ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW.
of Salary Ceiling.
August 13, 1986, President Corazon C. Aquino issued Memorandum Order
28 which provides as follows:chanroblesvirtuallawlibrary
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
a 13th month pay not later than December 24 of every year."
chan robles virtual law
its modification by the aforecited Memorandum Order, P.D. No. 851
from entitlement to the 13th month pay those employees who were
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
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
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
for at least one (1) month during a calendar year.
following employers are still not covered by P.D. No. 851:chanroblesvirtuallawlibrary
Government and any of its political subdivisions, including
and controlled corporations, excepts those corporations operating
as private subsidiaries of the Government;
already paying their employees a 13th month pay or more in a calendar
or its equivalent at the time of this issuance;
of household helpers and persons in the personal service of another in
relation to such workers; and
of those who are paid on purely commission, boundary, or task basis,
those who are paid a fixed amount for performing specific work,
of the time consumed in the performance thereof, except where the
are paid on piece-rate basis in which case the employer shall grant the
required 13th month pay to such workers.
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
is more or less regularly replicated, without regard to the time spent
in producing the same.
term "its equivalent" as used on paragraph (b) hereof shall include
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
pays less than required 1/12th of the employees basic salary, the
shall pay the difference.
chan robles virtual law
are Rank-and File Employees.
Labor Code distinguishes a rank-and-file employee from a managerial
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
transfer, suspend, lay-off, recall discharge, assign or discipline
or to effectively recommend such managerial actions. All employees not
falling within this definition are considered rank-and-file employees.
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.
and payment of 13th Month Pay
of the Amount. — The minimum 13th month pay required by law shall not
less than one-twelfth of the total basic salary earned by an employee
a calendar year. For the year 1987, the computation of the 13th month
shall include the cost of living allowances (COLA) integrated into the
basic salary of a covered employee pursuant to Executive Order 178.
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
pay of covered employees effective 1 May 1987, and the remaining P8.00
effective 1 October 1987. For establishments with less than 30
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
month pay for 1987, the COLAs integrated into the basic pay shall be
as of the date of their integration.
the total P17.00 daily COLA was integrated effective 1 May 1987 or
the inclusion of said COLA as part of the of the basic pay for the
of computing the 13th month pay shall be reckoned from the date of
"basic salary" of an employee for the purpose of computing the 13th
pay shall include all remunerations or earning paid by this employer
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
overtime, premium, night differential and holiday pay, and
allowances. However, these salary-related benefits should be included
part of the basic salary in the computation of the 13th month pay if by
individual or collective agreement, company practice or policy, the
are treated as part of the basic salary of the employees.
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
one half (½) of the required 13th month pay before the opening
the regular school year and the other half on before the 24th of
of every year. The frequency of payment of this monetary benefit may be
the subject of agreement between the employer and the
bargaining agent of the employees.
Month Pay for Certain Types of Employees.
Paid by Results. — Employees who are paid on piece work basis are by
entitled to the 13th month pay.
who are paid a fixed or guaranteed wage plus commission are also
to the mandated 13th month pay, based on their total earnings during
calendar year, i.e., on both their fixed or guaranteed wage and
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
time basis, are entitled to the required 13th month pay from all their
private employers regardless of their total earnings from each or all
chan robles virtual law
School Teachers. — Private school teachers, including faculty members
universities and colleges, are entitled to the required 13th month pay,
regardless of the number of months they teach or are paid within a
if they have rendered service for at least one (1) month within a year.
Month Pay of Resigned or Separated Employee.
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
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
the time of his resignation or termination from the service. Thus, if
worked only from January up to September his proportionate 13th month
should be equivalent of 1/12 his total basic salary he earned during
payment of the 13th month pay may be demanded by the employee upon the
cessation of employer-employee relationship. This is consistent with
principle of equity that as the employer can require the employee to
himself of all liabilities and property accountability, so can the
demand the payment of all benefits due him upon the termination of the
in Regular Wage.
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
against reduction or elimination of benefits.
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herein shall be construed to authorize any employer to eliminate, or
in any way, supplements, or other employee benefits or favorable
being enjoyed by the employee at the time of promulgation of this
FRANKLIN M. DRILON