HOUSE OF REPRESENTATIVES

REPUBLIC OF THE PHILIPPINES

HOUSE OF REPRESENTATIVES RE CEIVED
Quezon City pate, ©! YUL 201g
SEVENTEENTH CONGRESS

t Regular Session

1839

We: 2A
BY: ke

House Bill No.
RECSTRATION UNIT

Introduced by MAGDALO Party-List Represenfat
HON. GARY C. ALEJANO

EXPLANATORY NOTE

Social Enterprise applies an entrepreneurial approach to addressing social issues and creating
positive community change. The goal of social enterprise is the involvement of the marginalized, thus
creating capacity and self-sufficiency for individuals, and impacting their communities and lessening
their dependence to the government. Social enterprise aims to lessen the gap in the growing disparity
with regard the distribution of wealth by providing a sustainable income-generating opportunity that
provides the needs of people who live in poverty.

In the Philippines, the concept of Social Entrepreneurship is not new, though it is limited.
Majority of the established social enterprises are based in Manila. Thus, the concept is fairly new
outside of Manila. Social Entrepreneurs on the other hand have a reason to be happy nowadays as
awareness with regard the concept of Social Entrepreneurship is gaining ground outside Manila as it is
being offered as subjects in universities. However, there is still a need to create awareness not only to
educate future social entrepreneurs but the consumers as well!.

In order to provide the needed boost and support to the concept of Social Enterprise and to
provide an innovative alternative for poverty reduction, this bill seeks to establish a Poverty Reduction
Through Social Entrepreneurship (PRESENT) Program in order to develop the appropriate structures
and resources, as well as the proper environment to support and encourage the growth of social
enterprising in the Philippines.

In view of the foregoing reasons, and in support to the Constitutional mandate of the State to
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 immediate passage
of this bill is earnestly sought.

IN. GARY C. ALEJANO

" Data retrieved from. \omegrown.ph/social-enterprises-around-the-philippines/ on 07-Dec-2014.



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
t Regular Session

1839

House Bill No.

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
ORDAINING THE PROMOTION AND DEVELOPMENT OF SOCIAL ENTERPRISES IN
ORDER TO ENSURE POVERTY REDUCTION, PROVIDING THE MECHANISMS
THEREFOR, AND FOR OTHER PURPOS

CHAPTER I
TITLE, POLICIES AND OBJECTIVES

SECTION 1. Short Title. — This Act shall be known as the Poverty Reduction Through Social
Entrepreneurship (PRESENT) Act of 2016”.

SECTION 2. Declaration of Policy and Statement of Objectives - It is hereby declared the
policy of the State to 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.

likewise declared a policy of the State that the goals of the national economy are a more

equitable distribution of opportunities, income, and wealth; a

stained 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 underprivileged and that, in the pursuit of these
goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to
develop. Private enterprises, including corporations, cooperatives, and similar collective organizations,

shall be encouraged to broaden the base of their ownership.

Further, all economic agents shall contribute to the common good and that individuals and
private groups, including corporations, cooperatives, and similar collective organizations, shall have
the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote

distributive justice and to intervene when the common good so demands.

Finally, it is declared a policy of the State that the promotion of social justice shall include the

commitment to create economic opportunities based on freedom of initiative and self-reliance.

1


In furtherance of these policies, the Government shall pursue a poverty reduction program that

promotes an environment conducive to the development and viability of social enterprises with the

poor as the primary stakeholders, establishing the mechanisms essential to realizing their potential and

-ving their full growth, and extending the assistance necessary for their advancement.

The Government and all its departments, agencies, subdivisions, branches, and
instrumentalities shall ensure the provision of technical and financial assistance and other services and
incentives free from any conditions that might infringe upon the autonomy or organizational integrity
of said social enterprises in order for them to develop into viable and vital anti-poverty agents and
thereby result in a strong social entrepreneurship movement that shall be instrumental in bringing about

a substantial reduction in poverty in the country.

CHAPTER IL

DEFINITION OF TERMS

SECTION 3. Definition of Terms — For purposes of this Act, the following terms shall mean:

a) Absolute poverty refers to the condition of the household below the food threshold
levels

b) Assets refer to all kinds of properties, real or personal, owned by the SE as defined
in paragraph (dd) of this Section and used for the conduct of its business: Provided, That for the
purpose of exemption from taxes and to benefit from other incentives under this Act, this term
shall mean all kinds of properties, real or personal, owned and/or used by the SE for the conduct

of its busines

©) Basie sectors shall 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, differently-
abled persons, senior citizens, victims of calamities and disasters, youth and students, children,
and urban poor as defined under Republic Act (R.A.) No. 8425, otherwise known as the “Social
Reform and Poverty Alleviation Act”;

d) Bottom line shall refer to the objectives or purposes for which a social enterprise is
established, which include, among others, financial, social and ecological objectives:

©) Capability building refers to the process of enhancing the viability and
sustainability of SEs through activities that advance, in general, both transformational services

and transactional services and include training in social entrepreneurship development,

institutional 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 intervention,
technology incubation/commercialization, market studies, and product development

competitiveness, business matching activities, trade fairs and missions, policy advocacy, and


CEN ANU ED Ee

10

other related activities. The term capability building precludes the grant of any loan or equity

funds to the SE and shall in no way refer to the provision of equity investments, seed funding,

partnership's seed funds, equity participation, start-up funds or any such activity that connotes the
infusion of capital or funds from the government or from the People’s Development Trust Fund
created under R.A. No. 8425 to a SE as defined in this Act;

f) Civil society organizations refer to private voluntary organizations of citizens that
are established to pursue a mission, usually involving the interest of the public, marginalized
groups or specific sectors of society. ‘They include non-government organizations, socio-civic
groups, foundations and people’s organizations;

Commission shall refer to the Commission for Social Enterprises;

h) Cooperative shall refer to an autonomous and duly registered association of
persons, with a common bond of interest, who have voluntarily joined together to achieve their

social, economic, and cultural needs and aspirations by making equitable contributions to the

capital required, patronizing their products and services and accepting a fair share of the risks and
benefits of the undertaking in accordance with universally accepted cooperative principles as
defined in R.A. 6938, as amended by R.A. 9520, otherwise known as the “Philippine Cooperative
Code of 2008”;

i) Corporate Social Responsibility or CSR shall refer to the commitment of a private
enterprise or business to contribute on a voluntary basis to a sustainable social and economic
development by working with relevant stakeholders to improve their lives in ways that are good
for business, the social reform agenda, the sustainable development agenda, and society at large.
CSR -related activities shall include, but not be limited to, the following: 1) Charitable
programs and projects; 2) Scientific research; 3) Youth and sports development; 4) Cultural or

educational promotion; 5) Services to veterans and senior citizens; 6) Social welfare; 7)

Environmental sustainability; 8) Health development; 9) Disaster relief and assistance; and
Employee and worker welfare related CSR activities;

i) Economic subsectors are network of related firms that transform raw materials into
finished products and distribute them through supply channels to final consumers; they may be
identified by key raw material source or by finished product;

k) Empowerment strategy shall mean a development strategy that enables the
marginalized sectors to own, manage, and control social enterprises in order for them to reap
maximum benefits from it and which acts as a channel for directly distributing income:

1) Fair Trade shall refer to a trading partnership based on dialogue, transparency and
respect and which seeks greater equity in international trade and the transformation and
adaptation of trading structures and practices in favor of the poor and disadvantaged by offering
better trading conditions to, and securing the rights of, marginalised producers and workers;

m) — Fair Trade Organizations shall mean enterprises certified by internationally and

nationally recognized Fair Trade networks;


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n) — Foundation shall. mean the categorization ofa non-profit organization that
typically either donates funds and support to other organizations or provides the source of
funding for its own charitable purposes. Unlike a company, foundations have no shareholders
though they may have a board, an assembly and voting members. A foundation may hold assets
in its own name for the purposes set out in its constitutive documents, and its administration and
operation are carried out in accordance with its statutes or articles of association rather than
fiduciary principles:

©)  GPPB refers to the Government Procurement Policy Board established in
accordance with Article X of R.A.No.9184, otherwise known as the “Government Procurement
Reform Act;”

p) Intermediation strategy shall refer to a development strategy that provides
financial, agricultural, business development and institutional development services to the
entrepreneurial poor and employers of the poor and provides as well product development and
marketing support using the principles of fair trade to marginalized artisans. A Social Enterprise

engaged in intermediation strategy need not be owned by the marginalized stakeholders but

provide immediate access to services among a critical mass of these marginalized stakeholders:
q — Marginalized sectors shall refer to groups of people who are stigmatized or
marginalized by virtue of their physical, psychological, economic, social or cultural
circumstance;
1) Micro-enterprise enterprise as defined in R.A. No. 6977, as amended by R.A. No.

9501, otherwise known as the “Magna Carta for Small Enterpris

shall refer to any business

activity or enterprise engaged in industry, agribusiness and/or services, whether single
proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those
arising from loans but exclusive of the land on which the particular business entity's office, plant
and equipment are situated, must have a value of not more than Three Million Pesos
(P3,000,000.00). This amount is subject to review and adjustments by the Micro, Small and

Medium Enterprises Development (MSMED) Council, taking into account inflation and other

economic indicators and may use other variables such as number of employees, equity capital
and assets size;

s) Microfinance shall refer to a credit and savings mobilization program exclusively
for the poor to improve the asset base of households and expand the access to savings of the poor.
It involves the use of viable alternative credit schemes and savings program including the
extension of small loans, simplified loan application procedures, collateral-free arrangements,
alternative loan repayments, and minimum requirements for savings, and small denominated
savers’ instruments as defined in R.A. No. 8425;

1) Minimum basic needs shall refer to the needs of a Filipino family pertaining to
survival (food and nutrition; health; water and sanitation), security (shelter; peace and order;
public safety, income and livelihood); and enabling services (basic education and literacy,

participation in community development, family and psycho-social care);

4


Ren

Coed an

u) Non-Government Organization oF

GO refers to a duly registered non-stock, non-
profit organization focusing on the upliftment of the basic or disadvantaged sectors of society by
providing advocacy, training, community organizing, research, access to resources, and other
similar activities;

v) People's Organization or PO refers to a self-help group belonging to the basic
sectors and/or disadvantaged groups composed of members having a common bond of interest
who voluntarily join together to achieve a lawful common social or economic end;

w) Persons with Disability (PWDs) shall refer to those suffering from restriction or

different abilities, as a result of a mental, physical or sensory impairment, to perform an activity

in the manner or within the range considered normal for a human being;
x) Poor shall refer 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 as defined under R.A. 8425;
y) Poverty reduction/alleviation shall mean overcoming the income, resources, and
capability deprivation among the poor as defined in the preceding paragraph and the
marginalized sectors as defined in paragraph (q) hereof:
2) Private Enterprise shall refer to an organization engaged in a business activity

organized for the purpose of accumulating profit and whose primary stakeholders and

beneficiaries are its owners;

aa) 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;

bb) Resource mobilization strategy shall refer to a development strategy intended to
generate income from the sale of products and services of a social enterprise in order to finance
or subsidize the operations of its core development program or development interventions among

the marginalized sectors;

cc) SEPPS refers to a social enterprise with the poor as its primary stakeholders and
which is a wealth creating organization that explicitly declares poverty reduction/ alleviation or
improving the quality of life of specific segments of the poor as its primary objective:

dd) SEGFP refers to the SE Guarantee Fund Pool created under this Act;

ee) 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:

f) Social Enterprise or SE refers to an organization, whether an association, single
proprietorship, partnership, corporation, or a cooperative, whose primary stakeholders and/or
beneficiaries are marginalized sectors of society, engaged in providing goods and services that

are directly related to its mission of improving societal well-being. It is established to achieve

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multiple bottom lines such as financial, social and ecological. It generates profit or surplus with
due regard to social and environmental costs, and makes a pro-active contribution to resolving

social and environmental problems. A social enterprise, for purposes of this Act, shall strictly

mean a SEPPS
gg) Social Enterprise Service Institution refers to an organization that provides

assistance to social enterprises for them to become viable and sustainable and which assi

ance
pertains to supplying needs such as trainings, education and other capacity-building measures,
research and development, and other similar activitie

bh) Social Enterprise Advocacy Group refers to an organization whose primary
purpose is supporting the cause of social enterprises 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:

ii) Social entrepreneurship entails innovations designed to explicitly improve societal
well-being, housed within entrepreneurial organizations, which initiate, guide or contribute to
change in society;

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, economi

social or cultural circumstance in order to restore their dignity and create avenues for their
participation as productive members of society 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 for persons with disability and those who comprise the
majority of the workers;

My Social Investors are individuals or institutions that choose to put in money to a
business endeavor or activity not principally for financial profit but to fulfill a social mission
which may include poverty reduction, concern for environmental protection, strong
organizational governance, and a desire for a more economically just world;

mm) Social reform refers to the continuing process of addressing the basic inequities in
society through a systematic, unified and coordinated delivery of socioeconomic programs or
packages;

nn) — 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;

00) 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;

pp) Transactional services pertain to enterprise or market-driven activities, such as

providing loans, demonstrating new technologies or conducting trainings that are necessary for

6


[a

1 the poor in the social enterprise system to effectively and efficiently perform their roles as
2 workers, suppliers, clients and owners. Transactional services may be fee-based, such as the
3. granting of loans, or non-fee based, such as the extension of production-related trainings:
4

qq) Transformational services pertain to activities that empower the poor, such as

5 leadership formation and organizational development, asset build-up and providing education and
6 experiential learning opportunities, to become conscious change agents for themselves, for their
7 communities, sectors and society as a whole;

8 rr) Underemployment shall mean an economic position where an employed person's
9 desire to have additional hours of work in his/her present job or to have an additional job, or to
0 have anew job with longer working hours is not met:

i ss) Unemployment shall mean an economic situation where persons who are 15 years
12. old and over as of their last birthday and are 1) without work or have no job or business, 2)
13 available for work and willing to take up work in paid employment or self-employment, 3)
14 seeking work and had taken specific steps to look for a job or establish a business but failed to;
15 and

16 1) Value chain refers to interlinked value-adding activities that convert inputs into
17 outputs which, in tum, add to the bottom line and help create competitive advantage. A value
sts of: 1) inbound dist

18 chain typically consi bution or logistics, 2) manufacturing operations, 3)

19 outbound distribution or logistics, 4) marketing and selling, and 5) after-sales service. These
20 activities are supported by 6) purchasing or procurement, 7) research and development, 8) human

21 resource development, and 9) organizational development.

