Republic of the Philippines
HOUSE OF REPRESENTATIVES ;
Quezon City, Metro Manila

NINETEENTH CONGRESS
I Regular Session

451

House Bill No.

Introduced by Representatives JEFFREY SORIANO, ERIC G. YAP, PAOLO Z.
DUTERTE, EDVIC G. YAP, JOCELYN P. TULFO, and RALPH TULFO

EXPLANATORY NOTE

Section 20, Article II of the 1987 Constitution states: “The State recognizes the
indispensable role of the private sector, encourages private enterprise, and provides incentives

to needed investments.”

This recognition, herein provided by this Constitutional provision, comes hand-in-
hand with the social and ethical responsibility that the state advocates on behalf of the
private sector, which is implied by the laws sanctioning the private sector in any
offenses directed against its mandated social responsibility to the state and the general

public.

Corporate social responsibility (CSR), as defined by the World Bank, refers to the
commitment of business to contribute to sustainable economic development, working
with employces, their families, the local community and society at large to improve
quality of life, in ways that are both good for business and good for development. CSR
covers a wide range of issues relating to business conduct, from corporate governance
and environmental protection, to issues of social inclusion, human rights and national

economic development. !

This bill seeks to institutionalize corporate social responsibility in corporations,
partnership, and other establishments performing, business in the country, whether

domestic or foreign. Through this proposed measure, business entities are mandated



to prioritize the interest of the society by re-evaluating and recalibrating their actions
which would impact their customers, employees, shareholders, communities, and
environment. In addition, such legislation would entitle these business entities with
incentives of deductions on the expenses incurred in the exercise of their CSR

mandate.

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

c
JEFFREY SORIANO: PAOLO 4 DUTERTE
a7 JOCELYN P. TULFO
EDVI¢’ G. YAP RALPH TULFO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRE
1S Regular Session

House Bill No. 25.1

Introduced by Representatives JEFFREY SORIANO, ERIC G. YAP, PAOLO Z.
DUTERTE, EDVIC G. YAP, JOCELYN P. TULFO, and RALPH TULFO

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 "Corporate Social
Responsibility Act’

SEC. 2. Declaration of Policy. - The State recognizes the vital role of the private
sector 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 nongovernment and people's organizations, to work hand-in-hand
for the integration, promotion, and strengthening of corporate social responsibility in
all business organizations.

SEC. 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 country.

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:

a. Charitable programs and projects;
b. Scientific research;


c. Youth and sports development;
d. Cultural or educational promotion;
ce. Services to veterans and senior citizens;
£. Social welfare;

g. Environmental sustainability;
h.

i

j.

k

. Health development;
Disaster relief and assistance;
Socialized and low-cost housing; and
Employee and worker related CSR activities.

All business organizations are allowed to donate products and service 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 local 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.

SEC. 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. - x x x

"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
DEFINITE 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."

SEC. 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.

SEC. 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 CSR programs and projects and shall
encourage business organizations within their territorial jurisdiction to conduct CSR
projects / activities.

SEC. 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 (SEQ), DTI, or the Department of Finance, as the case may be.

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

SEC. 9. Separability Clause. - If any provision of this Act is declared invalid
or unconstitutional, the remaining provisions not affected thereby shall continue in

fall force and effect

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

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

Approved,