REPUBLIC ACT NO. 9178REPUBLIC ACT NO. 9178

AN ACT TO PROMOTE THE AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY ESTABLISHMENT OF BARANGAY MICRO BUSINESS ENTERPRISES MICRO BUSINESS ENTERPRISES

(BMBEs), PROVIDING INCENTIVES (BMBEs), PROVIDING INCENTIVES AND BENEFITS THEREFOR, AND AND BENEFITS THEREFOR, AND

FOR OTHER PURPOSESFOR OTHER PURPOSES

PRELIMINARY PROVISIONSPRELIMINARY PROVISIONS Section 1.    Short Title. — This Act shall be known as Section 1.    Short Title. — This Act shall be known as

the the "Barangay Micro Business Enterprises (BMBEs) "Barangay Micro Business Enterprises (BMBEs) Act of 2002.“Act of 2002.“

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

Sec. 3.    Definition of Terms. — As used in this Sec. 3.    Definition of Terms. — As used in this Act, the following terms shall mean:Act, the following terms shall mean:

"Barangay Micro Business Enterprise," hereinafter "Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or enterprise engaged in the production, processing or manufacturing of products or commodities, including manufacturing of products or commodities, including agro-processing, trading and services, whose total agro-processing, trading and services, whose total assets including those arising from loans but exclusive assets including those arising from loans but exclusive of the land on which the particular business entity's of the land on which the particular business entity's office, plant and equipment are situated, shall not be office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00). The more than Three Million Pesos (P3,000,000.00). The above definition shall be subject to review and upward above definition shall be subject to review and upward adjustment by the SMED Council, as mandated under adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act Republic Act No. 6977, as amended by Republic Act No. 8289.No. 8289.

For the purpose of this Act, "services" shall exclude For the purpose of this Act, "services" shall exclude those rendered by any one, who is duly licensed by the those rendered by any one, who is duly licensed by the government after having passed a government government after having passed a government licensure examination, in connection with the exercise licensure examination, in connection with the exercise of one's profession.of one's profession.

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

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

"Registration" refers to the "Registration" refers to the inclusion of BMBE in the BMBE inclusion of BMBE in the BMBE Registry of a city or Registry of a city or municipality.municipality.

  "Financing" refers to all "Financing" refers to all borrowings of the BMBE from borrowings of the BMBE from all sources after registration.all sources after registration.

REGISTRATION AND REGISTRATION AND OPERATION OF BMBEsOPERATION OF BMBEs

Sec. 4.    Registration and Fees.Sec. 4.    Registration and Fees. — — The Office of The Office of the Treasurer of each city or municipality shall the Treasurer of each city or municipality shall register the BMBEs and issue a Certificate of register the BMBEs and issue a Certificate of Authority to enable the BMBE to avail of the Authority to enable the BMBE to avail of the benefits under this Act. Any such application shall benefits under this Act. Any such application shall be processed within fifteen (15) working days be processed within fifteen (15) working days upon submission of complete documents. upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. Otherwise, the BMBEs shall be deemed registered. The Municipal or City Mayor may appoint a BMBE The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office Registration Officer who shall be under the Office of the Treasurer. Local government units (LGUs) of the Treasurer. Local government units (LGUs) are encouraged to establish a One-Stop-Business are encouraged to establish a One-Stop-Business Registration Center to handle the efficient Registration Center to handle the efficient registration and processing of permits/licenses of registration and processing of permits/licenses of BMBEs. Likewise, LGUs shall make a periodic BMBEs. Likewise, LGUs shall make a periodic evaluation of the BMBEs' financial status for evaluation of the BMBEs' financial status for monitoring and reporting purposes.monitoring and reporting purposes.

The LGUs shall issue the Certificate of The LGUs shall issue the Certificate of Authority promptly and free of charge. Authority promptly and free of charge. However, to defray the administrative costs However, to defray the administrative costs of registering and monitoring the BMBEs, the of registering and monitoring the BMBEs, the LGUs may charge a fee not exceeding One LGUs may charge a fee not exceeding One Thousand Pesos (P1,000.00). Thousand Pesos (P1,000.00).

