Page | 1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
First Regular Session 
HOUSE BILL NO. __________ 
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
PROMOTING INCLUSIVE AND SUSTAINABLE PRODUCTIVITY GROWTH, 
REPEALING FOR THE PURPOSE REPUBLIC ACT NO. 6971, OTHERWISE 
KNOWN AS THE “PRODUCTIVITY INCENTIVES ACT OF 1990” 
EXPLANATORY NOTE 
 Workers’ strong backs, and even strong creative minds hold the potential and 
capability to make the economy stay afloat.  
At present, workers and laborers desire for concrete policies that will address the best 
interest, both from their side and their employer. It is important for the workers to ensure that 
the excellent work they do for the progressive growth of the institution they work for, will 
eventually become added fruits of their labor.  
The passage of Republic Act No. 6971 twenty-nine years ago, known as the 
“Productivity Incentives Act of 1990” promoted the productivity incentives program to ensure 
that workers will have a greater share with the outstanding service they render. It is also enacted 
to make it certain that business enterprises will uphold gainful employment, improve working 
conditions and share the cost savings with the increased productivity of employees. However, 
with more than 10 years of its implementation, only few business enterprises complied to its 
provisions as it is hard to implement.  
This Bill aims to grant an additional deduction from the gross income equivalent to 
sixty-six percent (66%) of the total productivity bonuses given to employees under the program 
over and above the total allowable ordinary and necessary business deductions for said bonuses 
under the National Internal Revenue Code of 1997, as amended. It also entitles 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. (see 
table below) 
July 1, 2022
8:00 am
637


Page | 2 
Assuming Php 100.00 bonus achieves Php 100.00 net cost savings or Php 100.00 revenue 
gain for same structure 
Regular 
Additional 
Deduction 
0 
100% 
66% 
50% 
25% 
Bonus Amount 
100 
100 
100 
100 
100 
Revenue Income/ 
Cost Savings 
100 
100 
100 
100 
100 
Gross Revenues to 
 Firm 
0 
0 
0 
0 
0 
Additional Tax Shield 
30 
20 
15 
8 
Cost to Government 
-30
-20
-15
-8
Assuming P100 bonus is just cost regardless of benefit 
Regular 
Additional 
Deduction 
0 
100% 
66% 
50% 
25% 
Bonus Amount 
100 
100 
100 
100 
100 
No Revenue Income/ 
Cost Savings  
0 
0 
0 
0 
0 
Gross Revenues to 
 Firm 
-100
-100
-100
-100
-100
Share of Firm 
-70
-40
-50
-55
-63
Share of Government 
-30
-60
-50
-45
-38
This legislative initiative addresses the worker’s rights to elevate, better their lives and 
making it certain that businesses attain their vision with the harmonious relationship they 
maintain with their employees. Granting Productivity Incentive Bonus is not solely for the 
purpose of additional income but also an effective way to safeguard productivity of workers 
that is, at the end of the day, beneficial to the business enterprise.  
In view of the foregoing, the passage of this bill is earnestly sought. 
JOEY SARTE SALCEDA 


Page | 1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
First Regular Session 
HOUSE BILL NO. __________ 
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
PROMOTING INCLUSIVE AND SUSTAINABLE PRODUCTIVITY GROWTH, 
REPEALING FOR THE PURPOSE REPUBLIC ACT NO. 6971, OTHERWISE 
KNOWN AS THE “PRODUCTIVITY INCENTIVES ACT OF 1990” 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Short Title. – This Act shall be known as the “Enterprise Productivity Act.” 
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to: 
(a) Encourage higher levels of productivity in all industries to enable enterprises to
compete globally; 
(b) Promote gainful employment, improve working conditions, maintain industrial
peace  and  harmony,  and  promote  the  principle  of partnership and shared responsibility in 
the relations between workers and employers, recognizing the right of labor to its just share in 
the fruits of production, and the right of business enterprises to reasonable returns of 
investments, and for expansion and growth; and 
(c) Provide corresponding incentives to both labor and capital for undertaking
productivity improvement programs and gainsharing. 
SEC. 3. Coverage. – This Act shall apply to all business enterprises with or without existing 
and duly recognized collective bargaining agreements. It shall cover all employees and 
workers regardless of their position, designation, or status, and the manner by which their 
wages are paid. 
SEC. 4. Definition of Terms. – As used in this Act: 
(a) 
Business 
enterprise 
refers to 
an 
entity duly
incorporated, organized, or registered pursuant to the prevailing applicable laws, rules 
and regulations; 
(b)
Productivity improvement program refers to a set of actions identifying and
addressing productivity problem areas formulated by the productivity incentives committee 
using either a principle, tool, technique, method, practice, guideline, model or approach 
towards productivity improvement in people, inputs or technologies, products or services, 
637


