Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

RECEIVED

EL DATE July 28, 2022
* TIME 4:42pm *

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NINETEENTH CONGRESS
First Regular Session

House Bill No. __2699 _

Introduced by

HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
ENCOURAGING CORPORATE SOCIAL RESPONSIBILITY, PROVIDING
INCENTIVES THEREFOR

EXPLANATORY NOTE

The purpose of this bill is to encourage the private sector to utilize assets
towards the improvement of the current social and economic stature of the
Philippines.

Section 20, Article II of the 1987 Philippine Constitution provides that:
“The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments.”

The prominence of private businesses takes up a notable portion of
financial earnings in the country. This bill serves to motivate the private sector
to voluntarily contribute to the improvements of economic situations, disaster
preparations and response, societal welfare, and the livelihoods of
‘stakeholders without negatively impacting private businesses.


To encourage companies to engage in Corporate Social Responsibility,
stock corporations can retain surplus profits in excess of one hundred percent
(100%) of their paid-up capital stock when justified by a corporate expansion or
for corporate social responsibility projects approved by the Board of Directors.

In view of the foregoing, approval of this bill is earnestly sought.

Rep. YEDDA MARIE K. ROMUALDEZ
Representative, Fingog Sinirangan

Rep. JUDE/A. ACIDRE
Representative, Tingog Sinirangan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

House Bill No. __ 2699

—_—_—_——— eee

Introduced by

HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
ENCOURAGING CORPORATE SOCIAL RESPONSIBILITY, PROVIDING
INCENTIVES THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Section 1. Short Title. This act shall be known as the "Corporate Social
Responsibility Act."

Section 2. Declaration of Policy. The State recognizes the vital role of the
private section in nation-building and shall encourage its active participation in
fostering sustainable economic development and environment protection in the
Philippines. Towards this end, the government shall mobilize its various agencies, in

coordination with non-government and people's organizations.

Section 3. Corporate Social Responsibility. All business organizations
established and operating under Philippine laws, whether domestic or foreign, are
hereby encouraged to observe corporate social responsibility in the operation of their
businesses in the couniry.

As used in this Act, corporate social responsibility (CSR) refers to the
commitment of business to contribute on a voluntary basis to sustainable economic

development by working with relevant stakeholders to improve their lives in ways that


are good for business, sustainable development agenda, and society at large.
CSR-related activities shall include the following:
. Charitable programs and projects;
. Scientific research;
Youth and sports development;
|. Cultural or educational promotion;
. Services to veterans and senior citizens;
Social welfare;

Environmental sustainability;

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. Health development;

Disaster relief and assistance;

j. Socialized and low-cost housing; and,

k. Employee and worker welfare-related CSR activities.

All business organizations are allowed to donate products and services under
their CSR-related activities for disaster relief and assistance, in accordance with the
regulations to be issued by the appropriate government agency. All existing laws and
regulations restricting or prohibiting the right of focal government units under a state
of calamity and/or during a national emergency to solicit or accept any donation of
products and services under the CSR-related activities for disaster relief and
assistance of a business organization are hereby amended.

Section 4. Deduction from Unrestricted Retained Earnings. To encourage
companies to engage in CSR, Section 42 of Republic Act No. 11232, otherwise known
as the "Revised Corporation Code of the Philippines" is hereby amended to read as
follows:

"SEC. 42. Power to Declare Dividends. - xxx
"Stock corporations are prohibited from retaining surplus profits in

excess of one hundred percent (100%) of their paid-in capital stock, except: (a)

when justified by definite corporate expansion OR FOR CORPORATE SOCIAL

RESPONSIBILITY (CSR) projects or programs approved by the board of

directors; or (b) when the corporation is prohibited under any loan agreement

with financial institutions or creditors, whether local or foreign, from declaring


dividends without their consent, and such consent has not yet been secured;
‘or (c) when it can be clearly shown that such retention is necessary under
special circumstances obtaining in the corporation, such as when there is need

for special reserve for probable contingencies."

Section 5. Awards and Recognition. The Department of Trade and Industry
(DTI) shall recognize and reward all business organizations for outstanding, innovative
and world-class CSR-related services, projects, and programs. It shall likewise extend
endorsement and encouragements to domestic and foreign corporations doing
business in the Philippines which are candidates for recognition in international award-
giving bodies for their CSR-related activities.

Section 6. Local Government Units. All local government units where CSR-
related activities are conducted shall extend whatever assistance is necessary for
business organizations to accomplish their SR programs and projects.

Section 7. Periodic Report. All business organizations shall submit the list of
their CSR activities as part of their annual or regular report to the Securities and
Exchange Commission (SEC), DTI, or the Department of Finance, as the case may
be.

Section. 8. ‘implementing Rules and Regulations. Within sixty (60) days after
the effectivity of this Act, the Secretary of Finance shall, in coordination with DTI and
the SEC, promulgate rules and regulations for the effective implementation of this Act.

Section 9. Separability Clause. \f any provision of this Act is declared invalid
or unconstitutional, the remaining provisions not affected thereby shall continue in full
force and effect.

Section 10. Repealing Clause. Section 42 of Republic Act No. 11232 is hereby
amended. All laws, decrees, orders, rules and regulations, and other issuances, or
parts thereof, inconsistent with this Act are hereby repealed or modified accordingly.


Section 11. Effectivity Clause. This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in a newspaper of general circulation.

Approved,