EXPLANATORY NOTE
Section  1, Article XV /The Fami.fy) of the Constitution provides:
"The  State  recognizes  the  Filipino  family  as  the  foundation  of  the
nation.   Accordingly,  it shall  strengthen  its solidarity and actively promote its
total development."
This bill seeks the establishment of a Magna Carta for Ka/aka/an Pampami./ya which
shall grant family-owned businesses certain incentives and benefits.
The extreme poverty of majority of the Filipinos is an issue of national concern which
the government should  immediately address.   If government wants to minimize poverty and
hasten economic development,  priority programs must be geared towards the development
of the family.
The main purpose of the Magna Carta for Ka/aka/an Pampamf./ya is to encourage the
family members to venture  into  business enterprise  in order to provide work and  source of
livelihood  for the family  members.    It will  likewise  augment the  income  of family  members
which can help provide for the basic human necessities.   The proposed measure also seeks
to respond to the national effort of alleviating  poverty in the country and thereby accelerate
economic development.
In view of the foregoing, approval of this bill is earnestly recommended.


NINETEENTH CONGRESS                  )
REPUBLIC OF THE PHILIPPINES    )
First Regular session                            )
HOUSE OF REPRESENTATIVES
!n|_r_o±±!ucedbyRepresentativeRufus8.Rodriguez
HouseBj[]No.5LEL3
AN ACT
ESTABLisHiNG    "E    MAGNA   CARTA    FOR    raLARALAw   pAMPAMtLy:4
PROVIDING    INCENTIVES    AND    BENEFITS    THEREFOR   AND    FOR   OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives Of the Philippines
in Congress assembled:
SECTION 1.    Short Tfwe. -This Act shall be known as the "Magna Carla for
Kalakalan Pampamilya."
SEC. 2.             Dec/arafjon ofpo/fey. -lt is hereby declared to be the poliey
of  the  State  to  give  priority  to  the  family  in  the  socio-economic  development  and
enhance the quality of life of every Filipino.
SEC. 3.             Ka/aka/an pampam/lya. -Any family business enterprise with
employees  of  not  more  than  twenty  (20)  and  with  assets  of  not  more  than  Five
Hundred Thousand  Pesos (Php 500,000.00),  at the time of registration,  shall qualfty
for the incentives and benefits provided for under this Act.
SEC. 4.             Kalakalan pampamilya office. -The Kalakalan pampamilya
Office,  refemed  to  as  the  Office,  is  hereby  created  under the  Department of Trade
and Industry to exercise the following functions:
a)           Effectively    facilitate    the    financial    assistance    to    qualified    family
business enterprise;
b)          Assist  the  designated  banks  in  the  collection  of  payments  of  loan
granted to family business enterprises;
c)           Monitor  and  evaluate  on   a   regular  basis  the  status  of  the  family
business enterprises which availed of the benefits and incentives under this Act;
d)          Help family business enterprises achieve viability and success;
e)          Pursue appropriate measures to avail of foreign loans or grants; and
f)           Provide   such   guidelines   as   may   be   necessary  to   carry   out  the
mandate of this Act.
SEC. 5.             hJanagemenf  Board.  -  The  Office  shall  be  governed  by  a
Management Board which shall be composed of the following:
a)          Representative  of  the  Secretary  of  the  Department  of  Trade  and
Industry, as Chairman;
b)          Representative from the Department of science and Technology;
c)          Representative from the Department of Finance;
d)          Representative from the city Mayors' League of the philippines;
e)          Representative from the  Municipal  Mayors'  League of the philippines;
and
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f)           Three (3) private sector representatives from the trade and commerce
groups, from the labor groups and from the socio-civic groups, as members.
The   private   sector   representatives   of  the   Management   Board   shall   be
appointed  by the  President of the  Philippines within thirty (30) days from approval of
this Act.
The  secretariat  and  the  technical  staff  of the  Management  Board  shall  be
provided  by the  Department of Trade and  Industry and  supplemented  by personnel,
as may be necessary, from other departments and agencies of the government.
