1.2.4.
It shall be mandatory for the NLRC to conduct continuous hearings
Section 4. (c) Exempted from the provisions of this Act are household
or domestic helpers and persons employed in the personal service of
another, including family drivers.
Retail/service establishments regularly employing not more than ten
(10) workers may be exempted from the applicability of this Act upon
application with and as determined by the appropriate Regional Board
in accordance with the applicable rules and regulations issued by the
Commission. Whenever an application for exemption has been duly
filed with the appropriate Regional Board, action on any complaint for
alleged non-compliance with this Act shall be deferred pending
resolution of the application for exemption by the appropriate Regional
Board.
In the event that applications for exemptions are not granted,
employees shall receive the appropriate compensation due them as
provided for by this Acretroactive to the effectivity of this Act.
(d) If expressly provided for and agreed upon in the collective
bargaining agreements, all increases in the daily basic wage rates
granted by the employers three (3) months before the effectivity of this
Act shall be credited as compliance with the increases in the wage
rates prescribed herein, provided that, where such increases are less
than the prescribed increases in the wage rates under this Act, the
employer shall pay the difference. Such increases shall not include
anniversary wage increases, merit wage increases and those resulting
from the regularization or promotion of employees.
Where the application of the increases in the wage rates under this
Section results in distortions as defined under existing laws in the
wage structure within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily between the
parties and in the event of a deadlock, the same shall be finally
resolved through compulsory arbitration by the regional branches of
the National Labor Relations Commission (NLRC) having jurisdiction
over the workplace.
and decide any dispute arising under this Section within twenty (20)
calendar days from the time said dispute is formally submitted to it for
arbitration. The pendency of a dispute arising from a wage distortion
shall not in any way delay the applicability of the increase in the wage
rates prescribed under this Section.
1.2.5
REPUBLIC ACT NO. 8188 AN ACT INCREASING THE
PENALTY AND INCREASING DOUBLE INDEMNITY FOR
VIOLATION OF THE PRESCRIBED INCREASES OR
ADJUSTMENT IN THE WAGE RATES, AMENDING FOR THE
PURPOSE SECTION TWELVE OF REPUBLIC ACT NUMBERED
SIXTY-SEVEN HUNDRED TWENTY-SEVEN, OTHERWISE
KNOWN AS THE WAGE RATIONALIZATION ACT
"Section 12. Any person, corporation, trust, firm, partnership,
association or entity which refuses or fails to pay any of the prescribed
increases or adjustments in the wage rates made in accordance with
this Act shall be punished by a fine not less than Twentyfive thousand
pesos (P25,000) nor more than One hundred thousand pesos
(P100,000) or imprisonment of not less than two (2) years nor more
than four (4) years, or both such fine and imprisonment at the
discretion of the court: Provided, That any person convicted under this
Act shall not be entitled to the benefits provided for under the
Probation Law. "The employer concerned shall be ordered to pay an
amount equivalent to double the unpaid benefits owing to the
employees: Provided, That payment of indemnity shall not absolve the
employer from the criminal liability imposable under this Act. "If the
violation is committed by a corporation, trust or firm, partnership,
association or any other entity the penalty of imprisonment shall be
imposed upon the entity's responsible officers, including, but not
limited to, the president, vice-president, chief executive officer,
general manager, managing director or partner."
WAGE ORDER NCR-20
HOURS OF WORK NIGHT SHIFT OT:
Art. 82. Coverage. The provisions of this Title shall apply to
employees in all establishments and undertakings whether for profit or
not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service
of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary
duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty.
Art. 83. Normal hours of work. The normal hours of work of any
employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at
least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time for
meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which
case, they shall be entitled to an additional compensation of at least
thirty percent (30%) of their regular wage for work on the sixth day.
For purposes of this Article, "health personnel" shall include resident
physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic
personnel.
Art. 84. Hours worked. Hours worked shall include (a) all time
during which an employee is required to be on duty or to be at a
prescribed workplace; and (b) all time during which an employee is
suffered or permitted to work.
