MALACAŅANG
M a n i l a
PRESIDENTIAL DECREE No. 1634 September 1, 1979
PROVIDING FOR ADDITIONAL MANDATORY EMERGENCY LIVING ALLOWANCE FOR WAGE EARNERS
WHEREAS, representatives of workers, employers and the Government met at a National Tripartite Conference at Puerto Azul, Ternate, Cavite, on August 16 and 17, 1979, for the purpose of considering measures for the protection of wages, promotion of employment and industrial peace, ensuring economic viability and growth in the face of the global energy crisis;
WHEREAS, the Conference recommended immediate restoration of the purchasing power of the effective minimum wage as of April 1979, with provision for exemption from or deferment of compliance in the case of temporarily distressed enterprises;
WHEREAS, in addition to the current efforts of the Government to hold down prices, especially those of prime commodities, it is urgently necessary to act immediately on the recommendation of the Conference in order to provide timely and adequate relief for the working masses in the face of rising costs of living;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President and Prime Minister, by virtue of the powers vested in me by the Constitution of the Republic of the Philippines, do hereby order and decree:
Section 1. All private employers shall pay their employees whose wage or salary is not more than P1,500.00 a month, a monthly additional mandatory emergency living allowance of P60.00 effective September 1, 1979 and another P30.00 a month effective January 1, 1980, except those engaged in the following:
(a) Cottage industries, handicrafts, and shellcrafts;
(b) Small and medium scale enterprises established after the promulgation of this Decree shall be exempt for a period of two years from start-up operations;
(c) Retail and service enterprises outside Metropolitan Manila and cities with a population of not more than 150,000; in the case of retail and service enterprises in Metropolitan Manila and cities with a population of more than 150,000, those employing not more than 15 workers;
(d) Non-plantation agriculture and plantations or agricultural enterprises with an area of not more than 24 hectares in a locality or employing not more than 20 workers; with respect to the sugar industry, LOI 829 shall be maintained until further action by the President.
(e) Labor-intensive and export-oriented enterprises engaged in the manufacture of garments, footwear, furniture, as well as leather and electronics products, until December 31, 1979; provided employers who have the ability to pay as determined by the Minister of Labor shall pay.
(f) Private hospitals outside Metropolitan Manila and in the case of private hospitals in Metropolitan Manila, those with a bed capacity of not more than 100;
(g) Private educational institutions until allowed to adjust tuition fees; and
(h) Employers who have given increases in wages and/or allowances of at least P60.00 a month on or after August 1, 1979, whether granted unilaterally or under collective agreement. Those who have given less than P60.00 shall pay the difference.
Section 2. Where a construction contract entered into prior to the promulgation of this Decree, is based on payment to workers employed to carry out the contract, for wages and/or allowances lower than the amounts provided in this Decree, the owner or principal or client to the contract shall be responsible to compensate the contractor such difference for labor cost in the remaining work on the contract by a corresponding negotiated adjustment in value of the unacccomplished petition of the contract.
Section 3. For purposes of compliance with this Decree, fifty per cent of the credited tips and/or service charges may be included in the computation of the minimum wage and/or allowances in the hotel and restaurant industry.
Section 4. The Minister of Labor shall issue rules to implement this Decree. In the case of temporarily distressed or dislocated enterprises or new enterprises full or fifty per cent exemption from or deferment of compliance may be granted by the Minister of Labor upon recommendation of the Ministries concerned. The Minister of Labor shall create a tripartite advisory committee as may be needed to assist him in implementing pertinent provisions of this Decree.
Section 5. The Standing Cabinet Committee shall monitor the implementation of this Decree and in the performance of its assigned functions, shall receive and act on any grievance, complaints on any adverse effects encountered by industry, labor or management groups, which may be referred to them, subject to guidelines issued by the President (Prime Minister) after consultation with the ministries concerned.
Section 6. Violation of this Decree and of the implementing rules promulgated by the Minister of Labor shall be punished under the applicable provisions of the Labor Code pertaining to the non-payment of wages and other benefits.
Done in the City of Manila, this 21st day of August, in the year of Our Lord, nineteen hundred and seventy-nine.
