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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills
Quezon City .

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EIGHTEENTH CONGRESS:
First Regular Session

House Bill No. °°" ” 2ea4

Introduced by: Rep. Josephine Y. Ramirez Sato

EXPLANATORY NOTE
The Philippine Constitution mandates the promotion of social justice and self-
reliance alongside creating economic opportunities. It also put emphasis to raise the
Quality of fife for all, especially the under-privileged. The country, however, is
continuously faced with poverty. Alongside the private sector, academe, and CSOs,
the Philippine goverment have been continuously looking for innovative means to
ensure that this constitutional mandate is fulfilled.

Experiences in the past thought us that in order to address this perennial
challenge, it requires appropriate systems, organization, structures, and resources. It
also requires new social investment models and capacity building programs to help
new breed entrepreneurs achieve significant positive impact.

There are many social enterprises able to prove its mouels to create wealth
while performing its social mission. As a poverty reduction strategy, it creates social
and economic value that benefits the poor as its primary stakeholders. These
stakeholders are engaged as partners in the value chain (either as workers, ‘suppliers,
clients, co-developer, co-producer) and in social enterprise governance.

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This bill provides the framework for planning and implementation of a National
Poverty Reduction Through Socia! Entrepreneurship (the “PRESENT") Program. It
also seeks to provide incentives and benefits to promote the growth of social
enterprises, and to integrate SE to the overall poverty reduction strategy of the
Philippine government. .

‘The support and passage of this bill is also a means for the country to further
contribute in the achievement of the national targets in conformance to the 2030
Sustainable Development Goals. In particular, zero Poverty, zero hunger, reduced
inequality, decent jobs and inclusive, and sustainable communities.

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



Republic of the Philippines .
HOUSE OF REPRESENTATIVES
Constitution Hills
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 2894

Introduced by: Rep. Josephine Y. Ramirez Sato

AN ACT INSTITUTIONALIZING THE POVERTY REDUCTION THROUGH SOCIAL
ENTREPRENEURSHIP (PRESENT) PROGRAM
AND PROMOTING SOCIAL ENTERPRISES
WITH THE POOR AS PRIMARY STAKEHOLDERS

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

CHAPTER I
GENERAL PROVISIONS

‘SECTION 1.- Short Title. - This Act shall be known as the “Poverty Reduction
Through Social Entrepreneurship (PRESENT) Act”.

SEC. 2. Declaration of Policy. The State shall promote a just and dynamic
Social order that will ensure the prosperity and independence of the nation and free
the people from poverty through policies that provide adequate social services,
Promote full employment, a rising standard of living, and an improved quality of life for
all. The State shall provide social justice in all phases of national development and
that the State values the dignity of every human person and guarantees full respect
for human rights.

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 expanding
productivity as the key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets.

The State also recognizes the important role of enterprises in the economy as


the major agent of development, creating off-farm employment opportunities and
Providing transitional means for improving the livelihood of the people,

Towards this end, the State shall pursue an inclusive growth strategy that
promotes an environment conducive to the development and growth of a vibrant social
enterprise sector engaged in poverty reduction, economic and social development. It
shall empower the poor as primary stakeholders in social enterprises, establish
mechanisms essential to realizing their potential and achieving thelr full growth, and
extend the assistance necessary for their advancement. The State shall likewise
Provide technical and financial assistance, incentives and other services to enable
Social Enterprises to develop into viable and vital anti-poverty agents, and a strong
social entrepreneurship movement that will be instrumental in Téducing poverty in the
country.

SEC 3. Definition of Terms. — As used in this Act, the following terms shall
mean:

a) Basic Sectors - as defined by Republic Act 8425, or the "Social Reform and
Poverty Alleviation Aci" refer to the disadvantaged sectors of Philippine
society, namely: farmer-peasant, artisanal fisherfolk, workers in the formal
sector and migrant workers, workers in the informal sector, indigenous
Peoples and cultural communities, women, persons with disabilities, senior
citizens, victims of calamities and disasters, youth and students, children,
and urban poor;

b)

Economic Subsectors - networks of related actors, and enterprises
performing various functions in value chains. These actors and enterprises
transform raw materials into finished products, or develop services, and
distribute or provide them through market channels to final consumers; they
may be identified by key raw material source, by finished product or final
service provided. An economic subsector may be comprised of several
competing value chains. By understanding the dynamics of economic
‘Subsectors and using them as units of planning social entrepreneurship
interventions, government agencies, support institutions and SEs shall
more effectively reach and benefit a greater number of poor in poverty
reduction programs;

¢) Government Procuring Entity - 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;

d)

Living Wage - refers to the amount of family income needed to provide for
the family’s food and non-food expenditures with sufficient allowance for
savings/investments for social security so as to enable the family to live and
maintain a decent standard of human existence beyond mere subsistence
level, taking into account all of the family's physiological, social and other
needs.


