AN ACT ESTABLISHING THE MAGNA CARTA FOR COUNTRYSIDE AND BARANGAY BUSINESS ENTERPRISES

Case Overview and Summary

MAGNA CARTA FOR COUNTRYSIDE AND BARANGAY BUSINESS ENTERPRISES (KALAKALAN 20)

• Policy and Purpose (Section 1): To achieve growth of countryside business enterprises through absence of bureaucratic restrictions and granting of incentives and benefits.

• Definition of Countryside and Barangay Business Enterprises (CBBE) (Section 2):
- Number of employees does not exceed 20 at any time. (Section 2a)
- Assets at the time of registration do not exceed P500,000 before financing. (Section 2b)
- Principal office and business operations are located in the countryside. (Section 2c)
- Excludes businesses engaged in professional services, retailing, wholesaling, or trading. (Section 2a)

• Registration and Fees (Section 3):
- Pay P250 to the municipality or city for issuance of CBBE authority.
- Exempted from all taxes (except real property, capital gains, and import duties), license fees, building permit fees, and other business taxes.
- Income and proceeds are excluded from gross income for individual income tax computation.
- Exempted from government rules and regulations related to assets, income, and business activities.
- Pay CBBE fee to the municipal or city treasurer starting on the second year, based on net assets before financing:
- Not more than P100,000: P1,000 per annum (Section 3a)
- More than P100,000 to P250,000: P2,500 per annum (Section 3b)
- More than P250,000 to P400,000: P4,000 per annum (Section 3c)
- More than P400,000 to P500,000: P5,000 per annum (Section 3d)
- Brand names must be registered with the Bureau of Domestic Trade.

• Use of CBBE Fee (Section 4): The collected CBBE fee shall accrue to the municipality or city and be used for developmental projects approved by the council.

• Juridical Personality (Section 5): CBBEs shall acquire a separate juridical personality from the owners/members, with the capacity to own, dispose, and encumber properties, enter into contracts, sue and be sued, and transact business anywhere in the country.

• Employment and Resource Utilization (Section 6): CBBEs shall, as far as practicable, recruit employees and utilize indigenous and existing resources within their areas of operations.

• Forfeiture of Exemptions and Benefits (Section 7): Exemptions and benefits shall be forfeited after due notice and hearing in case of any violation by the CBBE or its officers and authorized representatives.

• Revocation of CBBE Authority (Section 8): The CBBE authority shall be revoked and cancelled after due notice and hearing if the CBBE fails, without valid reasons, to commence operations within 45 days from receipt of the authority.

• Duration of Exemptions and Benefits (Section 9): The exemptions and benefits shall apply for a period not exceeding 5 years from the date of CBBE registration, provided the CBBE is registered within 5 years from the effectivity of this Act.

• Implementation and Rules and Regulations (Section 10): The Secretary of Trade and Industry, in consultation with other Secretaries and local government units, shall formulate and prepare the necessary rules and regulations within 120 days. The rules and regulations shall take effect 15 days after publication.

• Penalties (Section 11): Any person who willfully violates the provisions of this Act shall be punished by a fine of not less than P1,000 nor more than P10,000. If the act is covered by another law with a heavier penalty, the latter shall apply. Public officials shall be prosecuted under existing applicable laws.

• Repealing Clause (Section 12): All laws, decrees, orders, rules, and regulations inconsistent with this Act are repealed or modified accordingly.

• Separability Clause (Section 13): If any provision of this Act is declared invalid, the remainder shall remain in force and effect.

• Effectivity (Section 14): This Act shall take effect upon its approval.