Page | 2  
 
policies, and process. It shall contain, among others, a productivity tool or technique, 
benchmarks and measurement of productivity, or efficiency improvements; 
 
(c) 
Productivity incentives committee refers to a body in a business enterprise
 
composed of representativesof management or employers and employees created to 
formulate and implement the productivity incentives program, and to settle issues arising 
from the interpretation or implementation of the said program; and 
 
(d) 
Productivity incentives program refers to a formal agreement formulated by 
the productivity incentives committee, containing a productivity improvement program and 
provisions on its coverage, schemes on the sharing of the gains, or savings realized 
therefrom, and the forms, manner, and frequency of payment or distribution of such 
incentives. 
 
SEC. 5. Productivity Incentives Committee. – Business enterprises employing ten (10) or 
more persons shall establish a productivity incentives committee, hereinafter referred to as 
the Committee, composed of representatives from the employers and employees. 
 
 
(a) In business enterprises with legitimate labor organization or workers’ association, 
the employee representatives shall be those designated in the collective bargaining agreement 
or by the said organization or association. 
 
(b) In business enterprises with Labor-Management Councils or Labor-Management 
Committee, it shall be a subcommittee thereof. 
 
(c) In business enterprises without legitimate labor organization or workers’ 
association, the employee representatives shall be those designated by at least a majority of 
all rank-and-file employees. 
 
SEC. 6. Incentives Program. – The Committee shall develop the productivity incentives 
program. Whenever gains, or savings are realized from the implementation of the 
productivity improvement program, the management shall initiate the discussion on the 
sharing thereof. Productivity incentives programs as provided in this Act shall be based on 
the implemented productivity improvement program, and without prejudice to any company  
policy,  program,  contract,  or  collective  bargaining  agreement providing for higher 
productivity incentives. 
 
SEC. 7. Tax Deductions. – Private establishments may avail of the following tax deductions: 
 
 
a) Subject to the provisions of Section 6, a business enterprise which adopts a 
productivity incentives program duly and mutually agreed upon by the employers and 
employees’ representatives, shall be granted a special deduction from gross income 
equivalent to fifty percent (50%) of the total productivity incentives given to employees 
under this Program, over and above the deductions for total allowable ordinary, and 
necessary trade, business, or professional expenses under the National Internal Revenue Code 
of 1997,  as amended, and other prevailing laws, rules and regulations; 
 
b) A business enterprise shall be granted a special deduction from gross income 
equivalent to fifty percent (50%) of the total grants for training, and special studies given to 
employees pursuant to the productivity incentives program prepared by the Committee, over 
and above the deductions for total allowable ordinary, and necessary trade, business, or 
professional expenses under the National Internal Revenue Code of 1997, as amended, and 
other prevailing laws, rules and regulations; 
 
 
A business enterprise shall submit a copy of its productivity incentives program and 


Page | 3  
 
other required documents to the concerned revenue district office of the Bureau of Internal 
Revenue to avail of the corresponding benefits, and tax deductions provided in this Act; 
 
 
A business enterprise shall be entitled to the aforementioned tax deductions starting 
the next taxable year following the effectivity of this Act. 
 
