LAGUNA COLLEGE

Department of Commerce and Accountancy

Bachelor of Science in Accountancy

Evaluating the Awareness of Micro Entrepreneurs in San Pablo City regarding

Barangay Micro Business Enterprises Law of 2002

In Partial Fulfillment of the Course Requirements in Synthesis

Presented to:

Mr. Demetrio A. Asacta, CPA, MBM

Presented By:

Fernandez, Ruth Ann A.

Guese, Prince Ricky Lenard L.

Malijan, Joshua B.

Obias, Gianuel G.

Perez, Romneil Ray B.

BSA IV
ACKNOWLEDGEMENT

First of all, we are grateful to our Lord God for the good health and wellbeing that were necessary

to complete this book.

We would like to express our sincere gratitude to our Synthesis adviser, Prof. Demetrio A. Asacta,

for the continuous support of our study and research, for his patience, motivation, enthusiasm,

and immense knowledge. This work would not have been possible without his support. His

guidance helped us in all the time of research and writing of this thesis.

We would like to give our deepest gratitude to our panelist, Ms. Maritoni Matibag and Dean Beda

de Pedro, who is the key person in the realization of this study. The researchers truly salute to

their expertise. Thank you for their time, suggestion and encouragement. Allowing us to get the

necessary information we need to make this thesis possible.

We would also like to extend our appreciation to the people of San Pablo City, Laguna, especially

to the respondents of the said barangays for giving us time and effort in conducting our

interviews and surveys.

Finally, we must express our very profound gratitude to our family, especially to our parents for

providing us with unfailing support and continuous encouragement throughout our months of

study and through the process of researching and writing this thesis. This accomplishment would

not have been possible without them. Thank you.

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 TABLE OF CONTENTS

Page Number
Title Page i
Acknowledgement ii
Table of Contents iii
List of Tables v
List of Figures v
Abstract vi

I. INTRODUCTION
A. Background of the Study 1
B. Rationale of the Study 2
C. Statement of the Problem 2
D. Objectives of the Study 3
E. Significance of the Study 3
F. Scope and Limitations of the Study 4

II. REVIEW OF LITERATURE

A.Micro and Small Enterprises: An Overview 5
B. Micro Businesses in the Philippines 20
C. Barangay Micro Business Enterprise Act of 2002 (BMBE) 27
D. Related Philippine Financial Reporting Standard 28

III. STUDY FRAMEWORK

A. Theoretical Framework 30
B. Conceptual Framework 32
C. Operational Framework 33
D. Definition of Terms 35
E. Hypothesis 35

IV. METHODOLOGY
A. Research Design 36
B. Population of the Study 36
C. Sampling Method 36
D. Instrument and Data Collection 37
E. Data Analysis 38

V. RESULTS AND DISCUSSION

A. Results 39
B. Discussion 45

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VI. SUMMARY, CONCLUSION AND RECOMMENDATIONS
A. Summary of Findings 46
B. Conclusion 47
C. Recommendations 47

VII. BIBLIOGRAPHY 48

VIII. APPENDICES
Appendix A: Survey Questionnaires 51
Appendix B: Researcher’s Profile 54

iv
LIST OF TABLES

Table 1. Difference between small and large firm

Table 2. Classification of MSMEs in the Philippines

Table 3. Willingness to Learn and Register

Table 4. Degree of Awareness to the Existence of BMBE Law

LIST OF FIGURES

Fig. 1. IPOO Model of the Theoretical Framework

Fig. 2. Conceptual Framework

Fig. 3. Operational Framework

Fig. 4. Legal Form

Fig. 5. Business Activity

Fig. 6. Size of Capital

Fig. 7. Registered BMBE

Fig. 8. Number of Respondents with Knowledge of BMBE Law

v
ABSTRACT

Entrepreneurship is viewed as important to empowering the poor, enhancing production,

and as force to innovation. But being a startup founder or small business owner is not easy. This

research work was pursued to gain insights regarding the level of awareness of the micro

enterprises in San Pablo City on RA 9178 also known as Barangay Micro Business Enterprises

Law of 2002. Barangay Micro Business Enterprises Law of 2002 was enacted to hasten the

country’s economic development by encouraging the formation and growth of micro businesses.

The study utilized descriptive research method with one hundred (100) small and micro

entrepreneurs that were chosen on the basis of non-probability sampling. Questionnaires were

used to collect data. Results showed that majority of the respondents were not aware of the

aforesaid law. Likert scale interpretation showed that unaware respondents were highly

interested to know more about BMBE and were very willing to register under it. “BMBE aware”

respondents were highly informed and knowledgeable of RA 9178.

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 CHAPTER I. INTRODUCTION

A. Background of the Study

Micro, small and medium enterprises (MSMEs) are very important to our country’s

economic growth. They help reduce poverty by creating jobs for the country’s growing labor

population. They are pivotal in the economic development in rural and remote areas. They have

substantial contribution to the country’s manufacturing output, making them critical engines of

economic growth and development.

In the 2016 MSME Statistics by the Philippine Statistics Authority (PSA), it is estimated

that around 99.57% of recorded business establishments in the Philippines are MSMEs of which

with 89.63% were microenterprises and 9.5% were small enterprises. MSMEs are undoubtedly

vital to the country’s economy.

Entrepreneurship is viewed as important to empowering the poor, enhancing production,

and as force to innovation. But being a startup founder or small business owner is not easy. From

accumulating the necessary capital to dealing with risks and losses along the way, the startup

journey is truly filled with uncertainties. Because of this, many aspiring entrepreneurs are

deterred or discouraged from entering the startup life. Those few who are brave enough to pursue

business will face a lot of difficulties and challenges that will push them to just give up and go

back to employment. Fortunately, there are laws and policies created to aid and serve as guide

for new and existing micro enterprises.

The government, in its objective to strengthen barangay micro business enterprises in the

country and provide more jobs, livelihood and a better quality of life for Filipinos, has enacted

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Republic Act No. 9178, otherwise known as the “Barangay Micro Business Enterprises Act of

2002”. This law encourages the formation and growth of barangay micro business enterprises by

granting them incentives and other benefits.

B. Rationale of the Study

Barangay Micro Business Enterprises Law of 2002 has been long enacted and

implemented. However, only few are aware of the aforesaid law thus, the interest of the

researchers to study. The purpose of this study is to evaluate the awareness of micro business

practitioners regarding Barangay Micro Business Enterprises Law of 2002. The practical

implication of this research relates to promoting the registration of micro business as BMBE.

C. Statement of the Problem

The study aims to evaluate the awareness of micro enterprises in San Pablo City about the

Barangay Micro Business Enterprises Law of 2002 from the information given by micro business

enterprises.

Specifically, the following questions will be answered:

 What are the level of awareness of the micro entrepreneurs regarding the Barangay Micro

Business Enterprises Law of 2002?

 How well does the local government disseminate information about the BMBE Law?

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D. Objectives of the Study

The objectives of this study are the following:

 To determine the level of awareness of micro establishments in San Pablo City about the

Barangay Micro Business Enterprises Law of 2002;

 To disseminate information about BMBE Law; and

 To encourage micro enterprises to register and avail the incentives under BMBE Law.

E. Significance of the Study

At the start of the 21st century, economic development shifted from San Pablo City to the

western cities of Laguna. Neighboring cities such as Biñan, Sta. Rosa and Calamba experienced

rapid economic development brought about by local and foreign investments, leaving San Pablo

City behind and remained as a semi-developed city.

Considering the current economic situation of San Pablo, this study aims to promote

awareness of the Barangay Micro Business Enterprises Act of 2002 to the micro business entities

of the city by disseminating the information to selected barangays that will give each community

an opportunity to benefit from the BMBE law which will be effective in the development of the

city's current status. This study also aims to check the application of the Philippine Financial

Reporting Standard for Small Entities.

Moreover, this study will be helpful to the business practitioners, especially to those

planning to start a business, as it will serve as a tool to guide them in maximizing business

opportunities rendered by the said law.

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F. Scope and Limitations of the Study

The study focuses on the awareness status and the dissemination of information of the RA

9178, also known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002 of micro

businesses in selected areas of San Pablo City, Laguna. A non-probability sampling method via

surveys will be conducted in five (5) Barangays namely, San Rafael, San Gabriel, San Nicolas, Sto.

Cristo and Brgy. IV-C from August 2018 until November 2018 to collect the necessary pieces of

information which will be used throughout the study.

However, this study will not cover the effects of the BMBE law to the small, medium and

large enterprises and in the collection of taxes of the BIR. Moreover, the study will not examine

the impact of the limitations and benefits given by the said law in small enterprises.

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 CHAPTER II. REVIEW OF RELATED LITERATURE

A. Micro and Small Enterprises: An Overview

1. Definition

According to Shaper and Voley (2007), creating a clear cut definition of a small

business is very difficult. They said that since small businesses are located in almost all

places in the world, they vary in their definition and characteristic. The small businesses

all over the world and in almost all industries vary in their organizational, legal and

operating forms (Shaper and Volery 2007). In addition, a business may be categorized as

small provided that they conform to the qualitative and quantitative criteria. The

qualitative criteria, according to the book, are that small businesses are those that are

owned by just one or two individuals who therefore provides for the financing, those that

have a limited market share and limited life span, those that are sometimes run on a part-

time basis, those that have low levels of net profit, those with limited product or service

offering, those that are geographically limited to one or two locations (branches or

outlets), those that are often home based and family based business, and those that are

located only in the private sector. These qualitative characteristics are very helpful in

better understanding the life of these small scale businesses. Conversely, these are hard to

measure and evaluate since these are based on subjective perceptions.