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

As much as possible, BMBEs shall be subject As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and to minimal bureaucratic requirements and reasonable fees and charges.reasonable fees and charges.

Sec. 5.    Who are Eligible to Register.Sec. 5.    Who are Eligible to Register. - - Any person, natural or juridical, or Any person, natural or juridical, or cooperative, or association, having the cooperative, or association, having the qualifications as defined in Sec. 3(a) qualifications as defined in Sec. 3(a) hereof may apply for registration as hereof may apply for registration as BMBE.    BMBE.   

Sec. 6.    Transfer of Ownership.Sec. 6.    Transfer of Ownership. — The — The BMBE shall report to the city or BMBE shall report to the city or municipality of any change in the status municipality of any change in the status of its ownership structure, and shall of its ownership structure, and shall surrender the original copy of the BMBE surrender the original copy of the BMBE Certificate of Authority for notation of Certificate of Authority for notation of the transfer.the transfer.

INCENTIVES AND BENEFITSINCENTIVES AND BENEFITS Sec. 7.    Exemption from Taxes and Sec. 7.    Exemption from Taxes and

Fees. — All BMBEs shall be exempt Fees. — All BMBEs shall be exempt from income tax for income arising from income tax for income arising from the operations of the enterprise.from the operations of the enterprise.

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

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

Sec. 9.    Credit Delivery.Sec. 9.    Credit Delivery. — Upon the approval of — Upon the approval of this Act, the Land Bank of the Philippines (LBP), this Act, the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance the Small Business Guarantee and Finance Corporation (SBGFC), and the People's Credit Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a and Finance Corporation (PCFC) shall set up a special credit window that will service the special credit window that will service the financing needs of BMBEs registered under this financing needs of BMBEs registered under this Act consistent with the Bangko Sentral ng Act consistent with the Bangko Sentral ng Pilipinas (BSP) policies, rules and regulations. Pilipinas (BSP) policies, rules and regulations. The Government Service Insurance System The Government Service Insurance System (GSIS) and Social Security System (SSS) shall (GSIS) and Social Security System (SSS) shall likewise set up a special credit window that will likewise set up a special credit window that will serve the financing needs of their respective serve the financing needs of their respective members who wish to establish a BMBE. The members who wish to establish a BMBE. The concerned financial institutions (FIs) are concerned financial institutions (FIs) are encouraged to wholesale the funds to accredited encouraged to wholesale the funds to accredited private financial institutions including private financial institutions including community-based organizations such as credit, community-based organizations such as credit, cooperatives, non-government organizations cooperatives, non-government organizations (NGOs) and people's organizations, which will in (NGOs) and people's organizations, which will in turn, directly provide credit support to BMBEs.turn, directly provide credit support to BMBEs.

All loans from whatever sources granted to All loans from whatever sources granted to BMBEs under this Act shall be considered as BMBEs under this Act shall be considered as part of alternative compliance to Presidential part of alternative compliance to Presidential Decree No. 717, otherwise known as the Agri-Decree No. 717, otherwise known as the Agri-Agra Law, or to Republic Act No. 6977, known Agra Law, or to Republic Act No. 6977, known as the Magna Carta for Small and Medium as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of Enterprises, as amended. For purposes of compliance with Presidential Decree No. 717 compliance with Presidential Decree No. 717 and Republic Act No. 6977, as amended, loans and Republic Act No. 6977, as amended, loans granted to BMBEs under this Act shall be granted to BMBEs under this Act shall be computed at twice the amount of the face value computed at twice the amount of the face value of the loans.of the loans.

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

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

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

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

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

Sec. 10.    Technology Transfer, Sec. 10.    Technology Transfer, Production and Management Production and Management Training, and Marketing Training, and Marketing Assistance. — A BMBE Assistance. — A BMBE Development Fund shall be set up Development Fund shall be set up with an endowment of Three with an endowment of Three Hundred Million Pesos Hundred Million Pesos (P300,000,000.00) from the (P300,000,000.00) from the Philippine Amusement and Gaming Philippine Amusement and Gaming Corporation (PAGCOR) and shall be Corporation (PAGCOR) and shall be administered by the SMED Council.administered by the SMED Council.