SEC. 6.             Reg/-sfraf/.on.  -To  acquire  a  separate  and  distinct  juridical
personality   from   the   owners   or   members   thereof,   the   Ka/aka/an   Pampami./ya
business enterprise shall register as provided under this Act.   Upon such registration,
the family business enterprise can own,  dispose of and encumber its properties and
enter into  contracts on  its own  account,  with  the  capacity to  sue  and  be sued,  and
transact business anywhere in the Philippines.
The registration fee of Five Hundred Pesos (Php 500.00) shall be paid to the
municipality  or  city  where  its  principal  place  of  office  and  business  operations  is
located.
SEC.7.             Benefits    and    Incentives.   -   AII    Kalakalan    Pampamilya
business  enterprise  shall   be  exempted  from  all  taxes,   national  or  local,   building
permit fees and  other business taxes,  except real  property and  capital  gains taxes,
import duties  and  other taxes on  imported  articles.    In  addition,  any and  all  income,
receipts   and   proceeds   derived   from   the   business   operations   of  the   Ka/aka/an
Pampam/./ya  business  enterprise  shall  be  excluded  from  the  computation  of gross
income of the individual income tax of the business owner or members thereof.
It  shall  be  exempted  from  any  and  all  government  rules  and  regulations  in
respect to assets,  income,  and  other activities  indispensably and  directly  utilized  in,
proceeding from, or connected with the business enterprise.
The family business enterprise, however, shall pay the fee to the municipal or
city treasurer where they are registered,  starting on their second year of operations,
based on the following schedule:
a)          Those  with  net  assets  before  financing  amounting  to  not  more  than
One Hundred Thousand Pesos (Php 100,000.00) shall pay the fee of One Thousand
Pesos (Php 1,000.00) per annum;
b)          Those with net assets before financing of not less than one Hundred
Thousand  Pesos (Php  100,000.00) and  not more than Two Hundred  Fifty Thousand
Pesos  (Php  250,000.00)  shall  pay  the  fee  of Two  Thousand  Five  Hundred  Pesos
(Php 2,500.00) per annum;
c)          Those with  net assets before financing of not less than Two Hundred
Fifty Thousand Pesos (Php 250,000.00) and not more than Four Hundred Thousand
Pesos (Php 400,000.00) shall  pay the fee of Four Thousand  Pesos  (Php 4,000.00)
per annum; and
d)          Those with  net assets before financing of not less than  Four Hundred
Thousand   Pesos  (Php  400,000.00)  and  not  more  than  Five  Hundred  Thousand
Pesos  (Php  500,000.00) shall  pay the fee  of Five Thousand  Pesos (Php  5,000.00)
per annum.
In   the   event  the  family   business   enterprise   uses   a   brand   name   on   its
products,   such   brand   name   shall  first   be   registered   with   the   Bureau   of  Trade
Regulation and Consumer Protection, through the Department of Trade and  Industry
(DTI) provincial office.
SEC. 8.             Loca/   Deve/opmenf   Counci-/.   -The   local   development
councils  of the  various  local  government  units,  shall  receive  all  applications for the
establishment or additional  funding  of family business enterprises,  within  its  area  of
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jurisdiction;  evaluate  and  approve  or  disapprove  all  applications  within  thirty  (30)
days  from  receipt  thereof;  endorse  the  applications  to  the  Office  for  funding;  and
assist designated  banks to collect payments of loan  granted  to the family business
enterprises.
SEC. 9.             Reg/.sfrafi.on  Fee.  -Eighty  percent  (80%)  of the  registration
fee   shall   accrue   exclusively   to   the   municipality   or   city   where   the   Ka/aka/an
Pampam/./ya  is  located,  and  shall  be  used  for developmental  projects  approved  by
the  municipal  or city council.   Twenty  percent (200/o) will  be  remitted  to the  National
Treasury of the Philippines.