@) Marginalized Sectors - groups of people who are stigmatized or excluded

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by virtue of their physical, psychological, economic, social or cultural
circumstance;

Poor - as defined by Republic Act 8425, refers to individuals and families
whose income fall below the poverty threshold as defined by the National
Economic and Development Authority and/or cannot afford in a sustained
manner to provide their minimum basic needs of food, health, education,
housing and other essential amenities of life;

Poverty Reduction - overcoming the income, resource and capability
deprivation among the poor, basic and marginalized sectors;

Social Enterprise or SE - to a social mission-driven organization, whether
an association, sole proprietorship, partnership, cooperative, corporation or
any other legal form, that conducts economic activities providing goods
and/or services directly related to its primary mission of improving the well-
being of the poor, basic and marginalized sectors and their living
environment. A social enterprise explicitly declares and pursues poverty
reduction as its principal objective by purposefully rendering both
transactional and transformational services. An SE engages and invests in
the poor 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 SE
also uses its surplus or profits and mobilizes other resources to assist the
Poor to become partners in SE or value chain management and governance
and to become partners in community, sectoral and societal transformation.

A SE registered as a sole proprietorship, partnership or corporation must
fulfill the eligibilities set forth in Section 14 to avail of the benefits and
incentives under this act.

Social Enterprise (SE) Service Institution - 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;

Transactional Services - enterprise or market-driven activities, such as
providing loans, demonstrating new technologies or conducting trainings
that are necessary for the poor in the SE system to effectively and efficiently
Perform their roles as workers, suppliers, clients and owners. Transactional
services may be fee-based, such as the granting of loans, or non-fee based,
such as the extension of production-related trainings;

Transformative Services — activities that empower the poor, such as
leadership formation, organizational development, financial and legal
literacy, asset build-up and providing education and experiential learning
opportunities, to become conscious change agents for themselves, for their


communities, sectors and society as a whole; and

|) Value Chains - value-adding economic activities that an enterprise is
interlinked with in the process of producing goods and/or services to serve
its chosen market. A value chain typically consists of: 1) raw materials
processing, 2) inbound distribution or logistics, 3) manufacturing operations,
4) outbound distribution or logistics, 5) marketing and selling, and 6) after-
sales service. These activities are supported by 6) purchasing or
Procurement, 7) research and development, 8) human resource
development, and 9) organizational development. A SE that understands
and manages its value chain improves its capability to create economic,
environmental and social values towards improving the position and
benefits of the poor in the value chain and towards ensuring the viability and
sustainability of the enterprise.

CHAPTER II
POVERTY REDUCTION THROUGH SOCIAL ENTERPRISES

SEC. 4. Formulation of a Poverty Reduction Through Social
Entrepreneurship (PRESENT) Program. - The PRESENT Program shalt be
established as a flagship program of government. The objective of the PRESENT
Program is to progressively improve the position of and benefits to the poor,
marginalized and basic sectors derived from economic subsector development and
growth. It shall do this by Identifying strategic economic subsectors with the potentials
for growth and where the poor are concentrated or could be major players. In the
process, it shall identify and develop key SEs and resource institutions as partners in
Providing transactional and transformational services towards poverty reduction. SEs
shall be developed as vehicles to ensure that the poor benefit the most from
‘sustainable subsector development.

The formulation of the PRESENT program shall be guided by the following
principles:

a) Promoting sustainable programs that support the development of inclusive
value chains in key economic subsectors, towards reducing inequality in
incomes and increase self-reliance among the poor;

b) Enabling SEs to overcome constraints and to take advantage of opportunities
for enhancing the position and benefits of the poor and their living environments
including those that hamess innovative approaches in addressing sacial
problems;

¢) Development of sustainable mechanisms for the provision of quality and
accessible social services to the poor,

d) People's empowerment by ensuring the participation of the poor, basic and
marginalized sectors;

) Gender-sensitivity by ensuring women's equal rights and access to SE's


resources;
f) Ecological soundness in the pursuit of sustainable and equitable development;

9) Incorporation of the PRESENT Program in the government's poverty reduction
drive as a major sustainable and comprehensive strategy; and

h) Rationalization of poverty reduction programs by streamlining and coordinating
the various anti-poverty programs of the government to reduce inefficiency and
duplication and to improve the effectiveness of each program.

