THIRTEENTH CONGRESS OF THE 
REPUBLIC QF THE PHILIPPINES 
First Regular Session 
SENATE 
A
.
 
Introduced by Senator Jinggoy Ejercito Estrada 
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EXPLANATORY NOTE 
Section 3, Art. IX-B of the 1987 Constitution states: 
“The Civil Service Commission, as the central personnel agency of the 
Government, shall establish a career service and adopt measures to promote 
morale, efficiency, integrity, responsiveness, progressiveness, and courtesy in 
the civil service. It shall strengthen the merit and rewards systems, integrate all 
human resources development program for all levels and ranks, and 
institutionalize a management climate conducive to public accountabiIity.”x x x 
This bill seeks to strengthen the enforcement of this constitutional mandate by 
establishing a mechanism for reward and incentive pay for all officials and employees in 
the government. Through this bill the low salaries of government employees would be 
augmented by means of a reward and incentive pay scheme. Under the proposed 
incentive pay scheme, a portion of the revenue collection in excess of the target for the 
year by a revenue-generating government agency will be allocated or reserved for 
distribution to all government employees employed in revenue and non-revenue 
generating government agency will be allocated or reserved for distribution to all 
government employees employed in revenue and non-revenue generating government 
instrumentalities. In all cases, the reward and incentive pay will be based on the 
performance and productivity standard set by the Civil Service Commission on Audit, 
and the Department of Finance, in coordination with the Departments, instrumentalities, 
agencies, boards or commissions concerned. 
To illustrate, if the Bureau of Customs exceeds its collection target for the year by 
P3.0 billion, forty percent (40%) of this amount or P1.2 billion will be set aside as a 
Special Fund. 
Of the latter amount, fifty percent (50%) or P600 million will be 
distributed to all the Bureau’s employees in a manner to be determined by the 
Department of Finance and the Bureau, in coordination with the Civil Service 
Commission and the Commission on Audit. The balance of P600 million will be 
distributed among the employees and officials of non-revenue generating government 
agencies. 
The proposed measure was filed in the House of Representatives by more than 
one hundred seventy (I 
70) members led by Congressman Miguel Romero. 
This Bill was conceptualized during one of the executive training workshops for 
House Members conducted by the late Dean Gaston Z. Ortigas of the Asian Institute of 
Management (AIM) last year. 


Civil Service Chairman Patricia Sto. Tomas stated in an endorsement letter that 
“The proposed measure is a concrete translation of the rewards and incentives 
principle. ” 
Labor Secretary Ruben D. Torres, through his Office stated that “This Bill an 
opportune answer to the need of a more responsive mechanism that would promote 
morale, efficiency, integrity, responsiveness, progressiveness and courtesy in the civil 
service. We fully support the idea to establish a mechanism for incentive pay for all 
employees and officials in the government-owned or controlled corporations with 
original charters based on productivity and performance. 
The approval of this bill is earnestly requested. 
ESTRADA 
Senator 


1 
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U’ *. ’ 
THIRTEENTH CONGRESS &F THE 
REPUBLIC OF THE Philippines 
1 
First Regular Session 
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(j ‘“1 70 pq 6 
‘04 , j T . j ? k d  
n 
I 
IntroduceP by Senator Jinggoy Ejercito Estrada 
I 
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I 
AN ACT 
PERFORMANCE, FOR ALL OFFICIALS AND EMPLOYEES OF THE 
GOVERNMENT, AND FOR OTHER PURPOSES. 
INSTiTUTiNG AN iNcEN!IVE PAY SYSTEM, BASED ON PRoDucTivim AND 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. 
Title - This Act shall known and referred to as “Kaunlaran ng 
Bayan.” 
SECTION 2. Declaration ofPo/icy. - It is the declared policy of the State to 
promote the morale, efficiency, integrity, responsiveness, progressiveness, and 
courtesy in the Civil Service. Towards this end, the State shall institute an incentive 
mechanism based on productivity and performance. 
SECTION 3. Incentive Pay Based on Productjvify and Performance. - The 
provision of any law to the contrary notwithstanding, an incentive pay system, based on 
productivity and performance , shall be instituted in the government service. The 
incentive pay system under this Act shall be disbursed annually based on the accepted 
standards of productivity and performance as prescribed by the Civil Service 
Commission, Commission on Audit, Department of Finance, and the departments, 
instrumentalities, agencies, boards, and commissions concerned. 
The special fund for this pay scheme shall be derived from forty per centum 
(40%) of any sum beyond the amount or level of revenue target during the year by the 
government office which shall be prescribed by a committee composed of Secretary of 
Finance, the Secretary of Budget and Management, and the Director-General of the 
National Economic and Development Authority: Provided, that Fifty per centum (50%) of 
the Special Fund shall be disbursed to the officials and employees of the government 


c 
office which generated the said amount in a manner to be determined by the 
departments, instrumentalities, agencies, boards and commissions concerned, in 
accordance with the rules and regulations of the Civil Service Commission, the 
Commission on Audit, and the Department of Finance, taking into account the 
productivity and performance , as well as the salary level, of the said officials and 
employees, and the balance shall be entrusted to the Department of Budget and 
Management for eventual distribution to departments, instrumentalities, agencies, 
boards and commissions which are non-revenue generating in the same manner and 
considering the same factors: Provided, that the incentive pay shall be distributed in 
cash, within thirty (30) days after December 31 of each year: Provided, further, That this 
incentive pay scheme shall not apply to the President, Vice-president, members of the 
Cabinet rank, and members of the Congress. 
SECTION 4. No Diminufion ofBenefifs. - The application of the reward and 
incentive pay under this Act shall be in addition to all benefits already enjoyed by 
officials and employees under other Laws. The pay contemplated herein shall not result 
in any diminution of the benefits of employee and officials upon effectivity of this Act. 
SECTION 5. 
Rules and Regulations. - 
The Department of Finance, the 
Department of Budget and Management, the Civil Service Commission and the 
Commission on Audit shall promulgate rules and regulations necessary to carry out the 
purpose of this Act. 
SECTION 6. Repealing Clause. - The provision of any law executive or 
administrative order, rules and regulations or parts thereof, inconsistent with this Act are 
hereby repealed or modified accordingly. 
SECTION 7. Effectivity Clause - This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in at least two(2) newspapers of national 
circulation. 
Approved,