REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
QUEZON CITY

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1225

Introduced by REPRESENTATIVES ENRICO A. PINEDA and
MICHAEL ODYLON L. ROMERO, PhD.

EXPLANATORY NOTE

Corporate Social Responsibility or CSR refers to voluntary and sustained
initiatives of businesses, working with employees, families and communities that
contribute to the social and economic development of the nation.

In the Philippine context, corporations can complement efforts of the national
government to ensure the social welfare and development of the country.

This bill defines the scope of CSR-related activities, as among others, charitable
programs and projects, scientific research, youth and sports development, cultural and
education promotion, services to veterans and senior citizens, social welfare,
environmental sustainability, health development, disaster relief and assistance,
socialized and low-cost housing projects, and incentivizes its practice. It is believed that
by offering a raft of rewards, CSR will be widely observed to the benefit of the people.

Under this bill, stock corporations will be allowed to retain profits in excess of
100% of paid-in capital stock to be used for corporate social responsibility projects and
programs while mandating the Department of Trade and Industry to recognize and
rewards business establishments for outstanding, innovative and world-class CSR-
related services.

Given these aforementioned incentives, more corporations will be enticed to
infuse a bigger portion of their income in charity and social enterprises that promote the
common good, build human capital and create better communities. Plowing back
corporate resources to communities, especially those underserved by the government,
would help cure the deficit in state spending in areas that cry out for development.

Such scheme can be seen as direct intervention by the private sector in which they
get to spend money which would have paid as taxes but in an efficient manner without
the overhead associated with the bureaucracy.


This proposed bill was filed in the 17 Congress, underwent thorough
deliberations and was subsequently passed on the Third Reading. Hence, immediate
passage of this measure is earnestly prayed for.

alt A\PINEDA MICHAL ODYLON L. ROMERO, PhD

1PACMAN PACMAN



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
QUEZON CITY

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. _1eR5

Introduced by REPRESENTATIVES ENRICO A. PINEDA and
MICHAEL ODYLON L. ROMERO, PhD.

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

AN ACT ENCOURAGING CORPORATE SOCIAL RESPONSIBILITY,
PROVIDING INCENTIVES THEREFOR

SECTION 1. Short Title, This Act shall be known as the “Corporate Social
Responsibility Act”.

SECTION 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.

SECTION 3. Corporate Social Responsibility. All business organizations established
and operating under Philippine laws, whether domestic or foreign, are hereby
encouraged to observe corporate social responsibility in the operation of their businesses
in the country.

As used in this Act, corporate social responsibility (CSR) refers to the commitment of
business to contribute on a voluntary basis to sustainable economic development by
working with relevant stakeholders to improve their lives in ways that are good for
business, sustainable development agenda and society at large. CSR-related activities
shall include the following:

a) Charitable programs and projects;

b) Scientific research;

©) Youth and sports development;

d) Cultural or educational promotion;

e) Services to veterans and senior citizens;
£) Social welfare;

g) Environment sustainability;

h) Health development;

i) Disaster relief and assistance;

j) Socialized and low-cost housing; and
¥) Employee and worker welfare-related CSR activities


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

“Sec. 43 Power to declare dividends. -

XXX XXX XXX
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 FOR 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 circumstances obtaining in the corporation,
such as when there is need for special reserve for probable contingencies.”

SECTION 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.

SECTION 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.

SECTION 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 (DOF), as the case may be.

SECTION 8. Implementing Rules and Regulations. Within sixty (60) days, the
Secretary of Finance shall, in coordination with the Department of Trade and Industry
and the Securities and Exchange Commission, promulgate the rules and regulations for
the effective implementation of this Act and shall monitor strict compliance therewith.

SECTION 9. 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.

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

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

Approved,