22

23 CHAPTERIII

24 POVERTY REDUCTION THROUGH SOCIAL ENTREPRISES

25

26 SECTION 4. Social Enterprise (SE); General Concept and Coverage ~ A Social Enterprise,

27 for purposes of this bill, refers to social enterprises with the poor as its primary stakeholders. As such,

28 it declares poverty reduction/alleviation or the improvement in the quality of life of specifie segments
29 of the poor as its primary objective and pursues this objective by directly engaging its chosen
30. segment/s of the poor as workers, clients and/or suppliers. ‘The poor play either just transaction roles or

31 both transactional and transformational roles in the enterprise.

33 In addition to the aforementioned definition, in order for a social enterprise to be covered by
34 this Act and considered to fall under said definition and, thereby, be eligible for the services, assistance
35 and incentives set forth hereunder, said social enterprise:

36 (a) shall be duly registered with the appropriate agencies as provided under the Corporation
37 Code or the Cooperative Code of the Philippines;


(b) shall be one hundred percent (100%) owned and capitalized by Filipino citizens if single
proprietorship or partnership. If the enterprise is a juridical entity, at least sixty percent (60%) of its
capital or outstanding stocks must be owned by Filipino citizens;

(c) shall possess for accreditation with the Commission on SEPPS Development created in
Section 6 of this Act all the documentary requirements enumerated in Section 10 hereof;

(@) may be collectively owned by the poor usually in the form of cooperatives or associations
where the poor are the exclusive owners or comprise a majority of the members thereof;

(@) shall provide transactional services to the poor by as

ing them in the provision of goods
and services in a value chain in furtherance of its social mission of increasing the economic benefits
that the poor can derive from said value chain or provide transformational services and, thereby,
enhance the poor’s position in said enterprise as worker-owners, managers, and active members in its

governing bodies or provide both transactional and transformational services, observing fair trade

practices;
(shall be engaged in a business activity within the major economic sectors,
namely: agriculture, industry, and services which for purposes of this Act refers to any business
activity in any of the economic subsectors:
(g) shall employ any of the following development strategies in the pursuit of its social mission:
1) empowerment strategy; 2) social inclusion strategy; 3) intermediation strategy; and, resource
mobilization strategy;

(h) shall, aside from ensuring the s

stainability of its operations, distribute the wealth it derives
to a broader segment of society, generate profit or surplus with due regard to social and environmental
costs, and make a pro-active contribution to resolving social and environmental problems;

(i) shall plough back a significant portion of its gross earnings in any given fiscal year for the
expansion of its social investment and utilize no less than forty percent (40%) of its operational income
for the procurement of raw materials or purchase of goods or services from its primary stakeholders;

(j) shall neither be a branch, subsidiary or di

ion of a private enterprise, regardless of the size

of such private enterprise, nor may its policies be determined by a private enterprise or by persons who
are not owners or employees of the enterprise: Provided, That this shall not preclude a social enterprise
from accepting subcontracts from large private enterprises or firms or from joining in cooperative or

joint-venture activities with other social enterprises or foundations practicing CSR.

Only Social Enterprises with the poor as their primary stakeholders are entitled to the services,

assistance, and incentives set forth under this Act.

Micro, small, and medium enterprises established under R.A. No.6977, as amended by R.A.

No. 8299 and R.A. 9150; Barangay Micro Business Enterprises established under R.A. 9178; Fair
Trade certified organizations or certified Fair Trade organizations; Overseas Filipino Workers
(OFWs)and their dependents that are organized and assisted by the Overseas Workers Welfare

Administration (OWWA) and the National Livelihood and Development Corporation (NLDC) under

g


Cor aAuen

the Livelihood Development Program for OF Ws; as well as community-based associations composed.
of poor families organized by the Department of Social Welfare and Development and the local
government units (LGUs) under the Self-Employment Assistance — Kaunlaran Program as an
alternative to the Conditional Cash Transfer Program that meet the preceding requirements shall be

regarded as a Social Enterprise under this Act.

SECTION 5. Formulation of a Poverty Reduction Through Social Entrepreneurship
(PRESENT) Program — To promote the development of social enterprises with the poor as primary
stakeholders, a comprehensive and fully-integrated Poverty Reduction Through Social
Entrepreneurship (PRESENT) Program shall be formulated, guided by the following principles:

a) Incorporation of the PRESENT Program in the government’s poverty reduction drive as a
major sustainable and comprehensive strategy:

b) Rationalization of anti-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:

©) 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:

©) Identification of opportunities and constraints facing SEs within the context of economic
subsectors and value chains; and,

£) Gender-sensitivity by ensuring women’s equal rights and access to SE’s resources.

The planning framework of the Poverty Reduction Through Social Entrepreneurship
(PRESENT) Program and its planning process shall ensure that the poor, in general, are engaged,
further ensuring the inclusion therein of the economic subsectors and the value chains, in particular, by
utilizing the economic subsector as a sustainable unit of planning for local economic development and

for designing interventions for Social Enterprise development.

Annual and medium-term development plans shall likewise be formulated. The PRESENT

development program shall be in synchrony with the medium-term development plan.

CHAPTERIV
INSTITUTIONAL MECHANISMS

SECTION 6. Creation and Composition of the Commission for Social Enterprises (CSE) -
To carry out the above-stated policy and to spur the growth and development of SEs in the country, the
Commission for Social Enterprises, hereinafter referred to as the Commission, is hereby created under
the Office of the President.


‘The Commission shall be the primary agency tasked to carry out the promotion, propel the

development, and spur the growth of SEs in the country. It shall be responsible for facilitating and

coordinating national efforts to promote the viability and progress of SEs,

‘The Commission shall be headed by the President as Chairperson with the Secretary of the
Department of Trade and Industry (DTI) as Vice Chairperson and shall be composed of the following:

(a) The Lead Convenor of the National Anti-Poverty Commission (NAPC);

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

(©) The Secretary of the Department of Finance (DOF);

(4) The Secretary of the Department of the Interior and Local Government

(DILG);

(©) The Secretary of the Department of Agriculture:

(The Chairperson of the Cooperative Development Authority (CDA), or his duly
authorized permanent representative;

(g) ‘Three (3) representatives from SEs, one (1) representatives each from the main island

groupings of Luzon, Visayas, and Mindanao;

(h) One (1) representative from among SE service institutions; and

(i) One (1) representative from SE advocacy groups.

Cabinet-ranked ex officio members of the Commission shall designate a permanent
representative in case they fail to attend its meetings. The designated permanent representative of any
of the aformentioned Cabinet-ranked members of the Commission must hold a position not lower than

a bureau director.

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
from among the nominees submitted by their respective national organizations to serve in the
Commission 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 Commission shall be entitled to a reasonable per diem for
each meeting actually attended at such amount as may be fixed by the Commission in accordance with

existing laws, rules and regulations.

‘The Commission 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 resolution to problems that concern

their respective offices with respect to the implementation of the PRESENT Program enunciated

10


hereunder and which affects the growth and development of SEs.

The Commission may create an Executive Committee of five (5) members elected by the
Commission members from among themselves or their designated permanent representatives, with at
least two (2) members representing the SEs, and with authority to act for and on behalf of the
Commission during intervals of Commission meetings, and within the specific authority granted by the

Commission.