On the other hand, quantitative criteria include the number of staff that works in the

firm, the annual wages and salaries expenses, total annual revenue that the business

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produce, the value of the assets of the business which involve their materials, equipment,

properties and the like, and the share of ownership that is held by the owner-manager.

(Shaper and Volery 2007) Moreover, Australia was able to come up with four major

categories of enterprises namely, micro, small, medium and large enterprise based on the

number of workers a firm employs. Micro enterprises employ less than five (5) workers

including those who are self-employed, small enterprises are those which have between

five to nineteen (5-19) workers, medium enterprises include firms having more than 19

staffs but less than 199 people while large firms consist of more than 200 employees.

Although they gave these categories, they stated that often times, micro, small and

medium enterprises are collectively referred to as small and medium enterprises (SMEs).

Even with these qualitative and quantitative definitions, it is still difficult to give a

standard and clear definition of what characterizes a small enterprise. The challenge here

is that there has to be a balance in qualitative and quantitative aspect so that the definition

may be unambiguous. Given such, the writers gave a general definition of a small

business. Their definition of a “small business is a small-scale independent firm usually

managed, funded and operated by its owners and whose staff size, financial resources

and assets are comparatively limited in scale”. (Shaper and Volery 2007)

According to Megginson, normally, those that are within the neighborhood vicinity

are the ones considered as small businesses. The definition as to what are the

classifications of a small business remains vague and unclear. The Small Business

Administration of the United States classified the four categories of businesses namely

“very small”, ”small”, “medium”, “large” according to the number of their employees:

very small firms are those under 20 employees, small firms with 20-99 employees,

medium firms with 100-499 employees and lastly, large firms with 500 or more. However,

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Megginson, et.al. cited an example inconsistent with the previous data showing that

American Motors having 8500 employees was once considered as a small business for the

reason that it was relatively small compared to its main competitors like General Motors,

Ford and Chrysler. It was later on bought by Chrysler. Aside from the quantitative

descriptions of these categories of businesses, qualitative factors were also mentioned. The

authors said that a small business must at least possess two of the following features: (1)

Management is independent, since the manager usually owns the business (2) Capital is

supplied and ownership is held by an individual or a few individuals (3) the area of

operations is primary local, although the market isn’t necessarily local (4) the business is

small in comparison with the larger competitors in its industry. The definition considered

and used by the Congress of the U.S. which was defined in the Small Business Act of 1953

was considered the best definition for a small business: A small business is one that is

independently owned and operated and is not dominant in its field of operation.

A business journal written by Jamak, Ali and Salleh from Malaysia focused on micro

businesses owned by the Orang Asli Aborigines, “a minority group in the multi-ethnic

Malaysian society”. They conducted a survey and found out that 56% of their respondents

engage in small scale retail businesses though almost all are uneconomic because they

usually have their businesses located at settlement areas and the operation of the business

is customarily because of social obligation and not really about gaining profit. The most

common reason why majority of the businesses fail is because of uncollected debts from

their customers. Micro businesses in this part of Malaysia usually engage in retailing

although some do “odd jobs” or take up contract work within the settlement area.

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2. Difference from other Types of Business

In a book entitled “Small & Medium Industries in the Philippines: An Overview”

published by the Institute for Small-Scale Industries, University of the Philippines

Diliman, everything about SMEs from its definition, to the business aspects and even to

the government assistance programs given to these SMEs was thoroughly discussed.

The book also presented the differentiation between small industries from

“cottage industry”; the latter defined as “manufacturing and/or industrial service

enterprises with employment of less than five and with total assets not exceeding

250,000”. Cottage industry also possesses some or sometimes even all of the

characteristics of a small business. These businesses are mainly situated at the home of

the owner and subsequently, the members of the family are the ones who help in

the operations of the business. Having said this, however, small industries do not cover

cottage industries in general. This is because of the qualifying characteristic of small

businesses that is: the owner does not participate in the actual production process.

Cottage industry merely provides an efficient entrepreneurial base for SMEs.

Clark and Douglas (2010) said that although micro businesses in New Zealand,

representing 89% of New Zealand firms thus a significant sector in the economy of the

country, have rarely been studied and as a matter of fact, it was not focused in any

academic research, government policy or even business support programs in New

Zealand. In their journal entitled “Micro Business Characteristics of Home-Based Business

in New Zealand”, they listed some factors that contributed to the continuous increase in

popularity of home-based businesses. They emphasized however the two kinds of home-

based business: (1) firms generating at home, where all business operations are done at

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the residence of the owner; and (2) firms operating from home, where only administration,

record-keeping and supplies management are maintained at home. The factors include

improvements in information and communication technologies, changes in cultural

attitude towards self-employment, societal attitudes towards flexible work and lifestyle

as well as economic cycles driving business restructuring and redundancies. Clark and

Douglas defined home-based businesses as “enterprises which operate at or from the

owner’s home residence. The business owner is self-employed and uses his/her home

residence for some of the core business activities to generate income”. Their study

specifically examined the characteristics and basic activities of home-based businesses in

New Zealand. Results showed that a home-based business owner may work full time or

part-time on his/her business or work part-time and at the same time be affiliated with

other businesses or even work part-time and be an employee in another organization.

Their study also yielded to the result that majority of home-based businesses were under

10 years old although a significant percentage of 14% represents businesses that had been

operating for 15 years or more. In addition to this result, the study showed that a very

small ration of one-third of home-based businesses were sole proprietors while a majority

of 56% were limited liability companies and the remainder are registered as partnerships.

Generally, home based businesses are relatively small but these firms have strong passion

and commitment to growth and progress.

According to a study undergone by three researchers from Victoria University in

Australia, home-based businesses comprise 67% of the total number of microbusinesses

in the country. It can be expected that since they are small and cater to minor markets,

they would initially make contact with the local government. Basing from the data

gathered by Ali, Paguio & Breen, home based businesses prefer to be anonymous and they

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do not usually coordinate with the local government because of the fear that this might

lead to a negative effect on their business. Given this, the local government goes through

a hard time reaching out to these home-based businesses.

Storey and Greene (2010) in their book entitled “Small Business and

Entrepreneurship” summarized the differences of small and large entities and are shown

in Table 1.

Table 1. Difference between small and large firm

Aspect Small Firms Large Firms

1. Risk of According to the book, small firms are
Failure more likely to cease operations than the
large businesses. This risk of failure is the
primary factor that differentiates small
from large enterprises. This is due to the
reason that small businesses focus on the
short term goals and short term survival.
2. Market They have no market power as to set
Power prices. Small firms compete through
service, quality and responsiveness.
Although large firms do fail,
the risk of failure is not that
high compared to the small
businesses.
More likely to have the power
to set prices.

3. Management Most small firms are generally owned Owners are commonly
and managed by the same person(s). private stakeholders or
financial institutions. The
management responsibility
are given to professionals are
only modest owners of
shares.
4. Motivation of The purpose of establishing small The owners usually have the
Owner businesses for most cases is to obtain a objective of maximizing the
comfortable living to themselves and/or potential value of the firm.
to their family members.
5. Brand No brand value Brand is an important factor
for large firms. It can increase
or decrease profitability since
the brand provides
awareness resulting to
confidence and later on
loyalty to the firm.
6. Strategy The strategy has to be flexible because Large firms seek to exploit its
small enterprises are deficient in price, advantages and
opportunities to reap scale economies. advantages through labor
resource, plant or research
and development.

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 7. Source of Small firms are founded primarily from Large businesses have vast
Finance the personal savings and retained profits choices of finance sources.
of the owners.

3. Significance to the Economy

Shaper and Volery (2007) stated that small firms are essential in the growth of the

national economy. Small enterprises are very crucial components in the economic

structure of any country. The book enumerated the potential and significant contribution

that a small firm may give the economy. First, small firms provide employment

opportunities for people. Not only does the owner have employment (self-employment)

but also their staff or workers. Second, the small enterprises are the next generation of

large firms. It is customary that large firms are not going to exist forever so having small

firms will enable new potential large businesses in the future if the small firms survive

and succeed. Third, they provide competition in the market. If the market is monopolized

by one or two firms, the customers will be experiencing over pricing and that they will

have no other choice but to avail of their product or service even if it is over-priced, low

in quality and with poor service. Fourth, small firms provide innovative ideas and

specialized products and services that will allow the market to have new and fresh

products or ideas. Lastly, they aid in having exports and they provide an outlet for

entrepreneurial activities for the growth of the economy. The important contributions are

not limited to those that are given above. There may be other possible contribution that

small firms may give to the growth of the economy. (Shaper and Volery 2007)

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 In the study entitled “SME Development and Technology Upgrading in Malaysia:

Lessons For The Philippines” by Habaradas (2008), it stated that small and medium

enterprises are the backbone of vibrant economies since they provide significant

contributions in addressing the poverty crisis by creating jobs and increase employment

opportunities, in scattering economic activities in rural and urban areas and providing

broad based sources of growth, in serving as a top supplier or provider of support services

for large enterprises, in stimulating entrepreneurial skills among the people and lastly, in

acting as seedbeds for developing domestic enterprises into large corporations.

