HOUSE OF REPRESENTATIVES

RECEIVED
Republic of the Philippines DATE: 30 NUN OIG
HOUSE OF REPRESENTATIVES. awe /:27
Quezon City OP
SEVENTEENTH CONGRESS ~
First Regular Session EERIGTRATION UNIT

ARIES WDE X SERVICE

House Bill No. 698

Introduced by Representative GLORIA MACAPAGAL ARROYO,

AN ACT ENCOURAGING CORPORATE SOCIAL RESPONSIBILITY, PROVIDING
INCENTIVES THEREFORE, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Corporate Social Responsibility or CSR is defined by the World Bank as “the
commitment of business to behave ethically and to contribute to sustainable economic
development by working with all relevant stakeholders to improve their lives in ways that
are good for business, the sustainable development agenda, and society at large”.
Companies, be it big or small, have come up with their own CSR programs and have
used it as an effective tool in improving their public relations with concerned
stakeholders.

It is observed, however, that despite this, many corporations and other business
organizations have shown very little care for the welfare of society, community where
they operate and the natural environment around them. Their sole purpose is to
maximize their respective returns on investment totally disregarding the impact of their
activities on customers, employees, shareholders, communities and environment.

This bill, therefore, seeks to foster sustainable economic and environment
development and environment protection, among other things, by institutionalizing
corporate social responsibility in corporations, whether domestic or foreign, partnership
and other establishment performing business in the country. Under this bill, all business
organizations are mandated to take into consideration the interest of society by taking
responsibility for the impact of their activities on customers, employees, shareholders
communities and environment. In return, businesses which shall comply with the
mandate of this proposed measure shall be entitled to full deductions of the expenses
incurred in connection thereto.

In view of the foregoing, the enactment of this piece of legislation is earnestly

recommended.
REP. acheesoron ARROYO

2" District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS

First Regular Session 7

House BillNo.___ 693

Introduced by Representative GLORIA MACAPAGAL ARROYO.

AN ACT ENCOURAGING CORPORATE SOCIAL RESPONSIBILITY, PROVIDING
INCENTIVES THEREFORE, AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. —- This Act shall be known as the “Corporate Social
Responsibility Act of 2016.”

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 non-government 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 (CSR) in the operation of their
business in the country.

For purposes of this Act, “corporate social responsibility” 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 shalll include, but not be limited to, the following:

a) Charitable programs and projects;

b) Scientific research;

¢) Youth and sports development;

d) Cultural or educational promotion;

e) Services to veterans and senior citizens;

f) Social welfare;

g) Environmental sustainability;

h) Health development;

i) Disaster relief and assistance; and

j) Employee and worker welfare related CSR activities

Sec. 4. Deduction from Unrestricted Retained Earnings. - To encourage
companies to engage in CSR, Section 43 of Batas Pambansa Big. 68, otherwise known
as the "Corporation Code of the Philippines” is hereby amended to read as follows:

“Sec. 43 Power to declare dividends. -

Xxx XX HK
Stock corporations are prohibited from retaining surplus profits in excess of one
hundred (100%) percent of their paid-in capital stock, except: (1) when justified


by definite corporate expansion OR CORPORATE SOCIAL RESPONSIBILITY
projects and programs approved by the board of directors; or (2) when the
corporation is prohibited under any loan agreement with any financial institution
or creditor, whether local or foreign, from declaring dividends without its/his
consent, and such consent has not yet been secured; or (3) when it can clearly
show 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. Full Deductibility from Gross Income. - Nothing herein shall be deemed to
amend or modify Section 34 (H) of Republic Act No. 8424 otherwise known as the “Tax
Reform Act of 1997” relative to the full deductibility of contributions or gifts actually paid
or made to accredited donee institutions in computing taxable income which shall
continue to be in force and effect.

Sec. 6. Awards and Recognition. - The State, through the Department of Trade
and Industry shall give national recognition and rewards to all business organizations for
outstanding, innovative and world-class CSR-related services, projects and programs.
It shall likewise extend endorsements and encouragement to domestic and foreign
corporations doing business in the Philippines who are candidates for recognition in
international award-giving bodies for their CSR-related activities.

Sec. 7. Local Government Units. - All local government units where CSR-related
activities are conducted shall extend whatever assistance is necessary for business
organizations to perform their CSR.

Sec. 8. 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, the Department of Trade and Industry, or the Department of Finance, as
the case may be.

Sec. 9. Implementing Rules and Regulations. — The Secretary of Finance shall,
in coordination with the Department of Trade and Industry and Securities and Exchange
Commission, promulgate rules and regulations for the effective implementation of this
Act and shall monitor strict compliance therewith.

Sec. 10. Separability Clause. — If any provision of this Act is declared invalid or
unconstitutional, the remaining provisions not affected thereby shall continue in full force
and effect.

Sec. 11. Repealing Clause. — Section 43 of Batas Pambansa Bg. 68 is hereby
amended. All laws, decrees, orders, rules and regulations, and other issuances, or
parts thereof, inconsistent with this Act are hereby repealed or modified accordingly.

Sec, 12. Effectivity Clause. — This Act shall take effect fifteen (15) days after
publication in the Official Gazette or in two (2) national newspapers of general
circulation.

Approved.