These rules define genetic resources (GR) as genetic materials of plant, animal, microbial, or other origin containing functional units of heredity of actual or potential value.
These rules define blue economy as sustainable use of ocean resources for economic growth, improved livelihood and jobs, while preserving the ocean ecosystem.
These rules define innovation centers as centers of competence and innovation activities that support collaborative research, development and extension (RD&E) and innovation-related activities between and among academic/educational institutions, RD&E centers, and business.
These rules define innovation governance as the institutional set-up of the national innovation ecosystem elements, including structures and processes governing policymaking and implementation, monitoring and evaluation, and coordination/collaboration across public institutions and stakeholders.
These rules define pre-commercial procurement as procurement of RD&E services for services, solutions, or products not yet existing, including contracting by development phase from feasibility through commercialization.
These rules define startup as any person or registered entity in the Philippines aiming to develop innovative products, processes, or business model as defined under Republic Act No. 11337.
These rules define technology diffusion procurement as public procurement undertaken on behalf of end-users to accelerate diffusion of innovative solutions or technologies offering the greatest advantage to users.
These rules define MSMEs as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation, as defined under Republic Act No. 9501.

Innovation scope, priorities, and programs

These rules apply to all potential types and sources of innovation, including product, process, organizational, and marketing innovation, and academic or educational, policy, and social innovation.
These rules direct innovation goals toward developing new technologies while also harnessing available global knowledge and technologies supporting development of new and/or improved products, systems, processes, policies, or services to increase productivity and promote overall welfare.
The NIC shall, in consultation with concerned sectors, consider priority areas such as food security and sustainable agriculture and natural resources, the blue economy, education and the academe (including STEM education and high-grade technology-focused upskilling and re-skilling vocational training), health, secure clean renewable and reliable energy, climate change and disaster resilience, resource efficiencies, and others including digital economy, transportation services, and traditional knowledge, traditional cultural expressions, and genetic resources.
The NIC shall develop strategies promoting participation of different sectors in creating new ideas developed into new and quality products, processes, and services to improve welfare of low-income livelihood and entrepreneurship opportunities.
The NIC shall develop strategies promoting MSME internationalization, digitalization, and participation in local and global value chains, including a comprehensive support program from incorporation to internationalization.
A comprehensive support program under the MSME framework must include coaching and mentoring in areas including design, technology extension services, standard business practices in contracting/accounting/project management, quality control, standard-setting, business services (including commercialization market needs assessment, marketing and promotion, and management), and patents and other forms of intellectual property rights.
The DTI shall identify high productivity innovative businesses to help them exploit overseas market opportunities, and the NIC shall develop metrics to assess progress in these areas.
Implementing agencies must have areas of responsibility assigned based on their mandates to avoid duplication of assistance.
For implementing Section 12 of the Act, these rules further define the Startup MSME Innovation Development Program, which mobilizes government agencies with private organizations and academic institutions to provide technical and/or financial support for entrepreneur development training and includes incentives and intellectual property registration under the Investment Priorities Plan (IPP).
The startup component of the innovation development program must be implemented through the Philippine Startup Development Program under Republic Act No. 11337, with the DTI leading development of the comprehensive MSME innovation support program in coordination with NIC members.
The rules require capacity-building for the public sector to ensure training for startups and MSMEs is suitable, updated, and valuable, and require considering other existing initiatives when designing financial support programs.
The Philippine Statistics Authority (PSA) must collect MSME and startup data, in coordination with DTI-BSMED, ensuring consistency, accessibility, and availability of adequate and timely statistics on MSMEs by asset size under Republic Act No. 9501, including indicators such as employment size, and make other pertinent information available to track MSME progress over time for development planning and investment programming.
Implementing agencies must annually report to the NIC implementation status, challenges, and accomplishments vis-a-vis NIC-approved targets.

