PRESIDENTIAL DECREE NO.

851

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 13th-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. 

Sec. 2. Definition of certain terms.  - As used in this issuance:chanroblesvirtuallawlibrary

(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.

Sec. 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 or 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. 

Sec. 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. 

Sec. 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. 

Sec. 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. 

Sec. 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. 

Sec. 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:chanroblesvirtuallawlibrary

REPORT ON COMPLIANCE WITH P.D. 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

Sec. 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. 
Sec. 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. 

Sec. 11. Transitory Provision. - These rules and regulations shall take effect immediately and for purposes of the 13th-
month pay for 1975, the same shall apply only to those who are employees as of December 16, 1975. 

Manila, Philippines, 22 December 1975.

ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW.

1. Removal of Salary Ceiling.

On August 13, 1986, President Corazon C. Aquino issued Memorandum Order No. 28 which provides as follows:

"Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are hereby required to pay
all their rank-and-file employees a 13th month pay not later than December 24 of every year." chan robles virtual law
library

Before its modification by the aforecited Memorandum Order, P.D. No. 851 excludes from entitlement to the 13th
month pay those employees who were receiving a basic salary of more than P1,000.00 a month. With the removal of the
salary ceiling of P1,000.00, all rank and file employees are now entitled to a 13th month pay regardless of the amount of
basic salary that they receive in a month if their employers are not otherwise exempted from the application of P.D. No.
851. Such employees are entitled to the benefit regardless of their designation or employment status, and irrespective
of the method by which their wages are paid, provided that they have worked for at least one (1) month during a
calendar year.

2. Exempted Employers.

The following employers are still not covered by P.D. No. 851:

a. The Government and any of its political subdivisions, including government-owned and controlled corporations,
excepts those corporations operating essentially as private subsidiaries of the Government;

b. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time
of this issuance;

c. Employers of household helpers and persons in the personal service of another in relation to such workers; and

d. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed
amount for performing 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 grant the required 13th month pay to such
workers.

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 on paragraph (b) hereof shall include Christmas bonus, mid-year bonus, cash bonuses
and other payments amounting to not less than 1/12 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 required 1/12th of the employees basic salary, the employer shall pay the difference.
3. Who are Rank-and File Employees.

The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial
employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered rank-and-file employees.

The above distinction shall be used as guide for the purpose of determining who are rank-and-file employees entitled to
the mandated 13th month pay.

4. Amount and payment of 13th Month Pay

(a) Minimum of the Amount. — The minimum 13th month pay required by law shall not be less than one-twelfth of the
total basic salary earned by an employee within a calendar year. For the year 1987, the computation of the 13th month
pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to
Executive Order 178.

E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for non-agricultural workers shall
be integrated into the basic pay of covered employees effective 1 May 1987, and the remaining P8.00 effective 1
October 1987. For establishments with less than 30 employees and paid-up capital of P500,000 or less, the integration of
COLAs shall be as follows: P4.50 effective on 1 May 1987; P4.50 on 1 October 1987; and P8.00 effective 1 January 1988.
Thus, in the computation of the 13th month pay for 1987, the COLAs integrated into the basic pay shall be included as of
the date of their integration.

Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said COLA as part of
the of the basic pay for the purpose of computing the 13th month pay shall be reckoned from the date of actual
integration.

The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all remunerations or
earning paid by this employer for services rendered but does not include allowances and monetary benefits which are
not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and
sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these
salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by
individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the
employees.

(b) Time of Payment. — The required 13th month pay shall be paid not later than December 24 of each year. An
employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of the
regular school year and the other half on before the 24th of December of every year. The frequency of payment of this
monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining
agent of the employees.
5. 13th Month Pay for Certain Types of Employees.

(a) Employees Paid by Results. — Employees who are paid on piece work basis are by law entitled to the 13th month
pay.

Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay,
based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission.

(b) Those with Multiple Employers. — Government employees working part time in a private enterprise, including
private educational institutions, as well as employees working in two or more private firms, whether on full or part time
basis, are entitled to the required 13th month pay from all their private employers regardless of their total earnings
from each or all their employers.

(c) Private School Teachers. — Private school teachers, including faculty members of universities and colleges, are
entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if
they have rendered service for at least one (1) month within a year.

6. 13th Month Pay of Resigned or Separated Employee.

An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th
month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned
from the time he started working during the calendar year up to the time of his resignation or termination from the
service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent
of 1/12 his total basic salary he earned during that period.

The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee
relationship. This is consistent with the principle of equity that as the employer can require the employee to clear
himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him
upon the termination of the relationship.

7. Non-inclusion in Regular Wage.

The mandated 13th month pay need not be credited as part of regular wage of employees for purposes of determining
overtime and premium pays, fringe benefits insurance fund, Social Security, Medicare and private retirement plans.