The planning framework of the PRESENT Program and its planning process
shall ensure that the poor are engaged as primary stakeholders. It shall add value and
complement ecosystem-based, area-based, community-based and other tools and
processes in local economic development by promoting and utilizing the economic
subsector as a strategic unit of analysis and planning SE development interventions.

PRESENT medium-term and annual development plans shall be formulated in
synchrony with the medium-term development plan of the natiorial government.

SEC. 5. Social Enterprise Development Council. - To carry out the policy
declared under this Act, a Social Enterprise Development Council, hereinafter referred
to as the” Council", is hereby created as an agency attached to the Office of the
President. It shall be the primary agency tasked to carry out the promotion, growth
and development of social enterprises in the country.

The Council shall be composed of the following:

a) SE sector head representative, as co-chairperson;

b) Secretary of Trade and Industry, as co-chairperson;

©) Secretary of Agriculture, as co-vice chairperson;

d) Lead Convenor of the National Anti-Poverty Council (NAPC), as co—vice
chairperson;

) Secretary of Social Welfare and Development;

f) Director-General of the National Economic Development Authority (NEDA);

g) Secretary of Finance; ‘

h) Secretary of the Interior and Local Government;

il) Secretary of Labor and Employment;

j) Secretary of Science and Technology;

k) Secretary of Education;

|) Secretary of Agrarian Reform;

m) Secretary of Health;

Nn) Secretary of Environment and Natural Resources;

©) Chairperson of the Cooperative Development Autharity (CDA);

P) Nine (9) representatives from SEs, three (3) representatives each from the
main island groupings of Luzon, Visayas, and Mindanao;

q) Three (3) representatives from SE service institutions; and

r) Three (3) representatives from SE advocacy groups, as members.


Cabinet-ranked ex officio members of the Council shall désignate a permanent
representative in case they fail to attend its meetings. The designated permanent
representative of any of the Cabinet-ranked members of the Council must hold a
Position not lower than a bureau director.

The SE sector head, the representatives of the SEs from the main island
groupings of Luzon, Visayas, and Mindanao, the SE service institutions, and the SE
advocacy groups shall be chosen by the President fram among the nominees
submitted by their respective national organizations to serve in the Council for a term
of three (3) years. These representatives must be conversant in the theory and
practice of SE and committed to the policies and programs provided under this Act.

The Chairperson and members of the Council shall be entitled to a reasonable
per diem for each meeting actually attended at such amount as may be fixed by the
Council in accordance with existing laws, rules and regulations.

The Council shall, from time to time, call upon the participation of any
government agency to attend in its meetings to assist in clarifying issues and finding
tesolution to problems that concern their respective offices with respect to the
implementation of the PRESENT Program enunciated under this Act or any
development program for SEs.

The Council may create an Executive Committee of seven (7) members elected
by its members from among themselves or their designated permanent
representatives, with at least three (3) members representing the SEs, and with the
authority to act for the Council, and within the specific authority granted by the Council.

SEC. 6. Center for Social Enterprise Development. - There shall be
established a Center for Social Enterprise Development (CSED) under the supervision
of the Council and to be headed by an Executive Director, which shall have the primary
fesponsibility of implementing comprehensive policies for Social Enterprise
Development. Specifically, the CSED shall be responsible for:

a) The development and implementation of the PRESENT Program as
approved by the Council, with the following components:

1, Formulation and implementation of social entrepreneurship-oriented
‘strategic economic sub-sector development plans that shail serve as the
basis for major policies, projects and activities;

2. Capacity Building and Sustainability - The CSED- will work with qualified
Social Enterprise Service Institutions and other intermediaries to design
and deliver training and education in social entrepreneurship
development, institutional start-up or strengthening, human resource
competency and skills training, business planning and advisory services,
upgrading of accounting and auditing systems, technical assistance for
the installation or improvement of management information systems,
technology incubation/commercialization, market studies,


competitiveness, business matching activities, trade fairs and missions,
policy advocacy, disaster-resiliency and other related activities:
intervention, technology and product development

