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WHEREAS, government recognizes that efficiency and effectiveness in the civil service can be further enhanced by an incentive pay system that is based on employee productivity and performance;

WHEREAS, some heads of government departments/offices authorized to grant of Productivity Incentive Benefits in varying amounts to their officials and employees of CYs 1991, 1992 and 1993 invoking as legal basis for such grant the provisions of Sections 31, 35 and 36 (2), Chapter 5, Subtitle I, Book V of the Administrative Code of 1987, but which grant gave rise to dissension and dissatisfaction among those who received less or no benefits due to lack of funds;

WHEREAS, there is a need to rationalize the grant of said Productivity Incentive Benefit under a uniform set of guidelines to ensure fairness and equity in its award;

WHEREAS, Section 17, Article VII of the 1987 Constitution vests in the President of the Philippines prerogatives which include among others the determination of the rates, the timing and schedule of payment, and final authority to commit limited resources of government for the payment of personnel incentives, cash rewards, productivity and loyalty bonus, and other forms of additional compensation and fringe benefits to government personnel.

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby direct.

SECTION 1. Policy - There shall be instituted a standard system of incentive pay based on productivity and performance among officials and employees of the Government.

SECTION 2. Coverage - The benefits herein authorized shall apply to all appointive officials and employees of the national government, local government units and government-owned and/or - controlled corporations and government financial institutions, including casual, temporary and full-time contractual personnel whose employment is in the nature of regular personnel, who obtained at least a satisfactory performance rating for the two (2) semesters immediately preceding the year in which the incentive pay shall be released and who have contributed to the productivity of their office/agency as determined by their respective heads of agency; Provided, that, officials and employees of government sequestered/foreclosed corporations that are covered by the national labor laws being implemented by the Department of Labor and Employment shall not be entitled to the benefits prescribed in this Order.

SECTION 3. Basis and Amount of Award - The incentive pay shall be based on individual personnel productivity and performance as evaluated and determined by the heads of the respective offices/agencies in accordance with the policies and standards set by the Civil Service Commission. The amount of incentive that will be paid deserving officials/employees pursuant to this Order may vary for each official/employee within an agency depending on individual performance appraisal, subject to Section 4 below.

SECTION 4. Total Cost of Incentive - The total cost of the incentive pay that will be utilized for the purpose by any government agency including government-owned and/or controlled corporations, government financial institutions and local government units in any one year shall in no case exceed an aggregate total for an agency computed at an average of P2,000.00 per occupied/filled-up position referred to in Section 2 above as of end of CY 1994.

SECTION 5. Funding Source - The Department of Budget and Management shall set aside an Incentive Fund to be incorporated in the annual General Appropriations Act to cover the requirements of this Order in the National Government.

In the case of government-owned and/or - controlled corporations, including government financial institutions, local government units and project personnel, funding shall be sourced from their respective corporate, local and project funds. For this purpose, government-owned and/or controlled corporations and government financial institutions, and local government units are hereby authorized to appropriate annually an amount to cover these benefits.

SECTION 6. Release of Funds to National Government Office/Agency - The Department of Budget and Management shall release the funds from the Incentive Fund direct to the government office/agency involved. For this purpose, offices/agencies of the national government shall submit a list of officials and employees entitled to the benefit under this Order within first quarter of the calendar year immediately following the two semesters during which the benefit was earned, as basis for the release of funds.

SECTION 7. Prohibition from Establishing/Authorizing a Separate Productivity and Performance Incentive Award - Heads of departments, agencies, governing boards, commissions, offices, including government-owned and/or - controlled corporations and government financial institutions, and local government units, are hereby prohibited from establishing and authorizing a separate productivity and performance incentive award or any form of the same or similar nature.

Accordingly, all administrative authorization/decrees issued to select government offices/agencies, government-owned and/or -controlled corporations and government financial institutions, and local government units, relative to grant of any Incentive Award or Bonus; administrative, memorandum and/or any order issued authorizing the grant of Incentive Award or Bonus or any form of similar nature pursuant to the provisions of Sections 31, 35 and 36 (2), Chapter 5, Subtitle A, Title I, Book V of Executive Order Nos. 292, otherwise known as the Administrative Code of 1987; and executive orders providing for the grant of said Incentive Award or Bonus that are not inconsistent this Order are hereby revoked.

SECTION 8. Strict compliance by all concerned with the provisions of this Order is enjoined. Anyone found violating any of the mandates in this Order, including all officials/employees and the COA Auditor-in-Charge of such government office/agency found to have taken part thereof, shall be accordingly and severely dealt with in accordance with the applicable provisions of existing penal laws.

SECTION 9. Cases not covered under this Order shall be referred to the Department of Budget and Management for proper study and recommendation to the Office of the President.

SECTION 10. The Department of Budget and Management is directed to issue the appropriate circulars for the implementation of this Order.

SECTION 11. This Order shall take effect on January 1, 1995 based on the performance evaluation of officials and employees for CY 1994.

Adopted: 6 Dec. 1994

(SGD.) FIDEL V. RAMOS
President of the Philippines

By the President:

(SGD.) TEOFISTO T. GUINGONA, JR.
Executive Secretary