Rest periods of short duration during working hours shall be counted
as hours worked.
Art. 85. Meal periods. Subject to such regulations as the Secretary of
Labor may prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their regular
meals.
Art. 86. Night shift differential. Every employee shall be paid a night
shift differential of not less than ten percent (10%) of his regular wage
for each hour of work performed between ten oclock in the evening
and six oclock in the morning.
Art. 87. Overtime work. Work may be performed beyond eight (8)
hours a day provided that the employee is paid for the overtime work,
an additional compensation equivalent to his regular wage plus at least
twenty-five percent (25%) thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a holiday or rest day
plus at least thirty percent (30%) thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any
particular day shall not be offset by overtime work on any other day.
Permission given to the employee to go on leave on some other day of
the week shall not exempt the employer from paying the additional
compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be required
by the employer to perform overtime work in any of the following
cases:
1. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
Chief Executive;
2. When it is necessary to prevent loss of life or property or in
case of imminent danger to public safety due to an actual or
impending emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity;
 3. When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or
damage to the employer or some other cause of similar nature;
4. When the work is necessary to prevent loss or damage to
perishable goods; and
5. Where the completion or continuation of the work started
before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the
employer.
Any employee required to render overtime work under this Article
shall be paid the additional compensation required in this Chapter.
Art. 90. Computation of additional compensation. For purposes of
computing overtime and other additional remuneration as required by
this Chapter, the "regular wage" of an employee shall include the cash
wage only, without deduction on account of facilities provided by the
employer.
OMNIBUS RULES IMPLEMENTING LABOR CODE 3
RULE I
Hours of Work
SECTION 1. General statement on coverage. The provisions of this
Rule shall apply to all employees in all establishments and
undertakings, whether operated for profit or not, except to those
specifically exempted under Section 2 hereof.
SECTION 2. Exemption. The provisions of this Rule shall not
apply to the following persons if they qualify for exemption under the
conditions set forth herein:
(a) Government employees whether employed by the National
Government or any of its political subdivision, including those
employed in government-owned and/or controlled corporations;
(b) Managerial employees, if they meet all of the following conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or sub-
division thereof.
(2) They customarily and regularly direct the work of two or more
employees therein.
(3) They have the authority to hire or fire employees of lower rank; or
their suggestions and recommendations as to hiring and firing and as to
the promotion or any other change of status of other employees, are
given particular weight.
(c) Officers or members of a managerial staff if they perform the
following duties and responsibilities:
(1) The primary duty consists of the performance of work directly
related to management policies of their employer;
(2) Customarily and regularly exercise discretion and independent
judgment; and
(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii)
execute, under general supervision, special assignments and tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a
work week to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2) and (3)
above.
(d) Domestic servants and persons in the personal service of another if
they perform such services in the employer's home which are usually
necessary or desirable for the maintenance and enjoyment thereof, or
minister to the personal comfort, convenience, or safety of the
employer as well as the members of his employer's household.
(e) Workers who are paid by results, including those who are paid on
piece-work, "takay," "pakiao" or task basis, and other non-time work if
their output rates are in accordance with the standards prescribed under
Section 8, Rule VII, Book Three of these regulations, or where such
rates have been fixed by the Secretary of Labor and Employment in
accordance with the aforesaid Section.
(f) Non-agricultural field personnel if they regularly perform their
duties away from the principal or branch office or place of business of
the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
SECTION 3. Hours worked. The following shall be considered as
compensable hours worked:
(a) All time during which an employee is required to be on duty or to
be at the employer's premises or to be at a prescribed work place; and
(b) All time during which an employee is suffered or permitted to
work.
SECTION 4. Principles in determining hours worked. The
following general principles shall govern in determining whether the
time spent by an employee is considered hours worked for purposes of
this Rule:
(a) All hours are hours worked which the employee is required to give
his employer, regardless of whether or not such hours are spent in
productive labor or involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in
order that his rest period shall not be counted, it being enough that he
stops working, may rest completely and may leave his work place, to
go elsewhere, whether within or outside the premises of his work
place.
