FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No, 1048

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

EXPLANATORY NOTE

This bill seeks to expand the coverage of the productivity incentives program,
to include all branches, agencies and instrumentalities of the government and
broaden its concept to include a productivity gainsharing program whereby
employers and employees share in the fruits of improvement in productivity.

Republic Act No. 6971 or the Productivity Incentives Act of 1990 was enacted
to provide incentives to both labor and capital for undertaking voluntary programs to
ensure greater sharing by the workers in the fruits of their labor.

Under the said Act, productivity incentives program refers to a formal
agreement established by the labor -management committee containing a process
that will promote gainful employment, improve working conditions and result in
increased productivity, including cost savings, whereby the employees are granted
salary, bonuses proportionate to increases in current productivity over the average
for the preceding three (3) consecutive years. A business enterprise which adopts a
productivity incentives program shall be granted a special deduction from gross
income equivalent to fifty percent (50%) of the total productivity bonuses given to
employees under the program over and above the total allowable ordinary and
necessary

More than ten years into the implementation of the law, only a handful of
business enterprises have adopted the program due to certain restrictive provisions
of the law that make it hard to implement.

This bill addresses such concerns by introducing amendments aimed at
making the law more responsive to the situations prevailing in labor and
employment.

In view of the foregoing, immediate passage of this bill is earnestly requested.

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RUFUS B. ROPRIGUEZ

OL,

MAXIMO B. RODRIGUEZ, JR.


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No. _ 1048

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

AN ACT
AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6971 OTHERWISE
KNOWN AS “THE PRODUCTIVITY INCENTIVES ACT OF 2007” AND FOR
OTHER PURPOSES

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

SECTION 1. Section 2 of Republic Act No. 6971, otherwise known as the
“Productivity Incentives of 2007”, is hereby amended to read, as follows:

SEC. 2. Declaration of Policy — It is declared policy of the State to
encourage higher levels productivity IN ORDER THAT PHILIPPINE
PRODUCTS SERVICES CAN MEET GLOBAL COMPITITION, maintain
industrial peace and harmony and promote the principle of shared
responsibility in the relations between workers and employers SO AS TO
STRENGTHEN THE COOPERATION BETWEEN LABOR AND CAPITAL,
recognizing the right of labor to its just in the fruits of production and the right
of business the right business enterprises to reasonable returns on
investments and to expansion and growth, and accordingly to provide
corresponding incentives to both labor and capital for undertaking voluntarily
Programs to ensure JUST SHARE BY THE WORKERS IN THE FRUITS OF
THEIR LABOR IN RELATION TO THE PROFIT TO YIELDED TO THE
EMPLOYER AS A RESULT OF INCREASED PRODUCTIVITY AND THUS,
ENCHANCE THE IMPROVEMENT OF THE QUALITY OF LIFE OF THE
EMPLOYEES [greater sharing by the workers in the fruits of their labor)’

‘SEC. 2. Section 3 of R.A. 6971 is hereby amended to read, as follows:

“SEC. 3. Coverage - This Act shall apply to all business enterprises
with or without existing and duly recognized COLLECTIVE BARGAINING
REPRESENTATIVE [or certified labor organizations] including ALL
government [ owned and controlled corporations performing proprietary
functions] INTRUMENTALITIES AND SUBDIVISIONS | THEREOF
[INCLUDING] = AND SECOND GENERATION GOVERNMENT
CORPORATION OR ENTITIES. It shall cover all employees, and workers
REGARDLESS OF THEIR STATUS AND THE MANNER THEY ARE PAID


THEIR SALARIES AND WAGES [including casual, regular, supervisory and
managerial employees}”

SEC. 3. Section 4 of R.A 6971 is hereby amended to read as follows:
SEC. 4. Definition of Terms — As used in this Act:

a. “Business Enterprises” refer to industrial, agriculture, or agro-industrial
establishments engaged in the production, manufacturing, repacking, or
assembly of goods, including service-oriented enterprises [, duly certified as
such by appropriate government agencies]

b. [Labor-Management Committee” refers to a negotiating body in a
business enterprise composed of the representative of labor and
management created to establish a productivity incentives programs, and to
settle disputes arising therefrom in accordance with section 9 hereof.

c.  [‘Productivity Incentives Program" refers to a formal agreement
VOLUNTARILY established by a [the] JOINT Labor-Management Committee
OR ANY EXISTING LABOR MANAGEMENT MECHANISM containing a
PRODUCTIVITY IMPROVEMENT PROGRAM (PIP) [process] that will
promote gainful employment, improve working conditions, MAINTAIN
INDUSTRIAL PEACE, [and] result in increased productivity [including cost
savings] AND YIELD PROFITS TO THE EMPLOYER, AS WELL AS
PRODUCTIVITY GAINSHARING PROGRAM whereby the EMPLOYERS
AND THE WORKERS SHARE IN THE RESULT OF IMPROVEMENT IN
PRODUCTIVITY [whereby the employees are granted salary bonuses
proportionate to increase in current productivity over the average for the
preceding three (3) consecutive years. The agreement shall be ratified by at
lest a majority of the employees who have rendered at least six (6) months of
continuous service).”