3. Research and Development - The CSED in coordination with the NEDA,
DOST, DTI, and other appropriate agencies, research institutions, and
intermediaries, shall develop and enhance a research and development
system that:

i. provides studies on opportunities for poverty reduction and
SE development in key economic subsectors and other
inputs for the Council to undertake strategic planning for
Programs and projects;

ii, equip SEs and support institutions with services and

technologies that are appropriate’ for enhancing the

Participation and benefits of the poor in various economic

‘subsectors; and;

equip SEs and support institutions with innovative, and

sustainable approaches to improve access of the poor to

quality basic social services.

4. Information and Marketing Assistance - The CSED shall promote the
development and expansion of local and foreign markets for the products
and services of SEs. Towards this, the CSED shall:

i. establish a marketing assistance program that will assist
SEs match supply with demand in both domestic and foreign
markets, as well as promote SE products and services
through tri-media, trade fairs and trade missions; and

ii. develop install and sustain a market information system for
‘SB with the assistance of the DTI and DOT. All government
departments, agencies, bureaus, research institutions, as
well as the Local Government Units (LGUs) shall
consolidate and continuously update all relevant information
and data that would be of use to SEs on a periodic basis and
make such data available in a dedicated website on the
internet.

b) Establishment and implementation of criteria and process for the
qualification of SEs that shall be eligible for support and other incentives as
provided by this Act and as approved by the Council;

©) Identification of sources of financing for the SE sector not limited to grants,
loans and equity financing for enterprise incubation, start—up and
expansion;

d) Management of multi-stakeholder convergence programs and activities

among government agencies and private organizations in support of the
PRESENT Program;


e) Coordination with the concemed government agencies and local
government units in the development and implementation of the PRESENT
Program and projects.

f) Coordination with social enterprise stakeholders, including people's
organizations, non-government organizations, and multi-sectoral and multi-
disciplinary pool of experts from the academe, practicing professionals,
business, industry, youth, women and other concerned sectors to provide
advice and technical assistance on matters pertaining to SEs.

CHAPTER II
INCENTIVES AND BENEFITS FOR SOCIAL ENTERPRISES

‘SEC. 7. Social Enterprise Development Fund. - There shall be included in
the budget of the DT! under the annual General Appropriations Act an initial amount
of Nine Hundred Million Pesos (Php 900,000,000.00) for the establishment of a Social
Enterprise Development Fund (SEDF) which shall be utilized as. grants to SEs for the
plans set forth under the PRESENT program.

THE SEDF shall be allocated for:

a) Six Hundred Million Pesos (Php 600,000,000.00) for value-chain financing;
and
b) Three Hundred Million Pesos (Php 300,000,000.00) for enterprise
development services.
After the first year of implementation, such sums as may be necessary to fund
the SEDF shalt be included in the budget of the DTI under the annual General
Appropriations Act.

Plans for the utilization of the SEDF shall be developed by the CSED for
approval by the Council.

SEC. 8. Special Credit Windows. - The Land Bank of the Philippines,
Development Bank of the Philippines and other government financial institutions shall
establish special credit windows for the following purposes:

a) Credit line for business development loan or working capital loan to cover
the operational and management expenses of an existing business or
income generating project, including receivable financing or purchase of
additional inventory, soft or intangible investments such as trade fair
Participation or acquisition of software or franchise development packages;

b) Fixed assets financing to cover acquisition of fixed assets like machineries
and equipment, motor vehicle, or acquisition of lot for project site or
construction of a plant and building and the improvement thereof;


¢) Value chain financing to cover any of the value chain activities such as
Production, processing and marketing;

d) Domestic letter of credit or trust receipt to provide a stand-by credit facility
for the SE borrower for the purchase of product inputs, equipment,
machinery, implements, and spare parts, whereby payment of which is
guaranteed and to be made to the seller by the lending institution, Provided
all documents conform with the terms and conditions of the credit; and

) Revolving Credit Line for re-lending to finance the livelihood project
requirements of end-borrowers.