(c) If the work performed was necessary, or it benefited the employer,
or the employee could not abandon his work at the end of his normal
working hours because he had no replacement, all time spent for such
work shall be considered as hours worked, if the work was with the
knowledge of his employer or immediate supervisor.
(d) The time during which an employee is inactive by reason of
interruptions in his work beyond his control shall be considered
working time either if the imminence of the resumption of work
requires the employee's presence at the place of work or if the interval
is too brief to be utilized effectively and gainfully in the employee's
own interest.
SECTION 5. Waiting time. (a) Waiting time spent by an employee
shall be considered as working time if waiting is an integral part of his
work or the employee is required or engaged by the employer to wait.
(b) An employee who is required to remain on call in the employer's
premises or so close thereto that he cannot use the time effectively and
gainfully for his own purpose shall be considered as working while on
call. An employee who is not required to leave word at his home or
with company officials where he may be reached is not working while
on call.
SECTION 6. Lectures, meetings, training programs. Attendance at
lectures, meetings, training programs, and other similar activities shall
not be counted as working time if all of the following conditions are
met:
(a) Attendance is outside of the employee's regular working hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive work during such
attendance.
SECTION 7. Meal and Rest Periods. Every employer shall give his
employees, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal period of not
less than twenty (20) minutes may be given by the employer provided
that such shorter meal period is credited as compensable hours worked
of the employee:
(a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen
(16) hours a day;
(c) In case of actual or impending emergencies or there is urgent work
to be performed on machineries, equipment or installations to avoid
serious loss which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable
goods.
Rest periods or coffee breaks running from five (5) to twenty (20)
minutes shall be considered as compensable working time.
SECTION 8. Overtime pay. Any employee covered by this Rule
who is permitted or required to work beyond eight (8) hours on
ordinary working days shall be paid an additional compensation for the
overtime work in the amount equivalent to his regular wage plus at
least twenty-five percent (25%) thereof.
SECTION 9. Premium and overtime pay for holiday and rest day
work. (a) Except employees referred to under Section 2 of this
Rule, an employee who is permitted or suffered to work on special
holidays or on his designated rest days not falling on regular holidays,
shall be paid with an additional compensation as premium pay of not
less than thirty percent (30%) of his regular wage. For work performed
in excess of eight (8) hours on special holidays and rest days not
falling on regular holidays, an employee shall be paid an additional
compensation for the overtime work equivalent to his rate for the first
eight hours on a special holiday or rest day plus at least thirty percent
(30%) thereof.
(b) Employees of public utility enterprises as well as those employed
in non-profit institutions and organizations shall be entitled to the
premium and overtime pay provided herein, unless they are
specifically excluded from the coverage of this Rule as provided in
Section 2 hereof.
(c) The payment of additional compensation for work performed on
regular holidays shall be governed by Rule IV, Book Three, of these
Rules.
SECTION 10. Compulsory overtime work. In any of the following
cases, an employer may require any of his employees to work beyond
eight (8) hours a day, provided that the employee required to render
overtime work is paid the additional compensation required by these
regulations:
(a) When the country is at war or when any other national or local
emergency has been declared by Congress or the Chief Executive;
(b) When overtime work is necessary to prevent loss of life or
property, or in case of imminent danger to public safety due to actual
or impending emergency in the locality caused by serious accident,
fire, floods, typhoons, earthquake, epidemic or other disaster or
calamities;
(c) When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or damage to
the employer or some other causes of similar nature;
(d) When the work is necessary to prevent loss or damage to
perishable goods;
(e) When the completion or continuation of work started before the 8th
hour is necessary to prevent serious obstruction or prejudice to the
business or operations of the employer; or
(f) When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
In cases not falling within any of these enumerated in this Section, no
employee may be made to work beyond eight hours a day against his
will.