National Innovation Council: composition and powers

The National Innovation Council (NIC) is established as the policy advisory body for formulation, development, implementation, and monitoring of national innovation goals, priorities, and long-term strategy.
The NIC composition follows Section 6 of the Act and includes executive members appointed from business, entrepreneurs, academe, and scientific community, with at least one executive member being a woman.
The NIC must include at least one representative from the MSME sector and at least one representative from large reputable business enterprises, both recommended by legally established and reputable business organizations.
The academe and scientific community representatives must have at least seven (7) years of experience in science and technology, research and development, or innovation from reputable and recognized communities.
The President may designate the Executive Secretary to attend and preside over NIC meetings.
Department Secretaries and other NIC members must designate alternates with a rank not lower than an Undersecretary or equivalent.
The NIC must be fully constituted as soon as practicable after issuance of these rules.
An inter-agency working group composed of senior officials from NIC member agencies must draft the National Innovation Agenda and Strategy Document (NIASD) with assistance of the NIC Secretariat and submit it to the NIC after the rule’s effectivity, and the NIC must promulgate it immediately thereafter.
Heads of each NIC member agency must designate a focal unit to ensure effective coordination.

Functions and NIC Secretariat duties

The NIC must develop a strategic vision and long-term innovation goals and priorities aligned with the country’s long-term vision and global and regional commitments.
The NIC must develop innovation strategies ensuring coherent strategic direction and programs.
The NIC must serve as strategic intelligence for national innovation policy-making.
The NIC must coordinate and engage domestic and foreign expertise in strategic and innovation policy-making.
The NIC must coordinate across sectors and agencies for policy and program coherence.
The NIC must monitor and assess strategic and innovation programs and regularly review and update them.
The NIC must identify agencies and LGUs to implement specific strategies under the NIASD, guided by the agencies’ legal mandates.
The NIC must communicate innovation policies, priorities, and agenda to local and international public.
The NIC must establish and administer the Innovation Fund under Section 21 of the Act and develop a transparent and open support system in collaboration with the DBM, COA, and GPPB.
The NIC must identify and approve programs qualifying for funding from the Innovation Fund.
The NIC may create committees and/or invite resource persons or institutions to ensure effectiveness and expedite policy decision-making and implementation.
The NIC must develop metrics aligned with the Global Innovation Index and other international indices to monitor progress, including publicly funded RD&E projects.
The NIC must implement an action agenda for capacity development and innovation success as measured by the Global Innovation Index and other indices.
The NIC must submit annual reports to Congress on progress of Act implementation.
The NIC must perform other functions necessary to implement the Act.
A NIC Secretariat must be established within NEDA and headed by an Executive Director III (Salary Grade 28) appointed by the President.
The Executive Director III must have at least seven (7) years of experience in science and technology, R&D, MSME, innovation, finance, or business management and must be nominated by the NIC.
The Secretariat must be under the control and supervision of the Secretary of Socioeconomic Planning, consistent with the NIC framework.
NEDA must submit the initial staffing structure and complement to the DBM for funding immediately after effectivity.
The NIC Secretariat interim staffing must be constituted within one (1) month by temporary detail of at least one (1) personnel from each NIC member agency pending plantilla creation.
The Secretariat must provide drafting and support for NIC strategies and priorities, consult experts, coordinate stakeholders, and perform strategic intelligence gathering.
The Secretariat must draft relevant criteria used by the NIC to evaluate RD&E proposals for Innovation Fund public funding.
The Secretariat must design and administer metrics for monitoring and evaluation, assess science/technology and innovation grant programs and scholarships, and submit recommendations to the NIC aligned with NIASD.
The Secretariat must develop recommendations including review of existing policies and programs to align and harmonize with NIASD and the Act.

NIASD: content, timeline, compliance, review

The NIC must develop the National Innovation Agenda and Strategy Document (NIASD) establishing national vision and long-term goals for innovation consistent with long-term vision and global/regional commitments.
The NIASD must provide a roadmap for improving innovation governance through coordination of innovation policies/programs/projects across agencies and LGUs; deepening and accelerating innovation efforts including inclusive innovation programs targeting the poorest of the poor; integrating and fostering public-private partnerships; enabling and empowering public and private HEIs as knowledge producers and technology generators; and creation/protection/commercialization of intellectual properties.
The NIASD must identify strategies to stimulate regional capacity for differentiated innovation strategy across regions and provinces in the medium term while protecting traditional knowledge, cultural expressions, natural resources, and the environment.
The NIASD must include innovation priority areas, strategies to realize these priorities, and resources and budget provision for them.
The NIASD and strategies must have a minimum ten (10)-year horizon.
The NIC must periodically review the NIASD every five (5) years after issuance.
All agencies and LGUs must strictly comply with the NIASD and pursue it as a collective national effort.
Agencies and LGUs must incorporate innovation programs and projects in their respective work programs and action plans guided by the NIASD.
The NIASD must be developed in consultation with government agencies, Regional Development Councils, LGUs, and other stakeholders.
The NIASD must be completed within six (6) months from the effectivity of the Act.
The NIC must issue guidelines on implementation, monitoring, and evaluation of the NIASD.
The Harmonized National Research & Development Agenda and similar documents must be aligned and harmonized with the NIASD.