8. Prohibitions 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.
REPUBLIC ACT NO. 10361

AN ACT INSTITUTING POLICIES FOR THE PROTECTION AND WELFARE OF DOMESTIC WORKERS

Section 1. Short Title – “Domestic Worker’s Act or “Batas Kasambahay”

Section 3. Coverage.  – all domestic workers employed and working within the country

Section 4. Definition of Terms.  – As used in this Act, the term:

(a)  Debt bondage  refers to the rendering of service by the domestic worker as security or payment for a debt where the
length and nature of service is not clearly defined or when the value of the service is not reasonably applied in the
payment of the debt.

(b) Deployment expenses  refers to expenses that are directly used for the transfer of the domestic worker from place of
origin to the place of work covering the cost of transportation. Advances or loans by the domestic worker are not
included in the definition of deployment expenses.

(c) Domestic work  refers to work performed in or for a household or households.

(d) Domestic worker  or "Kasambahay" refers to any person engaged in domestic work within an employment
relationship such as, but not limited to, the following: general househelp, nursemaid or "yaya", cook, gardener, or
laundry person, but shall exclude any person who performs domestic work only occasionally or sporadically and not on
an occupational basis.

The term shall not include children who are under foster family arrangement, and are provided access to education and
given an allowance incidental to education, i.e. "baon", transportation, school projects and school activities.

(e) Employer  refers to any person who engages and controls the services of a domestic worker and is party to the
employment contract.

(f) Household  refers to the immediate members of the family or the occupants of the house that are directly provided
services by the domestic worker.

(g) Private Employment Agency (PEA)  refers to any individual, legitimate partnership, corporation or entity licensed to
engage in the recruitment and placement of domestic workers for local employment.

(h) Working children,  as used under this Act, refers to domestic workers who are fifteen (15) years old and above but
below eighteen (18) years old.

ARTICLE II
RIGHTS AND PRIVILEGES

Section 5. Standard of Treatment. –  shall not subject a to any kind of abuse nor inflict any form of physical violence or
harassment or any act tending to degrade the dignity of a domestic worker.

Section 6. Board, Lodging and Medical Attendance.  – The employer shall provide for the basic necessities

1. at least three (3) adequate meals a day and humane sleeping arrangements that ensure safety.

2. appropriate rest and assistance to the domestic worker in case of illnesses and injuries sustained during service
without loss of benefits.
At no instance shall the employer withdraw or hold in abeyance the provision of these basic necessities as punishment
or disciplinary action to the domestic worker.

Section 7. Guarantee of Privacy.  – Respect for the privacy shall be guaranteed at all times and shall extend to all forms
of communication and personal effects.

ARTICLE III
PRE-EMPLOYMENT

Section 11. Employment Contract.  – An employment contract shall be executed by and between the domestic worker
and the employer before the commencement of the service in a language or dialect understood by both the domestic
worker and the employer. The domestic worker shall be provided a copy of the duly signed employment contract which
must include the following:

(a) Duties and responsibilities of the domestic worker;

(b) Period of employment;

(c) Compensation;

(d) Authorized deductions;

(e) Hours of work and proportionate additional payment;

(f) Rest days and allowable leaves;

(g) Board, lodging and medical attention;

(h) Agreements on deployment expenses, if any;

(i) Loan agreement;

(j) Termination of employment; and

(k) Any other lawful condition agreed upon by both parties.

Section 12. Pre-Employment Requirement. – 

(a) Medical certificate or a health certificate issued by a local government health officer;

(b) Barangay and police clearance;

(c) National Bureau of Investigation (NBI) clearance; and

(d) Duly authenticated birth certificate or if not available, any other document showing the age of the domestic worker
such as voter’s identification card, baptismal record or passport.

However, Section 12(a), (b), (c) and (d) shall be standard requirements when the employment of the domestic worker is
facilitated through the PEA.

Minimum age of a domestic worker: 15 years old; Minor would still be entitled to the minimum wage and all benefits
provided under this Act (Sec. 16)
Rest Periods

Daily rest period: 8 hours a day(aggregated) (Sec. 20)

Weekly rest Period: 24 consecutive hours of rest in a week (Sec. 21)

 The employer and the domestic worker shall agree in writing on the schedule of the weekly rest day of the
domestic worker: Provided,  That the employer shall respect the preference of the domestic worker as to the
weekly rest day when such preference is based on religious grounds. 

 Nothing in this provision shall deprive the domestic worker and the employer from agreeing to the following:

a. Offsetting a day of absence with a particular rest day;

b. Waiving a particular rest day in return for an equivalent daily rate of pay;

c. Accumulating rest days not exceeding five (5) days; or

d. Other similar arrangements.