RULE I-A
Hours of Work of Hospital and Clinic Personnel
SECTION 1. General statement on coverage. This Rule shall apply
to:
(a) All hospitals and clinics, including those with a bed capacity of less
than one hundred (100) which are situated in cities or municipalities
with a population of one million or more; and
(b) All hospitals and clinics with a bed capacity of at least one hundred
(100), irrespective of the size of the population of the city or
municipality where they may be situated.
SECTION 2. Hospitals or clinics within the meaning of this Rule.
The terms "hospitals" and "clinics" as used in this Rule shall mean a
place devoted primarily to the maintenance and operation of facilities
for the diagnosis, treatment and care of individuals suffering from
illness, disease, injury, or deformity, or in need of obstetrical or other
medical and nursing care. Either term shall also be construed as any
institution, building, or place where there are installed beds, or cribs,
or bassinets for twenty-four (24) hours use or longer by patients in the
treatment of disease, injuries, deformities, or abnormal physical and
mental states, maternity cases or sanitorial care; or infirmaries,
nurseries, dispensaries, and such other similar names by which they
may be designated.
SECTION 3. Determination of bed capacity and population. (a) For
purposes of determining the applicability of this Rule, the actual bed
capacity of the hospital or clinic at the time of such determination shall
be considered, regardless of the actual or bed occupancy. The bed
capacity of hospital or clinic as determined by the Bureau of Medical
Services pursuant to Republic Act No. 4226, otherwise known as the
Hospital Licensure Act, shall prima facie be considered as the actual
bed capacity of such hospital or clinic.
(b) The size of the population of the city or municipality shall be
determined from the latest official census issued by the Bureau of the
Census and Statistics.
SECTION 4. Personnel covered by this Rule. This Rule applies to
all persons employed by any private or public hospital or clinic
mentioned in Section 1 hereof, and shall include, but not limited to,
resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians paramedical technicians,
psychologists, midwives, and attendants.
SECTION 5. Regular working hours. The regular working hours of
any person covered by this Rule shall not be more than eight (8) hours
in any one day nor more than forty (40) hours in any one week.
For purposes of this Rule a "day" shall mean a work day of twenty-
four (24) consecutive hours beginning at the same time each calendar
year. A "week" shall mean the work of 168 consecutive hours, or
seven consecutive 24-hour work days, beginning at the same hour and
on the same calendar day each calendar week.
SECTION 6. Regular working days. The regular working days of
covered employees shall not be more than five days in a work week.
The work week may begin at any hour and on any day, including
Saturday or Sunday, designated by the employer.
Employers are not precluded from changing the time at which the
work day or work week begins, provided that the change is not
intended to evade the requirements of this Rule.
SECTION 7. Overtime work. Where the exigencies of the service
so require as determined by the employer, any employee covered by
this Rule may be scheduled to work for more than five (5) days or
forty (40) hours a week, provided that the employee is paid for the
overtime work an additional compensation equivalent to his regular
wage plus at least thirty percent (30%) thereof, subject to the
provisions of this Book on the payment of additional compensation for
work performed on special and regular holidays and on rest
days.cralaw
SECTION 8. Hours worked. In determining the compensable hours
of work of hospital and clinic personnel covered by this Rule, the
pertinent provisions of Rule 1 of this Book shall apply.
SECTION 9. Additional compensation. Hospital and clinic
personnel covered by this Rule, with the exception of those employed
by the Government, shall be entitled to an additional compensation for
work performed on regular and special holidays and rest days as
provided in this Book. Such employees shall also be entitled to
overtime pay for services rendered in excess of forty hours a week, or
in excess of eight hours a day, whichever will yield the higher
additional compensation to the employee in the work week.
SECTION 10. Relation to Rule I. All provisions of Rule I of this
Book which are not inconsistent with this Rule shall be deemed
applicable to hospital and clinic personnel.