SECTION 7. Powers and Functions — The Commission shall have the following powers and

functions:

(a) Formulate policies, plans, programs and projects to develop and promote SEs as a tool for
poverty reduction and consistent with national development objectives;

(b) Oversee the successful implementation of the PRESENT Program and other Public-Private
Partnership programs with the poor as the primary stakeholders;

(c) Identify sources of financing to expand SEs;
(d) Monitor and evaluate the performance of programs and projects for appropriate incentives;
(c) Call upon any government agency to carry out and implement programs and projects
identified by the Commission;
() Call upon POs, NGOs, the academe and other sectors to provide advice on matters
pertaining to SEs and conduct of transactional and transformational services to farmers, producers,
workers, consumers and other stakeholders;

(g) Submit annual and other periodic reports to the President and Congress of 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 effectively the purposes and objectives of this Act; and

(i) Perform such other functions as may be necessary for its effective operations and for the

continued enhancement, growth or development of SEs

SECTION 8. Secretariat and Office ~ The Bureau of Small and Medium Business
Development of the Department of Trade and Industry shall be strengthened and empowered in terms
of establishing functional divisions and incremental staffing to serve as the national technical and
administrative secretariat of the Commission with the member agencies providing additional staff
support as the need arises, The secretariat shall perform the following functions:

(a) to provide staff support to the Commission, with the assistance of the National Economic
and Development Authority secretariat, in the formulation of the PRESENT development programs
and plans;

(b) to assist the Commission in the implementation of the PRESENT development program and

the annual and medium-term development;


(©) to assist the Commission in the accreditation of SEs;

(d) to assist the Commission in monitoring the PRESENT development programs and the
activities of the various concerned government agencies with respect SEs;

(e) to prepare, collate and integrate all necessary inputs to the Council's yearly report on
the status of SEs in the country;

(£) to submit periodic reports to the Commission on the progress and accomplishment of
its work programs; and

(g) to perform ad/hoc functions as are authorized by the Commission.

The Commission shall have its principal place of business in Metro Manila and may establish
such branches within the Philippines as may be deemed necessary by the President of the Philippines to

carry out the powers and functions of the Commission.

SECTION 9. The National Center for Social Enterprise Development - There shall be
established a National Center for Social Enterprise Development (NACSED) under the Commission
which shall develop a research and development system, provide training and education on SE
development, and establish a SE networking services in order to implement the provisions of this Act.

In this regard, it shall, in coordination with relevant agencies, perform the following functions:

(a) provide SEs with capability-training and education through the SE Capacity Building
Program created under Section 12 of this Act;

(b) develop and enhance a research and development system that shall equip every SE with
innovative and sustainable approaches that ensures improvement in the access to more desirable basic
social services by the poor pursuant to Section 14 hereunder; and

(©) establish and manage a Social Enterprise Marketing Information Network (SMIN) that shall

link the SEs not only to government and res

rch institutions but, more importantly, to markets, both
locally and abroad, in order to ensure that SEs generate the highest possible income pursuant to Section
15 hereof.

‘The NACSED shall be headed by the Director of the Bureau of Small and Medium Business
Development in his ex officio capacity as head of the Commission secretariat. It shall maintain a multi-
sectoral, multi-disciplinary pool of experts including those from the academe, practicing professionals,
business and industry, youth, women and other concerned sectors, who shall be screened according to

qualifications set by the Commission.

The National Center for Social Enterprise Development shall, in addition to coordinating with
relevant agencies, partner with the University of the Philippines Institute for Small Scale Industries
(UP ISSI), State Universities and Colleges, other universities and academic organizations, the
Technical Education and Skills Development Authority (TESDA), and Technology and Livelihood

Dp


1

Ren

Socwmid dy

Resource Center (TLRC), Department of Transportation and Communication (DOTC), and CSOs in

implementing its programs.

SECTION 10. Role of LGUs in Social Enterprise Development - Pursuant to the relevant
provisions of R.A. No. 7160, otherwise known as the Local Government Code, the LGUs shall be
primarily responsible for the development of SEs and the implementation and enforcement of the
relevant provisions of this Act within their respective jurisdictions with the end in view of reducing

poverty therein. The LGUs are hereby mandated to include in their respective local development plans

certain policies and programs geared toward the development of SEs in their jurisdiction.
LGUs with viable SE development plan as incorporated in their respective local development
plans are entitled to avail of the SE Development Fund created under the immediately succeeding

section for the purpose of initiating the development of SEs in their own jurisdiction.

CHAPTER V
OTHER CAPACITY BUILDING MECHANISMS

SECTION IL. Social Enterprise Capacity Building Program; Creation of Social Enterprise
Development Fund — There is hereby established a Social Enterprise Capacity Building Program
whose primary objective is to guarantee the viability and sustainability of SEs through activities that
advance, in general, both transformational services and transactional services. This program shall
include training in social entrepreneurship development, institutional 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 intervention, technology incubation/commercialization, market studies, and

product development competitiveness, business matching activities, trade fairs and missions, policy

advocacy, and other related activ

For this purpose, there is hereby created and established a Social Enterprise Development Fund
(SEDF) in the amount of Three Billion Pesos (P3,000,000,000.00) to be administered by the
Commission with an endowment from the earnings of the Philippine Amusement and Gaming
Corporation (PAGCOR), in addition to appropriations by Congress, voluntary contributions, grants,
gifts from both local and foreign sources as may be accepted by the Commission. Capacity building
projects approved by the Commission shall be implemented by the National Center for Social

Enterprise Development.

Only the fruits of the SEDF shall be used for the purposes provided herein. Any undisbursed
fruits for the preceding year shall form part of the disbursable portion of the SEDF in the following

year.

12


1 SECTION 12. Promotion and Development of Social Enterprises as One of the Purposes of
2 the People's Development Trust Fund (PDTF) ~ The promotion and development of SEPPS is hereby
3 declared one of the purposes of the PDTF established under Section 10 of R.A. 8425.

4

5 For this purpose Sec. 1] of R.A. 8425 is hereby amended to read as follows:
6 “Sec. 11. Purposes of the People’s Development Trust Fund.— The
7 earnings of the PDTF shall be utilized for the following purposes:

8 (1) Consultancy and training services for microfinance institutions and
9 their beneficiaries on the establishment of the necessary support services, social
10 and financial preparation of beneficiaries, preparation of plans and programs
ul including fund soureing and assistance, establishment of credit and savings
12 monitoring and evaluation mechanisms AS WELL AS CONSULTANCY AND
13 TRAINING SEVICES ON SOCIAL ENTERPRISE MANAGEMENT IN
14 THE FUNCTIONAL AREAS OF MARKETING, ORGANIZATIONAL
1s AND HUMAN RESOURCE MANAGEMENT, — OPERATIONS
16 MANAGEMENT, FINANCIAL MANAGEMENT AND STRATEGIC
17 MANAGEMENT;

18 (2) Scholarships or training grants for microfinance OR SOCIAL
19 ENTERPRISE staff and officers, and selected beneficiaries:

20 (3) Community organizing for microfinance, livelihood, SOCIAL
21 ENTERPRISE and micro-enterprises training services;

22 (4) Livelihood/micro-enterprise/SOCIAL ENTERPRISE
23 DEVELOPMENT AND CAPACITY BUILDING project/program feasibility
24 studies and researches:

25 (5) Savings mobilization and incentive programs, and other similar
26 facilities;

27 (©) Information and communication systems such as baseline surveys,
28 development monitoring systems, socioeconomic mapping __ surveys,
29 organizational assessments, and other similar activities;

30 (7) Legal and other management support services such as
31 registration/ACCREDITATION, documentation, contract review and
32 enforcement, financial audit and operational assessment;

33 (8) Information dissemination of microfinance technology AND SOCIAL
34 ENTERPRISE DEVELOPMENT; and

35 (9) Other activities to support microfinance AND SOCIAL
36 'TERPRISES as approved by the designated agency administering the PDTF.
37 ‘The PDTF may be accessed by the followin;

38 (a) Registered microfinance organizations engaged in providing micro-
39 enterprise services for the poor to enable them to become viable and sustainable;

14


(B) THE NATIONAL CENTER FOR SOCIAL ENTERPRISE
DEVELOPMENT;

(©) ACCREDITED SOCIAL ENTERPRISES;

(D) Local government units providing microfinance and micro-enterprise
programs to their constituents: Provided, That the PDTF shall not be used by the
LGUs for personal services and maintenance and other operating expenses; and

(E) Local government units undertaking self-help projects where at least
twenty-five percent (25%) of the total earnings of the PDTF shall be used

‘al services.

exclusively for the provision of materials and techi

SECTION 13. Social Enterprise Research and Development System - The Commission, in
coordination with the Department of Science and Technology, the Department of Trade and Industry,
and other appropriate agencies and research institutions, shall develop and enhance a research and
development system that equips Social Enterprises with innovative and sustainable approaches that

improves access to more desirable basic social services by the poor.

Appropriate technology and low-carbon and resource-efficient designs shall be encouraged in
the development, adaptation, diversification, or expansion of the design of goods or services that
consider not only the market needs but, more so, the need to protect the environment and produce
ethical products and conduct ethical practices in the provision of services, and reduce the cost, improve
the quality, and increase the value-added for such goods and services in order to be globally

competitive.

The Commission shall, in coordination with Department of Science and Technology and the
Department of Trade and Industry, cause the conduct of trainings and seminars, and the production of

training and information materials on the research output, including the trends and developments

thereof, in order to enhance hands-on learning and application of skills by the Social Enterpy

SECTION 14. Marketing Infrastructure Development - (a) A system of timely, accurate and
responsive business information and efficient trading services which will link the Social Enterprises to
profitable markets, both locally and abroad, for the promotion of their products shall be developed.
‘They shall, hence, be accorded an innovative support toward the generation of maximum income

through assistance in marketing.

(a) A market information system shall be installed and maintained by the Commission, with
the assistance of the Department of Trade and Industry and the Department of Transportation and
Communication, for the use and benefit of, but not limited to, the SEPPSes, government agencies,

LGUs, private enterprises, and the public at large.

15


(b) The Commission shall establish a Social Enterprises Marketing Assistance Program
(SMAP) that will ensure the generation of the highest possible income for the Social Enterprises,
matching supply and demand in both domestic and foreign markets. The SMAP shall include assistance
in marketing and promotions drive in the local tri-media and trade fair participation.

(©) A SE Marketing Information Network (SMIN) shall be set up from the level of the
municipal and provincial LGUs, the regional and up to the Commission level within one (1) year from
the approval of this Act, taking into account existing information networks such as the internet, to
ensure linkage of the Social Enterprises with the government and its various departments, agencies,

bureaus and instrumentalities, the local and domestic markets, as well as research institutions. The

Com n shall provide technical assistance in setting up the SMIN at the local and regional levels.

All government departments, agencies, bureaus, research institutions, as well as the 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 on the internet.

(d) The SMIN shall provide information and marketing services related to products of SEs

which shall include the following:

i. Supply data;

2. Demand data;

3. Price and Price trends;

4. Product standards;

5. Directory of, but not limited to social enterprises in general, SEs, traders, key market
centers, processors and business institutions both at the national and local levels:

6. Information and technology generated from research institutions:

7. International, regional and local market forecasts; and

8. Resource accounting data.

CHAPTER VI

ACCREDITATION OF SEs.

SECTION 15. Accreditation — No entity shall use the title of Social Enterprise unless duly

certified and accredited as such by the Commission.

A social enterprise formed and organized under this Act acquires juridical personality as a
Social Enterprise from the date the Commission issues a certificate of accreditation under its official
seal. All applications for accreditation shall be disposed of with finality by the Commission within a
period of sixty (60) days from the filing thereof, otherwise the application is deemed approved, unless
the cause of the delay is attributable to the applicant: Provided, That in case of a denial of the

16


SocwmrIrdshH ks oH

PPNRNRRee eee eee ne
EovX8Sexvzparanrasa

25

application for accreditation, an appeal may be elevated with the Office of the President within ninety
(90) days from receipt of the notice of denial thereof: Provided, further, That failure of the Office of
the President to act on the appeal within ninety (90) days from the filing thereof shall mean approval of

said application,

SECTION 16. Documents to be Submitted for Accreditation ~ For purposes of accreditation, a
Social Enterprise shall submit the following documents:
(a) A copy of the board resolution certifying to the result of the vote approved through a

referendum approving the accreditation of the SE with the Commission;

(b) A certified copy of the articles of incorporation/cooperation and bylaws as required by the
Commission;

(©) List of names of incumbent board of directors and their addresses certified by the board
secretary and attested by the chairperson;

(@) Summary of programs and services that show the applicant-organization’s engagement with
the poor:

(©) Within six (6) months from the accreditation, the treasurer shall submit a sworn statement
of the authorized share capital, the subscribed share capital of members and the amount of paid-up
share capital received by the treasurer; and,

(8) Bonds of accountable officers.

SECTION 17. Certificate of Accreditation ~ A certificate of accreditation issued by the

Commission under its official shall be conclusive evidence that the SE therein mentioned is duly

accredited unless it be proved that the accreditation thereof has been cancelled or revoked.

SECTION 18. Accreditation of Existing Cooperatives, Micro, Small, and Medium
enterprises, Barangay Micro Business Enterprises; Fair Trade certified organizations or certified
Fair Trade organizations; OFWs and their dependents organized and assisted under the Livelihood
Development Program for OFWs; and Community-based Associations under the Self-Employment
Assistance — Kaunlaran Program as SEs - A cooperative that qualifies as SE as defined in this Act
may be accredited as such by the Commission in order to enjoy the benefits and privileges granted
hereof only upon prior written verification by the Cooperative Development Authority to the effect that
the same is needed and desired by the beneficiaries and that it will be economically viable in its

operations; and that the same may now be accredited in accordance with requirements of this Act.

The Commission, in consultation with Cooperative Development Authority shall issue the

appropriate rules and regulations pertaining to the implementation of this Section.

A micro, small, and medium enterprise established under R.A. No.6977, as amended by R.A.
No.8299 and R.A. No. 9150, a Barangay Micro Business Enterprise established under R.A. 9178, Fair

17


BFS c@weixrt sven

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15
16
17
18
19
20

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23
24
25
26
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29
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31
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33
34
35
36
Ed
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Trade certified organizations or certified Fair Trade organizations, OFWs and their dependents that are
organized and assisted by the OWWA and the NLDC under the Livelihood Development Program for
OFWs; and community-based associations composed of poor families organized by the Department of
Social Welfare and Development and the LGUs under the Self-Employment Assistance ~ Kaunlaran
Program that meet the qualifications as a Social Enterprise under Section 4 of this Act may likewise be

aceredited as a Social Enterprise.