Whole-of-government, online portal, and reporting

A “whole of government approach” must be adopted to drive innovation across government policy areas spanning education, training, health, energy, communication, industry, science and technology, defense, and others.
The whole-of-government approach must facilitate engagement with business, RD&E sector, MSMEs, and the broader community for full and effective implementation of the innovation agenda.
Government agencies mandated by the NIC, including those enumerated under Section 17 of the Act, must implement the national innovation strategies and observe the whole-of-government approach.
Agencies must make available for public access a joint web portal containing information on innovation policies, strategies, programs, services, grants, and financial assistance for related trainings, and must guide beneficiaries on available services.
The web portal must include a database of all ongoing and completed innovation projects implemented under the NIASD.
The NIC must designate the management of the web portal with links to relevant websites on startups, MSME development, human resource development, and other innovation matters.
The portal must have interactive features allowing the public to access services or file applications for scholarships or other services/programs online.
Inquiries must be addressed within three (3) days from receipt.
Processing of scholarship and other service applications must be streamlined in accordance with NIC guidelines and consistent with existing anti-red tape and ease of doing business rules.
Reforms must be reported to the NIC within six (6) months from effectivity of the Act.
Each online transaction must provide an acknowledgment receipt and reference number for monitoring.
Government agencies must submit periodic progress reports to the NIC on the status of innovation strategies and projects.
Reporting must take into consideration reports required under other laws related to innovation to harmonize and achieve efficiencies, and NIC must issue reporting guidelines.
The enumeration of agencies under the rules does not limit NIC from mandating other agencies.

Innovation Instruments, procurement, and special day

Government must employ innovation instruments including technology programs, innovation centers, innovation networks, technology platforms, Science and Technology Parks (STPs), cluster policies (including policy dialogues), human capacity building programs, and use of patent information including patent landscape reports.
The NIC must develop strategies for agencies to harness these instruments, and agencies under Section 17 of the Act must submit action plans guided by NIC strategies.
Innovation centers must be established in coordination with the private sector, academe/education institutions, and other sectors to maximize collaboration and joint initiatives, including partnerships with foreign governments, development partners, and abroad private entities.
Public procurement must follow Republic Act No. 9184 and its IRR.
The NIC must coordinate with the GPPB and its Technical Support Office to develop and issue procurement guidelines under Republic Act No. 9184 covering: (a) innovative goods and services through requirements, output specifications, and functional/performance criteria with allowance for project-based competition; (b) pre-commercial procurement through government agencies determining long-term needs, procurement involving multi-stage process; and (c) technology diffusion procurement through aggregated demand and technology procurement to promote technology diffusion and market transformation.
The NIC/GPPB procurement guidelines must ensure efficiency, transparency, timeliness, and relevance.
April 21 of every year is declared National Innovation Day as a special working public holiday throughout the country.
All current innovation-related public events are encouraged to be conducted during April for the National Innovation Day.
The NIC, closely coordinated with the DOST, DTI, DepEd, CHED, and the TESDA, must plan and implement programs and activities involving other national agencies, LGUs, private sector, and schools.
An annual event must serve as a discussion platform for industry movers, entrepreneurs, HEIs, RDIs, government funding agencies, and other agencies to explore innovation models, collaborative engagements, social motivations, and collective aspirations consistent with the country’s innovation agenda.
LGUs must conduct innovation-related activities in coordination with appropriate agencies within their jurisdictions.