The Department of Trade and The Department of Trade and Industry (DTI), the Department of Industry (DTI), the Department of Science and Technology (DOST), the Science and Technology (DOST), the University of the Philippines Institute University of the Philippines Institute for Small Scale Industries (UP ISSI), for Small Scale Industries (UP ISSI), Cooperative Development Authority Cooperative Development Authority (CDA), Technical Education and Skills (CDA), Technical Education and Skills Development Authority (TESDA), and Development Authority (TESDA), and Technology and Livelihood Resource Technology and Livelihood Resource Center (TLRC) may avail of the said Center (TLRC) may avail of the said Fund for technology transfer, Fund for technology transfer, production and management training production and management training and marketing assistance to BMBEs.   and marketing assistance to BMBEs.   

The DTI, in coordination with the private The DTI, in coordination with the private sector and non-government organizations sector and non-government organizations (NGOs), shall explore the possibilities of (NGOs), shall explore the possibilities of linking or matching-up BMBEs with small, linking or matching-up BMBEs with small, medium and large enterprises, and likewise medium and large enterprises, and likewise establish incentives therefor.establish incentives therefor.

The DTI, in behalf of the DOST, UP ISSI, The DTI, in behalf of the DOST, UP ISSI, CDA, TESDA and TLRC shall be required to CDA, TESDA and TLRC shall be required to furnish the appropriate Committees of both furnish the appropriate Committees of both Houses of Congress a yearly report on the Houses of Congress a yearly report on the development and accomplishments of their development and accomplishments of their projects and programs in relation to projects and programs in relation to technology transfer, production and technology transfer, production and management training and marketing management training and marketing assistance extended to BMBEs.assistance extended to BMBEs.

REGISTRATION OF REGISTRATION OF BARANGAY MICRO BARANGAY MICRO

BUSINESS BUSINESS ENTERPRISE (BMBE)ENTERPRISE (BMBE)

SECTION 4. PLACE OF REGISTRATIONSECTION 4. PLACE OF REGISTRATION The Office of the City Treasurer of Davao The Office of the City Treasurer of Davao

shall register Barangay Micro Business shall register Barangay Micro Business Enterprises (BMBE) and issue a Certificate of Enterprises (BMBE) and issue a Certificate of Authority (CA) upon payment of registration Authority (CA) upon payment of registration fess as provided for in Section 8 hereof, to fess as provided for in Section 8 hereof, to enable the BMBE to avail of the benefits and enable the BMBE to avail of the benefits and incentives under R.A 9178, otherwise known incentives under R.A 9178, otherwise known as the “Barabgay Micro Business Enterprises as the “Barabgay Micro Business Enterprises Act of 2002”, Provided, that only one Act of 2002”, Provided, that only one Certificate of Authority shall be issued fro Certificate of Authority shall be issued fro each BMBE and only by the City Treasurer’s each BMBE and only by the City Treasurer’s Office of Davao.Office of Davao.

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

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

SECTION 5. SECTION 5. REGISTRATION OFFICER REGISTRATION OFFICER

AND ITS FUNCTIONSAND ITS FUNCTIONS

The Business Tax and License Chief of The Business Tax and License Chief of the Davao City Treasurer’s Office shall the Davao City Treasurer’s Office shall Act of the BMBE Registration Officer Act of the BMBE Registration Officer who shall have the following functions:who shall have the following functions:

1.) Handle the efficient 1.) Handle the efficient registration and processing of permits, registration and processing of permits, licenses of BMBE’s;licenses of BMBE’s;

2. ) Monitor the operation of the 2. ) Monitor the operation of the BMBE’s and make a periodic evaluation of BMBE’s and make a periodic evaluation of the BMBE’s financial status;the BMBE’s financial status;The City Treasurer may, however, appoint The City Treasurer may, however, appoint District Treasurers to assist the BMBE District Treasurers to assist the BMBE Registration officer in the latter’s duties Registration officer in the latter’s duties and responsibilities, if and when and responsibilities, if and when necessary;necessary;

