Article 135Labor and Agrarian Laws and Social Legislation, p. 135

LABOR LAWS AND SOCIAL LEGISLATION SPECIAL LAWS AND IMPLEMENTING RULES AND REGULATIONS

a) intersifying and expanding programs for training in

entrepreneurship and for skills development for labor;

b) facilitating their access to sources of funds;

c)

assuring

to

them

access

to

a

fair

share

of

governments

contracts

and

related

incentives

and

preferences;

d)

complementing

and supplementing financing

programs for MSMEs and doing away with stringent and

burdensome

collateral

requirements

that

small

entrepreneurs

invariably

find

extreme

difficulty

complying with;

e)

instituting

safeguards

for

the

protection

and

stability of the credit delivery system;

f) raising government efficiency and effectiveness in

providing assistance to MSMEs throughout the country,

at the least cost;

g)

promoting

linkages between large and small

enterprises, and by encouraging the establishments of

common service facilities;

h) making the private sector a partner in the task of

building

up

MSMEs

through

the

promotion

and

participation of private voluntary organizations viable

industry associations, and cooperatives; and

i) assuring a balance and sustainable development

through the establishment of a feedback and evaluation

mechanism that will monitor the economic contributions

as well as bottlenecks and environmental effects of the

development of MSMEs. (as amended by RA No 9501)

Section 3. Micro , Small and Medium Enterprises as

Beneficiaries . — MSMEs shall be defined as any business

activity or enterprise engaged in industry, agribusiness

and/or

services,

whether

single

proprietorship,

cooperative,

partnership

or

corporation

whose

total

assets, inclusive of those arising from loans but exclusive

of the land on which the particular business entity's

office, plant and equipment are situated, must have value

falling under the following categories:

Micro

not more than P3,000,000

Small

P3,000,001 - P15,000,000

Medium

P15,000,001 - P1,000,000,000

The above definitions shall be subject to review and

adjustments by the Micro, Small and Medium Enterprises

Development (MSMED) Council under Section 6 of this

Act or upon recommendation of sectoral organizations

concerned,

taking

into

account

inflation

and

other

economic indicators. The Council may use other variables

such as number of employees, equity capital and assets

size.

The Council shall ensure that notwithstanding the

plans and programs set for MSMEs as a whole, there shall

be set and implemented other plans and programs

varied and distinct from each other, according to the

specific needs of each sector, encouraging MSMEs to

graduate from one category to the next or even higher

category. (as amended by RA No 8289, 9501)

Section 4. Eligibility for Government Assistance . —

To

qualify

for

assistance,

counseling,

incentives and

promotion under this Act, businesses falling under the

above definition must be:

a) duly registered with the appropriate agencies as

presently provided by law: Provided, That in the case of

micro enterprises as defined herein, registration with the

office of the municipal or city treasurer shall be deemed

sufficient compliance with this requirement;

b) one hundred percent (100%) owned, capitalized by

Filipino

citizens,

whether

single

proprietorship

or

partnership. If the enterprise is a juridical entity, at least

sixty percent (60%) of its capital or outstanding stock

must be owned by Filipino citizens;

c) a business activity within the major sectors of the

economy, namely; industry, trade, services, including the

practice

of

one's

profession,

the

operation

of

tourism-related establishments, and agri-business, which

for purposes of this Act refers to any business activity

involving

the

manufacturing,

processing,

and/or

production of agricultural produce; and

d) it must not be a branch, subsidiary or division of a

large scale enterprise.

However, this requirement shall not preclude MSMEs

from accepting subcontracts and entering into franchise

partnership with large enterprises or from joining in

cooperative activities with other MSMEs.

Program

of

the

Small

Business Corporation (SB

Corporation) as provided in subsequent provisions of this

Act shall be exclusively delivered and directed to bonafide

MSMEs.

Any MSME, its directors, officers or agents, found to

have

committed

fraud

or

misrepresentation for the

purpose of availing the benefits under this Act shall be

immediately

disqualified

as

a

beneficiary,

without

prejudice to any administrative, criminal or civil liability

under existing laws.

Eligible MSMEs shall be entitled to a share of at least

ten percent (10%) of total procurement value of goods

and services supplied to the Government, its bureaus,

offices and agencies annually.

The Department of Budget and Management shall

monitor the compliance of government agencies on the

required procurement for MSMEs and submit its report to

the MSMED Council on a semestral basis and to the

Congress

of the Philippines, through its appropriate

committees on a yearly basis. (as amended by RA No

8289, 9501)

Section 5. Guiding Principles . — To set the pace for

MSME development, the State shall be guided by the

following principles:

(a)

Minimal

set

of

rules

and

simplification

of

procedures and requirements . - All government agencies

having to do with small enterprises shall pursue stability

of rules and to encourage entrepreneurial spirit among

the citizenry. The agencies shall see to it that procedural

rules and requirements, within their respective offices in

coordination with other agencies, are minimized in the

act of registration, availment of financing and accessing

other government services and assistance.

(b) Role of the private sector. - In order to hasten

growth and expansion of small and medium enterprises,

the

private

sector

throughout

the

country shall be

encouraged to assist in the effective implementation of

this Act by participating in government programs for

small and medium enterprises strictly in accordance with

the law, and consistent with the attainment of the

purposes

hereof.

To

encourage

private

sector

participation,

the

Council,

in

consultation

with

the

concerned sector, may recommend simplified procedure

and

localized

incentives

to

small

enterprises.

The

Government

shall

encourage

the

organization

and

establishment of small and medium enterprise industry

associations at the local and regional levels preferably

unified under a national federation/association.

(c) Coordination of government efforts. - Coordination

of

government

efforts.

Government

efforts

shall

be

coordinated

to

achieve

coherence

in

objectives.

All

appropriate

offices,

particularly

those

under

the

Departments of Trade and Industry, Finance, Budget and

Management, Agriculture, Agrarian Reform, Environment

and

Natural

Resources,

Labor

and

Employment,

Transportation and Communications, Public Works and

Highways, Science and Technology, Interior and Local

Government

and

Tourism

as

well

as

the

National

Economic

and

Development

Authority,

Philippine

Information Agency and the Bangko Sentral ng Pilipinas,

© Compiled By RGL

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