(Habaradas, 2008)

A study made by John V. Mensah entitled “Small-Scale Industry as a Sponge? An

Empirical Survey in the Central Region, Ghana” stated that small scale industries are

beneficial to developing nations having abundance in the supply of labor. This study

mentioned that small scale enterprises provide broad employment opportunities for the

excessive labor force and that they have potential in income opportunities thus aiding in

alleviating poverty. This study stated that economic growth can have a dual effect, it can

either be good or bad. Small scale industries sponge up excess labor when the economy is

tight and let go of this surplus when the economy is at ease (Liedholm & Mead, 1999).

This study used three questionnaire surveys, observation and library research as

their method in gathering data. The researchers found out that engaging in numerous

occupations is the only strategy these small scale proprietors to minimize economic risks

and to survive low income from their individual firms. Moreover, results showed that

only a small portion of small scale owners wanted to close their firms however, most of

them declared that they cannot carry on with their operations and that they could not

offer better work conditions because of their limited resources. The study suggested that

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there is an urgent and great demand for devising strategies that would be beneficial in

improving national and regional economy, in reducing the population’s growth rate and

improving the profitability of small and micro enterprises and the like. (Mensah, 2005)

Megginson, et.al wrote a comprehensive discussion on the basic and essential

pieces of information necessary for the success of a small business. Americans believe that

the best way to achieve the American dream is by means of owning and operating a small

firm or business. As a matter of fact, a study showed that 40% of the top 1% of the

wealthiest people in America started from a small business. The authors presented six

reasons why there is a significant increase in the interest for the establishment of a small

business and the three most important of these are (1) there is a rapid growth in number

of small businesses (2) they create new jobs and increase employment and (3) course

offerings in high school and college levels include entrepreneurship and small business

management. While it is true that the first five years of a business are the most crucial

years of its operations, facts show that out of 10 firms, a ratio of 9:1 was found to be the

proportion of newly- established firms as to those who fail and close, respectively. In

addition to this, small firms generate the most job openings and greatly contribute to the

rate of employment of the United States. Larger firms for the past years increased their

revenues by an estimate of 3.5% but employment in these firms significantly declined. The

authors also pointed out that these smaller firms provide good opportunities for older

members of the work force.

A more thorough discussion on micro-enterprises especially on their growth and

efficiency was presented in a thesis study by Genevieve P. Yanga entitled, “Evaluation

Micro-Enterprises in Aurora Province Based on Growth and Efficiency”. This study aimed

to determine the characteristics of micro-enterprises in Aurora, the inputs that contributed

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to their total sales and income, the causes of success or failure of micro-businesses, and

the effects of different variables to micro enterprises productivity and efficiency in

Aurora. Results showed that, in general, the labor productivity with respect to sales was

90.6% and with respect to income, a percentage 85.8% for years 2000-2004. In addition to

this, the year 2004 increased returns on operations and growth rates of inputs as well as

outputs as the net income increased. This particularly resulted to a high efficiency in

operations. On a slight contrary, the manufacturing sector of micro enterprises in Aurora

experienced a substantial a decrease in productivity because of factors like frequent

brownout, poor road condition, inconsistent policies and lack of support. Generally, the

study showed that micro-enterprise in Aurora Province achieved productivity and

growth from 2000-2004 although they were also hindered by outside factors that affected

the condition of the business workplace. The primary cause of the increase in productivity

among MEs in Aurora is their innovation. Hence, MEs helped in economic development

in terms of job creations, revenue generation and improvement in the condition of life in

Aurora Province.

4. Challenges Encountered

According to a study conducted by National Federation of Independent Business

(NFIB), stated that more than 10% of the businesses stop their operations at their first year

while roughly 25% ceased operations at their second or third year or in between those

given. Moreover, 20% closed between their third and fifth year of existence and only 13%

percent were able to survive for more than 21 years.

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 Businesses fail because of many factors: type of ownership, size of business and

expertise of the owner. However, the two major factors are inadequate financing and

inadequate management. In terms of inadequate financing, some small firms do not have

enough finances to continue with the business and to support the cost of operations. On

the other hand, inadequate management results from the lack of experience of the owner-

manager of the firm since in these kinds of firms, management skills are desirable.

Another reason is that since these small enterprises have limited funds and resources, they

are not able to hire full-time experts who could help lessen their expenses and costs.

(Hatten, 2012)

Small firms have a high mortality rate in the business world. Small firms are lucky

enough to survive more than five (5) years of existence due to many difficulties. According

to Birch (2006), an estimated number of eight million enterprises operating in America

closed every year. The book entitled “The Complete Small Business Guide” by Colin

Barron (2006) enumerated the reasons behind business failure in the small enterprises

field. It was stated that even though there has been impressive increase in new enterprise

establishment, failure rates remain depressingly high. According to Colin (2006), the

major factors contributing to the business failure are the lack of management expertise

and under-capitalization. Aside from these two factors, Colin also stated that insufficient

turnover, poor management supervision, lack of proper accounting, competition, not

enough capital, bad debts and excessive remuneration to the owners. It was indicated that

lack of management and lack of expertise on the part of the owners can be traced to having

scarce capital resources. Since according to the book, all learning has its equivalent price.

Moreover, enterprises also experience cash flow crisis since the resources are low and the

cost of operations are high. (Barron, 2006)

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 Another disadvantage of entering small business is the ambiguity and constant

change in the market. There may be instant rise and fall in the sales income, profitability,

government regulations, competitors and market dynamics from one time to another.

Moreover, another disadvantage given by the book entitled “Entrepreneurship and Small

Business” written by Shaper and Volery (2007), is having potential financial loss. Since the

small business are solely owned by an individual, if the business collapses, then the owner

might lose his starting capital and also some of his own personal assets, in some cases ie

use of personal asset to satisfy a withstanding bank loan.

Moreover, Shaper and Volery (2007) enumerated the potential problems that

might be encountered by the small firms obtained through research in three countries

namely UK, Singapore and Malaysia. First, in terms of finances, problems are lack of

funds, cash flow difficulties, and lack of working capital and problem of getting paid.

Also, small firms face crises in the marketing field. These problems include having

difficulty in obtaining sufficient sales, pricing, distribution, competition, lack of marketing

skills and knowledge. In terms of production, there problems include their business

premise, getting supplies, low-quality of product and/or service. More so, in the case of

personnel management, problems are having difficulties in hiring competent and good

staff, interpersonal problems and the problem of laying off employees. Lastly, in the case

of personal dilemma, stress, immersion in the business, long hours of work, no family

support, prejudice and distrust, lack of respect, tension between personal life and career

are evident in the lives of small firm owners. (Shaper & Volery, 2007)

Robert S. Frey, in his book entitled “Successful Proposal Strategies for Small

Businesses”, listed constraints as well as advantages over bigger firms. He said that small

businesses tend to fill the areas or markets that large corporations cannot cater to. In

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addition to this, since smaller firms have fewer layers of management, decision-making is

faster. As a result, policies and business operations can be made flexible to efficiently meet

the customers’ demands. Small firms are also at an advantage when penetrating new

market sectors. They are, however, at risk because of (1) very limited B&P funds (2) lack

of depth in human resources (3) small business base (4) a contract backlog deficit (5) low

level of contractual experience (6) lack of name recognition in the marketplace (7) line of

credit challenges.

According to an article entitled “Help for Small Business” written by Goldstein,

there has been wants to change some of the state’s business incentive program such that

small firms may be able to qualify to avail of the given incentives. Many small business

owners said that Garden State is a difficult place to start business because of the expensive

starting costs, high taxes and precipitous health insurance benefits. This leads to the idea

that the current policies regarding these should be altered to fit the small business and be

able to provide assistance for them too.

5. Assistance Provided

An endeavor to achieve better economic competitiveness in the global business

arena is one of the primary goals of developing countries like Malaysia and Philippines.

A study made by Habaradas (2008) entitled “SME Development and Technology

Upgrading in Malaysia: Lessons for the Philippines” provided an analysis of the programs

and mechanisms used by Malaysia to empower small and medium-scale enterprises in

their country. It also provided some of the programs ventured into by Malaysia that

became very effective in the empowerment of small and medium firms. Likewise, the

Page 17
study presented ways on how the Philippine government can implement to encourage,

promote and empower the SMEs in the Philippines.

In the study, it stated that small and medium enterprises are the backbone of

vibrant economies since they provide significant contributions in addressing the poverty

crisis by creating jobs and increase employment opportunities, in scattering economic

activities in rural and urban areas and providing broad-based sources of growth, in

serving as a top supplier or provider of support services for large enterprises, in

stimulating entrepreneurial skills among the people and lastly, in acting as seedbeds for

developing domestic enterprises into large corporations. Moreover, according to the

study, SMEs comprise most of the volume of the business enterprises in both developed

and developing countries. Due to this, it is evident that governments put an emphasis in

this topic. Governments create policies and mechanisms to support and empower the

SMEs because SMEs prove to help attain the two major goals of the government: poverty

alleviation and employment generation.