SEC.10.          Forfeiture of Exemptions and Benefits. -(a) ln catse of ainy
violation   of  the   provisions   of  this   Act   by  the   Ka/aka/an   Pampam/./ya   business
enterprise or by any of its officers and authorized representatives, all the exemptions
and  benefits herein  provided  shall,  after due notice and  hearing,  be forfeited  and  all
existing loans be paid in full.
(b) The  exemptions  and  other  benefits  provided  in  this  Act shall  apply for a
period not exceeding five (5) years from the date of the registration.
SEC.11.           Kalakalan  pampamilya  Fund. -The  Kalakalan  pampamilya
Fund  hereinafter referred to as the  Fund,  is hereby created  as a source of financial
assistance to all qualified family business enterprises.
The  Fund shall  be appropriated from the national budget,  and supplemented
by  funds  from   bilateral   and   multilateral   sources  which   shall   be   negotiated   and
arranged by the National Government to ensure adequacy of the Fund.
The Fund shall be deposited with and managed by the Development Bank of
the  Philippines  (DBP).    Disbursements from  the said  Fund  shall  be  made  solely for
investments as equity, grants or loans, in favor of family business enterprises.
SEC. 12.          Cancellation  of  the  License.  -  The  l.ioense  Of   Kalakalan
Pampam/./ya business enterprise shall, after due notice and hearing,  be revoked and
cancelled  upon the failure of the family business enterprise, without valid  reasons, to
commence  its  operations  within  forty  five  (45)  days  from  receipt  of the  license  to
Operate.
SEC.13.          Implementing  Rules  and  Regulations.  -The  Secretary  Of
Trade and  Industry shall,  in  consultation with  the  Secretaries of Finance,  Labor and
the  Interior and  Local  Government,  formulate and  prepare the  necessary rules and
regulations to  implement the  provisions  of this Act within  one  hundred  twenty (120)
days after effectivity thereof.
The  rules  and  regulations  issued  pursuant  to  this  section  shall  take  effect
fifteen  (15)  days  after  publication  in  a  newspaper  of  general  circulation  or  by  any
other  means  of  notification  as  the  Secretary  of  Trade  and   Industry  may  deem
reasonably sufficient to inform interested parties of such issuance.
SEC.14.          Annua/ Report. -The Management Board shall submit to the
President  and  the  Congress  of  the  Philippines  an  annual  report  of  its  operations
accounting   for  the   availment   and   use   of  the   financial   assistance   including   its
collection under this Fund.
SEC.15.           Pena/fi.es.   -Any   person   who   shall   divert   the   financial
assistance  allocated  under  this  Act  shall,  in  addition  to  penalties  imposed  under
existing  laws,  be punished with  imprisonment ranging from three (3) years to five (5)
years and a fine of Fifty Thousand Pesos (Php 50,000.00).
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Any  public officer or employee  who  shall,  on  his  own  or in  connivance with
others,  commit the act mentioned  under the preceding  paragraph shall  be punished
with   the   maximum    penalty   imposed    under   the   law   in   addition   to   perpetual
disqualification from  public office.
Finally,  if the  offender  is  an  alien,  he  shall  be  deported  immediately without
further proceedings, after service of sentence.
SEC.16.          Appropri.affons.    -There    is    hereby    authorized    to
appropriated  from  the  unappropriated  funds  of  the  Office  of  the   President,
amount   of   One   Billion   Pesos   (Php   1,000,000,000.00)   as   initial   capital   of
Kalakalan Pampamilya Fund.
The Management Board shall submit to the Office of the President the budget
needed for its operations for inclusion in the annual General Appropriations Act.
SEC.17.          Repea//'ng  C/ause.  -  All  laws,   decrees,  orders,   rules  and
regulations,  or parts thereof,  inconsistent with  the  provisions  of this Act are  hereby
repealed or modified accordingly.
SEC.18.           Effecfr-vri-fy c/ause. -This Act shall take effect thirty (30) days
after its publication in two (2) national newspapers of general circulations.
Approved,