SECTION 19. Register of SEs — The Commission shall establish a register which shall contain
a chronological entry of the name of every SE accredited or whose accreditation is cancelled/revoked
or which is under dissolution under this Act together with the basic information required for

accreditation or cancellation or revocation and any other information considered useful. The

Commission shall publish annually a list of existing SEs, SEs whose accreditation are cancelled or
revoked, and SEs under dissolution during the year together with such information on each of them as

may be prescribed in the implementing rules and regulations.

CHAPTER VIL
ACCESS TO CREDIT RESOURCES AND GUARANTEE FUND

SECTION 20. SEs! Access to Credit Resources and Mandatory Allocation Thereof - In the
pursuit of poverty reduction through SEs, there is a need to ensure their access to credit. In this regard,

the active participation of the banking sector and government financial institutions is hereby mandated.

In addition to and apart from the special credit windows mandated under Section 16 of R.A.
No. 8425 to be opened by the Land Bank of the Philippines, Development Bank of the Philippines,
Philippine Postal Bank, and Al Amanah Bank for the promotion of microfinance, the foregoing banks
are hereby mandated to set aside at least eight percent (8%) of their total loan portfolio based on their
balance sheet as of the end of the preceding quarter and open a special credit window for SEs as herein

contemplated.

For a period of ten (10) years from the date of the effectivity of this Act, all other lending
institutions as defined under Bangko Sentral ng Pilipinas rules, whether public of private, shall likewise
set aside at least eight (8%) percent of their total loan portfolio based on their balance sheet as of the

end of the previous quarter and make the same available for SEs through a special credit window.

‘The Bangko Sentral ng Pilipinas, in consultation with the Commission, shall formulate the rules
for the effective implementation of this provision: Provided, That the purchase of government notes,
securities and other negotiable instruments shall not be deemed compliance with the foregoing

provision: Provided, further, That the Bangko Sentral ng Pilipinas shall establish an incentive program

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20
21
22
23
24
25
26
27
28
29
30
31

3
34
35
36
37
38

to encourage lending to small and medium industries beyond mandatory credit allocation to said

enterprises, such as possible reduction in bank's reserve requirement.

‘The Commission shall establish the appropriate systems to monitor all loan applications of SEs

in order to account for the absorptive capacity of the SE sector.

‘The Bangko Sentral ng Pilipinas shall require lending institutions covered by this Act to furnish
the Commission on a quarterly basis a regular report on their respective compliance with the above
provisions on the mandatory credit allocations for SEs and act with dispatch on the Commission's

reports of non-compliance therewith,

The special credit window for SEs shall bear lower than market interest rates with longer terms

or repayment and waiver of applicable fees.

SECTION 21. SEs' Special Credit Window; Purposes — The special credit window mandated

in the preceding section to be created shall be intended for, but not limited to, the following purposes:

(a) Organizational Developmental Loan or Capacity-Building Loan for the conduct of

social preparation activities or the conduct of capability-building/training or professional development

of the board, management and staff of the SEPPS intended for social entrepreneurship development
and institutional strengthening, human resource competency and skills training, business planning and
advisory services, technology intervention, technology incubation/commercialization, market studies,
and product development competitiveness, business matching activities, trade fairs and missions, and
policy advocacy;

(b) Credit Line for Business Development Loan or Working Capital Loan to cover the
operational and management expenses of a start-up/existing business or income generating project,
including receivable financing and/or purchase of additional inventory, and soft or intangible

investments such as: trade fair participation; pre-operating expenses for expansion project; rental

deposit; IT software packages; franchise development packages, and others;

(©) Fixed Assets Financing to cover acquisition of fixed assets like machinery and equipment
or motor vehicle; lot acquisition for project site and/or the construction of a plant and building and the
improvements thereof;

(d) Value Chain Financing to cover any of the value chain activities (production, processing
and marketing) with direct forward or backward link;

() Domestic Letter of Credit/Trust Receipt to provide a standby credit facility for the
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

19


0 OOO OQ) OQ) QO EE —eV7”

1 (f) Revolving Credit Line — funds for re-lending to finance the livelihood project requirements
2 ofend-borrowers.

3

4 SECTION 22. Eligibility for Agriculture and Fisheries Credit. - At least ten percent (10%) of

the funds created under Section 6 of Republic Act No. 10000, otherwise known as "The Agri-Agra
Reform Credit Act of 2009", and mandated to be set aside by all banking institutions, whether
government or private, for agriculture and fisheries credit shall be made available for SEs engaged in

agriculture and fisheries activities.

Socxwr)d] 4

SECTION 23. SE Guarantee Fund Pool. - There shall be evolved a Social Enterprise credit
11 insurance and financing system to improve the viability and productivity of the SEPPS through
12 government and private banking institutions.

13

14 ‘There is hereby created a Social Enterprise Guarantee Fund Pool (SEGEP) which shall
15 comprise five percent (5%) of the 2012 surplus of the government-owned and/or ~ controlled
16 corporations and government financial institutions including the Philippine Amusement and Gaming
17 Corporation (PAGCOR), the Philippine Charity Sweepstakes Office (PCSO), the Social Security
18 System (SSS), and the Government Service Insurance System (GSIS), the National Power Corporation
19 and the Philippine National Oil Company as contribution to the SGFP in accordance with relevant
20 laws, charters and by-laws and the penalties collected from banking institutions for non-compliance
21 and under compliance as provided under this Act.

22

23 ‘The SEGEP shall be administered by the Commission and shall be used to mitigate the risks
24 involved in SEPPS sector lending, thereby facilitating the provision of credit therefor. Such fund shall

25 be placed in trust with the Land Bank of the Philippines for the purpose of providing guarantee cover to

26 participating financial institutions and other parties in extending financing to SEs. The Commission, in

27 coordination with the Land Bank of the Philippines, shall draw up the mechanics and administrative

28 arrangements and issue the implementing guidelines for the fund pool.

29

30 CHAPTER VIII

31 INCENTIVES AND BENEFITS

32

33 SECTION 24. Tariffs and Duties Exemption for the Importation of Product Inputs,

34 Equipment, Machinery, and Implements - All SEs as duly certified by the Commission in consultation
35 with the Department of Finance and the Board of Investment of the Department of Trade and Industry
36 shall, for five (5) years after the effectivity of this Act, be exempted from the payment of tariff and
37 duties for the importation of all types of product inputs, equipment, machinery, implements, and spare

38 parts: Provided, however, That 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 of the SEs.

‘The Commission, in consultation with the Department of Finance and the Board of Investment,
shall, 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.

SECTION 25. Taxation of an Accredited SE ~ The taxation of a SE shall be as follows:

a) A Social Enterprise with undistributed or undivided net income of not more than Ten
Million Pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or
barangay taxes of whatever name and nature.

b) Transactions of the SE and its clients shall be exempt from documentary stamp tax.

©) 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 for income tax purposes.

SECTION 26. Preferential Right for SEs Transacting Procurement Business with
Government — SEs shall be accorded a preferential right in the procurement process and the

implementation of procurement contracts by the government and all its branches, departments,

agencies, subdivisions, and instrumentalities, including government-owned and/or -controlled

corporations and local government units.