The study of Habaradas (2008) discussed the policy of Malaysia regarding SME

development and empowerment. According to him, the chief SME policy of Malaysia is

“the development of a competitive, innovative and technologically strong SME sector that

is able to contribute to the domestic economy and to complete globally.” (SME Annual

Report, 2006). In order to fulfill such, the government of Malaysia came up with many

interesting programs and mechanisms to insure the attainment of such vision. Despite the

many programs, the study of Habaradas focused only on three major areas: financial

assistance for technological upgrading, strengthening SME linkages with large firms and

universities and, developing human capital.

Page 18
 Since the government of Malaysia is aware of the limitations and constraints faced

by the SME sector in terms of financial resources, the government offers financial

assistance and incentives in the form of grants and soft loans that are given by many

ministries and their agencies (Habaradas, 2008). These financial aid can help in the

mission of these small and medium-scale enterprises to have a technological advancement

venture. Moreover, the government encourages SME linkage through strengthening SME

connections by having programs such as linkage with large firms. In this program, it is

beneficial to the SMEs since they will have technological assistance, training, and

information given by the large companies. Likewise, the government of Malaysia

encourages connections between the universities and public research institutions, the

provider of knowledge, and the SMEs, users of knowledge, to allow both parties to

influence on both the physical and human resources of each other. Lastly, the government

encourages the development of the human capital by providing training to enhance their

skills and capabilities that will yield to the empowerment of SMEs.

Habaradas (2008) provided insights patterned in the policy of Malaysia for the

Philippines to better empower and support the SMEs in such country. These insights

include linking SME development efforts to over-all socio-economic goals, adjusting

programs and policies to fit environmental realities, designing support programs and

incentives to fit the specific needs of the SMEs, strengthening the formal education system

in the Philippines and encouraging the participation of the private sector in the quest to

empower and support the SME development in the country.

B. Micro Enterprises in the Philippines

Page 19
1. Definition and Significance to Philippine Economy

Abion (2012) classified and defined the categories of the business firms according

to the number of staff and to the amount of capitalization. According to Abion (2012),

those having less than 10 employees are considered as micro enterprises while those

having at least 10-199 staffs belong to the small and medium classification. More so, those

firms having at least 200 and above employees belong to the large enterprises strata. Table

2 shows the classification of MSME in the Philippines based on number of employees and

asset size.

Table 2. Classification of MSMEs in the Philippines

Size By Employment By Asset Size

Micro 1~9 employees Up to P 3,000,000

Small 10~99 employees P 3,000,001 – P 100,000,000

Medium 100~199 employees P 100,000,001 – P 350,000,000

According to Abion (2012), a recent statistics presented by the House of

Representatives provided that micro, small and medium enterprises include about 99% of

the total business enterprise in the Philippines. This links to the conclusion that MSMEs

have a vital role in the national development and national growth of the Philippines. It

was also mentioned that the MSMEs contributes to the advancement of the Philippines

through job creation and provider of economic activity. Moreover, it was also stated that

Page 20
alleviation of poverty had been one of the major contributions of these MSMEs to the

Philippines.

In terms of poverty alleviation, micro and small businesses are of critical

importance to the developing countries. It has been recognized as a major source of

employment especially in Third World countries. It has been established that it may its

potential for helping the working poor, the unemployed and those who receive public

assistance through the many contributions these small and micro firms have. Moreover,

not only do they provide employment opportunities but also they are a source of job

creation and livelihood for the Filipino people. As a result, this may lead to poverty

alleviation and betterment of the lives of the Filipinos.

Through their income generation in both rural and urban areas, rural development

and employment generation, sources said that MSMEs play a vital role in the economic

development of the Philippines. Since it is given that the Philippines is rich in labor

resources, the problem now arises since if less firms or corporations employ them, it will

result to high unemployment rate. In this scenario, MSMEs play a vital role. According to

the National Statistics Office (NSO), 68% of the total number of employed individuals are

employed by MSMEs and only 32% of the total are employed by large firms. (Reyes, 2012)

2. Condition

Many of MSMEs experience financial crisis and are nearing the point where such

entrepreneurs will foreclose their business. This now becomes detrimental. If their firms

foreclose, many families could lose their source of income and people will lose

employment thus, aggravating poverty in the Philippines. (Abion, 2012)

Page 21
 In a book entitled “Small & Medium Industries in the Philippines: An Overview”

published by the Institute for Small-Scale Industries, University of the Philippines

Diliman, it was stated that SMEs, being a minority in terms of size and capital, face

problems in different aspects of the business. In the operations aspect, the first constraint

is the shortage in the supply of raw materials because some suppliers tend to be biased

against smaller businesses and cling toward the larger ones. Scheduling, inventory control

and quality control are usually taken for granted and this is the second problem of SMEs.

Third is the inadequacy of machineries and the inferiority on technological advancements.

Other problems consist of small factory sites, lack of cost control, high labor cost and

machine breakdowns.

A study entitled “Small-Scale Business Enterprises in The Philippines: Survey and

Empirical Analysis” conducted by Ruane (2007) tried to determine the factors that

contribute to entrepreneurial motivations and success in the Philippines. Moreover, this

study aimed to identity the extent of sacrifices made and challenges faced by Filipino

entrepreneurs. This study involves entrepreneurial intensity, sacrifice, motivation,

business plans, the effect of the business to the entrepreneur’s quality of life, the

businessman’s personal beliefs and attitudes and challenges and difficulties faced by the

owner at the different stages of operating the firm.

As to the entrepreneurial intensity, the study found out that owners prioritize their

families over the management of the firm. They spend less time managing the business

while more time is allocated for family related activities. Moreover, in the case of

entrepreneur’s sacrifices, the extent of this involves acquiring additional skills at their own

expense and performing tasks that are beneficial to their business. However, the

entrepreneurs are most likely not willing to sacrifice their marriage, family and friends for

Page 22
their business operations. Most of the respondents when asked what motivated them to

start business answered that they believe that their business will be a source of higher

income and better financial status for them and their families. Also, they answered that

starting their business is caused by its benefit of having a flexible schedule to balance work

and family life. This study also showed that the business positively affects the quality of

life of the entrepreneurs. The business provided sufficient source of income and financial

stability to the entrepreneurs and their families. Also, having small businesses lead them

to a better quality of life and achievement of personal goals. (Ruane, 2007)

A local study by Eric S. Parilla of Northwestern University, Laoag City Philippines

presented a very comprehensive discussion on micro business in Laoag City from

demographics, qualitative and quantitative assessments of products and services to the

effect of those to the Socio Economic Development in the city. He arrived with the

following conclusions: (1) Micro-business owners in Ilocos Norte are majority young,

college graduates and are mostly women. Most of the respondents have not attended

previous seminars on business and they are also not members of professional

organizations. (2) Most micro businesses in the city have existed for only less than 5 years

and majority of them are sole proprietors and into retailing/ merchandising. (3) Majority

have started their operations with a starting capital of less than ₱500,000 usually from the

owner’s savings. Most businesses have only 1-2 employees who are usually family

members. Moreover, majority have an average annual sale of below ₱150,000. (4)

Microbusiness owners in Ilocos Norte are responsible towards their employees and

customers, highly competent to handle and manage their respective businesses and that

Page 23
they observe a high level of management practice. Lastly, (5) Microbusinesses play a

significant role in the economic and social development in the province of Ilocos Norte.

In the present generation of world trade liberalization and fast technological

changes, the government through its legislative department enacted laws that paved way

for the declaration of programs that help and encourage the increase in number of micro

to small enterprises. In a thesis entitled “Success Factors of the Selected Micro Chicharon

Ventures in Bulacan”, the researcher cited that according to the data as of 2007 by the

National Statistics Office (NSO), micro businesses comprise 91.36% of the total

establishments in the Philippines and basing from the researcher’s presented data, a high

percentage of 93.2% employment rate in Bulacan was due to the high number of micro

businesses in the province. Wholesaling/retailing also ranks as the top industry in

Bulacan. The research undergone by Gravador covered four business variables namely

marketing, finance, human resources and production to determine the perceived success

factors of the micro chicharon enterprises in Bulacan, particularly in San Miguel and Santa

Maria. Results showed that marketing is the number one perceived success variable in the

micro business ventures having a grand mean of 3.20. This was followed by human

resource, production and lastly, finance.

3. Philippine Government Assistance

The government, in the adoption of the 1983-1987 Five Year Development Plan,

gave attention towards SMEs. The plan included the promotion of SMEs by providing a

greater access to institutional finance, intermediate technology and marketing schemes

for these small and medium industries. Some of the institutions tasked to give aide to

Page 24
SMEs in terms of financing are DBP and other development banks, commercial banks and

specialized government banks. For production, National Science and Technology

Authority aims to guide engineering and technological efforts of the people (i.e. SMEs).

