, 
SIXTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
SENATE 
Senate Bill No. 1026 
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JUL Z2 P 4 :23 
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-------------------------------------------------------V 
,-
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
EXPLANATORY NOTE 
The SOCial Enterprise ("SE") Bill provides the framework for the planning and 
implementation of a National Poverty Reduction Through Social Entrepreneurship (the 
"PRESENT'') Program. The SE Bill, or the PRESENT Bill provides a nurturing environment for 
the growth and burgeoning of strong and innovative Social Enterprises as tools to reduce 
poverty. 
A "Social Enterprise" as defined in the proposed Bill, refers to an enterprise with the 
poor as primary stakeholders. This is an enterprise that explicitly declares and pursues 
poverty reduction, alleviation, or improving the quality of life of speCific segments of the 
poor as a principal objective. A Social Enterprise engages and invests in the poor for them 
to become effective workers, suppliers, clients and/or owners, and ensures that a 
substantive part of the wealth created by the enterprise is distributed to, or benefits them. 
In addition to reinvesting its surplus or profits back to the enterprise to sustain the 
fulfillment of its social mission, a Social Enterprise also uses its surplus or profits and 
mobilizes other resources to assist the poor in becoming partners in the value chain 
management/governance as well as to become partners in community, sectoral and societal 
transformation. 
This is in line with Article XII, Section 1 of the Philippine Constitution which states: 
Section 1. The goals of the national economy are a more eqUitable distribution of opportunities, 
income, and wealth; a sustained increase in the amount of goods and services produced by the 
nation for the benefit of the people; and an expanding productivity as the key to raising the 
quality of life for all, especially the under-privileged. 
xxx 
The challenge for Social Enterprises is how to become an effective poverty reduction 
tool. In the face of this challenge, government must playa supportive role to ensure that 
the appropriate systems, structures, and resources needed to support SOCial enterprises are 
put in place. Government must help these new breed of entrepreneurs to acquire 
resources, build successful organizations, and achieve significant positive impact. 
A nation's economy is not stagnant - new social investment models, ways of doing 
business, and impact measurement tools continually arise. These changes at times distort 
and blur the once clear boundaries among the traditional nonprofit, for-profit, and public 
sectors. It is time that a "Social Enterprise" deserves to be officially recognized and defined 
in order for the government to be able to give it adequate support. 


Therefore, the legislature is urged to pass measures wherein the government must 
make a leap forward and take advantage of this potential for the nation's social change. 
Such leap forward is through the PRESENT Bill. 


i> l? HI>! !' 
SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
d)!htr ~)f tilt :l?j'!Trbr~ 
'13 
JUL 22 P 4 :23 
SENATE 
Senate Bill No. 1026 
Introduced by: Senator Paolo Benigno "Bam" A. Aquino IV 
AN ACT 
ORDAINING THE PROMOTION OF SOCIAL ENTERPRISES TO ALLEVIATE POVERTY, 
ESTABLISHING FOR THE PURPOSE THE POVERTY REDUCTION THROUGH SOCIAL 
ENTREPRENEURSHIP (PRESENT) PROGRAM AND PROVIDING INCENTIVES AND BENEFITS 
THEREFOR 
CHAPTER I 
GENERAL PROVISIONS 
1 
SECTION 1. 
Short Title. - This Act shall be known as the "Poverty Reduction Through Social 
2 
Entrepreneurship (PRESENT) Act." 
3 
4 
SECTION 2. Declaration of Policy. -The State shall promote a just and dynamic social order that 
5 
will ensure the prosperity and independence of the nation and free the people from poverty 
6 
through policies that provide adequate social services, promote full employment, a rising 
7 
standard of living, and an improved quality of life for all. The State shall provide social justice in 
8 
all phases of national development and that the State values the dignity of every human person 
9 
and guarantees full respect for human rights. 
10 
The goals of the national economy are a more equitable distribution of opportunities, income, 
11 
and wealth; a sustained increase in the amount of goods and services produced by the nation 
12 
for the benefit of the people; and an expanding productivity as the key to raising the quality of 
13 
life for all, especially the underprivileged. 
The State shall promote industrialization and full 
14 
employment based on sound agricultural development and agrarian reform, through industries 
15 
that make full and efficient use of human and natural resources, and which are competitive in 
16 
both domestic and foreign markets. However, the State shall protect Filipino enterprises 
17 
against unfair foreign competition and trade practices. 
18 
1 


1 
2 
The State also recognizes the important role of enterprises in the economy as the major 
3 
agent of development, creating off-farm employment opportunities and providing transitional 
4 
means for improving the livelihood of the people. 
5 
6 
Towards this end, the State shall pursue a poverty reduction program that promotes an 
7 
environment conducive to the development and growth of a vibrant social enterprise sector 
8 
engaged in poverty reduction, economic and social development. It shall empower the poor as 
9 
primary stakeholders in social enterprises, establish mechanisms essential to realizing their 
10 
potential and achieving their full growth, and extend the assistance necessary for their 
11 
advancement. The State shall likewise ensure that the provision for technical and financial 
12 
assistance, incentives and other services are free from any condition that might infringe upon 
13 
the autonomy or organizational integrity of the social enterprises to enable them to develop 
14 
into viable and vital anti-poverty agents, and a strong social entrepreneurship movement which 
15 
will be instrumental in reducing poverty in the country. 
16 
17 
SECTION. 3. 
Definition of Terms. - As used in this Act: 
18 
19 
a) 
Social Enterprise or SE refers to a wealth-creating organization, whether an association, 
20 
single proprietorship, partnership, corporation, or a cooperative or any other legal form, 
21 
whose primary stakeholders are marginalized sectors of society, engaged in providing goods 
22 
and services that are directly related to its mission of improving societal well-being. It is 
23 
established to achieve triple bottom lines such as financial, social and ecological. It generates 
24 
profit or surplus with due regard to social and environmental costs, and makes a pro-active 
25 
contribution to resolving social and environmental problems. 
26 
27 
A social enterprise for purposes of this act shall mean a Social Enterprise with the Poor 
28 
as Primary Stakeholders (SEPPS). A SEPPS is a social enterprise that explicitly declares 
29 
and pursues poverty reduction/alleviation or improving the quality of life of specific 
30 
segments of the poor as principal objective. A SEPPS engages and invests in the poor to 
31 
become effective workers, suppliers, clients and/or owners, and/or ensures that a 
32 
substantive part of the wealth created by the enterprise is distributed to, or benefits 
33 
them. In addition to reinvesting its surplus or profits back to the enterprise to sustain 
34 
the fulfilment of its social miSSion, a SEPPS also uses its surplus or profits and mobilizes 
35 
other resources to assist the poor to become partners in SE or value chain 
36 
management/governance and to become partners in community, sectoral and societal 
2 