SEC. 4. Section 5 of R.A. 6971 is hereby amended to read as follows:

“SEC. 5. Labor-management Committee —
a. A business enterprise and/ or its employees, through their authorized
representatives, may initiate the formation of a labor-management
committee OR ANY LABOR-MANAGEMENT MECHANISM that shall be
composed of [an equal number of] representatives from the management
and from the rank-and-file employees. [:] INCASE THERE IS ALREADY AN
EXITING LABOR MECHANISM IN THE ENTERPRISE, SUCH
MECHANISM MAT BE USED, PROVIDED THA IT INCLUDES AS ONE ITS
OBJECTIVES THE DEVELOPMENT AND IMPLEMETATION OF
PRODUCTIVITY INCENTIVES PROGRAM: Provided, [That both
management and labor shall have equal voting rights: Provided, further,]
That at the request of any party to the negotiation, the National Wages and
Productivity Commission AND THE REGIONAL TRIPARTITE WAGES AND
PRODUCTIVITY BAORDS of the Department of Labor and Employment
shall provide the necessary studies, technical information and assistance,
and expert advice to enable the parties to conclude productivity agreements.

b. In_ business enterprise without duly recognized COLLECTIVE
BARGAINING REPRESENTATIVES, [or certified labor organizations, the


representatives of labor shall be elected by at least majority of all rank-and-
file employees who have rendered at least six (6) months of continuous
service.”

SEC. 5. Section 6 of R.A. 6971 is hereby amended to read as follows;

“SEC. 6, Productivity Incentives Program —

a. The productivity incentives program shall contain flexible PROVISION
for MEASURING PRODUCTIVITY CHANGES [the manner of sharing]
and the factors in determining productivity bonuses AS WELL AS THE
COVERAGE AND MANNER OF SHARING BONUSES [: Provided,
That the productivity bonuses granted to labor under this program shall
not be less than half of the percentage increase in the productivity of
the business enterprise).

b. Productivity agreement reached by the parties as provided in this Act
MAY [shall] supplement existing collective bargaining agreements.

c. If during the existence of the productivity incentives program or
agreement, the employees will join or form a union, such program or
agreement may, in addition to the terms and conditions agreed upon by
labor and management, be integrated in the collective bargaining
agreement that may be entered into between them.

SEC. 6. Section 7 of R.A. 6971 is hereby amended to read as follows:

a. Subject to the provision of section 6 hereof, a business enterprise
which adopts a productivity incentives program, duly and mutually
agreed upon by parties to the labor-management committee, shall be
granted a special deduction from gross income equivalent to fifty
percent (50%) of the total productivity bonuses given to employees
under the PRODUCTIVITY INCENTIVES program over and above the
total allowable ordinary and necessary business deduction for said
bonuses under the National Internal Code, as amended.

b. Grants for manpower training and special studies given to rank-and-file
employees pursuant to SKILLS DEVELOPMENT ACTIVITIES UNDER
THE PRODUCTIVITY INCENTIVE [a] program [ prepared by the labor-
management committee for the development of skills identified as
necessary by the appropriate government agencies] shall also entitle
the business enterprise to a special deduction from gross income
equivalent to fifty percent (50%) of the total grants over and above the
allowable ordinary and necessary business deductions for said grants
under the National internal Revenue Code, as amended.

