REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES

Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _3853_

EXPLANATORY NOTE

This bill seeks to encourage corporate social responsibility among
corporations, domestic or foreign, partnerships, and other
establishments doing business in the country. This bill has already been
approved by the House of Representatives on its 3 and final reading in
the 17% Congress. Considering however the significance of this bill
recognizing the indubitable role of the private sector in nation building it
is imperative that this bill be filed.

The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments (Section 20, Article II, 1987 Constitution). The State shall
encourage non-governmental, community-based, or _ sectoral
organizations that promote the welfare of the nation. To this end, the
State shall encourage the participation of the private sector through the
concept of corporate responsibility with the end in view of achieving
sustainable economic and environmental protections. It is high time for
corporations to take full responsibility of the effects of their actions in the
community where they operate. It is high time for corporate managers to
take care of the environment free from abuse and corporate neglect, and
at the same time incentivize the same for their corporate expense and
contributions.


In view of the bill’s importance as an institutionalized mechanism
in integrating the involvement of private corporations and partnerships
in the delivery of socio-economic and social services beneficial to the
people, it is earnestly sought that this bill be approved.

ATTY. TYRONE D. AGABAS.
Representative
6t District, Pangasinan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 3853

Introduced by Representative TYRONE D. AGABAS _

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:

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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 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 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-telated activities shall include the following:

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(a) Charitable programs and projects;

(b) Scientific research;

(c) Youth and sports development;

(d) Cultural and educational promoting;

(e) Services to veterans and senior citizens;
(f) Social welfare

(g) Environmental sustainability;

(h) Health development;

(i) Disaster relief and assistance;

() Socialized and low-cost housing; and

(k) Employee and worker welfare related CSR activities.

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

“Sec. 43. Power to Declare Dividends. —

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“Stock corporations are prohibited from retaining surplus profits in excess
of one hundred percent (100%) of their paid-in capital stock, except: (1) when
justified by definite corporate expansion OR FOR CORPORATE SOCIAL
RESPONSIBILITY projects or programs approved by the board of directors;
or (2) when the corporation is prohibited under any loan agreement with any
financial institutions or creditors, whether local or foreign, from declaring
dividends without its/his consent, and such consent has not yet been
secured; or (3) 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.

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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.

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

SEC. 8. Implementing Rules and Regulations. — Within sixty (60) days, the
Secretary of Finance shall, in coordination with the DTI and the SEC,
promulgate rules and regulations for the effective implementation of this Act
and shall monitor strict compliance therewith.

SEC. 9. Separability Clause. — If any provision of this Act is declared invalid
or unconstitutional, the remaining provisions not affected thereby shall
continue to be in full force and effect.

SEC. 10. Repealing Clause. — Section 43 of Batas Pambansa Big. 68 is
hereby amended. All laws, decrees, orders, rules and regulations, and other
issuances, or parts of thereof, inconsistent with this Act are hereby repealed
‘or modified accordingly.

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

Approved,

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