RULE II
Night Shift Differential
SECTION 1. Coverage. This Rule shall apply to all employees
except:
(a) Those of the government and any of its political subdivisions,
including government-owned and/or controlled corporations;
(b) Those of retail and service establishments regularly employing not
more than five (5) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of this Code;
(e) Field personnel and other employees whose time and performance
is unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the time consumed
in the performance thereof.
SECTION 2. Night shift differential. An employee shall be paid
night shift differential of no less than ten per cent (10%) of his regular
wage for each hour of work performed between ten o'clock in the
evening and six o'clock in the morning.
SECTION 3. Additional compensation. Where an employee is
permitted or suffered to work on the period covered after his work
schedule, he shall be entitled to his regular wage plus at least twenty-
five per cent (25%) and an additional amount of no less than ten per
cent (10%) of such overtime rate for each hour or work performed
between 10 p.m. to 6 a.m.
SECTION 4. Additional compensation on scheduled rest day/special
holiday. An employee who is required or permitted to work on the
period covered during rest days and/or special holidays not falling on
regular holidays, shall be paid a compensation equivalent to his regular
wage plus at least thirty (30%) per cent and an additional amount of
not less than ten (10%) per cent of such premium pay rate for each
hour of work performed.
SECTION 5. Additional compensation on regular holidays. For
work on the period covered during regular holidays, an employee shall
be entitled to his regular wage during these days plus an additional
compensation of no less than ten (10%) per cent of such premium rate
for each hour of work performed.
SECTION 6. Relation to agreements. Nothing in this Rule shall
justify an employer in withdrawing or reducing any benefits,
supplements or payments as provided in existing individual or
collective agreements or employer practice or policy.
RA 10028: Expanded Breastfeeding Promotion Act of 2009
Sec. 12. Lactation Periods. - Nursing employees shall granted break
intervals in addition to the regular time-off for meals to breastfeed or
express milk. These intervals, which shall include the time it takes an
employee to get to and from the workplace lactation station, shall be
counted as compensable hours worked. The Department of Labor and
Employment (DOLE) may adjust the same: Provided, That such
intervals shall not be less than a total of forty (40) minutes for every
eight (8)-hour working period.
IRR
Section 12. Lactation Periods - Nursing employees are entitled to
break intervals in addition to the regular time-off for meals to
breastfeed or express milk. The employee shall noti$ their immediate
supervisor before leaving their station. These intervals which include
the time it takes an employee to get to and from the workplace
lactation station shall be counted as compensable hours worked. The
DOLE may adjust the same but in no case shall such intervals be less
than 40 minutes for every 8- hour working period. Duration and
frequency of breaks may be agreed upon by employees and employers
with the minimum being 40 minutes. Usually, there could be2-3
breastmilk expressions lasting to l5-30 minutes each within a workday.
HOLIDAYS AND LEAVES ETC:
RATES:
Chapter II
WEEKLY REST PERIODS
Art. 91. Right to weekly rest day.
1. It shall be the duty of every employer, whether operating for
profit or not, to provide each of his employees a rest period of
not less than twenty-four (24) consecutive hours after every six
(6) consecutive normal work days.
2. The employer shall determine and schedule the weekly rest day
of his employees subject to collective bargaining agreement
and to such rules and regulations as the Secretary of Labor and
Employment may provide. However, the employer shall
respect the preference of employees as to their weekly rest day
when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day. The
employer may require his employees to work on any day:
1. In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other
disaster or calamity to prevent loss of life and property, or
imminent danger to public safety;
 2. In cases of urgent work to be performed on the machinery,
equipment, or installation, to avoid serious loss which the
employer would otherwise suffer;
3. In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
4. To prevent loss or damage to perishable goods;
5. Where the nature of the work requires continuous operations
and the stoppage of work may result in irreparable injury or
loss to the employer; and
6. Under other circumstances analogous or similar to the
foregoing as determined by the Secretary of Labor and
Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
1. Where an employee is made or permitted to work on his
scheduled rest day, he shall be paid an additional compensation
of at least thirty percent (30%) of his regular wage. An
employee shall be entitled to such additional compensation for
work performed on Sunday only when it is his established rest
day.