RULES IMPLEMENTING NEW EMERGENCYLIVING ALLOWANCE UNDER PD 1634
Pursuant to the authority vested in the Minister of Labor under Section 4 of Presidential Decree No. 1634, the following rules are hereby issued for strict compliance by all concerned:
Section 1. Definition of Terms.
(a) "Decree" means Presidential Decree No. 1634;
(b) "Cottage Industries" are those registered/accredited under the National Cottage Industries Development Authority (NACIDA) under the provisions of Republic Act No. 3470, as amended;
(d) "Handicrafts and shellcrafts" refers to a trade or activity in which articles are fashioned totally or chiefly by hand with manual or artistic skill, using principally indigenous materials;
(c) "Small Scale Enterprises" refers to establishments whose authorized capital or total assets is P1,000,000.00 or less;
(d) "Medium Scale Enterprises" refers to establishments whose authorized capital or total assets is over P1,000,000.00 but less than P4,000,000.00;
(e) "Retail Enterprise" is one open to the general consuming public for the sale of goods that are commonly bought by end-users for personal or household use;
(f) "Service Enterprise" is one engaged predominantly in the sale of services to individuals for their own or household use;
(g) "Metropolitan Manila" covers the cities of Manila, Quezon, Pasay and Caloocan, and the municipalities of Makati, Mandaluyong, San Juan, Las Piñas, Malabon, Navotas, Pasig, Pateros, Parañaque, Marikina, Muntinlupa and Taguig in the province of Rizal and Valenzuela in the province of Bulacan;
(h) "Agriculture" includes farming in all its branches and among other things, includes the cultivation and tillage of the soil, dairying the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapple, or other farm products.
(i) "Plantation Agricultural Workers" means those agricultural workers employed in any plantation or agricultural enterprises with an area of more than 24 hectares in a locality or which employs at least 20 workers.
(j) "Labor-Intensive Export Oriented Industries" includes enterprises engaged in the manufacture of garments, footwear, furniture, learner and electronic products and other enterprises which export at least 50% of its production and employ labor at a ratio of one (1) worker for every ten thousand (P10,000.00) pesos or less of its operating machinery and equipment.
Section 2. Employers Covered. This Rules shall apply to all employers in the private sector except:
(a) Cottage industries, handicrafts and shellcrafts;
(b) Small and medium-scale enterprises established after the promulgation of this Decree shall be exempt for a period of two years from the first day of commercial operation;
(c) Retail and service enterprises outside Metropolitan Manila and cities with a population of not more than 150,000; in the case of retail and service enterprises in Metropolitan Manila and cities with a population of more than 150,000, those employing not more than 15 workers;
(d) Non-plantation agriculture and plantations or agricultural enterprises with an area of not more than 24 hectares in a locality or employing not more than 20 workers; with respect to the sugar industry, LOI 829 shall be maintained until further action by the President;
(e) Labor-intensive export-oriented enterprises engaged in the manufacture of garments, footwear, furniture, as well as leather and electronics products, until 31 December 1979; provided employers who have the ability to pay as determined by the Minister of Labor shall pay;
(f) Private hospitals outside Metropolitan Manila and in the case of private hospitals in Metropolitan Manila, those with a bed capacity of not more than 100;
(g) Private educational institutions, until the opening of the school year following the approval of their petition for increase in tuition fees, or until the increased fees are actually charged, whichever occurs earlier;
(h) Employers who have granted increases in wages and/or allowances of at least P60.00 a month on or after 1 August 1979, whether granted unilaterally or under collective agreement. Those who have given less than P60.00 shall pay the difference. lawphi1.net
Section 3. Employees Covered. The Decree shall apply to all employees of covered employers regardless of their position, designation or status, and irrespective of the method by which their wages are paid except:
(a) Household or domestic helpers, including family drivers and persons in the personal service of another;
(b) Learners and apprentices employed in accordance with program duly approved by the Ministry of Labor;
(c) Those paid on purely commission of boundary basis.
Employees who are paid a wage plus commission shall be entitled to the allowance prescribed by the Decree provided that the wage and commission do not exceed P1,500.00 a month.
Section 4. Amount of Allowances. Effective 1 September 1979, covered employers shall pay their employees whose wage is not more than P1,500.00 a month, a monthly additional mandatory emergency allowance of P60.00 and another P30.00 a month effective 1 January 1980.