1 
transformation. 
2 
3 
b) 
Absolute poverty refers to the condition of the household below the food threshold 
4 
level; 
5 
6 
c) 
Assets refer to all kinds of properties, real or personal, owned by the social enterprise 
7 
(SE) as defined in paragraph (dd) of this Section and used for the conduct of its 
8 
business: Provided, That for the purpose of exemption from taxes and to benefit from other 
9 
incentives under this Act, this term shall mean all kinds of properties, real or personal, 
10 
owned and/or used by the SE for the conduct of its business; 
11 
12 
d) 
Basic sectors shall refer to the disadvantaged sectors of Philippine SOciety, namely: 
13 
farmer-peasant, artisanal fisherfolk, workers in the formal sector and migrant workers, 
14 
workers in the informal sector, indigenous peoples and cultural communities, women, 
15 
persons with disability, senior citizens, victims of calamities and disasters, youth and 
16 
students, children, and urban poor as defined under Republic Act (R.A.) No. 8425, otherwise 
17 
known as the "Social Reform and Poverty Alleviation Act"; 
18 
19 
e) 
Bottom line shall refer to the objectives or purposes for which a SE is established. Triple 
20 
bottom line shall refer to social, ecological and financial objectives; 
21 
22 
f) 
Capability building refers to the process of enhancing the viability and sustainability of 
23 
SEs and pertain to education, training, coaching and other learning events like study tours; 
24 
technical, consultancy and advisory services; 
assistance in organizational systems 
25 
development; technology incubation, development and dissemination; value chain and 
26 
subsector development; conduct of SE trade fairs and missions; networking and policy 
27 
advocacy initiatives and other such activities that enable SEs to be effective and efficient 
28 
vehicles for poverty reduction. The term capability building precludes the grant of any loan 
29 
or equity funds to the SE and shall in no way refer to the provision of equity investments, 
30 
seed funding, partnership'S seed funds, equity participation, start-up funds or any such 
31 
activity that connotes the infusion of capital or funds from the government or from the SE 
32 
Development Fund created under Section 16 of this Act; . 
3 


1 
2 
g) 
Civil society organizations refer to private voluntary organizations of citizens that are 
3 
established to pursue a mission, usually involving the interest of the public, marginalized 
4 
groups or specific sectors of society. They include non-government organizations, socio-civic 
5 
groups, foundations and people's organizations; 
6 
7 
h) 
Council shall refer to the SE Council; 
8 
9 
i) 
Cooperative shall refer to an autonomous and duly registered association of persons, 
10 
with a common bond of interest, who have voluntarily joined together to achieve their social, 
11 
economic, and cultural needs and aspirations by making equitable contributions to the 
12 
capital required, patronizing their products and services and accepting a fair share of the 
13 
risks and benefits of the undertaking in accordance with universally accepted cooperative 
14 
principles as defined in R.A. 6938, as amended by R.A. 9520, otherwise known as the 
15 
"Philippine Cooperative Code of 2008"; 
16 
17 
j) 
Corporate Social Responsibility or CSR shall refer to the commitment of a private 
18 
enterprise or business to contribute on a voluntary basis to a sustainable social and 
19 
economic development by working with relevant stakeholders to improve their lives in ways 
20 
that are good for bUSiness, the social reform agenda, the sustainable development agenda, 
21 
and society at large. CSR-related activities shall include, but not be limited to, the following: 
22 
1) 
Charitable programs and projects; 2) Scientific research; 3) Youth and sports 
23 
development; 4) Cultural or educational promotion; 5) 
Services to veterans and senior 
24 
citizens; 6) Social welfare; 7) Environmental sustainability; 8) Health development; 9) Disaster 
25 
relief and assistance; and Employee and worker welfare related CSR activities; 
26 
27 
k) 
Economic subsectors are networks of related actors and enterprises performing various 
28 
functions in value chains. These actors and enterprises transform raw materials into finished 
29 
prodUcts, or develop services, and distribute or provide them through market channels to 
30 
final consumers; they may be identified by key raw material source, by finished product or 
31 
final service provided. An economic subsector may be comprised of several competing value 
32 
chains. By understanding the dynamics of economic subsectors and using them as units of 
33 
planning social entrepreneurship interventions, government agencies, support institutions 
4 


1 
and SEs shall more effectively reach and benefit a greater number of poor in poverty 
2 
reduction programs; 
3 
4 
1) 
Empowerment strategy shall mean a development strategy that enables the 
5 
marginalized sectors to own, manage, and control SEs in order for them to reap maximum 
6 
benefits from it and which acts as a channel for directly distributing income; 
7 
8 
m) Fair trade shall refer to a trading partnership based on dialogue, transparency and 
9 
respect and which seeks greater equity in international trade and the transformation and 
10 
adaptation of trading structures and practices in favor of the poor and disadvantaged by 
11 
offering better trading conditions to, and securing the rights of, marginalized producers and 
12 
workers; 
13 
14 
n) 
Fair trade organizations shall mean enterprises certified by internationally and 
15 
nationally recognized Fair Trade networks; 
16 
17 
0) 
Fair trade principles refer to the values adopted by fair trade organizations in their day-
18 
to-day operation. These include creating opportunities for economically- disadvantaged 
19 
producers; transparency and accountability; payment of a fair price; ensuring no child labor 
20 
and forced labor; commitment to non-discrimination, gender equity and freedom of 
21 
association; ensuring good working conditions; providing capacity building; and, respect for 
22 
the environment; 
23 
24 
p) Foundation shall mean the categorization of a non-profit organization that typically 
25 
either donates funds and support to other organizations or provides the source of funding for 
26 
its own charitable purposes. Unlike a company, foundations have no shareholders though 
27 
they may have a board, an assembly and voting members. A foundation may hold assets in 
28 
its own name for the purposes set out in its constitutive documents, and its administration 
29 
and operation are carried out in accordance with its statutes or articles of association rather 
30 
than fiduciary principles; 
31 
32 
q) 
GPPB refers to the Government Procurement Policy Board established in accordance 
33 
with Article X of R.A.No.9184, otherwise known as the "Government Procurement Reform 
34 
Act;" 
5 


1 
2 
r) 
Intermediation strategy shall refer to a development strategy that provides financial, 
3 
agricultural, business development and institutional development services to the 
4 
entrepreneurial poor and employers of the poor and provides as well product development 
5 
and marketing support using the principles of fair trade to marginalized producers. A SE 
6 
engaged in intermediation strategy need not be owned by the marginalized stakeholders but 
7 
provide immediate access to services among a critical mass of these marginalized 
8 
stakeholders; 
9 
10 
s) 
Marginalized Sectors shall refer to groups of people who are stigmatized or marginalized 
11 
by virtue of their physical, psychological, economic, social or cultural circumstance; 
12 
13 
t) 
Micro-enterprise as defined in R.A. No. 6977, as amended by R.A. No. 9501, otherwise 
14 
known as the "Magna Carta for Small Enterprises," shall refer to any business activity or 
15 
enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, 
16 
cooperative, partnership or corporation whose total assets,. inclusive of those arising from 
17 
loans but exclusive of the land on which the particular business entity's office, plant and 
18 
equipment are situated, must have a value of not more than Three Million Pesos 
19 
(fl,3,000,000.00). This amount is subject to review and adjustments by the Micro, Small and 
20 
Medium Enterprises Development (MSMED) Council, taking into account inflation and other 
21 
economic indicators and may use other variables such as number of employees, equity 
22 
capital and assets size; 
23 
24 
u) Microfinance shall refer to the provision of a broad range of financial services such as 
25 
deposits, loans, payment services, money transfers and insurance products to the poor and 
26 
low-income households and their microenterprises and small businesses, to enable them to 
27 
raise their income levels and improve their living standards; 
28 
29 
v) Minimum basic needs shall refer to the needs of a Filipino family pertaining to survival 
30 
(food and nutrition; health; water and sanitation), security (shelter; peace and order; public 
31 
safety, income and livelihood); and enabling services (basic education and literacy, 
32 
participation in community development, family and psycho-social care); 
33 
6 