¢. Any AGREEMENT (strike or lockout] arising from any violation of the
productivity incentives program shall BE RESOLVED BY PARTIES
INVOLVED. HOWEVER, IN CASES WHERE A THIRD PARTY IS
NEEDED, THE COMMITTEE MAY SEEK THE ASSISTANCE OF THE
TRIPARITE WAGES AND PRODUCTIVITY BOARD (TWPB) WHICH
WILL MEDIATE BETWEEN INVOLVED PARTIES TO ARRIVE AT AN
AGREEMENT. THE TWPB WILL ACT ONLY AS AN ADVISORY
BODY RENDERING INTERPRETATION AND CLARIFICATION TP
HELP THE INVOLVED PARTIES TO ADOPT A FINAL RESULOTION
[suspend the effectivity thereof pending settlement of such strike or


lockout]: Provided, That the business enterprise shall not be deemed to
have forfeited tax incentives accrued prior to the date of occurrence of
such DISAGREEMENT [strike or lockout,] and the workers shall be
required to reimburse the productivity bonuses already to them under
the incentives program. Likewise, bonuses which have already accrued
before the DISAGREEMENT [strike or lockout] shall be paid the
workers within THE PERIOD OF six (6) months from their accrual.

d. THE FREQUENCY OF PAYMENT OF PRODUCTIVITY BONUS
SHALL BE THE RESULT OF THE STUDY MADE BY PARTIES
CONCERNED [Bonuses provided for under the productivity incentives
program shall be given to the employees not later than (6) months from
the starts of such program over and above existing bonus granted by
the business enterprise and by law]: Provided, that the said bonuses
shall not be deemed as salary increases due the employees and
workers.

e. SUCH BONUSES PROVIDED TO THE EMPLOYEES SHALL BE TAX
FREE [The special deduction from gross income provided for herein
shall be allowed starting the next taxable year after the effectivity of this
Act.”

SEC. 7. Section 8 of R.A. 6971 is hereby amended to read as follows:

"SEC. 8. Notification - A bonuses enterprises which adopts a
productivity incentives program shall submit copies of the same to the
APPROPRIATE REGIONAL TRIPARTITES WAGES AND
PRODUCTIVITY BOARD (RTWPB) OF THE NATIONAL WAGES AND
PRODUCTIVITY COMMISION (NWPC) and [to] the bureau of internal
Revenue for their information and record.”

SEC. 8. Section 9 of R.A. 6971 is hereby amended to read as follows:

"SEC. 9. Disagreement - [Disputes and grievances] - Where
DISAGREEMENT (disputes, grievance,] or other matters arise from the
interpretation or implementation of the productivity incentives program,
the [labor-management] committee CREATED TO ESTABLISH THE
PRODUTIVITY INCENTIVES PROGRAM shall meet to resolve the
DISAGREEMENT (dispute, and]. THE COMMITTEE may REFER THE
DISAGREEMENT OR DIFFERENCES TO THE REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD (TWPB) WHICH
WILL MEDIATE BETWEEN INVOLVED PARTIES TO ARRIVE AT AN
AGREEMENT. THE TWPB WILL ACT ONLY AS AN ADVISORY
BODY RENDERING INTERPELATION AND CLARIFICATION TO.
HELP THE INVOLVED PARTIES TO ADOPT AFINAL RESOLUTION
[seek assistance of the National Conciliation and Mediation Board of
the Department of Labor and Employment for such purpose. Any
dispute which remains unresolved within twenty (20) days from the
time of its submission to the labor-management committee shall be

submitted for voluntary arbitration in line with the pertinent provisions of
the Labor Code, as amended.


The productivity incentives program shall include the name(s) of the
voluntary arbitrator or panel voluntary arbitrators previously chosen and
agreed upon by the labor-management committee}.”

SEC. 9. Section 10 of R.A. 6971 is hereby amended to read, as follows:

"SEC. 10. Rule Making Power - The Secretary of Labor and
Employment and the Secretary of Finance, IN CONSULTATION WITH
THE DEPARTMENT OF BUGET AND MANAGEMAENT, CIVIL
SRVICE COMMISION AND THE NTIONAL WAGES AND
PRODUCTIVITY COMMISION, [after due notice and hearing), shall
jointly promulgate and issue [within six (6) months from the effectivity of
this Act] such rules and regulations as necessary to carry out the
provision OF THE ACT [hereof].”

SEC. 10. Section 2 to 9 of R.A. 6971 and all references thereto in said law are
hereby repealed or modified accordingly. All other laws, rules, and regulations and /

or parts thereof inconsistent with the provision of this act are hereby repealed or
modified accordingly.

SEC. 11. The Department of Labor and Employment is hereby directed to
make the necessary amendments to the Implementing Rules and Regulations of
R.A, 6971 in order to reflect the changes embodied in this act.

SEC. 12. If any part or section of this Act is declared unconstitutional for any

reason whatsoever, such declaration shall not in any way affect the other parts or
sections of this Act.

SEC. 13. This Act shall take effect fifteen (15) days after publication in two (2)
newspaper of general circulation in the Philippines.

Approved.