Section 5. Contractual Employers. Construction and service contractors are covered by the Decree.
(a) Where a construction contract entered into prior to the promulgation of the Decree provides for allowances lower than the amounts provided in the Decree, the owner or principal shall make the necessary adjustments in the allowance for remaining work.
(b) Contracts for security, janitorial and similar services with at least 80 per cent costing labor content, adjustments in mandatory living allowance provided in the Decree shall be borne by the principal.
Section 6. Tips and Service Charges. In the hotel and restaurant industry, 50% of the credited tips/service charges may be included in computing the allowance required by the Decree.
Section 7. Application for Exemption. Employers falling under Section 4 of the Decree may apply for exemption:
(a) With the Ministry of Labor through the Regional Labor Offices, when the ground for their inability to comply with the Decree is actual losses; and
(b) With the Ministry concerned, if the ground is potential losses, copy furnished the Minister of Labor.
The applications shall be under oath showing their inability to implement the Decree and the reasons therefor and shall be accompanied by the following:
(a) Audited Financial Statements (together with the notes thereto) for the last two accounting periods filed with and stamped received by the Securities and Exchange Commission and the Bureau of Internal Revenue;
(b) Income Tax Return of the last two calendar periods filed with and stamped received by the Bureau of Internal Revenue;
(c) If ground for application is potential losses, projected financial statements for the current and succeeding year; and
(d) Such other proofs as may be required by the Minister of Labor and by the Ministries concerned.
Applications filed with incomplete documents shall not be accepted. When duly filed, however, action by the Regional Offices of the Ministry of Labor on any complaint for alleged non-compliance with the Decree shall be held in abeyance pending resolution of the application.
Section 8. A. Criteria: For purposes of the preceding Section, the following criteria to determine whether the applicant employer is actually distressed or anticipating potential distress shall be observed:
1. When the accumulated losses for the last two years have impaired to the extent of ten per cent (10%) or more the total book value of assets at the end of the latest accounting period, in the case of single proprietorship, partnership, stock and non-stock corporations operated for profit, and non-profit enterprises or organizations engaged in business activities or charging fees for services;
2. In the case of non-profit institutions and organizations engaged in purely religious charitable, civic, medical or educational activities which depend solely on donations for their operations and maintenance, when accumulated losses for the last two calendar or fiscal periods have impaired their income to the extent of twenty per cent (20%) or more;
3. In the case of an applicant facing potential distress when the projected losses during the current and succeeding year will impair to the extent of ten per cent (10%) or more the total book value of assets at the end of the current year, in the case of single proprietorship, partnership, stock and non-stock corporations operated for profit; and non-profit enterprises and organizations engaged in business activities or charging fees for services;
4. In the case of purely non-profit institutions and organizations, when the extent of potential impairment shall be twenty per cent (20%) or more of potential income from donations;
5. When there is certification from the Central Bank that a particular Bank in under receivership on account of insolvency, pursuant to Section 29, 30 and 31 of R.A. 615, otherwise known as the Central Bank Act;
6. When there is certification from the National Electrification Administration that an electric cooperative is still in the preconstruction construction stage.
Enterprises or organizations, who desire to avail of an exemption not because they are in distress or facing potential losses but because of the very nature of their activity has been exempted by the Decree and its implementing rules, need not file an application for exemption but shall file with the Labor Statistics Service of the Ministry of Labor an information sheet in such form and content as may be prescribed.
B. Disapporoval. The following are grounds for disapproval of applications for exemption:
1. The submission of false, fraudulent or fictitious documents; and
2. The withholding of material facts either related to the application, to the audited financial statements or to the income tax returns.
C. The Ministries concerned where applicants may file their application for exemption from compliance with the Decree on the ground that they are not actually distressed but may incur future losses, may require additional documents to be submitted together with the application.
The recommendations of the Ministries concerned on the applications, received by them shall be forwarded for decision to the Minister of Labor.
D. Decisions. The decisions of the Minister of Labor on the applications for exemption shall be final.
Section 9. Credited Benefits. For purposes of Section 2, paragraph (h) of this Rules, wage increases shall refer to general increases given to all workers, but excluding from regularization, promotion and merit increases.