SECTION 6. QUALIFIED SECTION 6. QUALIFIED REGISTRANTSREGISTRANTS

Any person natural or judicial, Any person natural or judicial, cooperative or association, cooperative or association, having the qualifications having the qualifications enumerated below, may apply enumerated below, may apply for registration as BMBE:for registration as BMBE:

Have an asset size of not more than Have an asset size of not more than Three Million Pesos (P3,000,000.00) Three Million Pesos (P3,000,000.00) exclusive of the land on which the exclusive of the land on which the business entity’s office, plant and business entity’s office, plant and equipments are located;equipments are located;

Engaged in the production Engaged in the production processing or manufacturing of processing or manufacturing of products or commodities, including products or commodities, including agro-processing trading and services;agro-processing trading and services;

Its principal pace of business is Its principal pace of business is located within the City the City of located within the City the City of Davao.Davao.

SECTION 7. SECTION 7. REQUIREMENTSREQUIREMENTS

AND PROCEDURES FOR AND PROCEDURES FOR REGISTRATION REGISTRATION

The following are the procedures and The following are the procedures and requirements when applying for registration requirements when applying for registration ad BMBE:ad BMBE:

1.) An applicant for BMBE shall go to the City 1.) An applicant for BMBE shall go to the City Treasurer’s Office of Davao where the business is Treasurer’s Office of Davao where the business is located;located;

2.) The applicant shall fill-up the BMBE Form 2.) The applicant shall fill-up the BMBE Form 01 (application form) in triplicate to be signed by 01 (application form) in triplicate to be signed by the owner manager of the entity applying for the owner manager of the entity applying for registration and shall attach its approved Mayor’s registration and shall attach its approved Mayor’s Permit and Financial Statement and if applicable, Permit and Financial Statement and if applicable, either of the following: the Business Name either of the following: the Business Name Registration (for individual/single proprietorship), Registration (for individual/single proprietorship), Securities and Exchange Commission (SEC) Securities and Exchange Commission (SEC) Registration and Articles of Incorporation (for Registration and Articles of Incorporation (for Partnership, corporation) and Cooperative Partnership, corporation) and Cooperative Development Authority (CDA) Registration (for Development Authority (CDA) Registration (for cooperatives) and submit them to the BMBE cooperatives) and submit them to the BMBE Registration Officer;Registration Officer;

3.) The BMBE registration 3.) The BMBE registration Officer evaluates the application, Officer evaluates the application, which shall be processed within which shall be processed within fifteen(15) working days upon fifteen(15) working days upon submission of complete documents. submission of complete documents. Otherwise, the BMBE shall be Otherwise, the BMBE shall be deemed registered; anddeemed registered; and

4.) A registered BMBE shall be 4.) A registered BMBE shall be issued a Certificate of Authority (CA) issued a Certificate of Authority (CA) as proof of registration, which shall as proof of registration, which shall be effective fro a period of two (2) be effective fro a period of two (2) years, renewable for another period years, renewable for another period of two (2) years fro every renewal ;of two (2) years fro every renewal ;

SECTION 8. REGISTRATION FEESSECTION 8. REGISTRATION FEES

To defray the administrative To defray the administrative costs of registering and monitoring costs of registering and monitoring BMBE’s, the BMBE Registration BMBE’s, the BMBE Registration Officer shall charge the following Officer shall charge the following fees:fees:

NET ASSETNET ASSET (based on financial Statement)(based on financial Statement) Registration Registration FeeFee

(Php)(Php)

100,000.00 or less 100,000.00 or less 50.00 50.00

More than 100, 000.00 -500,000.00More than 100, 000.00 -500,000.00 250.00 250.00

More than 500,000.00-1,000,000.00More than 500,000.00-1,000,000.00 750.00 750.00

More than 1,000,000.00-3,000,000.00 More than 1,000,000.00-3,000,000.00 1,000.001,000.00

The registration fees that will be The registration fees that will be collected shall go directly to the City’s collected shall go directly to the City’s General fund.General fund.

