Article 37Labor and Agrarian Laws and Social Legislation, p. 37

LABOR LAWS AND SOCIAL LEGISLATION SPECIAL LAWS AND IMPLEMENTING RULES AND REGULATIONS

Section 2. Employers already paying their employees a

13th-month pay or its equivalent are not covered by this

Decree.

Section 3. This Decree shall take effect immediately.

Done in the City of Manila, this 16th day of December 1975.

RULES AND REGULATIONS IMPLEMENTING

PRESIDENTIAL DECREE NO. 851

By virtue of the powers vested in me by law, the following

rules and regulations implementing Presidential Decree

No.

851

are

hereby

issued

for

the

guidance

of

all

concerned.

Section

1.

Payment

of

13-month

Pay All employers

covered

by

Presidential

Decree

No.

851,

hereinafter

referred to as the "Decree", shall pay to all their employees

receiving a basic salary of not more than P1,000 a month

a thirteenth-month pay not later than December 24 of

every year.

Section 2. Definition of certain terms As used in this

issuance.

(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of

the basic salary of an employee within a calendar year;

(b)

"Basic

salary"

shall

include all remunerations or

earnings paid by an employer to an employee for services

rendered but may not include cost-of-living allowances

granted pursuant to Presidential Decree No. 525 or Letter

of Instructions No. 174, profit-sharing payments, and all

allowances

and

monetary

benefits

which

are

not

considered or integrated as part of the regular or basic

salary of the employee at the time of the promulgation of

the Decree on December 16, 1975.

Section 3. Employers covered The Decree shall apply to

all employers except to:

(a) Distressed employers, such as (1) those which are

currently incurring substantial losses or (2) in the case of

non-profit institutions and organizations, where their

income, whether from donations, contributions, grants

and other earnings from any source, has consistently

declined by more than forty (40%) percent of their normal

income for the last two (2) years, subject to the provision

of Section 7 of this issuance;

(b) The Government and any of its political subdivisions,

including

government-owned

and

controlled

corporations,

except

those

corporations

operating

essentially as private subsidiaries of the Government;

(c) Employers already paying their employees 13-month

pay or more in a calendar year of its equivalent at the

time of this issuance;

(d) Employers of household helpers and persons in the

personal service of another in relation to such workers;

and

(e)

Employers

of

those

who

are

paid

on

purely

commission, boundary, or task basis, and those who are

paid a fixed amount for performing a specific work,

irrespective of the time consumed in the performance

thereof, except where the workers are paid on piece-rate

basis in which case the employer shall be covered by this

issuance insofar as such workers are concerned.

As used herein, workers paid on piece-rate basis shall

refer to those who are paid a standard amount for every

piece or unit of work produced that is more or less

regularly replicated, without regard to the time spent in

producing the same.

The term "its equivalent" as used in paragraph c) hereof

shall

include

Christmas

bonus,

mid-year

bonus,

profit-sharing

payments

and

other

cash

bonuses

amounting to not less than 1/12th of the basic salary but

shall not include cash and stock dividends, cost of living

allowances and all other allowances regularly enjoyed by

the employee, as well as non-monetary benefits. Where

an employer pays less than 1/12th of the employees basic

salary, the employer shall pay the difference.

Section 4. Employees covered Except as provided in

Section 3 of this issuance, all employees of covered

employers shall be entitled to benefit provided under the

Decree who are receiving not more than P1,000 a month,

regardless of their position, designation or employment

status, and irrespective of the method by which their

wages are paid, provided that they have worked for at

least one month during the calendar year.

Section

5.

Option

of

covered

employers A covered

employer

may

pay

one-half

of

the 13th-month pay

required by the Decree before the opening of the regular

school year and the other half on or before the 24th day

of December of every year.

In any establishment where a union has been recognized

or certified as the collective bargaining agent of the

employees

therein,

the

periodicity

or

frequency

of

payment of the 13th month pay may be the subject of

agreement.

Nothing herein shall prevent employers from giving the

benefits provided in the Decree to their employees who

are receiving more than One Thousand (P1,000) Pesos a

month or benefits higher than those provided by the

Decree.

Section 6. Special feature of benefit The benefits granted

under this issuance shall not be credited as part of the

regular

wage

of

the

employees

for

purposes

of

determining overtime and premium pay, fringe benefits,

as well as premium contributions to the State Insurance

Fund, social security, medicare and private welfare and

retirement plans.

Section 7. Exemption of Distressed employers Distressed

employers

shall

qualify

for

exemption

from

the

requirement of the Decree upon prior authorization by

the Secretary of Labor. Petitions for exemptions may be

filed within the nearest regional office having jurisdiction

over the employer not later than January 15, 1976. The

regional

offices

shall

transmit

the

petitions

to

the

Secretary of Labor within 24 hours from receipt thereof.

Section 8. Report of compliance Every covered employer

shall make a report of his compliance with the Decree to

the nearest regional labor office not later than January 15

of each year.

The report shall conform substantially with the following

form:

REPORT ON COMPLIANCE WITH PD NO. 851

1. Name of establishment

2. Address

3. Principal product or business

4. Total employment

5. Total number of workers benefited

6. Amount granted per employee

7. Total amount of benefits granted

8. Name, position and tel. no. of person giving information

Section 9. Adjudication of claims Non-payment of the

thirteenth-month pay provided by the Decree and these

rules shall be treated as money claims cases and shall be

processed in accordance with the Rules Implementing

the Labor Code of the Philippines and the Rules of the

National Labor Relations Commission.

Section 10. Prohibition against reduction or elimination

of

benefits

Nothing

herein

shall

be

construed

to

authorize any employer to eliminate, or diminish in any

way,

supplements,

or

other

employee

benefits

or

favorable practice being enjoyed by the employee at the

time of promulgation of this issuance.

Section

11.

Transitory

Provision

These

rules

and

regulations

shall

take

effect

immediately

and

for

purposes of the 13-month pay for 1975, the same shall

© Compiled By RGL

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