SEC. 9. Social Enterprise Guarantee and Surety Fund. - There shall be
established a Social Enterprise Guarantee and Surety Fund (SEGSF) which shall be
funded from equity contributions of government financial institutions. The SEGSF ‘shall
be used to provide guarantee cover to participating financial institutions and other
Parties in extending financing to SEs. The SEGSF shall be administered by the Small
Business Corporation to enable qualified SEs to access non collateralized and other
appropriate financing while mitigating the risks involved in SE sector lending: Provided,
That the SEGSF may also be used
to cover the performance bond of SEs for their transactions.

SEC. 10. Public Procurement for Social Enterprises. - For purposes of
government procurement, the Government Procurement Policy Board (GPPB) shall
recommend and approve policies to facilitate the full Participation of SEs in public
Procurement processes and to ensure the maximum public benefit and impact of
government procurement projects. In support of these policies, the DBM shall direct
line agencies of goverment to include at least 10% of its annual budget for
Maintenance and Other Operating Expenses and Capital Outlay specifically for goods
Procured and services contracted from SEs.

SEC. 11. Insurance for Social Enterprises. - The Insurance Commission
shall issue the necessary rules and regulations and implement measures to ensure
that the insurance industry shall provide insurance Products, both life and non-life, for
social enterprises and their stakeholders among the poor. Furthermore, social
enterprises shall be eligible to be licensed agents or delivery channels for their clients
and constituents.

SEC. 12. Eligibility for Benefits and Incentives. - In the case of SEs
organized as stock corporations, partnerships or sole proprietorships, the following
fequirements shall apply to become eligible for benefits and incentives provided by
this Act:

a) ASE 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 Corporate Social Responsibility (CSR); and


b) A SE must plow back at least sixty percent (60%) of its total expenditures
and profits to the enterprise for the benefit of the poor, and engage in
practices that optimize the benefits for the poor through the Provision of
living wages, above-market pricing for economically disadvantaged
producers and suppliers, and other such best practiées that distribute the
profit generated by the enterprise.

. CHAPTER IV
APPROPRIATION AND OTHER PROVISIONS

SEC. 13. Role of Local Government Units (LGUs) in SE Development. -
LGUs shall be encouraged to incorporate viable SE development plans in their local
Plans and collaborate with SEs.

SEC. 14. Social Entrepreneurship Education in Schools. - Toward
strategically developing the nation’s human resource capability in social
entrepreneurship, the DepEd, TESDA and the CHED shall cause the integration of SE
content and inclusion of SE courses in the curricula at all levels, especially in the
‘secondary and tertiary levels. A continuing social entrepreneurship education program
for out-of-school youth and adults shall likewise be developed and undertaken,

SEC. 15. Social Enterprise Week. - In order to institute continuing awareness
on the importance of SEs as a viable govemment strategy in pursuing poverty
alleviation, the week of the month when this Act shall have been signed into law shall
be declared as the "Social Enterprise Week" and shall be celebrated annually. The
Council shalll, through the CSED, be responsible in organizing activities for the event.

SEC. 16. Appropriations. - The amount necessary to implement the provisions
of this Act shall be charged against the current year’s appropriations of the Office of
the President. Thereafter, such sums as may be necessary for its continued
implementation shall be included in the annual General Appropriations Act.

The budgetary requirements of the cooperating agencies shall be incorporated
in their respective budgets. The CSED may raise funds from other sources for specific
projects as may be authorized by law.

‘SEC. 17. Transitory Provision. - Within a period of five years, the CSED shall
facilitate the development and dissemination of tools, and invest in the development
of the capability of SEs to plan, monitor and evaluate their social and financial
Performance and outcomes. Further, the CSED shall evolve socially acceptable
benchmarks for evaluating the performance of SEs and incorporate such to more
effectively develop and regulate the sector.

SEC. 18. Implementing Rules and Regulations. - Within ninety (90) days
from the effectivity of this Act, the Secretary of Trade and Industry shall, in consultation
and coordination with the concerned government agencies, promulgate the necessary
rules and regulations for the effective implementation of this Act.


SEC. 19. Separability Clause. - If any provision or part of this Act is declared
invalid or unconstitutional, the remaining parts or provisions not affected shall remain
in full force and effect. .

SEC. 20. Repealing Clause. — All laws decrees, ordinances, rules and
regulations, executive order or administrative order and other Presidential issuances
inconsistent in this act are hereby repealed, amended or modified accordingly.

SEC. 21. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in two (2) national newspapers of general
circulation.

Approved,