1 
w) Non-Government Organization ar NGO refers to a duly registered non-stock, non-profit 
2 
organization focusing on the upliftment of the basic or disadvantaged sectors of society by 
3 
praviding advocacy, training, community organizing, research, access to resources, and other 
4 
similar activities and, as defined under Section 34 (H)(2)(c) of Republic Act No. 8424, as 
5 
amended, otherwise known as the National Internal Revenue Code of 1997, organized and 
6 
operated exclusively for scientific, research, educational, character-building and youth and 
7 
sports development, health, social welfare, cultural or charitable purposes, or a combination 
8 
thereof, and no part of the net income of which inures to the benefit of any private 
9 
individual; 
10 
11 
x) 
Peaple's Organizatian ar PO refers to a self-help group belonging to the basic sectors 
12 
and/or disadvantaged groups composed of members having a common bond of interest who 
13 
voluntarily join together to achieve a lawful common social or economic end; 
14 
15 
y) 
Persons with Disability shall refer to individuals with restriction or different abilities, as a 
16 
result of a mental, physical or sensory impairment, to perform an activity in the manner or 
17 
within the range considered normal for a human being; 
18 
19 
z) 
Poor shall refer to individuals and families whose income fall below the poverty 
20 
threshold as defined by the National Economic and Development Authority and/or are 
21 
deprived of the means to provide in a sustained manner their minimum basic needs of food, 
22 
health, education, housing and other essential amenities of life, as defined under R.A. 8425; 
23 
24 
25 
26 
27 
aa) 
Poverty reduction/alleviation shall mean overcoming the income, resource, and 
capability deprivation among the poor as defined in the preceding paragraph and the 
marginalized sectors as defined in paragraph (q) hereof; . 
28 
bb) 
Private Enterprise shall refer to an organization engaged in a business activity 
29 
organized for the purpose of accumulating profit and whose primary stakeholders and 
30 
beneficiaries are its owners; 
31 
7 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
cc) 
Procuring Entity refers to any branch, department, office, agency, or 
instrumentality of the government, including state universities and 
colleges, 
government-owned and/or - controlled corporations, government financial institutions, 
and local government units procuring Goods, Consulting Services and Infrastructure 
Projects; 
dd) 
Resource mobilization strategy shall refer to a development strategy intended to 
generate income from the sale of products and services of a SE in order to finance or 
subsidize the operations of its core development program or development interventions 
among the marginalized sectors; 
ee) 
SEGFP refers to the SE Guarantee Fund Pool created under this Act; 
ff) 
Social development refers to the continuing process of addressing the needs of 
society, beginning with the people's minimum basic needs, through a systematic 
implementation of socioeconomic programs or packages; 
gg) 
Social Enterprise Service Institution refers to an organization that provides 
assistance to SEs for them to become viable and sustainable and which assistance 
pertains to supplying needs such as trainings, education and other capacity-building 
measures, research and development, and other similar activities; 
hh) 
Social Enterprise Advocacy Group refers to an organization whose primary 
purpose is supporting the cause of SEs especially with regard to public policy and 
articulating issues or causes related to social entrepreneurship; 
ii) 
Social entrepreneur refers to an innovative individual or institution that promotes 
the creation and operationalization of enterprises or livelihood endeavors for those in 
need or which address social problems and improve societal well-being; 
8 


1 
jj) 
Social entrepreneurship entails innovations designed to expliCitly improve 
2 
societal well-being, housed within entrepreneurial organizations, which initiate, guide or 
3 
contribute to change in society; 
4 
5 
6 
7 
8 
9 
10 
11 
kk) 
Social Inclusion strategy refers to the development strategy that assists groups of 
people who are stigmatized or marginalized by virtue of their physical, psychological, 
economic, social or cultural circumstance in order to restore their dignity by not only 
removing the barriers that limit their access to the delivery of basic social services and 
employment, but more importantly, by nurturing work and other environments that 
create avenues for their participation as productive members of society; 
12 
11) 
Social Investors are individuals or institutions that choose to put in money to a 
13 
business endeavor or activity not principally for financial profit but to fulfill a social 
14 
mission which may include poverty reduction, concern for environmental protection, 
15 
strong organizational governance, and a desire for a more economically just world; 
16 
17 
mm) 
Social reform refers to the continuing process of addreSSing the basic inequities 
18 
19 
20 
21 
in society through a systematic, unified and coordinated delivery of socioeconomic 
programs or packages; 
nn) 
Social value refers to the additional benefit to the community from the 
22 
government procurement process over and above the direct purchasing of goods, 
23 
services and outcomes, including social; economic and environmental benefits; 
24 
25 
26 
27 
28 
29 
30 
31 
32 
00) 
Transactional roles refer to enterprise-related functions performed by the poor 
that involve an exchange of goods or services for money including being workers, 
suppliers, clients or owners; 
pp) 
Transformational roles are functions performed by the poor as conscious agents 
of change to lift their own selves from poverty and to participate in group efforts to 
improve the quality of life of their community, sector or society as a whole; 
9 


1 
qq) 
Transactional services pertain to enterprise or market-driven activities, such as 
2 
providing loans, demonstrating new technologies or conducting trainings that are 
3 
necessary for the poor in the SE system to effectively and efficiently perform their roles 
4 
as workers, suppliers, clients and owners. Transactional services may be fee-based, such 
5 
as the granting of loans, or non-fee based, such as the extension of production-related 
6 
trainings; 
7 
8 
IT) 
Transformational services pertain to activities that empower the poor, such as 
9 
leadership formation and organizational development, asset build-up and providing 
10 
education and experiential learning opportunities, to become conscious change agents 
11 
for themselves, for their communities, sectors and society as a whole; 
12 
13 
ss) 
Underemployment shall mean an economic position where an employed person's 
14 
desire to have additional hours of work in his/her present job or to have an additional 
15 
job, or to have a new job with longer working hours is not met; 
16 
17 
tt) 
Unemployment shall mean an economic situation where persons who are 15 
18 
years old and over as of their last birthday and are 1) without work or have no job or 
19 
business, 2) available for work and willing to take up work in paid employment or self-
20 
employment, 3) seeking work and had taken specific steps to look for a job or establish a 
21 
business but failed to; and 
22 
23 
uu) 
Value chain refers to value-adding economic activities that an enterprise is 
24 
interlinked with in the process of prodUcing goods and/or services to serve its chosen 
25 
market. A value chain typically consists of: 1) inbound distribution or logistics, 2) 
26 
manufacturing operations, 3) outbound distribution or logistics, 4) marketing and selling, 
27 
and 5) after-sales service. These activities are supported by 6) purchasing or 
28 
procurement, 7) research and development, 8) human resource development, and 9) 
29 
organizational development. A 5E that understands and manages its value chain 
30 
improves its capability to create economic, enVironmental and social values towards 
31 
improving the position and benefits of the poor in the value chain and towards ensuring 
32 
the viability and sustainability of the enterprise. 
33 
10 


