NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
S. No.
Senate
of the t ret a fj>
*22 AUG-4 P5 50
ftfCEIVEO Q\:
Introduced by Senator Francis G. Escudero
AN ACT
EXPANDING THE NUMBER OF QUALIFIED BENEFICIARIES OF THE MAGNA 
CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES BY ADJUSTING THE 
ASSET THRESHOLD FOR EACH ENTERPRISE CATEGORY, FURTHER 
AMENDING FOR THE PURPOSE SECTION 3 OF REPUBLIC ACT NO. 6977, AS 
AMENDED, OTHERWISE KNOWN AS THE MAGNA CARTA FOR MICRO, SMALL 
AND MEDIUM ENTERPRISES
EXPLANATORY NOTE
The enactment of Republic Act No. 6977 or the Magna Carta for Small 
Enterprise in 1991 upheld the state policy to promote, support, strengthen and 
encourage the growth and development of small and medium enterprises in all 
productive sectors of the economy. Recognizing the pivotal role of Micro, Small and 
Medium Enterprises (MSMEs) in employment generation and economic development, 
the law and its subsequent amendments establish mechanisms to provide technical 
and other forms of assistance to the sector.
Despite the gains afforded by the laws to MSMEs, there are still a number of 
impediments that prevent the MSME sector from realizing its potential as a generator 
of jobs and a driver of economic growth. One of these impediments is the outdated 
definition of business activities and enterprises that may be classified as MSMEs. While 
Republic Act No. 9501 delegated to the Micro, Small and Medium Enterprises 
Development Council the power to review and adjust MSME definition, such definition 
has remained virtually unchanged since 2008. The lack of adjustment in what 
constitutes MSMEs has created an onerous situation wherein many enterprises are 
barred from enjoying the benefits of MSME programs and projects that could improve 
their productivity and competitiveness.


To remedy this situation, this bill proposes to redefine the asset threshold for 
each MSME category in order to expand the provision of privileges and benefits across 
more enterprises. Under the proposed measure, the old asset threshold as provided 
under Republic Act No. 9501 would be adjusted to its present-day value, which would 
consequently increase the number of enterprises that would be eligible for MSME- 
related interventions of government. Additionally, the bill provides a stronger mandate 
for the adjustment of asset thresholds to ensure that the MSME classification remains 
consistent with the realities of the times.
Drawing inspiration from Senate Bill No. 475 as filed by Sen. Ralph G. Recto in 
the Eighteenth Congress, it is hoped that this modest intervention can assist in 
reinvigorating the country's business environment, sustaining the momentum of the 
Philippine economy, and protecting the critical drivers of growth and development in 
the country.
In view of the foregoing, the approval of this measure is earnestly sought.
Respect fully submitted.
FRANCIS G. ESCUDERO


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NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
)
SENATE
s. No. 103 8
of tl)e
72 AUG -4 P5 50
RECEIVED 5V
Introduced by Senator Francis G. Escudero
AN ACT
EXPANDING THE NUMBER OF QUALIFIED BENEFICIARIES OF THE MAGNA 
CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES BY ADJUSTING THE 
ASSET THRESHOLD FOR EACH ENTERPRISE CATEGORY, FURTHER 
AMENDING FOR THE PURPOSE SECTION 3 OF REPUBLIC ACT NO. 6977, AS 
AMENDED, OTHERWISE KNOWN AS THE MAGNA CARTA FOR MICRO, SMALL 
AND MEDIUM ENTERPRISES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Section 3 of the Republic Act No. 6977, as amended, otherwise
2 
known as the Magna Carta for Micro, Small and Medium Enterprises, is hereby further
3 
amended to read as follows:
"Sec. 3. Micro, Small and Medium Enterprises (MSMEs) as 
Beneficiaries. - MSMEs shall be defined as any business activity or 
enterprise engaged in industry, agribusiness and/or services, whether 
single proprietorship, cooperative, partnership or corporation whose total 
assets, inclusive of those arising from loans but exclusive of the land on 
which the particular business entity's office, plant and equipment are 
situated, must have value falling under the following categories:
"micro: not more than [P3,000,000] FOUR MILLION FIVE 
HUNDRED THOUSAND PESOS (P4,500,000.00);
"small: [P3,QQ0,001-P15,Q00,0Q0] FROM FOUR MILLION FIVE 
HUNDRED THOUSAND AND ONE PESOS (P4,500,001.00) TO


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TWENTY TWO MILLION FIVE HUNDRED THOUSAND PESOS
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(P22,500,000.00); AND
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"medium: [P15,000,0Q1 P100,000,09Q3 FROM TWENTY TWO
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MILLION FIVE HUNDRED THOUSAND AND ONE PESOS
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(P22,500,001.00) TO ONE HUNDRED 
FIFTY MILLION PESOS
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(P150,000,000.00).
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"The TOTAL ASSET THRESHOLD FOR EACH MSME
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CATEGORY [above definitions] shall be [subject to review and
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adjustments] AUTOMATICALLY ADJUSTED EVERY FIVE (5) YEARS
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AFTER THE EFFECTIVITY OF THIS ACT by the Micro, Small and
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Medium Enterprises Development (MSMED) Council [-under Section 6-ef
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this Act or upon recommendation of sectoral organizations concerned,
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taking-into account inflation and other economic indicators. The Council
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may use other variables such as number of employees, equity capital and
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assets-size] TO ITS PRESENT VALUE USING THE CONSUMER
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PRICE INDEX, AS PUBLISHED BY THE PHILIPPINE STATISTICS
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AUTHORITY.
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"X X X."
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Sec. 3. Implementing Rules and Regulations. - Within thirty (30) days from the
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effectivity of this Act, the Department of Trade and Industry shall, in coordination with
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the MSMED Council, promulgate the rules and regulations to effectively implement the
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provision of this Act.
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Sec. 4. Separability Clause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of this Act or any provision not affected thereby shall
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remain in force and effect.
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Sec. 5. Effectivity. - This Act shall take effect immediately following the
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completion of its publication in the Official Gazette or in two (2) newspapers of general
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circulation.
Approved,