SECTION 9. TRANSFER OF SECTION 9. TRANSFER OF OWNERSHIPOWNERSHIP

The BMBE shall report to the BMBE The BMBE shall report to the BMBE Registration Officer any change in Registration Officer any change in the status of its ownership structure, the status of its ownership structure, and shall surrender original copy of and shall surrender original copy of the BMBE Certificate of Authority for the BMBE Certificate of Authority for annotation of the transfer.annotation of the transfer.

SECTION 10. PENALTYSECTION 10. PENALTY

Any person who shall willfully violate Any person who shall willfully violate any provision of this Ordinance or who any provision of this Ordinance or who shall in any manner commit any act to shall in any manner commit any act to defeat any provision of this Ordinance defeat any provision of this Ordinance shall, upon conviction, be punished by shall, upon conviction, be punished by fine of not more than Five Thousand fine of not more than Five Thousand Pesos (P5,000.00) or imprisonment of Pesos (P5,000.00) or imprisonment of not more than one (1) year or both ar not more than one (1) year or both ar the discretion of the court.the discretion of the court.

SECTION 11. SEPARABILITY SECTION 11. SEPARABILITY CLAUSECLAUSE

If any provision or part of has If any provision or part of has ordinance held invalid or ordinance held invalid or unconstitutional, the other parts or unconstitutional, the other parts or provisions hereof which are not provisions hereof which are not affected thereby shall continue to be affected thereby shall continue to be in full force and effect;in full force and effect;

SECTION 12. REPEALING CLAUSESECTION 12. REPEALING CLAUSE

All Ordinances, existing laws, All Ordinances, existing laws, executives orders, proclamations and executives orders, proclamations and administrative regulations, or part administrative regulations, or part thereof, which are inconsistent with thereof, which are inconsistent with the Ordinance are hereby repealed the Ordinance are hereby repealed or modified accordingly;or modified accordingly;

SECTION 13. EFFECTIVITYSECTION 13. EFFECTIVITY

This Ordinance shall take effect This Ordinance shall take effect fifteen (15) days after its approved fifteen (15) days after its approved and publication in newspaper of and publication in newspaper of general circulation, and posting at general circulation, and posting at the Legislative Hall and City Hall the Legislative Hall and City Hall premises and other conspicuous premises and other conspicuous public places. public places.

Q and A on Q and A on

Republic Act 9178Republic Act 9178

Barangay Micro Business Barangay Micro Business Enterprises (BMBE) Act of Enterprises (BMBE) Act of

20022002

1. What is the law all about?1. What is the law all about?

In a nutshell, the law encourages the In a nutshell, the law encourages the formation of growth of barangay formation of growth of barangay micro business enterprises, by micro business enterprises, by granting them incentives and other granting them incentives and other benefits. Barangay enterprises serve benefits. Barangay enterprises serve as the seedbeds of Filipino as the seedbeds of Filipino entrepreneurial talents which entrepreneurial talents which contribute to the country’s balanced contribute to the country’s balanced economic development.economic development.

2. What is the objective of the law?2. What is the objective of the law? The objective is to integrate The objective is to integrate

barangay micro enterprises which barangay micro enterprises which currently reside in the normal currently reside in the normal sector into the economic sector into the economic mainstream through active mainstream through active government intervention at the government intervention at the local level. By so doing jobs and local level. By so doing jobs and income-creating opportunities are income-creating opportunities are generated in the countryside.generated in the countryside.

3. What is Barangay Micro Business 3. What is Barangay Micro Business Enterprise (BMBE)?Enterprise (BMBE)?

- BMBE is defined as any business - BMBE is defined as any business enterprise engaged in production, enterprise engaged in production, processing, or manufacturing of processing, or manufacturing of products, including agro-processing, products, including agro-processing, as well as tracing and services, with as well as tracing and services, with total asstes of not more than Three total asstes of not more than Three Million Pesos (P3,000,000.00) such Million Pesos (P3,000,000.00) such assets shall include those arising assets shall include those arising from loans but not the land on which from loans but not the land on which the office, plant, and equipment are the office, plant, and equipment are located.located.