1 
2 
3 
CHAPTER II 
4 
POVERTY REDUCTION THROUGH SOCIAL ENTERPRISES 
5 
6 
SECTION 4. Social Enterprise (SE); General Concept and Coverage - A SE, for purposes of this 
7 
Act, refers to a Social Enterprise with the Poor as Primary Stakeholders as the term is defined in 
8 
Sec. 3a of this Act. 
It may be collectively owned by the poor in the form of cooperatives or 
9 
associations where the poor are the exclusive owners or comprise a majority of the members. 
10 
SEPPS may also include NGOs or other organizations that engage in wealth-creating activities, 
11 
the proceeds of which are used exclusively to finance the fulfillment of their social mission. 
12 
13 
SECTION 5. Eligibility for Benefits and Incentives. - To be recognized and be eligible for the 
14 
benefits and incentives provided for in this Act, the SE shall: 
15 
16 
a) provide or facilitate the provision of a combination of transactional and/or 
17 
transformational services to improve the position and benefits derived by the poor 
18 
from the SE and the value chain or economic subsector where the SE is located, 
19 
including becoming worker-owners, supplier-owners, supervisors and managers, 
20 
active members and leaders in governing bodies of the SE or its allied organizations; 
21 
22 
b) invest a substantive part of its surplus, profits or mobilize other resources to assist the 
23 
poor to become partners in SE or value chain management/governance and/or to 
24 
become partners in community, sectoral and societal transformation; 
25 
26 
c) make a pro-active contribution to resolving social and environmental problems and 
27 
generate profit or surplus with due regard to social and environmental costs; 
28 
29 
d) employ any of the following development strategies in the pursuit of its social mission: 
30 
1) empowerment strategy; 2) social inclusion strategy; 3) intermediation strategy; 
31 
and, resource mobilization strategy; 
32 
33 
e) be engaged in an economic activity within the sectors of agriculture and fisheries, 
34 
industry and services Which, for purposes of this Act, shall refer to an activity in any of 
35 
the economic subsectors; 
11 


1 
2 
f) ensure that a substantive part of the wealth created by the enterprise is distributed 
3 
to the poor in the form of services, dividends and other forms of benefits, and 
4 
payments and incentives for products or services rendered consistent with the 
5 
principles of fair trade; 
6 
7 
g) be duly registered with the appropriate agencies as provided under the Corporation 
8 
Code or the Cooperative 'Code of the Philippines, Magna Carta for Micro, Small and 
9 
Medium Enterprises, Barangay Micro Business Enterprises Act and other laws. 
10 
11 
Financial sustainability shall not be a prerequisite for the availment of incentives and benefits 
12 
under this Act. Provided that, social enterprises that have not achieved financial sustainability 
13 
may be eligible to avail of the services, assistance and incentives set forth in this Act by 
14 
presenting a workable strategy to achieve financial sustainability over a reasonable period of 
15 
time. 
16 
17 
18 
SECTION 6. Other Eligibility Provisions. In the case of social enterprises organized as stock 
19 
corporations, partnerships or sole proprietorships, the following additional requirements shall 
20 
apply: 
21 
22 
a. 
A social enterprise, if organized as a sole proprietorship or partnership must be 
23 
one hundred percent (100%) owned and capitalized by Filipino citizens. If the enterprise 
24 
is a stock corporation, at least sixty percent (60%) of its outstanding capital stocks must 
25 
be owned by Filipino citizens; 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
b. 
A social enterprise must not be organized as a branch, subsidiary or division of a 
private business enterprise, regardless of the size of such private business enterprise, 
nor may its policies be determined by a private business enterprise. Provided, that this 
shall not preclude a SE from accepting subcontracts from large private business 
enterprises or firms or from joining in cooperative or joint-venture activities with other 
SEs or foundations practicing CSR. 
c. 
A social enterprise organized as stock corporations, partnerships or sole 
proprietorships, must invest at least 60% of its gross revenues to sustain the fulfillment 
of its social mission or to provide transformational services for the poor. 
12 


1 
SECTION 7. 
Qualifications. - Within ninety (90) days from the effectivity of this Act, the Social 
2 
Enterprise Development Council shall formulate the implementing rules and regulations for the 
3 
application and accreditation of enterprises to qualify as SE under this Act, following the 
4 
principles of self-regulation, transparency and responsibility. 
5 
6 
SECTION 8. Formulation of a Poverty Reduction Through Social Entrepreneurship (PRESENT) 
7 
Program -
To promote the development of a SE sector with the poor as primary stakeholders, 
8 
a comprehensive and fully-integrated Poverty Reduction Through Social Entrepreneurship 
9 
(PRESENT) Program, shall be formulated, guided by the following principles: 
10 
11 
a) Incorporation of the PRESENT Program in the government's poverty reduction 
12 
drive as a major sustainable and comprehensive strategy; 
13 
14 
b) Rationalization of poverty reduction programs by streamlining and coordinating 
15 
the various anti-poverty programs of the government to reduce inefficiency and 
16 
duplication and to improve the effectiveness of each program; 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
c) People's 
participation 
and 
empowerment 
by 
mobilizing 
civil 
society 
organizations and social movement groups working with the poor; 
d) Promoting sustainable programs that reduce inequality in incomes across 
economic sectors and increase self-reliance among the poor; 
e) Enabling SEs to overcome constraints and to take advantage of opportunities for 
enhancing the position and benefits of the poor in economic subsectors and 
value chains; 
1) Gender-sensitivity by ensuring women's equal rights and access to SE's 
resources; and, 
31 
g) Development of sustainable mechanisms for the provision of quality and 
32 
accessible social services to the poor. 
33 
34 
The planning framework of the PRESENT Program and its planning process shall ensure 
35 
that the poor are engaged as primary stakeholders. It shall add value and complement 
13 


1 
ecosystem-based, area-based, community-based and other tools and processes in local 
2 
economic development by promoting and utilizing the economic subsector as a strategic unit of 
3 
analysis and planning SE development interventions. 
4 
5 
The PRESENT Program shall identify and develop key SEs and resource institutions as 
6 
partners in strategic economic subsectors that have the potential for growth and where large 
7 
numbers of the poor are concentrated. SEs shall be developed as vehicles to ensure that the 
8 
poor benefit the most from sustainable subsector development. 
9 
10 
PRESENT medium-term and annual development plans shall be formulated in synchrony 
11 
with the medium-term development plan of the national government. 
12 
13 
SECTION 9. 
Social Enterprise Development Council. - To carry out the policy declared under 
14 
this Act, a Social Enterprise Development Council (SEDC), hereinafter referred to as the CounCil, 
15 
is hereby created as an agency attached to the Department of Trade and Industry (DTI). It shall 
16 
be the primary agency tasked to carry out the promotion, growth and development of social 
17 
enterprises in the country. 
18 
19 
The Council shall be composed of the following: 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
a) 
b) 
c) 
d) 
e) 
f) 
g) 
h) 
i) 
j) 
k) 
1) 
m) 
n) 
0) 
Secretary of Trade and Industry, as co-chairperson; 
SE sector head representative, as co-chairperson; 
Secretary of Agriculture, as co-vice chairperson; 
Lead Convenor of the National Anti-Poverty Council (NAPe), as co-vice 
chairperson; 
Secretary of Social Welfare and Development; 
Director-General of the National Economic Development Authority (NEDA); 
Secretary of Finance; 
Secretary of the Interior and Local Government; 
Secretary of Labor and Employment; 
Secretary of Science and Technology; 
Secretary of Education; 
Secretary of Agrarian Reform; 
Secretary of Health; 
Secretary of Environment and Natural Resources; 
Chairperson of the Cooperative Development Authority (CDA); 
14 


