Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19th CONGRESS 
First Regular Session 
HOUSE BILL NO.  ____ 
___________________________________________________________________________ 
Introduced by REP. BERNADETTE “DETTE” G. ESCUDERO 
___________________________________________________________________________ 
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 One of these impediments is the outdated definition of business activities and 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 
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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.  
Respectfully submitted. 
 
 
 
 
 
 
 
 
 
BERNADETTE “DETTE” ESCUDERO 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19th CONGRESS 
First Regular Session 
HOUSE BILL NO.  ____ 
___________________________________________________________________________ 
Introduced by REP. BERNADETTE “DETTE” 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: 
Section 1. Section 3 of the Republic Act No. 6977, as amended, otherwise known 
as the Magna Carta for Micro, Small and Medium Enterprises, is hereby further 
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 the [P3,000,000,] FOUR MILLION FIVE 
HUNDRED THOUSAND PESOS (P4,500,000.00); 
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“small: [P3,000,001 - P15,000,000] FROM FOUR MILLION FIVE 
HUNDRED THOUSAND AND ONE PESOS (P4,500,001.00) TO TWENTY   
TWO    MILLION   FIVE   HUNDRED   THOUSAND    PESOS 
(P22,500,000.00); AND 
 
                      
“medium: [P15,000,001 P100,000,000] FROM TWENTY TWO 
           
  MILLION   FIVE   HUNDRED   THOUSAND   AND ONE   PESOS  
             
(P22,500,001.00) TO ONE HUNDRED FIFTY MILLION PESOS   
        
 
(P150,000,000.00). 
 
 
 
 “The   TOTAL     ASSET   THRESHOLD   FOR    EACH  MSME 
CATEGORY      [above definitions] shall be [subject to review and adjustments]   
AUTOMATICALLY    ADJUSTED   EVERY   FIVE   (5)   YEARS 
AFTER    THE    EFFECTIVITY    OF    THIS     ACT   by the Micro, Small 
and Medium Enterprises Development (MSMED) Council [ under Section 6 of 
this Act or upon recommendation of sectoral organizations concerned, taking into 
account inflation and other economic indicators. The Council may use other 
variables such as number of employees, equity capital and assets size]TO ITS    
PRESENT  
VALUE   USING      THE  CONSUMER PRICE INDEX,  AS 
PUBLISHED BY THE PHILIPPINE STATISTICS AUTHORITY. 
 
 
 
“x x x.” 
 
Sec. 2. Implementing Rules and Regulations. –  Within thirty (30) days from the 
effectivity of this Act, the Department of Trade and Industry shall, in coordination with the 
MSMED Council, promulgate the rules and regulations to effectively implement the 
provision of this Act. 
 


Sec. 3. Separability Clause. –  If any portion or provision of this Act is declared 
unconstitutional, the remainder of this Act or any provision not affected thereby shall 
remain in force and effect. 
 
Sec.5. Effectivity. –  This Act shall take effect immediately following the 
completion of its publication in the Official Gazette in two (2) newspapers of general 
circulation. 
 
 
Approved,