4. What are the incentives granted to 4. What are the incentives granted to BMBEs under the law?BMBEs under the law?

The major ones are (1) exemption from The major ones are (1) exemption from income tax for income arising from the income tax for income arising from the operations of the enterprise, and (2) operations of the enterprise, and (2) exemption from the coverage of the Minimum exemption from the coverage of the Minimum Wage Law. However, BMBE employees will Wage Law. However, BMBE employees will still get the same benefits as regular still get the same benefits as regular employees with respect to social security and employees with respect to social security and healthcare benefits, (3) priority to special healthcare benefits, (3) priority to special credit window set up specifically for the credit window set up specifically for the financing requirements of SMEs.financing requirements of SMEs.

In addition, a P300 million BMBE In addition, a P300 million BMBE Development Fund to be Development Fund to be administered by the SMED council is administered by the SMED council is provided. This may be tapped by provided. This may be tapped by specified agencies like the DTI and specified agencies like the DTI and DOST to support technology transfer, DOST to support technology transfer, production and management training production and management training and marketing assistance programs and marketing assistance programs for BMBE beneficiaries.for BMBE beneficiaries.

5. Who may avail of the special 5. Who may avail of the special credit window for BMBEs?credit window for BMBEs?

Only registered BMBEs are qualified Only registered BMBEs are qualified to take advantage of the credit to take advantage of the credit facility and other benefits. This facility and other benefits. This means the enterprise must have a means the enterprise must have a Certificate of Authority which Certificate of Authority which authorizes it to operate as a BMBE.authorizes it to operate as a BMBE.

6. Who may register as a BMBE?6. Who may register as a BMBE?

- Any natural or juridical person, - Any natural or juridical person, a cooperative or an association which a cooperative or an association which meets the definition of a BMBE may meets the definition of a BMBE may apply for registration.apply for registration.

7. Where should I register 7. Where should I register myself as a BMBE and how myself as a BMBE and how

long will it take for me to long will it take for me to register and get the Certificate register and get the Certificate

of Authority?of Authority?

The office of the Treasurer of each The office of the Treasurer of each City or Municipality registers the City or Municipality registers the BMBE and issues the Certificate of BMBE and issues the Certificate of Authority. Application shall be Authority. Application shall be processed within fifteen (15) working processed within fifteen (15) working days upon submission of complete days upon submission of complete documents, otherwise the applicant documents, otherwise the applicant shall be deemed registered. A BMBE shall be deemed registered. A BMBE Registration Officer shall be Registration Officer shall be appointed by the Municipal or City appointed by the Municipal or City Mayor under the Office of the Mayor under the Office of the Treasurer to handle the registration.Treasurer to handle the registration.

8. How much will it cost me to 8. How much will it cost me to register?register?

Registration and issuance of Certificate of Registration and issuance of Certificate of authority by the LGU is free of charge and authority by the LGU is free of charge and shall be done promptly to defray the shall be done promptly to defray the administrative costs of registering and administrative costs of registering and monitoring the BMBE, the LGUs are monitoring the BMBE, the LGUs are allowed to charge a fee not exceeding Pesos allowed to charge a fee not exceeding Pesos One Thousand (P1,000.00)One Thousand (P1,000.00)

The law specifies that BMBEs be The law specifies that BMBEs be subject to minimal bureaucratic subject to minimal bureaucratic requirements and reasonable fees and requirements and reasonable fees and charges.charges.