1 
2 
3 
4 
5 
p) 
q) 
r) 
Nine (9) representatives from SEs, three (3) representatives each from the main 
island groupings of Luzon, Visayas, and Mindanao; 
Three (3) representatives from SE service institutions; and 
Three (3) representatives from SE advocacy groups, as members. 
6 
Cabinet-ranked ex officio members of the Council shall designate a permanent 
7 
representative in case they fail to attend its meetings. 
The designated permanent 
8 
representative of any of the Cabinet-ranked members of the Council must hold a position not 
9 
lower than a bureau director. 
10 
11 
The SE sector head, the representatives of the SEs from the main island groupings of 
12 
Luzon, Visayas, and Mindanao, the SE service institutions, and the SE advocacy groups shall be 
13 
chosen by the President from among the nominees submitted by their respective national 
14 
organizations to serve in the Council for a term of three (3) years. These representatives must 
15 
be conversant in the theory and practice of SE and committed to the policies and programs 
16 
provided under this Act. 
17 
18 
The Chairperson and members of the Council shall be entitled to a reasonable per diem 
19 
for each meeting actually attended at such amount as may be fixed by the Council in 
20 
accordance with existing laws, rules and regulations. 
21 
22 
The Council shall, from time to time, call upon the participation of any government 
23 
agency to attend in its meetings to assist in clarifying issues and finding resolution to problems 
24 
that concern their respective offices with respect to the implementation of the PRESENT 
25 
Program enunciated under this Act or any development program for SEs. 
26 
27 
The Council may create an Executive Committee of seven (7) members elected by its 
28 
members from among themselves or their designated permanent representatives, with at least 
29 
three (3) members representing the SEs, and with the authority to act for the Council, and 
30 
within the specific authority granted by the Council. 
31 
SECTION 10. Powers and Functions. -
The Council shall have the following powers and 
32 
functions: 
33 
a) 
Formulate poliCies, plans, programs and projects to develop and promote SEs as 
34 
a tool for poverty reduction consistent with national development objectives; 
15 


1 
b) 
Oversee the successful implementation of the PRESENT Program imd other Sf 
2 
programs; 
3 
c) 
Identify and access sources of financing for the SE sector in the form of grants for 
4 
enterprise incubation and start-up and loans for expansion; 
5 
d) 
Monitor and evaluate the performance of programs and projects for appropriate 
6 
incentives; 
7 
e) 
Call upon any government agency to carry out and implement programs and 
8 
projects identified by the Council; 
9 
f) 
Call upon people's organizations, non-government organizations, the academe 
10 
and other sectors to provide advice on matters pertaining to SEs and conduct of transactional 
11 
and transformational services to farmers, producers, workers, consumers and other 
12 
stakeholders; 
13 
g) 
Submit annual and other periodic reports to the President and the Congress of 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
the Philippines through the Congressional Oversight Committee; 
h) 
Promulgate such rules and regulations and exercise such other powers and 
functions as may be necessary to carry out the purposes of this Act; and 
i) 
Perform such other functions as may be necessary for its effective operations 
and the continued enhancement, growth and development of the SE sector. 
SECTION 11. Secretariat. - There is hereby created a Secretariat headed by an Executive 
Director to serve as the national technical and administrative secretariat of the Council with the 
member agencies providing additional support staff when the need arises. The Secretariat shall 
perform the following functions: 
a) 
Provide administrative support to the Council, with the assistance 
25 
of the National Economic and Development Authority secretariat in the formulation· 
26 
of the PRESENT development programs and plans; 
27 
b) 
Assist the Council in the implementation of the PRESENT 
28 
development program and the annual and medium-term development plan; 
29 
c) 
Assist the Council in the accreditation of SEs; 
30 
d) 
Assist the Council in monitoring the PRESENT development 
31 
programs and the activities of the various concerned government agencies with 
32 
respect to SEs; 
33 
e) 
Assist the Council in facilitating funding mechanisms and promoting 
16 


1 
support programs for SEs. 
2 
f) 
Prepare, collate and integrate all necessary inputs to the Council's 
3 
yearly report on the status of SEs in the country; 
4 
g) 
Submit periodic reports to the Council on the progress and 
5 
accomplishment of its work programs; and 
6 
h) 
Perform other functions that may be aSSigned and authorized by 
7 
the Council. 
8 
9 
SECTION. 12. Office. - The Council shall have its principal place of business in Metro Manila 
10 
and may establish such branches within the Philippines as may be deemed necessary by the 
11 
President of the Philippines to carry out the powers and functions of the Council. 
12 
13 
SECTION. 13. National Center for Social Enterprise Development. - There shall be established a 
14 
National Center for SOCial Enterprise Development (NCSED) under the Council which shall 
15 
perform the following functions: 
16 
a) 
Provide SEs with capability-training and education through the Social Enterprise 
17 
Capability Building and Sustainability Program created under Section 16 of this Act; 
18 
b) 
Develop and enhance a research and development system which shall equip 
19 
every SE with innovative and sustainable approaches that ensures improvement in the access to 
20 
basic social services by the poor pursuant to Section 18 of this Act; and 
21 
c) 
Manage a Social Enterprise Marketing Assistance Program (SMAP) that will 
22 
ensure the generation of the highest possible income for the SEs pursuant to Section 19 of this 
23 
Act. 
24 
The NCSED shall be headed by the Executive Director of the Council Secretariat. It shall 
25 
maintain a multi-sectoral, multi-disciplinary pool of experts including those from the academe, 
26 
practicing professionals, business and industry, youth, women and other concerned sectors, 
27 
who shall be screened according to the qualifications set by the Council. 
28 
The NCSED shall coordinate with the University of the Philippines Institute for Small 
29 
Scale Industries (UP 1551), the Technical Education and Skills Development Authority (TESDA), 
30 
the Technology and Livelihood Resource Center (TLRC), the· Department of Transportation and 
17 


1 
Communications (DOTC), civil society organizations and other relevant agencies, state 
2 
universities and colleges in implementing its programs. 
3 
4 
SECTION. 14. Personnel. - Subject to the civil service laws, rules and regulations, the Council is 
5 
authorized to select, appoint, employ and fix the compensation of the officers and employees 
6 
of the Secretariat and the NCSED as shall be necessary to carry out its functions. 
7 
8 
SECTION. 15. Role 0/ LGUs in Sf Development - Pursuant to the relevant provisions of R.A. No. 
9 
7160, otherwise known as the Local Government Code, the LGUs shall be primarily responsible 
10 
for the development of SEs and the implementation and enforcement of the relevant provisions 
11 
of this Act within their respective jurisdictions with the end in view of reducing poverty therein. 
12 
The LGUs are hereby mandated to include in their respective local development plans certain 
13 
policies and programs geared toward the development of SEs in their jurisdiction. 
14 
LGUs with viable SE development plan as incorporated in their respective local 
15 
development plans are entitled to avail of the SE Development Fund created under the 
16 
immediately succeeding section for the purpose of initiating and facilitating the development 
17 
and sustainability of SEs in their own jurisdiction: Provided, That no LGU shall establish and 
18 
operate its own SE. 
19 
20 
21 
22 
CHAPTER III 
DEVELOPMENT OF SOCIAL ENTERPRISES 
23 
SECTION 16. Social Entrepreneurship Education in Schools - Toward strategically developing 
24 
the nation's human resource capability in social entrepreneurship, the DepEd and the CHED 
25 
shall Cause the integration of SE content and inclusion of SE courses in the curricula at all levels, 
26 
especially in the secondary and tertiary levels. This shall be part of the SE Capability Building 
27 
and Sustainability Program stated in Sec.17 o/this Act. 
28 
29 
A continuing social entrepreneurship education program for out-of-school youth and 
30 
adults shall likewise be developed and undertaken. 
31 
The social entrepreneurship education program for primary and secondary education 
32 
shall include information regarding: 
18 