SEC. 8. Availment of Tax Deductions. – The Bureau of Internal Revenue shall establish a 
system for availment of tax deductions. It shall maintain and furnish the National Wages and 
Productivity Commission (NWPC) an annual record of business enterprises that avail of tax 
deductions under this Act for program monitoring. 
 
SEC. 9. Productivity Advisories. – The Regional Tripartite Wages and Productivity Board 
(RTWPB) shall issue advisories on productivity improvement programs and schemes, and 
relative thereto, shall provide training and technical assistance to enterprises. 
 
SEC. 10. Issues and Grievances. – Whenever issues, grievances, or other matters arise from 
the interpretation or implementation of the productivity incentives program, the Committee 
shall meet to resolve the same within fifteen (15) days from receipt of a formal complaint 
from any aggrieved party, subject to the following conditions: 
 
 
(a) 
Parties may agree on whether or not to suspend the implementation of the 
productivity incentives program, pending the resolution of the complaint; 
 
(b) 
Business enterprises shall not be deemed to have forfeited any tax incentives 
accrued prior to the said complaint, and the employees and workers shall not be required to 
reimburse the productivity incentives already granted; 
 
(c) 
Likewise, productivity incentives that have already accrued prior to the said 
complaint, shall be paid to the entitled employees and workers within six (6) months from the 
date of accrual of the same; and 
 
(d) 
Any complaint which remained unresolved within thirty (30) days from the 
time of receipt of complaint shall be referred by the Committee to voluntary arbitration 
pursuant to prevailing laws, rules, and regulations on the matter. 
 
SEC. 11. Loan Availment. – All banking institutions shall provide a loan facility or extend a 
credit window at an interest rate lower than the prevailing rate to Micro, Small and Medium 
Enterprises (MSMEs) that implement a productivity improvement program. 
 
SEC. 12. Submission of Productivity Incentives Program. – A business enterprise which 
implements a productivity incentives program shall submit a copy of the same to the RTWPB 
for information and appropriate technical assistance, when needed. 
 
SEC. 13. National Innovation Council. – The National Innovation Council, created under 
Republic Act No. 11293, otherwise known as the “Philippine Innovation Act” shall 
mainstream strategic actions in support of national development plans to improve the 
country’s overall productivity performance. 
 
SEC. 14. Monitoring of Compliance. – The Secretary of Labor and Employment shall, under 
Article 128 of P.D. 442, as amended, otherwise known as the “Labor Code of the 
Philippines,” ensure the compliance of private enterprises with the provisions of this Act. 
 
SEC. 15. Technical Assistance. – Any member of the Committee may request technical 


Page | 4  
 
assistance from the following agencies in developing and implementing productivity 
improvement programs: 
 
 
(a) The Department of Agriculture shall provide technical assistance to MSMEs for 
agricultural extension or agricultural advisory services on current technologies and system; 
 
(b) The Department of Budget and Management (DBM) – Systems and Productivity 
Improvement Bureau shall establish a mechanism for technical 
assistance 
in
 
implementing the 
government 
quality management program; 
 
(c) The Department of Environment and Natural Resources shall be mandated to 
encourage and promote the use of technology and science to create products and services that 
are environmentally-friendly; 
 
(d) The Department of Trade and Industry (DTI) - Bureau of Small and Medium 
Enterprise Development for Youth Entrepreneurship and Enterprise Development shall 
extend assistance in the effective marketing of products and services; 
 
(e) The  DTI –  Competitiveness  Bureau  shall  promote  and  provide counseling 
services on business operations to address disputes between labor and management, and to 
enhance productivity growth in companies and enterprises; 
 
(f) The Department of Science and Technology shall provide and promote technology 
acquisition, and use for the improvement of the operational growth of companies and 
enterprises; 
 
(g) The Department of Tourism shall promote and encourage tourism quality 
standards, and accreditation; 
 
(h) The Development Academy of the Philippines (DAP) shall provide and assist 
MSMEs with productivity tools, and technologies to upgrade its productivity, and operations; 
 
(i) The NWPC and RTWPB shall provide productivity training, and technical 
assistance to companies and enterprises; 
 
(j) The Technical Education and Skills Development Authority shall provide and 
promote skills training, assessment, and certification; and 
 
(k) The University of the Philippines – Institute for Small Scale Industries shall be 
mandated to offer technical assistance to small scale industries. 
 