2. When the nature of the work of the employee is such that he
has no regular workdays and no regular rest days can be
scheduled, he shall be paid an additional compensation of at
least thirty percent (30%) of his regular wage for work
performed on Sundays and holidays.
3. Work performed on any special holiday shall be paid an
additional compensation of at least thirty percent (30%) of the
regular wage of the employee. Where such holiday work falls
on the employees scheduled rest day, he shall be entitled to an
additional compensation of at least fifty per cent (50%) of his
regular wage.
4. Where the collective bargaining agreement or other applicable
employment contract stipulates the payment of a higher
premium pay than that prescribed under this Article, the
employer shall pay such higher rate.
Chapter III
HOLIDAYS, SERVICE INCENTIVE LEAVES AND SERVICE
CHARGES
Art. 94. Right to holiday pay.
1. Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers;
2. The employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate; and
3. As used in this Article, "holiday" includes: New Years Day,
Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and thirtieth of December and the
day designated by law for holding a general election.
Art. 95. Right to service incentive leave.
1. Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days
with pay.
2. This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or
in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the
viability or financial condition of such establishment.
3. The grant of benefit in excess of that provided herein shall not
be made a subject of arbitration or any court or administrative
action.
Art. 96. Service charges. All service charges collected by hotels,
restaurants and similar establishments shall be distributed at the rate of
eighty-five percent (85%) for all covered employees and fifteen
percent (15%) for management. The share of the employees shall be
equally distributed among them. In case the service charge is
abolished, the share of the covered employees shall be considered
integrated in their wages.
RULE III
Weekly Rest Periods
SECTION 1. General statement on coverage. This Rule shall apply
to all employers whether operating for profit or not, including public
utilities operated by private persons.
SECTION 2. Business on Sundays/Holidays. All establishments
and enterprises may operate or open for business on Sundays and
holidays provided that the employees are given the weekly rest day
and the benefits as provided in this Rule.
SECTION 3. Weekly rest day. Every employer shall give his
employees a rest period of not less than twenty-four (24) consecutive
hours after every six consecutive normal work days.
SECTION 4. Preference of employee. The preference of the
employee as to his weekly day of rest shall be respected by the
employer if the same is based on religious grounds. The employee
shall make known his preference to the employer in writing at least
seven (7) days before the desired effectivity of the initial rest day so
preferred.
Where, however, the choice of the employee as to his rest day based
on religious grounds will inevitably result in serious prejudice or
obstruction to the operations of the undertaking and the employer
cannot normally be expected to resort to other remedial measures, the
employer may so schedule the weekly rest day of his choice for at least
two (2) days in a month.
SECTION 5. Schedule of rest day. (a) Where the weekly rest is
given to all employees simultaneously, the employer shall make
known such rest period by means of a written notice posted
conspicuously in the work place at least one week before it becomes
effective.
(b) Where the rest period is not granted to all employees
simultaneously and collectively, the employer shall make known to the
employees their respective schedules of weekly rest through written
notices posted conspicuously in the work place at least one week
before they become effective.
SECTION 6. When work on rest day authorized. An employer may
require any of his employees to work on his scheduled rest day for the
duration of the following emergencies and exceptional conditions:
(a) In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disaster or
calamity, to prevent loss of life or property, or in cases of force
majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment
or installations to avoid serious loss which the employer would
otherwise suffer;
(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected to
resort to other measures;
(d) To prevent serious loss of perishable goods;
(e) Where the nature of the work is such that the employees have to
work continuously for seven (7) days in a week or more, as in the case
of the crew members of a vessel to complete a voyage and in other
similar cases; and
(f) When the work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
No employee shall be required against his will to work on his
scheduled rest day except under circumstances provided in this
Section: Provided, However, that where an employee volunteers to
work on his rest day under other circumstances, he shall express such
desire in writing, subject to the provisions of Section 7 hereof
regarding additional compensation.