social issues and civic ways of addressing them; 
the producer as a steward of natural resources; 
1 
2 
3 
4 
5 
6 
7 
a) 
b) 
c) 
the consumer as a responsible member of society and his responsibility to 
develop critical awareness which is the responsibility to be alert and questioning 
about the environmental and social impacts of the goods and services he/she 
uses: 
8 
c.l ) social concern which is the responsibility to be aware of the impact of his 
9 
consumption to society, especially the disadvantaged; and 
10 
11 
c.2 ) environmental awareness which is the responsibility to understand the 
12 
environmental consequences of his use of natural resources, consumption, 
13 
recognizing his individual and social responsibility to conserve natural resources 
14 
forfuture generations. 
15 
16 
All higher learning institutions and vocational schools are mandated to include a subject 
17 
on social entrepreneurship in their social studies program or in their business, commerce, or 
18 
economics courses. 
19 
20 
SECTION 17. Sf Capability Building and SustainabiJity Program; Creation of Sf Development 
21 
Fund -
There is hereby established a SE Capability Building and Sustainability Program whose 
22 
primary objective is to guarantee the viability and sustainability of SE through activities that 
23 
advance, in general, both transformational services and transactional services. The NCSED will 
24 
work with qualified SE intermediaries who will develop the Program and be responsible for 
25 
designing and delivering training in social entrepreneurship development, institutional 
26 
strengthening, human resource competency and skills training, business planning and advisory 
27 
services, upgrading of accounting and auditing systems, technical assistance for the installation 
28 
or improvement of management information systems, technology intervention, technology 
29 
incubation/commercialization, market studies, and product development competitiveness, 
30 
business matching activities, trade fairs and missions, policy advocacy, disaster-resiliency and 
31 
other related activities. 
32 
The SE Capability Building and Sustainability Program shall likewise include the 
33 
establishment of an insurance system for SEs affected by natural calamities in line with the 
34 
National Framework Strategy on Climate Change 2010-2022 as provided for under RA 9729 or 
35 
the Climate Change Act of 2009 and RA 10121 or the Philippine Disaster Risk Reduction and 
19 


1 
Management Act of 2010. 
2 
For this purpose, there is hereby created and established a SE Development Fund (SED F) 
3 
in the amount of Three Billion Pesos (j;!3,000,000,000.00) to be administered by the Council with 
4 
an endowment from the earnings of the Philippine Amusement and Gaming Corporation 
5 
(PAGCOR), in addition to appropriations by Congress, voluntary contributions, grants, gifts from 
6 
both local and foreign sources as may be accepted by the Council. 
7 
Only the fruits of the SEDF shall be used for the purposes provided herein. Any 
8 
undisbursed fruits for the preceding year shall form part of the disbursable portion of the SEDF 
9 
in the following year. 
10 
11 
SECTION 18. Social Enterprise Research and Development System -The Council, in coordination 
12 
with the NEDA, DOST, DTI, and other appropriate agencies, research institutions, and 
13 
intermediaries, shall develop and enhance a research and development system that: 
14 
a) provides studies on opportunities for poverty reduction and SE development in key 
15 
economic subsectors and other inputs for the Council to undertake strategic planning 
16 
for its PRESENT Program; 
17 
b) equip SEs and support institutions with· services and technologies that are appropriate· 
18 
for enhancing the participation and benefits of the poor in various economic subsectors; 
19 
and, 
20 
c) equip SEs and support institutions with innovative and sustainable approaches to 
21 
improve access of the poor to quality basic social services. 
22 
23 
SECTION 19. Social Enterprise Marketing Infrastructure Development - The Council shall 
24 
promote the development and expansion of local and foreign markets for the products and 
25 
services of SEs, guided by the principles of fair trade. Consistent with this, the Council shall: 
26 
a) establish a SE Marketing Assistance Program (SMAP) that will assist SEs match 
27 
supply with demand in both domestic and foreign markets, as well as promote 
28 
SE products and services through tri-media, trade fairs and trade missions; 
29 
b) develop, install and sustain a SE market information system with the assistance 
30 
of the DTI and DOTC which shall be called the SE Marketing Information Network 
31 
(SMIN). 
32 
33 
The SMIN shall be set up from the level of the municipal and provincial LGUs, the 
34 
regional and up to the Council level within one (1) year from the approval of this Act, taking into 
20 


1 
account existing information networks such as the internet and using a dedicated website for 
2 
the purpose, to ensure linkage of the SEs with the government and its various departments, 
3 
agencies, bureaus and instrumentalities, the local and domestic markets, as well as research 
4 
institutions. The Council shall provide technic'll assistance in setting up the SMIN at the .Iocal. 
5 
and regional levels. 
6 
7 
All government departments, agencies, bureaus, research institutions, as well as the 
8 
LGUs shall consolidate and continuously update all relevant information and data that would be 
9 
of use to SEs on a periodic basis and make such data available in a dedicated website on the 
10 
internet. 
11 
12 
The SMIN shall provide information and marketing services related to products of SEs 
13 
which shall include the following: 
14 
15 
1. Supply data; 
16 
2. Demand data; 
17 
3. Price and Price trends; 
18 
4. Product standards; 
19 
5. Directory of, but not limited to SEs, traders, key market centers, processors and 
20 
business institutions both at the national and local levels; 
21 
6. Information and technology generated from research institutions; 
22 
7. International, regional and local market forecasts; and 
23 
8. Resource accounting data. 
24 
25 
CHAPTER IV 
26 
INCENTIVES AND BENEFITS 
27 
28 
SECTION 20. 
Special Credit Windows. -In addition to the spedal credit windows provided for 
29 
the promotion of microfinance as provided under Section 16 of RA 8425, the Land Bank of the 
30 
Philippines, Development Bank of the Philippines, Philippine Postal Bank, and AI Amanah Bank, 
31 
are hereby mandated to set aside at least eight percent (8%) of their total loan portfolio based 
32 
on their balance sheet in the end of the preceding quarter, and open a speCial credit window for 
33 
SEs. 
34 
For a period of ten (10) years from the date of the effectivity of this Act, all other lending 
35 
institutions as defined under the Central Bank Act or the General Banking Act, as amended, 
21 


1 
whether public or private, shall likewise set aside at least eight percent (8%) of their total loan 
2 
portfolio based on their balance sheet as of the end of the previous quarter and make the same 
3 
available for SEs through a special credit window. The BSP, in consultation with the Council, shall 
4 
formulate the rules for the effective implementation of this provision: Provided, That the 
5 
purchase of government notes, securities and other negotiable instruments shall not be 
6 
deemed compliance with the foregoing prOVision. 
7 
The BSP shall establish an incentive program to encourage lending to SEs beyond the 
8 
mandatory credit allocation such as possible reduction in bank's reserve requirement. 
9 
The Council shall establish a system to monitor all loan applications of SEs in order to 
10 
account for the absorptive capacity of the SE sector. The BSP shall require lending institutions 
11 
covered by this Act to furnish the Council on a quarterly basis a regular report on their 
12 
respective compliance with the above provisions on the mandatory credit allocations for SEs 
13 
and shall act immediately on the Council's reports of non-compliance therewith. 
14 
The special credit windows for SEs shall bear interest lower than the market rate and 
15 
shall have longer terms of payment and waiver of applicable fees. 
16 
17 
SECTION 21. Special Credit Window Purposes. - The special credit window provided under 
18 
Section 19 of this Act shall be intended for the following purposes: 
19 
a) 
Organizational developmental loan or capacity-building loan for the conduct of 
20 
social preparation activities or the conduct of capability-building and training or professional 
21 
development of the board, management and staff of the SE for social entrepreneurship, such 
22 
as business planning and advisory services, technology intervention, incubation, market studies, 
23 
and product development; 
24 
b) 
Credit line for business development loan or working capital loan to cover the 
25 
operational and management expenses of an existing business or income generating project, 
26 
including receivable financing or purchase of additional inventory, soft or intangible 
27 
investments such as trade fair participation or acquisition of software or franchise development 
28 
packages; 
29 
c) 
Fixed assets financing to cover acquisition of fixed assets like machineries and 
30 
equipment, motor vehicle, or acquisition of lot for project site or construction of a plant and 
31 
building and the improvement thereof; 
32 
d) 
Value chain financing to cover any of the value chain activities such as 
33 
production, processing and marketing; 
34 
e) 
Domestic letter of credit or trust receipt to provide a stand-by credit facility for 
35 
the SE borrower for the purchase of product inputs, equipment, machinery, implements, and 
22 