Increases in wages and/or allowances whether granted unilaterally or under collective agreements shall refer to those given on or after 1 August 1979.
Anniversary increases under collective bargaining agreement shall not be credited as compliance with the Decree.
Section 10. Allowances to be paid in cash. The allowances required by the Decree shall be paid in cash together with the regular wage on the customary pay days.
Section 11. Special Feature of the Allowances. Allowances granted to employees in compliance with the Decree need not be considered 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, maternity pay, and private welfare and retirement plans. In lieu of the allowances, employers may grant wage increases which shall be considered as compliance with the Decree, provided the amount is not less than that required by law.
Section 12. Allowances of full-time and part-time Employees. Employees shall be paid in full the required monthly allowance regardless of the number of their regular working days if they incur no absences during the month. If they incur absences without pay, the amounts corresponding to the absences may be deducted from the monthly allowance provided that in determining the equivalent allowance for purposes of such deduction, the applicable monthly allowance shall be divided by thirty (30) days.
In case of part-time employment, the allowance shall be paid in the amount proportionate to the time worked by the employee.
Section 13. Leave of Absence with Pay. All covered employees shall be entitled to the allowance provided herein when they are on leave of absence with pay.
Section 14. Rest days allowances. A covered employees shall be entitled to the allowance corresponding to his weekly rest day if he has worked for at least four (4) days during the month.
Section 15. Relation to Workmen's Compensation and Social Security Payments. An employee who is receiving workmen's compensation or social security benefits such as sick leave or maternity leave, in lieu of wages, is entitled to the allowance to the extent of such compensation or benefit.
Section 16. Relation to Other Agreements. Nothing herein shall prevent employers from granting allowances to their employees in excess of those provided under the Decree and these rules nor shall it be construed to countenance any reduction of benefits already being enjoyed.
Section 17. Reporting Required. All covered employers shall report to the Ministry of Labor through the Regional Office having jurisdiction over the business or undertaking of said employers, their allowance granted to their employees not later than September 30 of this year, and January 30, 1980 and every January 20, thereafter.
The report shall conform substantially to the following form:
Report On Compliance with PD No. 1634
1. Name of Establishment:
2. Address:
3. Principal product or business:
4. Capital Structure
(a) Authorized Capital
(b) Paid-up Capital
(c) Total Assets
5. Total Employment
6. Particulars of the emergency benefits granted:
(a) Mode of Payment: allowance/salary adjustment/others
(b) Date of Effectivity
(c) Mode of granting, voluntary, collective bargaining, etc.
(d) Total value of benefits granted per month under:
PD No. 525 PD No. 1123 TOTAL
+ +
PD No. 1614 PD. No. 1634
+ =
(e) Total number of workers benefited:
(f) Other details if necessary.
7. Name, position and telephone number of the person filing the report.
Section 18. Effects on Existing CBA. The promulgation of the Decree shall not be a ground for the negotiation of existing collective bargaining agreements except where there exists appropriate wage reopening clause. Where the application of the new minimum rates results in significant distortion of the wage structure in an establishment, the employer or the union may initiate negotiations but not only for the purpose of correcting the resulting distortions. Should a dispute arise in connection with the wage distortions the same shall be treated as an ordinary labor dispute under the Labor Code.
Section 19. Relations to Other Issuances. Nothing in the Decree and these rules shall be construed to withdraw or reduce any existing allowances, bonuses, and other benefits provided under existing laws, decrees, wage orders and other issuances or employer practice or policies.
Section 20. Effects on other Decrees and their implementation regulations. The provision of PD's 928, 1389, 525, 1123 and 1614 as well as the implementing regulations of these Decrees not otherwise repealed, modified by or inconsistent with the Decree and this Rules shall continue to have full force and effect.
Section 21. Enforcement and Penal Provisions. The Decree and these rules shall be enforced in accordance with the applicable provisions of the Labor Code, its implementing rules and regulations and other applicable laws, rules and regulations and issuances.
Any violation of the Decree and of these rules shall be penalized in accordance with the appropriate provisions of the Labor Code and other applicable laws.
Section 22. Effectivity. This Rules shall take effect September 1, 1979.
Done in the City of Manila, Republic of the Philippines, this 30th day of August 1979.
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