SECTION 7. Compensation on rest day/Sunday/holiday. (a) Except
those employees referred to under Section 2, Rule I, Book Three, an
employee who is made or permitted to work on his scheduled rest day
shall be paid with an additional compensation of at least 30% of his
regular wage. An employee shall be entitled to such additional
compensation for work performed on a Sunday only when it is his
established rest day.
(b) Where the nature of the work of the employee is such that he has
no regular work days and no regular rest days can be scheduled, he
shall be paid an additional compensation of at least 30% of his regular
wage for work performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid with an
additional compensation of at least 30% of the regular wage of the
employees. Where such holiday work falls on the employee's
scheduled rest day, he shall be entitled to additional compensation of
at least 50% of his regular wage.
(d) The payment of additional compensation for work performed on
regular holiday shall be governed by Rule IV, Book Three, of these
regulations.
(e) Where the collective bargaining agreement or other applicable
employment contract stipulates the payment of a higher premium pay
than that prescribed under this Section, the employer shall pay such
higher rate.
SECTION 8. Paid-off days. Nothing in this Rule shall justify an
employer in reducing the compensation of his employees for the
unworked Sundays, holidays, or other rest days which are considered
paid-off days or holidays by agreement or practice subsisting upon the
effectivity of the Code.
SECTION 9. Relation to agreements. Nothing herein shall prevent
the employer and his employees or their representatives in entering
into any agreement with terms more favorable to the employees than
those provided herein, or be used to diminish any benefit granted to the
employees under existing laws, agreements, and voluntary employer
practices.
RULE IV
Holidays with Pay
SECTION 1. Coverage. This rule shall apply to all employees
except:
(a) Those of the government and any of the political subdivision,
including government-owned and controlled corporation;
(b) Those of retail and service establishments regularly employing less
than ten (10) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of the Code;
(e) Field personnel and other employees whose time and performance
is unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the time consumed
in the performance thereof.
SECTION 2. Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be paid for all days in the month
whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the
statutory minimum wage multiplied by 365 days divided by twelve.
SECTION 3. Holiday Pay. Every employer shall pay his employees
their regular daily wage for any worked regular holidays.
As used in the rule, the term 'regular holiday' shall exclusively refer to:
New Year's Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the last Sunday of August, the
thirtieth of November, the twenty-fifth and thirtieth of December.
Nationwide special days shall include the first of November and the
last day of December.
As used in this Rule legal or regular holiday and special holiday shall
now be referred to as 'regular holiday' and 'special day', respectively.
SECTION 4. Compensation for holiday work. Any employee who
is permitted or suffered to work on any regular holiday, not exceeding
eight (8) hours, shall be paid at least two hundred percent (200%) of
his regular daily wage. If the holiday work falls on the scheduled rest
day of the employee, he shall be entitled to an additional premium pay
of at least 30% of his regular holiday rate of 200% based on his regular
wage rate.
SECTION 5. Overtime pay for holiday work. For work performed
in excess of eight hours on a regular holiday, an employee shall be
paid an additional compensation for the overtime work equivalent to
his rate for the first eight hours on such holiday work plus at least 30%
thereof.
Where the regular holiday work exceeding eight hours falls on the
scheduled rest day of the employee, he shall be paid an additional
compensation for the overtime work equivalent to his regular holiday-
rest day for the first 8 hours plus 30% thereof. The regular holiday rest
day rate of an employee shall consist of 200% of his regular daily
wage rate plus 30% thereof.
SECTION 6. Absences. (a) All covered employees shall be entitled
to the benefit provided herein when they are on leave of absence with
pay. Employees who are on leave of absence without pay on the day
immediately preceding a regular holiday may not be paid the required
holiday pay if he has not worked on such regular holiday.
(b) Employees shall grant the same percentage of the holiday pay as
the benefit granted by competent authority in the form of employee's
compensation or social security payment, whichever is higher, if they
are not reporting for work while on such benefits.