All Annual Procurement Plans of a Procuring Entity of the government as cited in Section 7 of

R.A. No. 9184 or the “Government Procurement Reform Act” shall promote, to the extent possible or

available, the preferential procurement of goods produced and services rendered by S

‘The provisions of Section 10 of R.A. 9184 to the contrary notwithstanding, the Procuring Entity
shall, at all times, resort first to direct contracting, shopping, or negotiated procurement in obtaining
goods or services where such goods or services may be obtained from a SE within the area of operation
of the Procuring Entity and is duly certified by the Commission as having the capacity to supply the

same.

(a) For this purpose, Sections 50, 52, and 53 of R.A. 9184 are hereby amended to read as

follows:

“Sec. 50. Direct Contracting, - Direct Contracting may be resorted to only

in any of the following conditions:

21


a. Procurement of Goods of propriety nature, which can be obtained only
from the propriety source, i.e. when patents, trade secrets and copyrights prohibit
others from manufacturing the same items;

b. When the Procurement of critical components from a specific
manufacturer, supplier, or distributor is a condition precedent to hold a contractor
to guarantee its project performance, in accordance with the provisions his
contract;

c. Those sold by an exclusive dealer or manufacturer, which does not have
sub-dealers selling at lower prices and for which no suitable substitute can be
obtained at more advantageous terms to the government; or

D, WHERE THERE EXISTS A SEPPS SELLING THE GOODS OR
SERVICES REQUIRED BY THE PROCURING ENTITY AS CERTIFIED
BY THE COMMISSION.

“Sec. 52. Shopping. - shopping may be resorted to under any of the
following instances:

a, When there is an unforeseen contingency requiring immediate purchase:
PROVIDED, THAT THE PROCUREMENT OF THE GOODS OR
SERVICES IS FIRST OBTAINED FROM A SOCIAL ENTERPRISE
WITHIN THE AREA OF OPERATION OF THE PROCURING ENTITY
WHICH IS DULY CERTIFIED BY THE COMMISSION AS HAVING THE
CAPACITY TO SUPPLY SAID GOODS AND SERVICES: _ Provided,
however, That the amount shall not exceed ONE HUNDRED THOUSAND
PESOS (P100,000); or

b. Procurement of ordinary or regular office supplies and equipment not
available in the Procurement Service involving an amount not exceeding Two
hundred fifty thousand pesos (P250,000): Provided, however, That the
Procurement does not result in Splitting of Contracts: Provided, further, That A
PRICE QUOTATION FROM A SEPPS CERTIFIED BY THE
COMMISSION AS HAVING THE CAPACITY TO FURNISH OR
PROVIDE SUCH OFFICE SUPPLIES AND EQUIPMENT SHALL FIRST
BE OBTAINED; PROVIDED, FINALLY, THAT ONLY AFTER THE
FAILURE OF SUBMISSION OF A PRICE QUOTATION BY A SOCIAL.
ENTERPRISE THAT at least three (3) price quotations from OTHER bona
fide suppliers shall be obtained.

The above amounts shall be subject to a periodic review by the GPPB. For
this purpose, the GPPB shall be authorized to increase or decrease the said
amount in order to reflect changes in economic conditions and for other justifiable

reasons.

22


“Sec. 53. Negotiated Procurement. - Negotiated Procurement shall be
allowed only in the following instances:

a. In case of two (2) failed bidding as provided in Sec. 35 hereof:

b. In case of imminent danger to life or property during a state of calamity,
or when time is of the essence arising from natural or man-made calamities or
other causes where immediate action is necessary to prevent damage to or loss of
life or property, or to restore vital public services, infrastructure facilities and
other public utilities;

c. Take-over of contracts, which have been rescinded or terminated for

causes provided for in the contract and existing laws, where immediate action is
necessary to prevent damage to or loss of life or property, or to restore vital public
services, infrastructure facilities and other public utilities:

d. Where the subject contract is adjacent or contiguous to an on-going
infrastructure project, as defined in the IRR: Provided, however, That the original
contract is the result of a Competitive Bidding; the subject contract to be
negotiated has similar or related scopes of work: it is within the contracting
capacity of the contractor; the contractor uses the same prices or lower unit prices
as in the original contract less mobilization cost; the amount involved does not
exceed the amount of the ongoing project; and, the contractor has no negative
slippage: Provided, further, That negotiations for the procurement are commenced
before the expiry of the original contract. Wherever applicable, the principle shall
also govern consultancy contract, where the consultants have unique experience
and expertise to deliver the required service:

€. Subject to the guidelines specified in the IRR, purchases of Goods from
another agency of the government, such as the Procurement Service of the DBM,
which is tasked with a centralized procurement of commonly used Goods for the
government in accordance with Letters of Instruction No. 755 and Executive
Order No. 359, series of 1989: or

F WHERE THE GOODS OR SERVICES SUBJECT OF THE
PROCUREMENT CONTRACT MAY BE OBTAINED FROM A SEPPS.
WITHIN THE AREA OF OPERATION OF THE PROCURING ENTITY
AND WHICH IS DULY CERTIFIED BY THE SEPPSDEV AS HAVING
THE CAPACITY TO SUPPLY SAID GOODS OR SERVICES.

(6) Only if and when no procurement is perfected by way of direct
contracting, shopping, or negotiated procurement by reason of the absence of a
Social Enterprise within the area of operation of the Procuring Entity which is
certified by the Commission as having the capacity to supply the goods and

services subject of the procurement contract or of the lack of interest to supply

23


Socwerd swe wH

from a Social Enterprise shall the Procuring Entity through its Bids and Awards
Committee issue an invitation to bid;

(c) A Procuring Entity shall, where applicable, have at least one
member representing SEs;

(d) _ In the implementation of R.A. No. 7880, otherwise known as the
"Fair and Equitable Access to Education Act", in particular the allocation for
textbooks, desks, furniture and equipment used for instructional purposes, the ten
percent (10%) out of the twenty five percent (25%) of the amount released for the
purchase of desks, furniture and equipment allocated to SEs or cooperatives of
persons with disabilities shall always be observed notwithstanding the provisions
of R.A. 9184 or the “Government Procurement Reform Act” to the contrary];

(e) Registered small enterprises under R.A. 6977, otherwise known as
the “Magna Carta for Small Enterprises,” as amended by R.A. 8299 and R.A.
9150, that qualify as SE under this Act shall, consistent with Section 4 of R.A.

9150, 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.

() The Commis

shall issue the rules and regulations that shall implement the preferential right

ion and the Department of Budget and Management

accorded to SEs under this Section, including the limitations and restrictions in

the application of the same.”

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) Donations to SEs shall be fully deductible from the gross income of the donor subject to the
conditions of Section 34(c) of Republic Act No. 8424, as amended, otherwise known as the “National
Internal Revenue Code of 1997": Provided, however, That the accreditation of the SE by the
Commission under this Act shall be sufficient; and

(b) Donations to the SE shall be exempt from donor’s tax subject to the qualifications of
Section 101 of Republic Act No. 8424, as amended, otherwise known as the “National Internal
Revenue Code of 1997”: Provided, That for purposes of utilization, accreditation granted under this Act

shall be sufficient.