 
The enumeration above shall not prevent any member of the Committee to also seek 
assistance from government agencies, or private institutions, other than those cited in this 
Section, in the development and implementation of their productivity improvement programs. 
 
SEC. 16. Accreditation of Productivity Experts. – The NWPC shall establish an accreditation 
system for productivity experts who shall provide productivity-related services to enterprises. 
To be accredited by the NWPC, a productivity expert shall pay an accreditation fee of Five 
thousand pesos (₱5,000.00), which amount shall be adjusted by the NWPC as it may deem 
necessary. 
 
 
The NWPC shall be allowed to utilize fifty percent (50%) of the collected 
accreditation fees for the administration and management of the accreditation system. An 
initial seed fund of Fifty million pesos (₱50,000,000.00) shall be drawn from the innovation 
fund under R.A. No. 11293, or the “National Innovation Act.” 
 
SEC. 17. Assistance to Micro Enterprises. – The NWPC shall develop guidelines in the 
engagement of productivity experts who shall provide technical assistance to micro 
enterprises. Relative to this, accredited productivity experts shall be entitled to receive an 
honorarium pursuant to DBM’s rules and regulations. 


Page | 5  
 
 
 
The DAP shall regularly conduct training, free of charge, to enhance the capabilities 
of the pool of productivity experts on advanced productivity technologies and systems. 
 
SEC. 18. Strengthening Workplace Bipartite Mechanism. – The Department of Labor and 
Employment (DOLE) shall formulate a program, in consultation with employer and labor 
groups, to strengthen the bipartite mechanism especially in the area of bargaining on 
productivity schemes and standards. 
 
SEC. 19. Penalty. – Any person who shall make any fraudulent claim under this Act, 
regardless of whether or not a tax benefit has been granted, shall, upon conviction, be 
punished with imprisonment of not less than six (6) months but not more than one (1) year, or 
a fine of not less than Twenty thousand pesos (₱20,000.00) but not more than Fifty thousand 
pesos (₱50,000.00), or both, at the discretion of the Court, without prejudice to prosecution 
for any other acts punishable under existing laws. 
 
In the case of partnerships or corporations, the penalty shall be imposed upon the officers, 
employees, and other persons responsible who knowingly approved, authorized, or ratified 
the filing of a fraudulent claim. 
 
SEC. 20. Non-Diminution of Benefits. – Nothing in this Act shall be construed to diminish or 
reduce any benefits and other privileges enjoyed by workers under existing laws, decrees, 
executive orders, company policy or practice, or any agreement or contract between 
employers and their employees. 
 
SEC. 21. Public Sector. – The Civil Service Commission and the DBM may establish a 
similar system in the public sector. 
 
SEC. 22. Implementing Rules and Regulations. – Within one hundred eighty (180) days from 
the effectivity of this Act, the NWPC and the DOLE shall, in consultation with other 
government agencies, and concerned stakeholders, issue the rules and regulations necessary 
to effectively implement the provisions of this Act. 
 
SEC. 23. Separability Clause. – Should any provision of this Act be declared 
unconstitutional, the remainder thereof not otherwise affected shall remain in full force and 
effect. 
 
SEC. 24. Repealing Clause. – Republic Act No. 6971, otherwise known as the “Productivity 
Incentives Act of 1990,” is hereby repealed. All laws, presidential decrees, executive orders, 
proclamations, or administrative regulations that are inconsistent with the provisions of this 
Act are hereby repealed, amended, or modified accordingly. 
 
SEC. 25. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the 
Official Gazette or in a newspaper of general circulation. 
 
Approved,