Innovation alliances, RD&E programs, and clustering

The NIC must establish conditions and framework promoting Innovation Alliances, including collaborative research consortia among private entities and with academic/educational institutions.
The alliances framework must facilitate regional networking for knowledge and technology sharing and collaboration in innovation projects.
The RDCs must serve as regional counterparts of the NIC to develop this framework and strengthen functional innovation alliances consistent with NIASD.
The NIC must encourage and support innovation alliances with foreign governments, development partners, private entities from abroad, and academic institutions.
The NIASD must integrate regional innovation strategies harnessing competitive advantages and strengths and promoting regional development through sound science, technology, and innovation programs.
RDCs must help coordinate and monitor NIASD implementation in their regions.
The NIC must adopt cluster policies as significant components of innovation policy, taking into account other policy streams such as regional economic development policy, industrial/enterprise policy, and higher education policy.
Cluster policies must focus on regional hubs/provinces/sectors such as MSMEs, large firms, spinoffs and startups, academic/educational institutions, research centers, or combinations.
The NIC must establish a Cluster Development Program, and funding must be incorporated in the annual General Appropriations Act.
Cluster strategies/programs must be implemented through concerned agencies through a coordinated system facilitated by the NIC addressing common needs within clusters.
The DTI, in coordination with relevant agencies, must formulate the Cluster Development Program for NIC approval.
The Cluster Development Program must provide mechanisms for establishing regional inclusive innovation centers, R&D centers, evaluating innovation policy and impacts, and maintaining a database linked to the Filipinnovation portal.
The NIC must develop RD&E themes in consultation with stakeholders guided by innovation agenda and development goals, adopting these themes in RD&E programs of concerned agencies.
The NIC must review RD&E themes periodically aligned with NIASD priorities.
The NIC must develop and administer relevance criteria for agencies selecting RD&E programs/projects for funding, and must conduct periodic review of these relevance criteria.
The NIC must prepare and regularly update an inventory of academic/educational and RD&E institutions, including resources and capacities, to guide public funding and grants.
The NIC must monitor project implementation to ensure compliance with criteria and fulfillment of funded objectives, and a peer review system may be established for this purpose.
The NIC must establish or strengthen centers of research excellence and adopt best practices for multidisciplinary research agenda; establish centers of collaborative research between academic and business; and require pertinent agencies to work with academic/educational and research institutions to provide research infrastructure for key research areas.
The NIC must recommend to Congress the annual proposed level of Gross Expenditure on Research and Development (GERD) based on NIASD submitted at the beginning of each annual budget cycle.
The DBM must prepare and submit to the NIC annual and multi-year RD&E expenditure programs using harmonized Unified Accounts Code Structure (UACS) from NGAs, GFIs, GOCCs, and SUCs.
The Bureau of Local Government Finance (BLGF) through the DOF must submit to the NIC the consolidated LGU RD&E expenditure program.

Innovation Fund: establishment, revolving seed, administration

An Innovation Fund is established to strengthen entrepreneurship and enterprises developing innovative solutions benefiting directly or indirectly the poorest of the poor.
The NIC administers the Innovation Fund by screening and approving qualified proposals.
The NIC must formulate guidelines for programming, disbursing, and accessing the Innovation Fund.
Subject to availability of funds, a revolving fund of One Billion Pesos (P1,000,000,000,000.00) is allocated for the initial year of implementation.
Funds necessary for continuous and effective implementation must be included in the annual General Appropriations Act.
The NIC, in coordination with concerned agencies, must explore accessing bilateral and multilateral funds for funding RD&E and other innovation efforts and must encourage public-private partnerships in RD&E, education, product development, and testing.

Credit quota and sanctions for noncompliance

A credit and financing program must be developed by the NIC in accordance with NIASD to generate and scale up innovation through loans and other financing for development of new technologies and innovations including product, organizational, and marketing innovation.
The NIC must involve the private sector in developing such credit and financing program in coordination with the BSP and other relevant agencies.
All banking institutions (government or private) must set aside at least four percent (4%) of their total loanable funds for innovation development credit.
“Loanable funds” for the quota must refer to funds generated from the date of effectivity of the Act.
Innovation development loans benefiting agricultural sector workers and businesses must be considered part of compliance with the credit quota under Republic Act No. 10000 (Agri-Agra Reform Credit Act of 2009).
The four percent (4%) credit quota is subject to joint review by the NIC and BSP after three (3) years of implementation to determine effectiveness, and findings must be submitted to Congress.
The NIC must conduct an annual assessment on compliance by banking institutions and submit recommendations to the BSP.
The BSP must impose administrative sanctions and other penalties on lending institutions for noncompliance.
Noncompliance/under-compliance includes false/misleading statements, perjury, and other acts violating usual banking rules and regulations, without prejudice to criminal sanctions.
Penalties for noncompliance/under-compliance are computed at one-half of one percent (0.5%) of the amount of noncompliance/under-compliance and are directed to innovation development.
Ninety percent (90%) of penalties collected by the BSP go to the Innovation Fund, and ten percent (10%) is retained by the BSP for administrative expenses.
The BSP and NIC, in consultation with concerned agencies and sectors, must promulgate rules to implement the Act’s Sections 22 and 23 within ninety (90) days after effectivity of these rules.
Implementing rules must provide modes of alternative compliance, including investments in bonds issued by DBP and LBP expressly declared eligible by competent authorities, including investments in other debt securities, and must account for varying bank scale and maturity.
Implementing rules take effect fifteen (15) days after publication in a newspaper of general circulation in the Philippines.