Lastly, R.A. 6041 was enacted in 1969 to participate in training and research for the benefit

of small and medium industries. This Act mandated the University of the Philippines

Institute for Small Scale Industries (UP ISSI) to be the “national government training

institute for Philippine small-scale industries”. Up to this time, the UP ISSI continues to

seek the help of foreign institutions for its different goals and activities.

According to “Promoting Philippine Enterprise Development” written by

Santiago (2011) the factors that causes the growth of selected small and medium

enterprises in the National Capital Region are entrepreneurial capability in terms of the

SME owners’ non managerial activities and their firms’ form of ownership which had

direct impact on sales growth.

Cosme, in her thesis entitled “An Analysis of the Small and Medium Enterprise

Credit Program I Philippine Business for Social Progress”, said that in order for SMEs to

grow and expand, they should rely on productivity and resources. This, however, is often

not achieved because of the limitation of their working capital. SME owners usually

depend on their own money to fund the operations of their business. Some resort to

commercial banks as a source of credits though most entrepreneurs do not prefer this

alternative because of the strict lending policies and requirements. The study primarily

focused on Philippine Business for Social Progress- Small and Medium Enterprise Credit

Program to measure the effectiveness of traditional and non-traditional ways of lending

in helping small and medium scale industries. Results showed that PBSP through its

Page 25
 SMEC program effectively served its purpose and was able to help SMEs in their financial

as well as technical needs. The funds released to the businesses that availed of such

program were able to help in the addition of employees and they were able acquire

additional fixed assets and working capital.

C. Barangay Micro Business Enterprise Act of 2002 (BMBE)

Micro businesses are essential to the growth of the Philippine economy. Micro enterprises

provide an avenue for job creation, employment opportunities and possible alleviation of

poverty. This leads to the creation of the Barangay Micro Business Enterprise Act of 2002. This

act is penned by former senator Juan Flavier. According to dti.gov.ph, the act was signed into law

by the former president Gloria Macapagal-Arroyo on the 13th of November 2002. Moreover, the

implementing rules and procedures of such act were issued on February 7, 2003 as DTI

Administrative Order No. 1 Series of 2003. Such was published in February 11 and 26 of the same

year in the issues of Manila Bulletin.

According to the law, BMBEs are critical to the economic development because they are

the stepping stone in the formulation of the development of Filipino entrepreneurial talent. This

act also aims to incorporate the informal sector through granting specific incentives to these firms

therefore giving them a chance to be part of the mainstream of the economy. Given these, the law

endeavors to strengthen the BMBEs because in doing so, it is tantamount to having more jobs and

livelihood for the people and more so better quality of life for the Filipino people.

According to Reyes (2012) in her study entitled “Rural Micro-Enterprise Promotion

Program: An Assessment on the Impact of the Financing Delivery Role of Small Business

Page 26
Corporation to MSMEs in Albay, Ragay and Sipocot, Camarines Sur”, R.A. 9178 otherwise known

as the Barangay Micro Business Enterprise Act of 2002 provided assistance to the micro

businesses through offering incentives and benefits for these firms. One major incentive is the

income tax exception awarded to the registered BMBEs. The aim of the law is to incorporate the

micro enterprises to the mainstream economy since they contribute a lot to the economic growth.

Also, its aim is to strengthen the said sector thus leading to job creation, livelihood and better

quality of life of Filipinos.

D. Related Philippine Financial Reporting Standard

The Securities and Exchange Commission has issued SEC Memorandum Circular No. 05

(2018) adopting, as part of its financial reporting rules and regulations, the Philippine Financial

Reporting Standards (PFRS) For Small Entities in line with the corporate regulator’s Ease of Doing

Business initiatives. A small entity shall adopt this PFRS for annual periods beginning on or after

January 1, 2019. Earlier adoption is permitted. Small entities are those that meet all the following

criteria: (1) Total Assets of between P 3,000,000 to P 100,000,000 or total liabilities of between P

3,000,000 to P 100,000,000. If the entity is a parent company, the said amounts shall be based on

the consolidated figures; (2) Are not required to file financial statements under Part II of SRC Rule

68; (3) Are not in the process of filing their financial statements for the purpose of issuing any

class of instruments in a public market, and; (4) Are not holders of secondary licenses issued by

regulatory agencies.

This PFRS for Small Entities was developed in response to feedback of small entities that

PFRS for Small and Medium-sized Entities (PFRS for SMEs) is too complex to apply. By reducing

Page 27
choices for accounting treatment, eliminating topics that are not generally relevant to small

entities, simplifying methods for recognition and measurement, and reducing disclosure

requirements, the PFRS for Small Entities allows small entities to comply with the financial

reporting requirements without undue cost or burden.

The adoption of the PFRS for Small Entitles was recommended by the Association of

Certified Public Accountants in Public Practice (ACPAPP.) The PFRS for Small Entitles was

approved by the Financial Reporting Standards Council (FRSC) on December 13, 2017, and by

the Board of Accountancy (BOA) and the Professional Regulation Commission (PRC) on

February 20, 2018.

In reference to this, the board specifically developed standard that will help the small

entities in doing business. Those entities 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, are not more than Three Million Pesos (P3,000,000.00) shall avail the BMBE law.

After completing the requirements, the local government unit will issue the Certificate of

Authority and the entity can now enjoy the benefits of the BMBE law.

Page 28
 CHAPTER III. STUDY FRAMEWORK

A. Theoretical Framework

The enactment of RA 9178, otherwise known as “Barangay Micro Business Enterprise

(BMBE) Act of 2002”, was intended to hasten the country’s economic development by

encouraging the formation and growth of barangay microbusiness enterprises. The Act

encourages the informal sector to integrate with the mainstream economy the active intervention

of the government especially in the local levels and the granting of incentives and benefits of the

said act to generate employment and alleviate poverty.

Micro, small and medium enterprises (MSME’s) comprise 99.6% of all registered

businesses in the Philippines. In 2016, the Philippine Statistics Authority (PSA) recorded a total

of 915, 726 business enterprises operating in the Philippines of which 99.57% of the establishments

are micro, small, and medium entrepreneurs with 131, 011 of the said businesses are found in

Region 4-A where in Laguna is also included. Within this population, 70% had been employed as

workforce.

However, a study conducted by Aldeguer (2015), reveals that only a few microenterprises

are registered and have availed of the benefits of the Act, making the act as not fully functional.

Page 29
Another study conducted by Figuera (2018) in Tarlac City showed that one of the major obstacles

faced by the micro entrepreneurs is the lack of understanding of the BMBE Law.

The studies of Figuera and Aldeguer will be used in the current study, given that the

problem is the lack of information disseminated to microbusinesses on a Barangay level.

Although Aldeguer had already concluded that the said act is not fully functional, this conclusion

only applies to the National Capital Region (NCR).

Figure 1. IPOO Model of the Theoretical Framework

Input Process Output Outcome

 Information,  Actions  Results of the  Medium term

ideas, and associated processing that then consequences of
resources with exit the system the project
used delivering  Direct immediate  Usually relate to
project goals term results the project goal or
associated with a aim
project

Feedback

Figure 1 shows how the study shall be conducted using the Input- Process- Output- Outcome

(IPOO) Model which aims to obtain the results that will be used in the interpretation of the

collected data. The IPOO model is wherein the input represents information, ideas and resources

used in the project in order to come up with the right output. On the other side, the process is a

step that includes all actions required to effect a transformation of the inputs. The outputs are the

Page 30
data and materials flowing out of the transformation process. And the outcome is the second level

of output that usually relate to the project goal or aim.

B. Conceptual Framework

From the studies conducted by Figueroa and Aldeguer, pieces of information can be

inferred regarding the population’s understanding of the BMBE law in certain areas of Luzon.

With these pieces of information collected from the mentioned studies, the researchers of this

study have integrated variable questions to further collect more specific results that would

support the current study.

A number of respondents will be subject to answer surveys regarding their Business

Profiles and their level of awareness and understanding of the BMBE Law. The collected data will

then be gathered together and statistically analyzed to be further evaluated to determine the

desired output of the study. The results will then be documented to serve as reference in

conducting a seminar and evaluation to meet the desired outcome of the study. Figure 2 explains

the concept of a more detailed process to carry out the desired outcomes

Figure 2. Conceptual Framework

Input Process Output Outcome

 Government  Seminars  Level of Awareness  Increased level of

Initiatives  Symposiums of the BMBE Law awareness of the
 Managerial  Marketing  Available BMBE Law to
Strategies and information to micro
management provide answers to entrepreneurs in
questions being selected barangays
training
asked  Availment by
micro
entrepreneurs of
Page 31 the benefits of the
BMBE Law.

Feedback
Figure 2 presents the conceptual framework which is described as a set of broad ideas and

principles taken from relevant fields of enquiry and used to structure a subsequent presentation.

As the figure shows, this describes the conceptual framework of the study wherein the input is

consisting of managerial strategies and government initiatives. On the other side, the process

being used is through seminars, symposiums and marketing and management training. The

output is the level of awareness of the BMBE Law and usable knowledge regarding their level of

aware which will be the information available to provide answers to questions being asked. The

researchers want to find out if, upon knowing information about the BMBE Law and its benefits,

the increased level of awareness and the willingness to avail as BMBE recipient.

