EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHIILIPPINES 
)
First Regular Session 
)
SENATE
S. No. 
475
/  . 
j. 
.
• \K
p .  lit 
' 
'*' i !1
’19 JUL 15 AiO 39
Introduced by Senator Ralph G. Recto
AN ACT
EXPANDING THE COVERAGE OF MICRO ENTERPRISES AS BENEFICIARIES OF 
THE MAGNA CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED
EXPLANATORY NOTE
The State upheld the policy "to promote, support, strengthen and encourage the 
growth and development of small and medium enterprises in all productive sectors of 
the economy" with the enactment of Republic Act No. 6977 or the Magna Carta for 
Small Enterprises in 1991. It created the Micro Small and Medium Enterprise 
Development (MSMED) Council and the Small Business Finance and Guarantee 
Corporation to aid in the fulfillment of the guiding principles enshrined in the law. The 
law also established rules in the provision of technical and other forms of assistance to 
MSMEs and required all lending institutions to set aside part of their loan portfolio and 
make it available for small enterprise credit. These interventions were made in 
recognition of the MSME's potential to generate employment and boost economic 
growth.
Nonetheless, problems and issues hindering the MSMEs from achieving their 
potentials still persist despite the enactment of the RA 6977 and its subsequent 
amendments. One of these impediments is the outdated definition of the business 
activities or enterprises that belong to the MSME category. While the Magna Carta for 
Small Enterprises and its subsequent amendments provided the MSMED Council the 
power to review and adjust the definition of business establishments considering 
inflation and other economic indicators, the definition of MSMEs remained unchanged 
since the enactment of RA 9501 in 2008. This creates an onerous situation where a 
good number of small enterprises are barred from enjoying the benefits, programs and 
plans to improve their productivity and competitiveness.


In order to correct this situation, this bill proposes to redefine the asset value 
thresholds of the Micro and Small Enterprise categories in order to make more 
privileges and benefits available to more enterprises. This bill proposes to amend the 
definition of micro enterprises as those with total assets of not more than P7.5 million 
instead of P3 million. Consequently, small enterprises will now be defined as those with 
total assets ranging from more than P7.5 million to P15 million. This bill thus reinforces 
the direction laid out in the MSME Development Plan 2017-2022 in addressing the key 
challenges and constraints that prevent the MSME sector from realizing its full potential 
in boosting the country's industrial growth. Redefining the total asset value of MSME 
categories would reinvigorate the business environment, protect critical economic 
drivers, and sustain the Philippine economic momentum in the near future.
In view of the foregoing, approval of this bill is earnestly sought.
/mdg


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
)
SENATE 
S. No.
REC'.
• . 
o; i 1 i 
l i. a .
*19 
JUL 15 
ffl0:4 0 
- ----------- 1
-
Introduced by Senator Ralph G. Recto
AN ACT
EXPANDING THE COVERAGE OF MICRO ENTERPRISES AS BENEFICIARIES OF 
THE MAGNA CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. Section 3 of the Magna Carta for Micro, Small and Medium Enterprises
2 
or Republic Act No. 6977, as amended by Republic Act No. 8289 and further amended
3 
by Republic Act No. 9501, is hereby further amended to read as follows:
4 
"Sec. 3. Micro, Small and Medium Enterprises (MSMEs) as
5 
Beneficiaries. — MSMEs shall be defined as any business activity or
6 
enterprise engaged in industry, agribusiness and/or services, whether
7 
single proprietorship, cooperative, partnership or corporation whose total
8 
assets, inclusive of those arising from loans but exclusive of the land on
9 
which the particular business entity's office, plant and equipment are
10 
situated, must have value falling under the following categories:
11 
micro: not more than [ P3,Q00,000] P7,500,000
12 
small: [P3,000,001-P-l-5,-OQ07QQQ] MORE THAN P7,500,000 TO
13 
P15,000,000
14 
medium: 
[ P15,000,001-P100,000,000] 
MORE 
THAN
15 
P15,000,000 TO P100,000,000.
16 
"X X X.
17 
"X X X."
18 
Sec. 2. Implementing Rules and Regulations. -  The Department of Trade and
19 
Industry shall, 
in coordination with the Micro, Small and 
Medium Enterprise
20 
Development Council, promulgate the necessary implementing rules and regulations
21 
within thirty (30) days upon the approval of this Act.


1 
Sec. 3. Repealing Cause. -  All laws, decrees, orders, rules and regulations or
2 
parts thereof inconsistent with any of the provisions of this Act are hereby repealed,
3 
amended or modified accordingly.
4 
Sec. 4. Effectivity Cause. -  This Act shall take effect fifteen (15) days after its
5 
complete publication in the Official Gazette or in at least two (2) newspapers of general
6 
circulation.
Approved,