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Law on barangay micro-business enterprises

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                                                REPUBLIC ACT  NO. 9178






         To encourage the formation and growth of barangay micro- business enterprises, the government has enacted Republic Act 9178 otherwise known as the Barangay Micro- Business Enterprises ( BMBEs) Act of 2002.

          The Act, signed into law on  November 13, 2002 by President Gloria Macapagal Arroyo grants incentives and other benefits to BMBEs which include any business enterprise engaged in the production, processing or manufacturing or products, including agro-processing as well as trading and services with total assets of not more than P 3 million.


Section 1. Short Title – This Act shall be known as the “ Barangay Micro Business Enterprises ( BMBEs ) Act of 2002. “

Section 2.  Declaration of Policy – It is hereby declared to be the policy of the State to hasten the country’s economic development by encouraging the formation and growth of barangay micro- enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government specially in the local level, and the granting of incentives and benefits to generate much – needed employment and alleviate poverty.

Section 3. Definition of Terms. -  As used in the Act, the following terms shall mean :

(a) “ Barangay Micro Business Enterprise, “ hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing, or manufacturing of products and commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall not be more than Three Million Pesos ( P 3,000,000.00 ).  The above

definition shall be subject to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.

For the purpose of the Act, “ services” shall 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.

    ( b) “ Certificate of Authority “ is the certificate issued granting authority to the registered BMBE to operate and be entitled to the benefits and privileges accorded thereto.

     ( c ).  “ Assets “ refers to all kinds of properties, real or personal, owned by the BMBE and used for the conduct of its business as defined by the SME Council:

Provided, That for the purpose of exemption from taxes and fees under the Act, this term shall mean all kinds of properties, real or personal owned and / or used by the BMBE for the conduct of its business as defined by the SMED Council.

 (d).  “ Registration” refers to the inclusion of BMBE in the BMBE Registry of a city or municipality. 
( e ).  “ Financing “ refers to all borrowings of the BMBE from all sources after registration.



Section 4.  Registration and Fees. – The Office of the Treasurer of each city or municipality shall register the BMBEs and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act. Any such application shall be processed within fifteen ( 15 ) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. The Municipality or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the Treasurer. Local 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, LGUs shall make a periodic evaluation of the BMBEs’ financial status for monitoring and reporting purposes.

        The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee not exceeding One Thousand Pesos ( P 1,000.00 ).

        The Certificate of Authority shall be effective for a period of two ( 2) years renewable for a period of two (2) years for every renewal.

Section 5. Who are eligible to Register – Any person, natural or judicial cooperative or association, having the qualifications as defined in Section 3(a) hereof may apply for registration as BMBE.

Section 6.  Transfer of ownership. – the BMBE shall report to the city or municipality of any charge in the status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority  for notation of the transfer.



Section 7.  Exemption from taxes and Fees -  All BMBEs shall be exempt from income tax for income arising from the operations of the enterprise.

         The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBEs from local taxes, fees and charges.

Section 8.  Exemption from the Coverage of the Minimum Wage Law.  The BMBEs shall be exempt from the coverage of the Minimum Wage Law; Provided that all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.

Section 9.  Credit Delivery. – upon approval of this act, the Land Bank of the Philippines ( LBP ), the Development Bank of the Philippines ( DBP ), the Small Business Guarantee 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 Pilipinas policies, rules and regulations. The

Government Service Insurance System and Social Security System 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 (FI)s are 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 are granted to BMBEs under this Act shall be considered as part of alternative compliance to Presidential Decree No. 717, otherwise known as the Agri- Agra Law, or to Republic Act No. 6977, known as the Magna Carta for Small and Medium Enterprises , as amended.

        For purposes of compliance with Presidential Decree No. 717 and Republic Act No. 6977, as amended , loans are granted to BMBEs under this Act shall be computed at twice the amount of the face value of the loans.

        Any existing laws to the contrary notwithstanding, interests, commissions, and discounts derived from the loans by the LBP, DBP, PCFC and SBGFC  granted to BMBEs a well as loans extended by the GSIS and SS to the respective member- employees under this Act shall be exempt from gross receipts tax ( GRT ).  

        To minimize the risks in lending to the BBEs, the SBGFC and the Quedan and Rural Credit Guarantee Corporation ) under the Department of Agriculture , in case of agribusiness activities, shall set up a special guarantee window to provide the necessary credit   guarantee to BMBEs under their respective guarantee programs.

 The LBP, DBP, PCFC, SBGFC, SSS, GSIS and QUEDANCOR shall annually report to the Appropriate Committees of both Houses of Congress the status of the implementation of this provision.

          The BSP shall formulate rules for the implementation of this provision and shall likewise establish incentive programs to encourage and improve credit delivery to the BMBEs.

Section 10. Technology Transfer, Production, and Management Training and Marketing Assistance. – A BMBE Development Fund shall be set up with the endowment of Three Hundred Million Pesos ( P 300,000,000.00 ) 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  ( UP ISSI ), Cooperative Development Authority ( CDA ), Technical Education and Skills Authority ( TESDA ), and Technology and Livelihood 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 – governmental organizations ( NGOs ), shall explore the possibilities of linking or matching – up BMBEs with small, medium and large enterprises , and shall likewise establish incentives therefor.

          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.

Section 11 .   Trade and Investment Promotion.  -  The data gathered from business registration shall be made accessible to and shall be utilized by private sector organizations and non- governmental organizations for purposes of business matching , trade and investment promotion.


Section 12.  Information Dissemination. The Philippine Information Agency ( PIA ) in coordination with the Department of Labor and Employment ( DOLE ) , the DILG and the DTI , shall ensure the proper and adequate information dissemination of the contents and benefits of this Act to the general public specially to its intended  beneficiaries specially in the barangay level.


Section 13.  Penalty – Any person who shall willfully violate any provision of this Act or who shall in any manner commit any act to defeat any provision of this Act shall, upon conviction, be punished by a fine of not less than Twenty Five Thousand Pesos ( P 25,000.00 ) but not more than Fifty thousand Pesos ( P 50,000.00 ) and suffer imprisonment of not less than six ( 6 )  months but not more than two (2) years.


            In case of non- compliance with the provisions of SECTION 9 of the Act, the BSP shall impose administrative sanctions and other penalties on the concerned government financial institutions, including a fine of not less than Five Hundred Thousand Pesos ( P 500,000.00 ).

Last Updated on Tuesday, 29 January 2008 01:47