C. Operational Framework

To further understand the concept and the process of the study being conducted, an

operational framework was built.

To meet the desired outcome of the study, 100 respondents from the five (5) pre-selected

barangays will be subjected for data gathering. The study will utilize survey questionnaires that

consist of four parts – a multiple-type of questions to identify the business profile, dichotomous

questions to learn if respondents were registered BMBE, Likert five point scale to measure the

willingness and interest on BMBE information and another Likert scale to assess the level of

awareness of the micro and small entrepreneurs in the five (5) selected barangays about the BMBE

Law. A Likert scale is an orderly scale from which respondents choose the option that best

Page 32
 supports their opinion. It can be used to measure someone's attitude by measuring the extent to

which they agree or disagree with a particular question or statement. Results will be tallied and

will serve as the basis to answer the problems stated in the study. Computation of weighted

mean for each Likert scale will be done. Numerical values will then be interpreted to evaluate the

awareness of micro entrepreneurs of the selected barangays about the BMBE law. Furthermore,

the results collected will help the researchers come up for recommended measures to improve

proper dissemination of the said law and to educated the selected community.

The Output of the research will be documented and will be subject for evaluation. The

said output shall serve as a reference and determinant if a seminar in the chosen barangays is

feasible and needed by the community to increase awareness about the BMBE Law to have higher

number of Micro entrepreneurs to avail of the benefits of the said law. Figure 3 shows the detailed

process and the variable that will be included to meet the desired outcome of the study.

Figure 3. Operational Framework

Data Gathering Collection of Statistical Treatment Output Outcome

 Survey Surveys  Arithmetic  Level of
- Perception  Profile of means awareness  Increase
survey Respondents  Likert Scale  Identifying awareness of the
- Business BMBE law to
 Univariate potential
Profiles analysis problems Micro
- Descriptive  Recommended entrepreneurs in
 Level of - Inferential measures to selected Barangays
Awareness
- Applicability increase  Higher availment
- Benefits effectiveness of by micro
dissemination entrepreneurs of
the benefits of the
BMBE Law.

Feedback

Page 33
D. Definition of Terms

1. Micro enterprises - A business operating on a very small scale, especially one with a sole
proprietor and fewer than six employees.

2. Small enterprises - those which have between five to nineteen (5-19) workers, medium
enterprises include firms having more than 19 staffs but less than 199 people while large
firms consist of more than 200 employees.

3. Statistical treatment - A summary of the procedure, including statistical methods used.

4. Perception survey - Most often used when one is trying to find out how people
understand or feel about their situations or environments. They are used to assess needs,
answer questions, solve problems, establish baselines, analyze trends, and select goals.

5. Dichotomous questionnaire - A question which can have two possible

answers. Dichotomous questions are usually used in a survey that asks for a Yes/No,
True/False or Agree/Disagree answers. They are used for clear distinction of qualities,
experiences or respondent's opinions.

6. Likert Scale - is a series of questions or items that ask your respondents to select a rating
on a scale that ranges from one extreme to another, such as “strongly agree” to “strongly
disagree.”

7. Pre survey - Of the period before a survey.

8. Non-probability Sampling - is a sampling technique where the samples are gathered in a

process that does not give all the individuals in the population equal chances of being
selected.

E. Hypothesis

The researchers hypothesized the following:

1. Micro entrepreneurs in San Pablo city are not aware of the BMBE Law.

2. Micro entrepreneurs in San Pablo City has low level of awareness on

Barangay Micro Business Enterprises Law of 2002.

3. The government has poor strategies on information dissemination of BMBE Law.

Page 34
 CHAPTER IV. METHODOLOGY

A. Research Design

The study used descriptive method of research in order to determine the level of

awareness of micro business owners in San Pablo City. It aims to describe the nature and/or

characteristic of sample population at the time of study.

The study made use of a two-part survey questionnaire consisting of 17 items. This was

done to attain data from the selected entrepreneurs.

B. Population of the study

The population of the study refers to the total number of the people in the form of a

thorough head count of all elements the findings of the study seeks to represent (Sekaran, 2003).

A clearly defined population ensures that the study basically assesses the level of awareness of

business owners from chosen barangays about the said law. Considering that the study basically

evaluates the level of understanding and awareness of the community about the BMBE Law, the

population of the study only includes 100 selected respondents with small to medium business

enterprises that operate within the chosen barangays of San Pablo City.

C. Sampling Method

A non-probability sampling was used for selecting the participants in this study. This

method was employed to ensure a fairly equal representation of variables for the research. This

Page 35
was achieved by personally distributing survey questionnaires to selected business entities that

fall under the categories of the chosen population—that are small to medium business

enterprises.

Data collected from the survey paved way for understanding not just the level of

awareness of the community about the BMBE Law but also the disposition of the said business

owners regarding the said law.

D. Instrument and Data Collection

The researchers designed a self-made survey questionnaire comprising of multiple choice,

dichotomous questions and a Likert Scale. These questionnaires where then distributed to the

chosen community by visiting 100 respondents belonging to the selected barangays in this study.

The survey questionnaire covered five (5) factors: Business Profile, Business Activity,

Capital Size, the Level of Understanding and Awareness of the BMBE Law and the Willingness

to register for the said Law. All individual factors measured were adequately discussed under

Chapter III of the study. A total of five (5) questions were placed with 3 subcategories under the

area of Understanding and Awareness Level factor and 1 subcategory under the area of

willingness to register under the BMBE law.

The study was conducted from August to November 2018. In order to gain permission to

collect data from the respondents, the researchers identified themselves as students of Laguna

Colleges and are conducting a research on BMBE law. Consent was also sought from each

individual respondent particularly before the researchers were allowed to complete any

instrument. Questionnaires were personally given to the selected population. Where needed,

Page 36
explanations had to be offered to some of the respondents who experienced difficulties in

completing the questionnaire.

In all, 100 respondents were selected from the chosen barangays of this study. On the

whole, the participants did not show much signs of difficulty in answering questions on the

survey questionnaires.

E. Data Analysis

Quantitative data from multiple choice and dichotomous questions were gathered from

the questionnaires which were then subjected to analysis by computing the percentage of each

factors. Descriptive aspects of the findings were presented with the help of tables and graphs

alongside other descriptive statistical indicators.

Responses from Likert Scale (Degree of Awareness to the Existence of BMBE Law) were

tabulated and the weighted mean were extracted for each item. Findings were interpreted and

over-all level of awareness was calculated.

Page 37
 CHAPTER IV. DATA INTERPRETATION AND ANALYSIS

A. Results

The study employed survey questionnaires to evaluate the level of awareness of small

and micro entrepreneurs of San Pablo City on Barangay Micro Business Enterprises Law of 2002.

This chapter summarized the collected data in forms of tabular and graphical presentation.

1. Business Profile

One hundred (100) respondents of small and micro entrepreneurs from the pre-

selected barangays in San Pablo City complete the survey questionnaire. Figure 4 shows

the legal form of the respondents in the study.

Figure 4. Legal Form

LEGAL FORM

10 Sole Proprietorship
Partnership
Corporation
Cooperative
Association

90 Others

Page 38
 As shown in Figure 4, majority of the respondents were sole proprietors (90%).

Because they were SMEs, it was expected that there are more sole proprietorship in the

sample. Ten respondents were in partnership.

In Figure 5, the respondents’ business activity were recorded. Of the 100

respondents, 30% were retail stores, 2% were drug store, 4% were repair shops, and 10%

were carinderia. The rest of the respondents had various business activities.

Figure 5. Business Activity

BUSINESS ACTIVITY

30%

54%

2%
4%

10%

Retail Store Drug Store Repair Shop Carinderia Others

Page 39
Figure 6. Size of Capital

0%
SIZE OF CAPITAL

6%
4%

Php 300,000 and below 8%

Php 300,001 - Php 1,000,000

8%
Php 1,000,001 - Php 1,500,000

Php 1,500,001 - Php 2,000,000

Php 2,000,001 - Php 2,500,000

74%
Php 2,500,001 - Php 3,000,000

As seen in the figure above, majority of the respondents had capital of P 300,000

and below. There are 18 respondents with more than a million pesos capital.

2. Registered BMBE Recipient

To determine the number of respondents with BMBE certification, Figure 7

displayed the number of respondents with BMBE certification and those without. There

are 96 out of 100 who are not yet registered.

Page 40
 Figure 7. Registered BMBE

BMBE REGISTRATION

Non-Registered 96

Registered 4

0 20 40 60 80 100 120

Registered Non-Registered

Survey results revealed that two respondents got the information from a local TV

commercial and the other two respondent who were BMBE recipients learned the

information through word of mouth.

As additional information, the registered respondents were asked how long were

they BMBE recipients and all of them answered 1 year and below.

3. Awareness and Willingness to Avail BMBE Law

In the study there are 16 (16.00%) respondents that are aware of BMBE Law and

there are 84 (84.0%) respondents that are not aware of BMBE Law. The percentage

show that there are much higher respondents that are not aware on the BMBE Law

than those that are aware.

