ADMINISTRATIVE ORDER NO.

161
ADMINISTRATIVE ORDER NO. 161 - PRESCRIBING A
STANDARD INCENTIVE PAY SYSTEM BASED ON
PRODUCTIVITY AND PERFORMANCE, FOR ALL
OFFICIALS AND EMPLOYEES OF THE GOVERNMENT,
NATIONAL AND LOCAL INCLUDING THOSE OF
GOVERNMENT-OWNED AND/OR CONTROLLED
CORPORATIONS AND GOVERNMENT FINANCIAL
INSTITUTIONS AND FOR OTHER PURPOSES

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 department/offices authorized to grant of roductivity !ncentive
"enefits in varying amounts to their officials and employees of #$s %&&%, %&&' and %&&( invo)ing as legal basis
for such grant the provisions of Sections (%, (* and (+,'-, #hapter *, Subtitle !, "oo) . of the Administrative
#ode of %&/0, but 1hich grant gave rise to dissension and dissatisfaction among those 1ho received less or no
benefits due to lac) of funds;
WHEREAS, there is a need to rationalize the grant of said roductivity !ncentive "enefit under a uniform set
of guidelines to ensure fairness and e2uity in its a1ard;
WHEREAS, Section %0, Article .!! of the %&/0 #onstitution vests in the resident of the hilippines
prerogatives 1hich 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
re1ards, productivity and loyalty bonus, and other forms of additional compensation and fringe benefits to
government personnel3
45W, 6HERE75RE, !, 7!8E9 .3 RA:5S, resident of the Republic of the hilippines prerogatives 1hich
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 re1ards, productivity
and loyalty bonus, and other forms of additional compensation and fringe benefits to government personnel3
45W, 6HERE75RE, !, 7!8E9 .3 RA:5S, resident of the Republic of the hilippines, by virtue of the
po1ers vested in me by la1 do hereby direct3
Section %3 olicy3 ; 6here shall be instituted a standard system of incentive pay based on productivity and
performance among officials and employees of the <overnment3
Sec3 '3 #overage3 ; 6he benefits herein authorized shall apply to all appointive officials and employees of the
national government, local government units and government=o1ned and/or controlled corporations and
government financial institutions, including casual, temporary and full=time contractual personnel 1hose
employment is in the nature of regular personnel, 1ho obtained at least a satisfactory performance rating for
the t1o ,'- semesters immediately preceding the year in 1hich the incentive pay shall be released and 1ho
have contributed to the productivity of their office/agency as determined by their respective heads of agency;
rovided, that, officials and employees of government se2uestered/foreclosed corporations that are covered by
the national labor la1s being implemented by the 8epartment of 9abor and Employment shall not be entitled
to the benefits prescribed in this 5rder3
Sec3 (3 "asis and Amount of A1ard3 ; 6he 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
1ith the policies and standards set by the #ivil Service #ommission3 6he amount of incentive that 1ill be paid
deserving officials/employees pursuant to this 5rder may vary for each official/employee 1ithin an agency
depending on individual performance appraisal, sub>ect to Section ? belo13
Sec3 ?3 6otal #ost of !ncentive3 ; 6he total cost of the incentive pay that 1ill be utilized for the purpose by any
government agency including government=o1ned and/or controlled corporations, government financial
institutions and local government units in any one year shall in no case e@ceed an aggregate total for an agency
computed at an average of ',AAA3AA per occupied/filled=up position referred to in Section ' above as of end of
#$ %&&?3
Sec3 *3 7unding Source3 ; 6he 8epartment of "udget and :anagement shall set aside an !ncentive 7und to be
incorporated in the annual <eneral Appropriations Act to cover the re2uirements of this 5rder in the 4ational
<overnment3
!n the case of government=o1ned and/or controlled corporations, including government financial institutions,
local government units and pro>ect personnel, funding shall be sourced from their respective corporate, local
and pro>ect funds3 7or this purpose, government=o1ned and/or controlled corporations and government
financial institutions, and local government units are hereby authorized to appropriate annually an amount to
cover these benefits3
Sec3 +3 Release of 7unds to 4ational <overnment 5ffice/Agency3 ; 6he 8epartment of "udget and
:anagement shall release the funds from the !ncentive 7und direct to the government office/agency involved3
7or this purpose, offices/agencies of the national government shall submit a list of officials and employees
entitled to the benefit under this 5rder 1ithin first 2uarter of the calendar year immediately follo1ing the t1o
semesters during 1hich the benefit 1as earned, as basis for the release of funds3
Sec3 03 rohibition from Establishing/Authorizing a Separate roductivity and erformance !ncentive A1ard3
; Heads of departments, agencies, governing boards, commissions, offices, including government=o1ned
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 a1ard or any
form of the same or similar nature3
Accordingly, all administrative authorization/decrees issued to select government offices/agencies,
government=o1ned and/or controlled corporations and government financial institutions, and local
government units, relative to grant of any !ncentive A1ard or "onus; administrative, memorandum and/or
any order issued authorizing the grant of !ncentive A1ard or "onus or any form of similar nature pursuant to
the provisions of Sections (%, (* and (+,'-, #hapter *, Subtitle A, 6itle !, "oo) . of E@ecutive 5rder 4o3 '&',
other1ise )no1n as the Administrative #ode of %&/0; and e@ecutive orders providing for the grant of said
!ncentive A1ard or "onus that are not inconsistent this 5rder are hereby revo)ed3
Sec3 /3 Strict compliance by all concerned 1ith the provisions of this 5rder is en>oined3 Anyone found violating
any of the mandates in this 5rder, including all officials/employees and the #5A Auditor=in=#harge of such
government office/agency found to have ta)en part thereof, shall be accordingly and severely dealt 1ith in
accordance 1ith the applicable provisions of e@isting penal la1s3
Sec3 &3 #ases not covered under this 5rder shall be referred to the 8epartment of "udget and :anagement for
proper study and recommendation to the 5ffice of the resident3
Sec3 %A3 6he 8epartment of "udget and :anagement is directed to issue the appropriate circulars for the
implementation of this 5rder3
Sec3 %%3 6his 5rder shall ta)e effect on Banuary %, %&&* based on the performance evaluation of officials and
employees for #$ %&&?3
DONE in the City of Manila, this 6th day of December in the year of our Lord, Nineteen Hundred and Ninety
Four.
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