1 
spare parts, whereby payment of 'which is guaranteed and to' be made to the seller by the 
2 
lending institution, provided all documents conform with the terms and conditions of the 
3 
credit; and 
4 
f) 
Revolving Credit Line for re-Iending to finance the livelihood project 
5 
requirements of end-borrowers. 
6 
7 
SECTION 22. 
Eligibility for Agriculture and Fisheries Credit. - At least ten percent (10%) of the 
8 
funds created under Section 6 of RA 10000, otherwise known as "The Agri-Agra Reform Credit 
9 
Act of 2009," mandated to be set aside by all banking institutions, whether government or 
10 
private, for agriculture and fisheries credit, shall be made available for SEs engaged in 
11 
agriculture and fisheries activities, 
12 
13 
SECTION 23. Social Enterprise Guarantee Fund Pool with Non-Collateral Loans. - There is 
14 
hereby created a Social Enterprise Guarantee Fund Pool (SEGFP) which shall be comprised of 
15 
the five percent (5%) of the preceding year budget surplus of the government-owned and 
16 
controlled corporations and government financial institutions including the PAGCOR, the 
17 
Philippine Charity Sweepstakes Office (PCSO), the Social Security System (555), the Government 
18 
Service Insurance System (GSIS), the National Power Corporation and the Philippine National Oil 
19 
Company (PNOC), as contribution to the SGFP in accordance with relevant laws, charters and 
20 
by-laws, in addition to voluntary contributions, grants and gifts from both local and foreign 
21 
sources as may be accepted by the Council. 
22 
The SEGFP shall be administered by the Council and shall be used to mitigate the risks 
23 
involved in SE sector lending, faCilitating the proviSion of credit therefor. The fund shall be 
24 
placed in trust with the Land Bank of the Philippines for the purpose of providing guarantee 
25 
cover to participating financial institutions and other parties in extending financing to SEs: 
26 
Provided, That the fund may also be used to cover the performance bond of SEs in government 
27 
procurement. 
28 
The Council, in coordination with the Land Bank of the Philippines, shall draw up the 
29 
mechanics and administrative arrangements and issue the implementing guidelines for the fund 
30 
pool. 
31 
32 
SECTION 24. Utilization of People's Development Trust Fund, - The earnings of the People's 
33 
Development Trust Fund (PDTF) declared under Section 11 of RA 8425 may be utilized and 
34 
accessed by the NSCED or accredited SE for the following purposes: 
35 
a) 
Consultancy and training services for SEs and their beneficiaries on 
23 


1 
the establishment of the necessary support services such as financial preparation, 
2 
fund sourcing, operation of credit and savings entities, monitoring and evaluation 
3 
including training on marketing, financial, human resource, operational and strategic 
4 
management; 
5 
b) 
Scholarships or training grants for SE staff and officers, and selected 
6 
beneficiaries; 
7 
c) 
Community organizing for SEs; 
8 
d) 
Enterprise start-up and incubation grants for new SEs; 
9 
e) 
SE development and capability building programs, feasibility studies 
10 
and researches; 
11 
e) 
Legal and other management support services for SEs such as 
12 
registration or accreditation, documentation, contract review and enforcement, 
13 
audit and operational assessment; 
14 
f) 
Information dissemination of SE technology and management; and 
15 
g) 
Other activities to support SEs as approved by the designated 
16 
agency administering the PDTF. 
17 
18 
SECTION 25. 
Tax Exemptions. - An accredited SE shall have the following tax exemptions: 
19 
a) 
The SE with a net income of not more than Fifteen million pesos 
20 
(P15,OOO,OOO.00) shall be exempt from all national, city, provincial, municipal or barangay taxes 
21 
of whatever name and nature: Provided, That such net income shall be allocated for 
22 
transformational services and other activities of the SE as provided under Section 5.g of this 
23 
Act; 
24 
25 
b) 
c) 
Documentary stamp tax; 
Capital gain tax on sales or exchanges of real property classified as capital assets 
26 
or shares of stock; and 
27 
d) 
For five (5) years after the effectivity of this Act, all SEs duly accredited by the 
28 
Council, in consultation with the Department of Finance (DOF) and the Board of Investment 
29 
(BOI) of the DTI, shall be exempted from the payment of tariff and duties for the importation of 
30 
all types of product inputs, equipment, machinery, implements, and spare parts: Provided, That 
24 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
these inputs, equipment, machinery, implements, and spare parts shall be for the exclusive use 
of the importing SEs and can be shown to be directly related to further improve the value chain 
operations ofthe SEs. 
The Council shall, in consultation with the DOF and the BOI, within ninety (90) days from 
the effectivity of this Act, formulate the implementing rules and regulations governing the 
importation of the inputs, equipment, machinery, and implements for use by the SEs. 
For income tax purposes, a reinvestment made by a SE for the expansion of its 
socioeconomic projects within the area of its operation shall be tax deductible from the gross 
income. 
SECTION 26. Procuring for Social Value. - Social value shall be included in the eligibility 
specifications for the procurement of goods and services by government in all its branches, 
departments, agencies, subdivisions, and instrumentalities, including government-owned and 
controlled corporations and local government units. 
Registered small enterprises under RA 6977 that qualify as SE under this Act shall, 
consistent with Section 4 of RA 9501, be entitled to a share of at least ten percent (10%) of total 
procurement value of goods and services supplied to the government, its bureaus, offices and 
agencies annually. 
SECTION 27. Incentives for Social Investors . . - Social investors and other institutions that 
contribute money or other forms of donation in the promotion and development of SEs shall be 
entitled to the following tax incentives: 
a) 
Equity investments and donations to an accredited SE shall be fully deductible 
from the gross income of the investor or donor subject to the conditions of Section 34 
paragraph (e) of RA 8424 otherWise known as the "National Internal Revenue Code of 1997," as 
amended. 
b) 
Donations to an accredited SE shall be exempt from donor's tax subject to the 
qualifications of Section 101 of RA 8424, as amended. 
For the purpose of availing of the tax incentives under this Section, the accreditation of 
the recipient SE by the Council shall be a sufficient evidence for 
qualification as a social 
investor under this Act. 
CHAPTER V 
25 