Page 41
Figure 8. Number of Respondents with Knowledge of BMBE Law

AWARE OF THE BMBE LAW

NO 84

YES 16

0 10 20 30 40 50 60 70 80 90

The respondents who answered “NO” on the previous item, was further asked if

they were interested to know more about BMBE Law. Table 3 showed the willingness of

86 respondents to learn more about BMBE Law and to register as its beneficiary.

Table 3. Willingness to Learn and Register

1 5
2 3 4
Very Very WM
Uninterested Neither Interested
Uninterested Interested
Learn more
of BMBE 6 0 18 34 26 3.88
Law
Register as
BMBE 8 2 20 40 14 3.60
Recipient
OVER-ALL 3.74

Table 3 showed the composite mean of 3.74 which was interpreted as high level

of interest the respondents had about BMBE Law.

Page 42
4. Degree of Awareness to the Existence of BMBE Law

Respondents who answered “YES” on question No. 7 were evaluated on the

degree of awareness they had regarding Barangay Micro Business Enterprises Law of

2002. The table below showed the extent of their knowledge on BMBE Law.

Table 4. Degree of Awareness to the Existence of BMBE Law

1 5
2 3 4
Category of Responses Very
Unaware Neither Aware
Very WM Interpretation
Unaware Aware

RA 9178 is also known as

Barangay Micro Business 4 12 3.5 Moderate
Enterprises Law of 2002

Definition of BMBE Law 4 4 8 2.75 Low

Requirements 6 8 2 3.38 Moderate

Tax Incentives 4 6 6 3.88 High

Exemption from
4 6 6 3.88 High
Minimum Wage Law

Financing Assistance 1 3 8 4 3.69 High

Technological and
4 6 6 3.88 High
Marketing Assistance

Registration Fee 16 4 High

Effective period of the

BMBE Certificate of 12 4 4.25 High
Authority

Penalties 8 4 4 2.75 Low

OVER- ALL 3.60 High

Page 43
B. Discussion

RA 9178 had been long enacted and several studies had been made. The researchers

decided to examine the level of awareness small and micro entrepreneurs had for this particular

law. The study aims to gauge the extent of awareness a “BMBE aware respondent” has for this

Act.

Starting with the methods used, a survey was conducted to five barangays in San Pablo

City. A total of 100 small and micro entrepreneurs from San Pablo City were selected as

respondents for the survey. The respondents were mostly sole proprietors with asset size of P

300,000 and below as seen in Figures 4 and 5. Retail store is the known business activity of the

respondents with 30.0% since 54.0% indicated “Others” as their line of business were not among

the choices.

Out of the 100 respondents only four were registered BMBE for under a year. Sources of

information were local television commercials and word of mouth. This means that the local

government is not actively promoting or disseminating information on BMBE even though the

law has been active for 16 years. The 96 unregistered respondents showed their interest given the

chance to learn more of the incentives of BMBE and to avail its benefits.

There are 16 respondents who were aware of the existence of the BMBE Law. A Likert

five-point scale was used to evaluate their responses. Table 4 showed a high level of awareness

from the respondents who were “BMBE aware”. Respondents were highly aware of the effective

period of the BMBE Certificate of Authority. Low level of awareness were traced to the definition

of BMBE and its punishment.

Page 44
 CHAPTER V. SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATION

A. Summary of Findings

MSMEs account for the 99.57% of established businesses and employ 63.3% of the

country’s labor force. (MSME Statistics, 2016) They are substantial contributors to our country’s

economic growth, trade, employment, innovation, and poverty alleviation. (Gonzales, 2018)

The Input-Process-Ouput-Outcome Model (IPOO) was used as the framework for this

study. The desired output of the process - awareness of entrepreneurs on BMBE law, were

evaluated using Likert scale and statistical analysis.

The study utilized quantitative and qualitative data gathering methods in order to satisfy

the objectives of the study. A survey was conducted among 100 micro and small entrepreneurs

in San Pablo City as the target audience of BMBE Law. Data were obtained from the respondents

through the use of self-administered questionnaires. Frequency and percentages were extracted

from the collected data.

The study had shown that majority of the small and micro business owners’ were sole

proprietors and with capital assets P300,000 and below. The known largest known trade activity

was retailing. The study has found that 84 out of the 100 business owners were not aware of the

BMBE Law. The study also found out that 4 of the 16 highly aware respondents were the only

registered BMBE. Majority of the unaware proprietors expressed their interest in learning and

availing the benefits and incentives of the aforesaid law.

Page 45
B. Conclusions

The purpose of this study was to evaluate the level of awareness of micro entrepreneurs

in San Pablo City on Barangay Micro Business Enterprises Law of 2002. The following conclusions

can be drawn from this study, majority (84%) of San Pablo City small and micro enterprises are

not aware of RA 9178. Even though BMBE Law has been in existence for 16 years, only few

business owners are informed of its programs and incentives. However, entrepreneurs who were

aware of the actuality of the said law were knowledgeable and informed.

C. Recommendations

The study pre-selected the barangays were the survey will be conducted. The researchers

suggest performing a random or systematic sampling method to get a more reliable

representation of the population. For future studies, the researchers suggest to conduct a pre-

survey to have a better knowledge and quality of respondents. This will also help to organize the

research method that future researchers are willing to undertake. Consider a more extensive

survey questionnaire that will clearly identify the necessary information for the study.

The researchers recommend to coordinate with government agencies who are responsible

for the dissemination of information.

Finally, this study aims to promote or raise the awareness of MSMEs that through the

findings of this study, more MSMEs will grab the benefits and incentives the BMBE Law has to

offer.

Page 46
 BIBLIOGRAPHY

Valix, C. T. (2017). Financial Accounting Three, Include SMEs

Institute for Small-Scale Industries. Small & Medium Industries in the Philippines: An
Overview. University of the Philippines Diliman, Quezon City, Manila, Philippines. Retrieved
from http://beta.entrepreneurship.org.ph/

Storey and Greene (2010). Small Business and Entrepreneurship. Retrieved from
https://books.google.com.ph/books/about/Small_Business_and_Entrepreneurship.html?id=Z
rcGQgAACAAJ&source=kp_book_description&redir_esc=y

Habaradas (2008). SME Development and Technology Upgrading in Malaysia: Lessons

For The Philippines. Raymund Habaradas Associate Professor, De La Salle University.
Retrieved from http://scholar.google.com.ph/citations?user=FTVzAuIAAAAJ&hl=en

John V. Mensah. Small-Scale Industry as a Sponge? An Empirical Survey in the Central

Region, Ghana. Retrieved from https://doi.org/10.1111/j.0129-7619.2005.00214.x

Coralde, H. P. (2011) Contributions of Business Social Responsibility to Micro, Small

and Medium Enterprise: Brgy. Angio San Fabian Pangasinan. Pangasinan, Philippines.
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about/Contributions_of_Business_Social_Respons.html?id=5RpdswEACAAJ&redir_es=y

Yanga, G. P. Evaluation Micro-Enterprises in Aurora Province Based on Growth and

Efficiency. Aurora, Philippines

Hatten (2012). Small Business Management, Entrepreneurship and Beyond. Retrieved

from https://books.google.com/books/about/Small_Business_Management_Entrepreneursh.
html?id=8m6PEcgFe6MC

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 Colin Barron (2006). The Complete Small Business Guide. Retrieved from
https://bolen.bc.ca/index.php?q=h.misc&act=search_series&series=Barron%5C%27s%20Busin
ess%20Library

Reyes (2012). Rural Micro-Enterprise Promotion Program: An Assessment on the Impact

of the Financing Delivery Role of Small Business Corporation to MSMEs in Albay, Ragay and
Sipocot Camarines Sur. Retrieved from https://books.google.com/books/about/Rural_micro_
enterprise_promotion_prgram.html?id=7uFLswEACAAJ

Small and Medium Development Council (2003). Retrieved from

https://www.dti.gov.ph/18-main-content/static/108-sme-development-council

Abion (2012). Assessing the Legal Rescue: Critical Issues on the Rehabilitation Process
for Micro, Small and Medium Enterprise (MSMEs)

Ruane (2007). Small-Scale Business Enterprises in The Philippines: Survey and Empirical
Analysis. Retrieved from https://www.questia.com/library/journal
/1G1-175110736/small-scale-business-enterprises-in-the-philippines

Parilla, E. S.A local study of Northwestern University, Laoag City Philippines presenting
a very comprehensive discussion on micro business in Laoag City

National Statistics Office (2007). Retrieved from https://psa.gov.ph/statistics

/census/population-and-housing/2007-PopCen

Santiago (2011). Promoting Philippine Enterprise Development (National Capital

Region). Retrieved from https://www.aim.edu/faculty-and-staff/faculty/maria-andrea-l-
santiago-cpa-dba

Cosme, A. A. An Analysis of the Small and Medium Enterprise Credit Program I

Philippine Business for Social Progress. Retrieved from https://issuu.com/marilynmirando/

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docs/pbsp_ar_2018_final_lowrescopy

Hamid et al (2011). Factors Affecting SMEs Successful Utilization of Tax Incentives in

Manufacturing Sectors. Retrieved from
http://arionline.uitm.edu.my/ojs/index.php/MAR/article/view/232/147

Byrd, J. D., Landry, A. (2012). Distinguishing Community Benefits: Tax Exemptions Versus
Organizational Legitimacy.Retrieved from https://works.bepress.com/cbmamaril/3/download/

Houben, H Maiterth, (2011). Endangering of Usinesses by the German Inheritance Tax?-

An Empirical Analysis. Retrieved from https://link.springer.com/article/10.1007/BF03342725

Segarra, M. (2012). Retrieved from

https://channels.theinnovationenterprise.com/authors/mariellesegarra

https://www.lawphil.net/statutes/repacts/ra2002/ra_9178_2002.html

http://www.bsp.gov.ph/downloads/laws/RA9178.pdf

https://www.verywellmind.com/what-is-a-hypothesis-2795239

Reichel, M., & Ramey, M. A. (Eds.). (1987). Conceptual frameworks for bibliographic
education: Theory to Practice. Littleton Colorado: Libraries Unlimited Inc. Retrieved from
http://www.iier.org.au/iier14/smyth.html

Page 49
 APPENDIX A

Survey Questionnaires

Name of Business: _____________________________________

Name of Owner: _____________________________________
Location: _____________________________________

Directions: Please put a check on the space provided. Kindly complete the following questions
and answer with honesty.