Non-household work:

 No domestic worker shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage
rate lower than that provided for agricultural or nonagricultural workers. In such cases, the domestic worker
shall be paid the applicable minimum wage. (Sec. 22)

 The domestic worker and the employer may mutually agree for the former to temporarily perform a task that is
outside the latter’s household for the benefit of another household. However, any liability that will be incurred
by the domestic worker on account of such arrangement shall be borne by the original employer. In addition,
such work performed outside the household shall entitle the domestic worker to an additional payment of not
less than the existing minimum wage rate of a domestic worker. It shall be unlawful for the original employer to
charge any amount from the said household where the service of the domestic worker was temporarily
performed. (Sec.23)

Wages

Minimum Wage (Sec. 23):

 NCR: P2,500

 Chartered cities and first class municipalities: P2,000

 Other municipalities: P1,500

Payment of wages (Sec.25):

 How it is done?
 o shall be made on time directly to the domestic worker to whom they are due in cash at least once a
month.

Prohibitions on the Employer

No deductions from the wages except (Sec.25):

 those mandated by law

 when it is allowed by the domestic worker through a written consent

Payment of wages by means of (Sec.25):

 promissory notes

 vouchers

 coupons

 tokens

 tickets

 chits

 or any object other than the cash wage as provided for under this Act.

Withholding of the employee’s wages, directly or indirectly (Sec.27)

 If the domestic worker leaves without any justifiable reason, any unpaid salary for a period not exceeding fifteen
(15) days shall be forfeited. Likewise, the employer shall not induce the domestic worker to give up any part of
the wages by force, stealth, intimidation, threat or by any other means whatsoever.

Benefits

Leave Benefits (Sec. 29)

 A domestic worker who has rendered at least one (1) year of service shall be entitled to an annual service
incentive leave of five (5) days with pay

 Any unused portion of said annual leave shall not be cumulative or carried over to the succeeding years. Unused
leaves shall not be convertible to cash.

Social and Other Benefits (Sec. 30)

o SSS

o PhilHealth

o Pag-IBIG

o all the benefits in accordance with the pertinent provisions provided by law.

 Premium payments or contributions shall be shouldered by the employer. However, if the domestic worker is
receiving a wage of Five thousand pesos (P5,000.00) and above per month, the domestic worker shall pay the
proportionate share in the premium payments or contributions, as provided by law.

 The domestic worker shall be entitled to all other benefits under existing laws.

Section 31 – Rescue and Rehabilitation of Abused Domestic Workers

 Abused or exploited domestic worker shall be immediately rescued by officer from the Department of Social
Welfare and Development (DSWD) in coordination with the concerned barangayofficials.

 The DSWD and the DILG shall develop a standard operating procedure for the rescue and rehabilitation of
abused domestic workers, and in coordination with the DOLE, for possible subsequent job placement.

ARTICLE V

POST EMPLOYMENT

SEC. 32. Termination of Service

 Neither the domestic worker nor the employer may terminate the contract before the expiration of the term
except for grounds provided for in Sections 33 and 34 of this Act.

 If the domestic worker is unjustly dismissed, the domestic worker shall be paid the compensation already
earned plus the equivalent of fifteen (15) days’ work by way of indemnity.

 If the domestic worker leaves without justifiable reason, any unpaid salary due not exceeding the equivalent
fifteen (15) days’ work shall be forfeited.

 Employer may recover from the domestic worker costs incurred related to the deployment expenses, if any:
Provided, That the service has been terminated within six (6) months from the domestic worker’s employment.

 If the duration of the domestic service is not determined either in stipulation or by the nature of the service, the
employer or the domestic worker may give notice to end the working relationship five (5) days before the
intended termination of the service.

SEC. 33. Termination Initiated by the Domestic Worker

GROUNDS:
(a) Verbal or emotional abuse of the domestic worker by the employer or any member of the household;

(b) Inhuman treatment including physical abuse of the domestic worker by the employer or any member of the
household;

(c) Commission of a crime or offense against the domestic worker by the employer or any member of the household;

(d) Violation by the employer of the terms and conditions of the employment contract and other standards set forth
under this law;

(e) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the household; and

(f) Other causes analogous to the foregoing.

SEC. 34. Termination Initiated by the Employer.

GROUNDS:

(a) Misconduct or willful disobedience by the domestic worker of the lawful order of the employer in connection with
the former’s work;

(b) Gross or habitual neglect or inefficiency by the domestic worker in the performance of duties;

(c) Fraud or willful breach of the trust reposed by the employer on the domestic worker;

(d) Commission of a crime or offense by the domestic worker against the person of the employer or any immediate
member of the employer’s family;

(e) Violation by the domestic worker of the terms and conditions of the employment contract and other standards set
forth under this law;

(f) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the household; and

(g) Other causes analogous to the foregoing.

ARTICLE VI

PRIVATE EMPLOYMENT AGENCIES

SEC. 36. Regulation of Private Employment Agencies (PEAs)

 DOLE has jurisdiction over this matter.

 Qualification provided by Labor Code on PEAs shall apply.

 PEA shall be jointly and severally liable with the employer for all the wages, wage-related benefits, and other
benefits due a domestic worker.