FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senat~ Bill No. 2577 
INTRODUCED BY SEN, MANNY VILLAR 
EXPLANATORY NOTE 
'10 
NOV -4 P 2 :11 
This bill seeks to provide incentives to all industrial enterprises which grant 
proportionate bonuses to their employees and whose employees voluntarily agree to 
maintain industrial peace. 
Under this measure, it is proposed that business enterprises establish a Labor-
Management Cooperation Committee to create an incentive program, initiated by both 
employers and unorganized employees. An Incentive Program is a three-year program 
whereby the employer agrees to grant proportionate salary bonuses based on 
production for the past three (3) consecutive years, cost, manpower and similar 
variables; and, the employees agree to maintain industrial peace. 
An incentives program duly decided upon by at least a majority of the members 
of the Labor-Management Cooperation Committee shall be granted the right of tax 
deduction double that of the bonuses given to the employees. 
The immediate passage of this bill is earnestly requested. 
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FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 2577 
'10 
NOV -4 P 2 :11 
INTRODUCED BY SEN. MANNY VIL:.LAR, 
AN ACT 
TO PROVIDE FURTHER INCENTIVES TO LABOR AND INDUSTRIAL 
ENTERPRISES TO THE END THAT BOTH PRODUCTIVITY AND 
INCOME WILL BE INCREASED 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. - This Act shall be known as "Industrial Incentives Act of 2010". 
SECTION 2, Declaration of Policy. - It is the declared policy of the government to 
provide incentives to all industrial enterprises which grant proportionate bonuses to their 
employees and whose employees voluntarily agree to maintain industrial peace. 
SECTION 3. Definition of Terms. - As used in this Act: 
1. "Industrial enterprise" refers to the business enterprise engaged in the 
production, manufacturing or processing of goods duly certified as such by the 
pertinent government offices. 
2. "Labor-Management Cooperation Committees" refer to negotiating 
bodies created by both employers and unorganized employees to establish an 
incentives program. 
3. "Incentives Program" refers to a three-year program whereby the 
employer agrees to grant proportionate salary bonuses based on production for 
the past three (3) consecutive years, cost, manpower and similar variables; and, 
the employees agree to maintain industrial peace. 
4. "Industrial Peace" refers to the state of labor and management relations 
wherein the parties thru the Labor-Management Cooperation Committee (LMMC) 
voluntarily decide, by at least a majority of all the members thereof, against 
strikes, lockouts or similar means which disrupt operations and production of the 
enterprise, except when an unfair labor practice is committed by other party. 
5. "Tax deductions" refer to deductions from gross income as determined 
by the National Internal Revenue Code, as amended. 
SECTION 
4. 
Labor-Management Cooperation 
Committee.-
An 
industrial 
enterprise may establish a Labor-Management Cooperation Committee to create an 
incentive program; Provided, That such Labor- Management Cooperation Committee 


shall be composed of an equal number of representatives from employees and 
management duly chosen and agreed upon by both of them. 
SECTION 5. Approval and Notification. - An industrial enterprise which adopts an 
incentives program shall submit copies of the same to the Department of Labor and 
Employment and to the Bureau of Internal Revenue for approval and notification, 
respectively. 
SECTION 6. Benefits. - Subject to the provisions of Section 3 (3) and (4) hereof, 
and industrial enterprise which adopts an incentives program duly decided upon by at 
least a majority of the members of the Labor- Management Cooperation Committee 
shall be granted the right of tax deduction double that of the bonuses given to the 
employees. Manpower training and speCial studies abroad shall be granted to qualified 
employees of the industrial enterprises pursuant to a program prepared by the 
appropriate government agencies. 
SECTION 7. Rule-Making Power. - The Secretary of the Department of Labor 
and Employment and the Commissioner of the Bureau of Internal Revenue are hereby 
authorized to promUlgate such rules and regulations necessary to carry out the 
provisions of this Act. 
SECTION 8. Penalty. - Any person who shall make any fraudulent claim under 
this Act, regardless whether a tax refund has been granted, shall, upon conviction, be 
punished with imprisonment of not less than six months and not more than one year, or 
a fine of not less than ten thousand pesos but not more than twenty thousand pesos, or 
both, without prejudice to prosecution and punishment for any other offense punishable 
under the Revised Penal Code or any other penal statute. 
In case of partnerships or corporations, the managing partner, general manager, 
or chief executive officer, as the case may be, shall be held criminally liable. 
SECTION 9. Separability Clause. - If any provision of this Act is held invalid, any 
other provision not affected shall continue to be valid and effective. 
SECTION 10. Repealing Clause. - Any law, executive order, letter of instruction, 
or any part thereof, which is inconsistent with any provisions of this Act is hereby 
repealed or amended accordingly. 
SECTION 11. Effectivity Clause. - This Act shall take effect fifteen (15) days 
following the completion of its publication in the Official Gazette or in at least two (2) 
national newspapers of general circulation. 
Approved,