14th Congress of the Republic 
) 
of the Philippines 
1 
First Regular Session 
1 
S E N A T E  
S .  No. 
Introduced by Senator Aquilino Q. Pimentel, &. 
EXPLANATORY NOTE 
This bill seeks to provide incentives to all industrial enterprises which 
grant proportionate bonuses to their employees and whose employpes voluntarily 
agree to maintain industrial peace. 
Under this measure, it is proposed that business enterpri$es establish a 
Labor-Management Cooperation Committee to create an incedtive program, 
initiated by both employers and unorganized employees. An Incentkve 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 nhajority 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 emplqyees. 
The immediate passage of this bill is earnestly reqxested. 
A~UILINO 
Q. PIMEN~EL, JR. 


14th Congress of the Republic 
) 
of the Philippines 
1 
First Regular Session 
1 
Introduced by Senator Aquilino Q. Pimentel, Jr. 
AN ACT 
TO PROVIDE FURTHER INCENTIVES TO LABOR AND INDUSTRIAL 
ENTERPRISES TO THE END THAT BOTH PRODUCTMTY AND 
INCOME WILL BE INCREASED 
Be it enacted bu the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION I.-. 
- This Act shall be known as “Industrial Incentives 
Act of 2007”. 
SECTION 2. 
Declaration ofPoZicy. - 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-Manaqement Cooperation Coritrnittee. 
- 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 .  
Axqwoual 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-Makino 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. Separabilitu Clause. - If any provision of this Act is 
held invalid, any other provision not affected shall continue to be valid and 
effective. 


SECTION IO. Revealina 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,