IP system management and registration reforms

Existing laws related to intellectual property must be enforced to protect exclusive rights of scientific inventors and innovators, including engineers, artists, designers, and entrepreneurs, to intellectual property and creations.
The IP laws specifically included in enforcement direction include Republic Act No. 8293 (as amended by Republic Act No. 10372), Republic Act No. 9168, Republic Act No. 8792, Republic Act No. 10055, and Republic Act No. 8371.
Any new laws or amendments to these IP laws and their corresponding IRRs must form part of these rules’ framework.
The NIC must issue policy direction to mainstream intellectual property among relevant government agencies and promote innovation and use of intellectual property as competitive tools.
Pertinent government agencies must promote diffusion of knowledge and information for national development.
The Intellectual Property Office of the Philippines (IPOPHIL) must promote registration of patents, utility models, layout designs, trademarks, copyrights, industrial designs, and geographical indications to ensure protection against misappropriation.
The IPOPHIL’s registration promotion must be guided by inclusion covering access, usage, quality, and perceived welfare.
The IPOPHIL must streamline and rationalize administrative and registration procedures and undertake programs to assist MSMEs in registration of patents, layout designs, trademarks and geographical indications and other ownership marks, industrial designs, utility models, and deposit of copyrights.
IPOPHIL reforms supporting MSME assistance must be reported to the NIC within six (6) months from effectivity of the Act and every year thereafter.
The IPOPHIL, with pertinent agencies of government, academe, and private sector, must promote use of patent information and analytics as a strategic tool to facilitate technology development.

Barriers removal, RD&E relevance, and advocacy

The NIC and its member government agencies must eliminate regulatory barriers to innovation and cut red tape to boost innovation efforts.
The NIC must facilitate stakeholder consultations to identify and cause removal of barriers accelerating innovation, including procurement rules and regulations, and align efforts for collaboration.
Government agencies and LGUs must improve efficiencies in addressing public transactions impacting innovation by reducing the number of days and costs of starting or expanding a business.
Government agencies and LGUs must ensure applications for starting a business and renewal of licenses are processed within three (3) working days from the time the application is received.
Processing of other permits and clearances, as well as applications for patents, must be streamlined to ensure a business environment fostering innovation consistent with existing anti-red tape and ease of doing business rules.
The NIC must develop guidelines for streamlining and improving performance in key indicators facilitating and promoting innovation, and must include provisions making budgeting, procurement, and auditing conducive to innovation by simplifying procedures to ensure timeliness and responsiveness of support systems.
The DBM, GPPB, CSC, PRC, and COA must collaborate closely with the NIC to adopt a more flexible approach consistent with existing laws.
LGUs must be proactive in innovation in line with Republic Act No. 7160 (Local Government Code of 1991), Chapter 2, Section 17(b)(2)(i); Section 17(b)(3)(i) & Section 17(b)(3)(ii).
LGUs must ensure inclusion of an innovation agenda in local development plans submitted to DILG.
LGUs may create innovation committees as per Section 112 of the LGC.
The NIC, in cooperation with concerned agencies, must undertake an information and community education program to rally public support for the innovation agenda and properties and to inform the public of available programs, services, grants, and financial assistance for trainings.
The government advocacy and community education program must be undertaken in partnership with the business sector and business associations, MSMEs, incubation centers and networks, Negosyo Centers, and academic institutions.
LGUs, in coordination with DILG, must create innovation programs through collaboration with other government agencies, NGOs, academic institutions, and private companies consistent with the Act and NIASD.
LGUs may provide incentives for implementation of innovation instruments, including those under Section 16 of the Act.
The NIC must develop and implement a communications plan consistent with the whole-of-government approach.

Diaspora for Innovation and Development

A Diaspora for Innovation and Development Program is established to mobilize and tap high-level expertise of the Filipino diaspora in