24


CHAPTER IX
PENAL PROVISIONS

SECTION 28. Non-Compliance with the Mandatory Allocation of Credit Resources — The

Bangko Sentral ng Pilipinas shall impose administrative sanctions and other penalties on the lending

institutions for non-compliance with provision of this Act including a fine of not less than Five hundred
thousand pesos (P500,000).

SECTION 29. Penalty Clause - Any person who, intentionally or by gross negligence,
commits an act, other than the non-compliance with the mandatory allocation of credit resources as
provided in the preceding section, in violation of any provision of this Act, fails to perform his/her
functions under this Act and/or who shall, in any manner, commit any act to defeat any provisions of
this Act shall, upon conviction, be punished with a fine of not less than Twenty-Five Thousand pesos

(P25,000.00) but not more than Fifty thousand pesos (P50,000.00) and suffer imprisonment of not less

than six (6) months but not more than two (2) years, without prejudice to being charged before a

regular court for violation of the provisions of the Revised Penal Code, Civil Code and other pertinent

laws.

If the violation is committed by the social enterprise or government agency, the members,
officers, directors or trustees thereof who have actually participated in, authorized, or ratified the

prohibited act shall, upon conviction, be held liable.

If the violation is committed by the employees and agents who acted in gross violation of the
provisions of this Act, the officers, directors or trustees, or incorporators of the social enterprise shall

be jointly and severally liable with the offending employees, agents, and the enterprise.

In the case of a public official or employee, the offender shall, upon conviction, suffer the

accessory penalty of absolute disqualification,

CHAPTER X
TRANSITORY PROVISION

SECTION 30. Phase-in of PRESENT Program as a Substitute Program for the Conditional
Cash Transfer Program. - Unless circumstances warrant otherwise, the Department of Social Welfare
and Development shall, in coordination with the Commission and within a period of five (5) years but
in no case longer than ten (10) years from the approval of this Act, phase-out the Conditional Cash
Transfer Program and, in lieu thereof, phase-in the development of SE as a substitute program for
poverty reduction to the extent allowed in the Eligible Expenditures in support of the Conditional Cash

25


‘Transfer Program as stipulated in the Appendix of the Loan Agreement thereof with the World Bank

through the International Bank for Reconstruction and Development.

The Commission, in coordination with the DSWD, shall prepare the beneficiaries of the

Conditional Cash Transfer Program and organize them into full-fledged SEs under the contemplation of
this Act.
CHAPTER XI
MISCELLANEOUS PROVISIONS

SECTION 31. Compliance With Other Laws that Govern the Relationship Between a Social
Enterprise and its Employees — The Labor Code and all other labor laws, the Social Security Act, the
Medical Care Act, and all other social legislations, and all other laws and executive orders that govern
the relationship between a Social Enterprise and its employees shall apply and that all employees
covered under this Act shall be entitled to the same benefits given to any regular employee such as

social security and healthcare benefits.

SECTION 32. Congressional Oversight - There is hereby created a Congressional Oversight
Committee on SE composed of the Chairman of the Senate Committee on Economic Affairs, Trade and
Commerce and the Chairman of the House Committee on Small Business and Entrepreneurship

Development, four (4) members

of the Senate and four (4) members of the House of Representatives.
‘The members from the Senate shall be appointed by the Senate President from among the members of
the Senate Committee on Economic Affairs, Trade and Commerce based on the proportional
representation of the parties or coalition therein. The members from the House of Representatives shall
be appointed by the Speaker from among the members of the House Committee on Small Business and
Entrepreneurship Development based on the proportional representation of the parties or coalitions

therein.

The Oversight Committee, upon review and approval of the Implementing Rules and
Regulations mandated under Sec. 34 of this Act shall become functus officio and therefore cease to
exist: Provided, however, That the Commission shall thereafter submit to the Committee on Economic
Affairs, Trade and Commerce of the Senate and the Committee on Small Business and
Entrepreneurship Development of the House of Representatives an annual report on the

implementation of this Act.

The appropriation for the oversight committee shall be charged to the budget of both Houses of
Congress in the Annual General Appropriations Act.

SECTION 33. Appropriations — To carry out the provisions of this Act, the following amounts

are appropriated as follows:

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(1) The sum of One Hundred Million Pesos (B100,000,000.00) is hereby appropriated as the
initial operating fund which sum shall be sourced from the President's Contingent Fund. In the
subsequent years, the Commission shall have a separate annual appropriation under the DTI which
shall be provided in the General Appropriation Act starting in the fiscal year immediately following the
approval of this Act.

(2) The aggregate sum of Three Billion Pesos (P3,000,000,000.00) for ten (10) years is hereby
appropriated for the establishment of the SEDF from the share of the national government in the
earings of the Philippine Amusement and Gaming Corporation (PAGCOR), in the following manner:
on the first year, One Hundred Million Pesos (2100,000,000.00); on the second year, One Hundred
Fifty Million Pesos (2150,000,000.00); on the third year, Two Hundred Million Pesos
(P200,000,000.00); on the fourth year, Two Hundred Fifty Million Pesos (P250,000,000.00); on the
fifth year, Three Hundred Million Pesos (2300,000,000.00); and every year thereafter until the tenth
year, Four Hundred Million Pesos (P500,000,000.00) annually.

SECTION 34. Social Enterprise Week - In order to institute continuing awareness on the
primacy of social enterprises with the poor as the primary stakeholders as a viable government strategy
in pursuing poverty reduction, 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 Commission,
through the National Center for SE Development shall be responsible in organizing activities for the

event.

SECTION 35. Implementing Rules and Regulations — The Commission shall formulate and

promulgate, in consultation with the concerned sectors, the rules and regulations necessary to

implement the provisions of this Act within three (3) months from its effectivity.

SECTION 36. Printing and Distribution — 1) The National Printing Office shall publish this
Act in the Official Gazette in full within sixty (60) days from the date of its effectivity. Copies of this
Act shall be given to every department, agency, subdivision, and instrumentality of the Government,
including government-owned and controlled corporations, regional and provincial offices, and local

governments.

2) All duly accredited SEs shall be given one (1) copy each at cost. Thereafter, every newly
accredited SEPPS shall be issued at cost a copy of this Act and the rules and regulations promulgated

thereunder together with its certificate of accreditation.

SECTION 37. Information Dissemination - The Philippine Information Agency (PIA), in
coordination with the Commission, the DTI, DA, and the DILG, shall ensure the proper and adequate
information dissemination of the contents and benefits of this Act to the general public especially to its
intended beneficiaries.

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CHAPTER XII
FINAL PROVISIONS.

SECTION 38. Non-Impairment Clause - Nothing in this Act shall be construed as to diminish,
impair, or repeal rights recognized, granted, or available to marginalized or basic sectors under existing

laws

SECTION 39. Separability Clause - If any provision of this Act shall be held invalid or
unconstitutional, the remaining provisions thereof not affected thereby shall remain in full force and

effect.

SECTION 40. Interpretation and Construction — In case of doubt as to the meaning of any
provision of his Act or the rules and regulations issued in pursuance thereof, the same shall be resolved

liberally in favor of the SEs and their stakeholders.

SECTION 41. Repealing Clause - All laws, decrees, proclamations, orders, other

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rules and regulations or parts thereof which are contrary to or inconsistent with this Act are hereby

repealed, amended or modified accordingly.

SECTION 42. 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,