A. Business Profile
1. Legal Forms
⃞ Sole Proprietorship
⃞ Partnership
⃞ Corporation
⃞ Cooperative
⃞ Association
⃞ Others, please specify: ____________________________

2. Business Activity
⃞ Retail Store
⃞ Drug Store
⃞ Repair Shop
⃞ Carinderia
⃞ Others, please specify: ____________________________

3. Size of Capital
⃞ Php 300,000.00 and below
⃞ Php 300,001.00 – Php 1,000,000.00
⃞ Php 1,000,001.00 – Php 1,500,000.00
⃞ Php 1,500,001.00 – Php 2,000,000.00
⃞ Php 2,000,001.00 – Php 2,500,000.00
⃞ Php 2,500,001.00 – Php 3,000,000.00

4. Are you a registered BMBE recipient?

⃞ Yes, proceed to Questions No. 5 & 6
⃞ No, proceed to Question No. 7

5. IF YES, how did you learn/hear about BMBE information?

⃞ Internet

Page 50
 ⃞ Television
⃞ Radio
⃞ Newspaper
⃞ Magazine
⃞ Word of mouth
⃞ Others, please specify: ______________________

6. How many years are you a BMBE recipient?

⃞ 1 year and below
⃞ 2 – 4 years
⃞ 5 – 7 years
⃞ 8 – 10 years
⃞ 11 – 13 years
⃞ 14 years or more

7. IF NO, are you aware of the BMBE Law?

⃞ Yes, proceed to Degree of Awareness Table
⃞ No, proceed to Question No. 8

8. Are you interested to know more of BMBE Law?

( 5 – Very interested 1 – Not Interested)

⃞ ⃞ ⃞ ⃞ ⃞
5 4 3 2 1

9. Will you register as a BMBE recipient?

( 5 – Very interested 1 – Not Interested)

⃞ ⃞ ⃞ ⃞ ⃞
5 4 3 2 1

Page 51
 B. Degree of Awareness to the existence of BMBE Law

1 2 3 4 5
Very Very
Unaware Neither Aware
Unaware Aware
1. RA 9178 is a law for Barangay Micro Business
Enterprises.
2. A BMBE is defined as any business enterprise
engaged in production, processing, or manufacturing of
products, including agro-processing, as well as trading
and services, with total assets of not more than P3
million. Such assets shall include those arising from
loans but not the land on which the plant and
equipment are located.
3. Any person, cooperative, or association owning an
enterprise that fits the description of a BMBE may
register for the first time or renew its registration with
the Office of the Treasurer of the city or municipality
where the business is located.
4. Registered BMBEs can have Income tax exemption
from income arising from the operations of the
enterprise.
5. Incentive of exemption from the coverage of the
Minimum Wage Law (BMBE employees will still
receive the same social security and health care benefits
as other employees)
6. A priority to a special credit window set up
specifically for the financing requirements of BMBEs
7. There is technology transfer, production and
management training, and marketing assistance
programs for BMBE beneficiaries.
8. Registration and issuance of the Certificate of
Authority of the LGU is free of charge and shall be done
promptly. However, to defray the administrative costs
of registering and monitoring the BMBEs, the LGUs are
allowed to charge a fee not exceeding P1, 000.00.

9. 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.

10. Any person who shall willfully violate any provision

Page 52
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 (Php 25,000.00) but not
more than Fifty Thousand Pesos (Php 50,000.00) and
suffer imprisonment of not less than six (6) months but
not more than two (2) years.
APPENDIX B: RESEARCHERS’ PROFILES

BIOGRAPHICAL DATA

PERSONAL DATA

NAME Ruth Ann A. Fernandez

Permanent Address B3 L13 Lynville Subdivision

Brgy. Sta. Monica, San Pablo City Laguna, 4000

Telephone Number +63 999 889 1659

E-mail Address raalbete@gmail.com

Education

Tertiary Level BS Accountancy

Laguna College
Paseo de Escudero cor Zulueta Sts,
San Pablo City, Laguna
Secondary Level San Pablo City National High School
Lakeside Park Subd., San Pablo City
Laguna
1997 – 2001
Elementary Level Bagong Lipunan Elementary School
Brgy. Sta. Monica, San Pablo City
Laguna
1991-1997

Organization Laguna College Accounting Society

Work Experience - Internship Collection Division

Bureau of Internal Revenue
1st Semester A.Y. 2018 – 2019

Page 53
Achievement College Scholar: 2nd Semester A.Y. 2016 – 2017 up
to
1st Semester A.Y. 2018 – 2019

BIOGRAPHICAL DATA

PERSONAL DATA

NAME Prince Ricky Lenard L. Guese

Permanent Address 0090 Crispin Calabia Ave., Brgy. San Francisco, San
Pablo City, Laguna

Telephone Number (049)300-9173/0936 672 3953

E-mail Address gueseprince128@gmail.com

Education

Tertiary Level BS Accountancy

Laguna College

San Pablo City, Laguna

Secondary Level 3rd Honorable Mention, San Pablo Colleges San

Pablo City, Laguna

Elementary Level 10th Honorable Mention, Don Enrique Bautista

Elementary School San Pablo City, Laguna

Organization Laguna College Accounting Society

Work Experience On The Job Training, Office of the City Accountant,

May-June 2018

Achievement College Scholar: 2nd Semester, AY 2015-2016

College Scholar: 2nd Semester, AY 2016-2017

2nd Place Accounting Quiz Bowl: AY 2016- 2017

2nd Place Accounting Quiz Bowl: 1st Semester, AY

Page 54
 2017- 2018

3rd Place – Accounting Triwizard Tournament

(Apprentices’ Battle) Manuel S. Enverga
University Foundation, Lucena City

BIOGRAPHICAL DATA

PERSONAL DATA

NAME Joshua B. Malijan

Permanent Address 73 M Marfori Avenue Calauan, Laguna

Telephone Number (049)566-0556/ 0995 649 4838

E-mail Address malijanjoshua@gmail.com

Education

Tertiary Level BS Accountancy

Laguna College

San Pablo City, Laguna

Secondary Level High Honor, The Refiner’s Christian School

Calauan, Laguna

Elementary Level Liceo de Calauan

Calauan, Laguna

Organization Laguna College Accounting Society

Work Experience On The Job Training, Office of the City Accountant

Page 55
Achievement Academic Cup, AFAR- Champion

Student Care Fight- 3rd Place

Year End Accounting Quiz Bowl- 3rd Place

BIOGRAPHICAL DATA

PERSONAL DATA

NAME Gianuel G. Obias

Permanent Address Teomora Phase III Corner Burgos St. Brgy. San
Gabriel, San Pablo City, Laguna

Telephone Number 503 04 33

E-mail Address gianuelobias2@gmail.com

Education

Tertiary Level BS Accountancy

Laguna College

San Pablo City, Laguna

Secondary Level Laguna College

San Pablo City, Laguna

Elementary Level Ambray Elementary School

San Pablo City, Laguna

Organization Laguna College Accounting Society

Work Experience On The Job Training, Office of the City Accountant,

May-June 2018

Achievement 2nd runner-up - BSA-3 level of the accounting

Page 56
 quiz bowl

Laguna College Accounting Society

September 23, 2017

2nd place in the Apprentices’ Battle Manuel S.

Enverga University Foundation, Lucena City

March 17, 2017

BIOGRAPHICAL DATA

PERSONAL DATA

NAME Romneil Ray B. Perez

Permanent Address Purok VI Brgy. San Rafael San Pablo City

Telephone Number 09755086155

E-mail Address romneilperez@gmail.com

Education

Tertiary Level BS Accountancy

Laguna College

San Pablo City, Laguna

Secondary Level Col. Lauro D. Dizon Memorial Nat’l High

School

San Pablo City, Laguna

Elementary Level Bagong Pook Elementary School

Page 57
 San Pablo City, Laguna

Organization Laguna College Accounting Society

Work Experience On The Job Training, San Pablo Water District

Page 58