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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
First Regular Session 
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Introduced by Senator Benigno S. Aquino 111 
EXPLANATORY NOTE 
The 1987 Constitution expressly states that: 
“The State shall promote a just and dynamic social 
order that will ensure the prosperity and independence of the 
nation and free the people from poverty through policies that 
provide adequate social services, promote full employment, g 
rising standard o f  livinq, and an improved aualitg of life .for 
- 
all.” 
(Article 11, Sec. 9) 
And : 
<‘The State shall promote social justice in all phases of 
national development.,’ (Article 11, Sec. 10); 
And further: 
‘<The State affirms labor as a primam social economic 
force. It shall protect the riahts of workers and promote 
their welfare.” 
(Article 11, Sec. 18) 
And finally: 
T h e  State shall regulate the relations between workers 
and employers, recognizing the right of labor to its just share 
in the fruits o f  production and the right o f  enterprises to 
reasonable return on investments, and to its expansion of its 
qrowth”. (Par. 4, Section 3, Article XIII) 
Pursuant to the above-quoted provisions of the 1987 Constitution, 
it is the apparent duty of the State to provide proper mechanisms that 
will put into practice these constitutional mandates. 


Presently, labor and management relations are characterized as 
confrontational when discussing and settling basic and significant issues 
affecting wages, benefits as well as conditions of work. As a result, the 
productivity expected both from labor and management suffers thereby 
lessening their ability to compete and survive as one entity. 
It is ideal as it is realistic that the success of any business 
enterprise largely depends on the atmosphere of cooperation and support 
of labor with management and vice versa. 
This bill, granting “Productivity Incentive Bonuses” to laborers in 
the private sector, is a recognition for their indispensable contribution to 
the success of the business enterprise. It likewise seeks to promote and 
provide measures for the mutual benefit and industrial harmony between 
labor and management. 
Through this legislative initiative, the worker’s rights to uplift and 
improve their lives as well as the management’s rights to a reasonable 
return on their investments are satisfied through their cooperative 
endeavors. 
The granting of the Productivity Incentive Bonus for labor will not 
only serve as an additional income but will work as an incentive for 
greater productivity. This increased productivity will definitely benefit 
the business enterprise. 
It is in this light that the approval of this measure is earnestly 
requested. 


Introduced by Senator Benign0 S. Aquino I11 
AN ACT 
GRANTING AN 
ANNUAL 
PRODUCTIVITY 
INCENTIVE 
TO ALL 
WORKERS IN THE PRIVATE SECTOR, ESTABLISHING MECHANISMS 
FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. Title. - This Act shall be known as the “Workers 
Productivity Incentives Act of 2007.” 
SEC. 2. Statement of Policy. - It is hereby declared the policy of 
the State to continuously empower the Filipino workers in their 
continuing struggle to uplift and improve their lives through policies that 
effectively contribute to greater economic gains, protection of their rights 
and advancement of their welfare. The State shall, therefore, promote the 
rights of workers in their just and fair share in the profits from the 
production of goods and services in all endeavors where their labors and 
expertise are employed by virtue of a management-labor/employer- 
employee relation. 
SEC. 3. Extent of Grant. -- All workers in the private sector 
regardless of their employment status and not excluded by this Act shall 
be granted an annual productivity incentive bonus which shall be 
equivalent to not less than ten percent (1 OYO) of net profits before taxes 
gained by any company or business establishment for every fiscal year 
that engages their labor, skills and expertise for any period or duration, 
provided that they have worked for at least one month during the 
calendar year. If the employee worked for only a portion of the year, the 
productivity incentive bonus shall be computed pro rata. 
SEC. 4. Rule Making Power - The Department of Labor and 
Employment, in consultation with the National Wages and Productivity 
Commission, Bureau of Internal Revenue, and representatives from the 
labor and employer sectors shall promulgate and issue within six (6) 
months from the effectivity of this Act such rules and regulations as are 
necessary to implement the provisions hereof. 
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SEC.5. Non-diminution of Benefits. - Nothing in this Act shall be 
construed to diminish or reduce any benefits and other privileges enjoyed 
by the workers under existing laws, decrees, executive orders, company 
policy or practice, or any agreement or contract between the employer 
and employees. 
SEC. 6. Unlawful interference’or restraint. - It shall be unlawful 
for an employer or labor union or for any government official or employee 
and any other business enterprise or entity to interfere with, restrain or 
coerce employees in the right to receive this grant and to require as a 
condition of employment that the employee shall, not collect this grant in 
his favor. 
SEC. 7. Exemptions. - The provisions of this Act shall not apply to 
government-owned and controlled corporations with original charters; 
managerial employees; house helpers; non-resident aliens; workers who 
are paid by results as determined by the Secretary of Labor in 
appropriate 
regulations; 
workers 
employed 
by 
retail 
service 
establishments employing not more than five (5) workers; employees or 
workers in companies or enterprises undergoing receivership/liquidation; 
and those employed in new business enterprises. Applications for 
exemption strictly in accordance with those exempted employers, 
enterprises or establishments herein stated shall be duly filed with the 
Office of the Regional Director of the Department of Labor and 
Employment (DOLE) whose decision can be appealed to the DOLE 
Secretary within ten (10) days from its promulgation. 
SEC. 8. Compliance Order. - All Regional Directors of the DOLE 
shall issue an annual compliance order for the payment of the grant as 
provided for in this Act. The order shall, among other things, direct the 
employer or manager to pay the amount due each worker or employee, 
thirty (30) days after the end of every fiscal year and shall also include 
the computation on which the order was based: 
SEC. 9. Penalties. - Any person, corporation, trust, firm, 
partnership, association or entity which refuses or fails to pay the herein 
prescribed grant in accordance with this Act shall be directly liable to the 
affected worker for thrice (3x) the accrued grant plus moral damages not 
exceeding thirty thousand pesos (P30,OOO.OO) for each affected worker 
and imprisonment of not less than one (1) year nor more than two (2) 
years and including the costs of litigation and attorney’s fees. 
If the violation is committed by a corporation, trust or firm, 
partnership, association or entity the penalty of imprisonment shall be 
imposed on the entity’s responsible officers. If the violation is committed 
by a foreign individual, he/she shall be summarily deported under 
applicable laws after complete satisfaction of his adjudged liabilities. 
SEC. 10. Separability Clause. - If any provision of this Act shall 
be declared unconstitutional, any other provision not affected thereby 
shall remain in full force and effect. 
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SEC. 11. Repealing Clause. - All laws, decrees, orders, rules and 
regulations, or parts thereof inconsistent with this Act are hereby 
repealed or amended accordingly. 
SEC. 12. Effectivity. - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
Approved, 
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