REPUBLIC ACT NO.

9178
BARANGAY MICRO BUSINESS ENTERPRISES (BMBE) ACT OF 2002

• An act promoting the formation and growth of barangay micro business enterprises
(BMBEs) by granting them incentives and other benefits.
• Integrates micro enterprises from informal sector into the mainstream of economy.
• Strengthen the presence of BMBEs to have more opportunities for jobs and livelihood,
and consequently a better quality of life of Filipinos, especially from the informal sector.
• Signed into law by Former President Gloria Macapagal Arroyo on November 13, 2002.

Preliminary Provisions (Section 2)

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 business
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.

BARANGAY MICRO BUSINESS ENTERPRISE

• Any business entity or enterprise engaged in the production, processing or manufacturing
of products or 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 (P3,000,000.00).
• Barangay-based means:
o Majority of its employees are residents of the municipality where the principal place
of business is located;
o Its principal activity consists in the application or use of skill peculiar to the locality,
or of raw materials predominantly sourced from the area; and
o Business operations are confined within the territorial jurisdiction of the
municipality where the principal place of business is located
• Micro-enterprise means:
o Principal activity is for livelihood
o Not a branch, subsidiary, division, or office of a large scale enterprise
o Not a franchisee
• Services shall exclude those rendered by persons duly licensed by the government in
connection with the exercise of one's profession.
• Examples of BMBEs:
o Sari-Sari Stores
o Canteen
o Computer Shops
o Laundromats
Problem 1:
Total assets: 5,460,000 – Qualifies as a BMBE because total assets excluding land where office
is situated is not more than 3M (2,960,000)

2021 MSME STATISTICS

The 2021 List of Establishments (LE) of the Philippine Statistics Authority (PSA) recorded a total
of 1,080,810 business enterprises operating in the country. Of these, 1,076,279 (99.58%) are
MSMEs and 4,531 (0.42%) are large enterprises. Micro enterprises constitute 90.54% (978,612)
of total establishments, followed by small enterprises at 8.63% (93,230) and medium enterprises
at 0.41% (4,437).
REGISTRATION AND OPERATION OF BMBEs
Eligibility Criteria

• Any person, natural or juridical, cooperative or association that:

o Have an asset size of not more than Three Million Pesos (P3,000,000) excluding
land, before applying for BMBE registration;
o Is engaged in the business activities as defined in Sec. 2(b) of the IRR;
o Is not engaged in the exercise of one's profession; and
o Is not a branch, subsidiary, division, or office of a large-scale enterprise, and not a
franchisee.
Registration and Fees

• An applicant for BMBE registration shall submit the duly filled up application (BMBE Form
01) in triplicate, signed by the owner or manager of said BMBE applying for registration at
the Office of the Treasurer of the city or municipality which has jurisdiction over the
principal place of business of the BMBE.
• The Municipal 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 (Negosyo Center) to allow efficient registration and processing of
permits and licenses of BMBEs.
• Applications shall be processed within fifteen (15) working days.
• The Office of the Treasurer of the city or municipality shall register the BMBEs and issue
a Certificate of Authority - refers to the certificate issued granting the authority to
the registered BMBE to operate and be entitled to the benefits and privileges
accorded thereto.
 • LGUs shall issue the Certificate of Authority free of charge. However, they may charge a
fee not exceeding One Thousand Pesos (P1,000) as administrative costs for registering
and monitoring of the BMBEs.
• 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.

Transfer of Ownership

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

INCENTIVES AND BENEFITS

• INCOME TAX EXEMPTION

o From income arising from operations or income from related activities
o Applicant must secure a Certificate of Authority and submit the same to the BIR to
apply for Income Tax Exemption
o Subject to business taxes (3% percentage or VAT) and other internal revenue
taxes such as documentary stamp taxes and other registration fees
o Revocation of Tax Exemption:
▪ Change in business address
▪ Value of assets exceeds 3M
▪ Voluntary surrender of CA
▪ Death of sole proprietor
▪ Merger or consolidation with any enterprise that is not a BMBE
▪ Sale of transfer of BMBE
▪ Falsification of documents
▪ Retirement from business
▪ Cessation or suspension of operations for one year
o 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.

• EXEMPTION FROM COVERAGE OF MINIMUM WAGE LAW

o BMBEs shall be exempt from the coverage of the Minimum Wage Law provided
that all employees covered under the Act shall be entitled to the same benefits
given to any regular employee such as social security and healthcare benefits.
o BMBE employees will still receive the same social security and health benefits as
other employees.

• CREDIT DELIVERY
o Funding Agencies designated to set-up special windows for BMBEs:
▪ Land Bank of the Philippines (LBP)
▪ Development Bank of the Philippines (DBP)
▪ People’s Credit and Finance Corporation
▪ Government Service Insurance System (GSIS)
 ▪ Social Security System (SSS)
o They shall set up a special credit window that will service the financing
needs of BMBEs registered under this act consistent with the BSP policies
rules and regulations.
o The concerned financial institutions (FIs) 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.
o All loans from whatever sources granted to BMBEs under the 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 granted to BMBEs under this Act shall be computed at twice the
amount of the face value of the loans.
o Interests, commissions and discounts derived from the loans by the LBP,
DBP, PCFC and SBGFC granted to BMBEs as well as loans extended by the
GSIS and SSS to their respective member employees under the Act shall be
exempt from gross receipts tax (GRT).

• TECHNOLOGY TRANSFER, PRODUCTION AND MANAGEMENT TRAINING, AND

MARKETING ASSISTANCE PROGRAMS
o Agencies mandated to provide assistance:
▪ Department of Trade and Industry (DTI)
▪ Department of Science and Technology (DOST)
▪ Cooperative Development Authority (CDA)
▪ Technical Education and Skills Development Authority (TESDA)

PENALTY

• Any person who shall willfully violate any provision of the Act or who shall in any manner
commit any act to defeat any provision of the Act shall be penalized:
o A fine of not less than P25,000 but not more than P50,000.00 and suffer
imprisonment of not less than 6 months but not more than two 2 years.
• The BSP shall impose administrative sanctions and other penalties on the concerned
government financial institutions, including a fine of not less than P500,000.