1 
2 
APPROPRIATION AND OTHER PROVISIONS 
3 
SECTION 28. Appropriations. - To carry out the provisions of this Act, the following amounts 
4 
are appropriated as follows: 
5 
a) 
The sum of One hundred million pesos (P100,000,000.00) is hereby appropriated 
6 
as the initial operating fund which sum shall be sourced from the President's Contingent 
7 
Fund and voluntary contributions, grants and gifts from both local and foreign sources as 
8 
may be accepted by the Council. In the subsequent years, the Council shall have a 
9 
separate annual appropriation under the DTI which shall be included in the annual 
10 
General Appropriations Act starting in the fiscal year immediately following the approval 
11 
ofthis Act; 
12 
b) 
The aggregate sum of Three billion pesos (P3,000,000,000.00) for ten (10) years 
13 
is hereby appropriated for the establishment of the SEDF from the share of the national 
14 
government in the earnings of the PAGCOR and from voluntary contributions, grants and gifts 
15 
from both local and foreign sources as may be accepted by the Council, in the following manner: 
16 
on the first year, One hundred million pesos (P100,000,000.00); on the second year, One 
17 
hundred fifty million pesos (P1SO,000,000.00); on the third year, Two hundred million pesos 
18 
(P200,000,000.00); on the fourth year, Two hundred fifty million pesos (P2S0,000,000.00); on 
19 
the fifth year, Three hundred million pesos (P300,OOO,OOO.00); and every year thereafter until 
20 
the tenth year, Five hundred million pesos (PSOO,OOO,OOO.OO) annually. 
21 
22 
SECTION 29. Penalty Clause. - The penalty of imprisonment for not less than six (6) months 
23 
but not more than two (2) years or a fine of not less than Twenty-five thousand pesos 
24 
(P2S,000.OO) but not more than Fifty thousand pesos (PSO,OOO.OO), or both imprisonment and 
25 
fine, at the discretion of the court, shall be imposed upon any person, corporation, government 
26 
entity or agency who, intentionally or by gross negligence, fails to provide the benefits, rights 
27 
and incentives granted to SEs in violation of this Act, or perform any act in violation of its 
28 
provisions. 
29 
If the violation is committed by the SE or a government agency, the members, officers, 
30 
directors or trustees thereof who are directly involved shall be held liable therefor. 
31 
If the violation is committed by the employees and agents who acted in gross Violation 
32 
,of the provisions of this Act, the officers, directors or trustees, or incorporators of the SE shall 
33 
be jointly and severally liable with the offending employees, agents, and the enterprise. 
34 
If the offender is a public official or employee, the offender shall, upon conviction, suffer 
35 
the accessory penalty of absolute disqualification. 
26 


1 
2 
SECTION 30. 
Non-Complionce with the Mondotory Allocation of Credit Resources. -
3 
Administrative sanctions including a fine of not less than Five hundred thousand pesos 
4 
(P500,000.00) shall be imposed by the Banko Sentral ng Pilipinas upon any banking or lending 
5 
institution who falls to provide the credit allocations granted to SE in violation of Section 19 of 
6 
this Act. 
7 
8 
SECTION 31. Non-Impairment Clause. - Nothing in this Act shall be construed to diminish, 
9 
impair, or repeal the rights granted to marginalized sectors under existing laws. 
10 
11 
SECTION 32. Information Dissemination. - The Philippine Information Agency (PIA) shall, in 
12 
coordination with the Council, the DTI, DA, and the DILG, ensure the proper and adequate 
13 
information dissemination of the contents and benefits of this Act to the general public 
14 
especially to its intended beneficiaries. 
15 
Within sixty days (60) after its effectivity, the Council shall distribute copies of this Act to 
16 
every department, agency, subdivision, and instrumentality of the government, including 
17 
government-owned and controlled corporations, regional and provincial offices, and local 
18 
governments. 
19 
All duly accredited SEs shall be given one (1) copy of this Act at cost. Thereafter, every 
20 
newly accredited SE shall be issued a copy of this Act together with the rules and regulations 
21 
promulgated pursuant to this Act. 
22 
23 
SECTION 33. 
PRESENT Program in Government. -
All agencies of the government 
24 
implementing a poverty alleviation program shall, in coordination with the Council and within a 
25 
period of five (5) years but in no case longer than ten (10) years from the approval of this Act, 
26 
incorporate the PRESENT Program in their respective poverty alleviation programs as a tool for 
27 
poverty reduction. 
28 
The Council shall, in coordination with the various government agencies with poverty 
29 
alleviation programs, prepare the appropriate beneficiaries thereof and organize them into full-
30 
fledged SEs under the contemplation of this Act. 
31 
Within a period of five (5) years, the Council shall facilitate the development and 
32 
dissemination of tools, and invest in the development of the capability of SEs to plan, monitor 
33 
and evaluate their social and financial performance and outcomes. The Council shall evolve 
27 


1 
socially acceptable benchmarks for evaluating the performance of SEs and incorporate them to 
2 
effectively develop and regulate the sector. 
3 
4 
SECTION 34. Applicability of Othe( Laws. - The Labor Code and all other labor laws, the Social. 
5 
Security Act, the Medical Care Act, other social legislations, and all other laws and executive 
6 
orders that govern the relationship between the employer and the employee shall apply to SE 
7 
and its employees and that all employees covered under this Act shall be entitled to the same 
8 
benefits given to any regular employee such as social security and healthcare benefits. 
9 
10 
SECTION 35. Interpretation and Construction. -
In case of doubt in the meaning of any 
11 
provision of this Act or in the rules and regulations promulgated pursuant to this Act, it shall be 
12 
resolved in favor of SEs and their stakeholders. 
13 
14 
SECTION 36. Congressional Oversight Committee. - There is hereby created a Congressional 
15 
Oversight Committee on Social Enterprises composed of the Chairman of the Senate 
16 
Committee on Economic Affairs, Trade and Commerce and the Chairman of the House 
17 
Committee on Trade and Industry, four (4) members of the Senate and four (4) members of the 
18 
House of Representatives. The members from the Senate shall be appointed by the Senate 
19 
President from among the members of the Senate Committee on Economic Affairs, Trade and 
20 
Commerce based on the proportional representation of the parties or coalition therein. The 
21 
members from the House of Representatives shall be appointed by the Speaker from among 
22 
the members of the House Committee on Trade and Industry based on the proportional 
23 
representation of the parties or coalitions therein. 
24 
The Oversight Committee, upon review and approval of the Implementing Rules and 
25 
Regulations of this Act shall become functus officio and thereafter cease to exist: Provided, 
26 
however, That the Council shall submit to the Committee on Economic Affairs, Trade and 
27 
Commerce of the Senate and the Committee on Trade and Industry of the House of 
28 
Representatives an annual report on the implementation of this Act. 
29 
The appropriation for the oversight committee shall be charged to the budget of both 
30 
Houses of Congress in the annual General Appropriations Act. 
31 
32 
SECTION 37. Social Enterprise Week. -
In order to institute continuing awareness on the 
33 
importance of SEs as a viable government strategy in pursuing poverty alleviation, the week of 
34 
the month when this Act shall have been signed into law shall be declared as the "Social 
35 
Enterprise Week" and shall be celebrated annually. The Council shall, through the NCSED, be 
28 


1 
responsible in organizing activities for the event. 
2 
3 
4 
5 
CHAPTER V 
FINAL PROVISIONS 
6 
SECTION 38. Implementing Rules and Regulations. -
Within ninety (90) days from the 
7 
effectivity of this Act, the Secretary of Trade and Industry shall, in consultation and 
8 
coordination with the concerned government agencies and sector, promulgate the necessary 
9 
rules and regulations for the effective implementation of this Act. 
10 
11 
SECTION 39. Separability Clause. - If any provision or part of this Act is declared invalid or 
12 
unconstitutional, the remaining parts or provisions not affected shall remain In full force and 
13 
effect. 
14 
15 
SECTION 40. Repealing Clause. -All laws decrees, ordinances, rules and regulations, executive 
16 
order or administrative order and other presidential issuances inconsistent in this act are 
17 
hereby repealed, amended or modified accordingly. 
18 
SECTION 41. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the 
19 
Official Gazette or in two (2) national newspapers of general circulation. 
20 
21 
Approved, 
29