9. Who are the funding agencies 9. Who are the funding agencies designated to set up the special designated to set up the special

credit window for BMBE?credit window for BMBE? The Land Bank of the Philippines (LBP), The Land Bank of the Philippines (LBP),

Development Bank of the Philippines (DBP), Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance the Small Business Guarantee and Finance Corporation (SBCFC), and the People’s Corporation (SBCFC), and the People’s Credit and Finance Corporation (PCFC), are Credit and Finance Corporation (PCFC), are the key lending institutions designated to the key lending institutions designated to set up the credit window in addition, the set up the credit window in addition, the Government Service Insurance System Government Service Insurance System (GSIS) and the Social Security System (SSS) (GSIS) and the Social Security System (SSS) are mandated to set up a special credit are mandated to set up a special credit window for the financing needs of members window for the financing needs of members who wish to set up a BMBE.who wish to set up a BMBE.

Requirements for New ApplicantRequirements for New Applicant

1.) Registration as a business entity or 1.) Registration as a business entity or enterprise from the appropriate enterprise from the appropriate government agency (e.g., Securities and government agency (e.g., Securities and Exchange Commission (SEC), Exchange Commission (SEC), registration in the of corporation, registration in the of corporation, partnership or association; Cooperative partnership or association; Cooperative Development Authority (CDA), Development Authority (CDA), registration in the case of cooperative; registration in the case of cooperative; Department of Trade and Industry (DTI) Department of Trade and Industry (DTI) business name registration in the case business name registration in the case of sole proprietorship);of sole proprietorship);

2.) Taxpayer Identification Number 2.) Taxpayer Identification Number (TIN);(TIN);

3.) Certificate of Registration from 3.) Certificate of Registration from the Bureau of Internal Revenue (BIR);the Bureau of Internal Revenue (BIR);

4.) Mayor’s Permit or City/Municipal 4.) Mayor’s Permit or City/Municipal Business Permit;Business Permit;

5. Sworn affidavit executed by the 5. Sworn affidavit executed by the sole proprietor or the President of the sole proprietor or the President of the enterprise, as the case may be, that enterprise, as the case may be, that the enterprise is barangay-based and the enterprise is barangay-based and micro-business in nature and scope, micro-business in nature and scope, in substantially the form attached as in substantially the form attached as Annex “A”;Annex “A”;

6.) Sworn Satement of Assets and 6.) Sworn Satement of Assets and Liabilities showing the values of assets Liabilities showing the values of assets owned and to be used in the conduct of owned and to be used in the conduct of business, which shall be supported by business, which shall be supported by pertinent information such as the date pertinent information such as the date of acquisition cost and depreciated of acquisition cost and depreciated value. In case of asset acquired during value. In case of asset acquired during the year of registration, it shall be the year of registration, it shall be supported by any of the following;supported by any of the following;

invoiceinvoice official receiptofficial receipt contact document or deedcontact document or deed

7.) Pictures of the place of business and its 7.) Pictures of the place of business and its assets, other than cash, receivables and assets, other than cash, receivables and intangibles;intangibles;

8.) Copy of loan contact/s, if any and Duly-8.) Copy of loan contact/s, if any and Duly-Notarized Certification of Amortization Notarized Certification of Amortization Payments on the Loan; andPayments on the Loan; and

9.) Income Tax Return (ITR) with proof that 9.) Income Tax Return (ITR) with proof that it has been duly filed with the BIR, including it has been duly filed with the BIR, including attachments, if any, (for an existing attachments, if any, (for an existing business only);business only);

10.) Sketch – place of business, in order for 10.) Sketch – place of business, in order for the CTO in charge personnel fro the the CTO in charge personnel fro the evaluation.evaluation.

B.) For Renewal of RegistrationB.) For Renewal of Registration

Documents listed in Section 3 (a) Documents listed in Section 3 (a) (1) to (8), inclusive;(1) to (8), inclusive;

Annual Information Return (for the Annual Information Return (for the tear immediately preceding the tear immediately preceding the renewal of registration) duly filed renewal of registration) duly filed with the BIR, together with its with the BIR, together with its Attachments; and Attachments; and

3.) Sketch – place of business, in 3.) Sketch – place of business, in order for the CTO in charge order for the CTO in charge personnel fro the evaluation.personnel fro the evaluation.

Sample Form Sample Form of of

BMBE Form 01BMBE Form 01

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