(c) Where the day immediately preceding the holiday is a non-working
day in the establishment or the scheduled rest day of the employee, he
shall not be deemed to be on leave of absence on that day, in which
case he shall be entitled to the holiday pay if he worked on the day
immediately preceding the non-working day or rest day.
SECTION 7. Temporary or periodic shutdown and temporary
cessation of work. (a) In cases of temporary or periodic shutdown
and temporary cessation of work of an establishment, as when a yearly
inventory or when the repair or cleaning of machineries and equipment
is undertaken, the regular holidays falling within the period shall be
compensated in accordance with this Rule.
(b) The regular holiday during the cessation of operation of an
enterprise due to business reverses as authorized by the Secretary of
Labor and Employment may not be paid by the employer.
SECTION 8. Holiday pay of certain employees. (a) Private school
teachers, including faculty members of colleges and universities, may
not be paid for the regular holidays during semestral vacations. They
shall, however, be paid for the regular holidays during Christmas
vacation;
(b) Where a covered employee, is paid by results or output, such as
payment on piece work, his holiday pay shall not be less than his
average daily earnings for the last seven (7) actual working days
preceding the regular holiday; Provided, However, that in no case shall
the holiday pay be less than the applicable statutory minimum wage
rate.
(c) Seasonal workers may not be paid the required holiday pay during
off-season when they are not at work.
(d) Workers who have no regular working days shall be entitled to the
benefits provided in this Rule.
SECTION 9. Regular holiday falling on rest days or Sundays. (a) A
regular holiday falling on the employee's rest day shall be
compensated accordingly.
(b) Where a regular holiday falls on a Sunday, the following day shall
be considered a special holiday for purposes of the Labor Code, unless
said day is also a regular holiday.
SECTION 10. Successive regular holidays. Where there are two (2)
successive regular holidays, like Holy Thursday and Good Friday, an
employee may not be paid for both holidays if he absents himself from
work on the day immediately preceding the first holiday, unless he
works on the first holiday, in which case he is entitled to his holiday
pay on the second holiday.
SECTION 11. Relation to agreements. Nothing in this Rule shall
justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked holidays as provided in
existing individual or collective agreement or employer practice or
policy.
LEAVES:
SIL
Art. 95. Right to service incentive leave.
1. Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days
with pay.
2. This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or
in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the
viability or financial condition of such establishment.
3. The grant of benefit in excess of that provided herein shall not
be made a subject of arbitration or any court or administrative
action.
RULE V
Service Incentive Leave
SECTION 1. Coverage. This rule shall apply to all employees
except:
(a) Those of the government and any of its political subdivisions,
including government-owned and controlled corporations;
(b) Domestic helpers and persons in the personal service of another;
(c) Managerial employees as defined in Book Three of this Code;
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the time consumed
in the performance thereof;
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; and
(g) Those employed in establishments regularly employing less than
ten employees.
SECTION 2. Right to service incentive leave. Every employee who
has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
SECTION 3. Definition of certain terms. The term "at least one-
year service" shall mean service for not less than 12 months, whether
continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or
policy, or that provided in the employment contract is less than 12
months, in which case said period shall be considered as one year.
SECTION 4. Accrual of benefit. Entitlement to the benefit provided
in this Rule shall start December 16, 1975, the date the amendatory
provision of the Code took effect.
SECTION 5. Treatment of benefit. The service incentive leave shall
be commutable to its money equivalent if not used or exhausted at the
end of the year.
SECTION 6. Relation to agreements. Nothing in the Rule shall
justify an employer from withdrawing or reducing any benefits,
supplements or payments as provided in existing individual or
collective agreements or employer's practices or policies.
PATERNITY LEAVE ACT
REPUBLIC ACT NO. 8187
AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7)
DAYS WITH FULLPAY TO ALL MARRIED MALE
EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS FOR
THE FIRST FOUR (4) DELIVERIES OF THE
LEGITIMATESPOUSE WITH WHOM HE IS COHABITING
AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as
the "Paternity Leave Act of 1996".
SECTION 2. Notwithstanding any law, rules and regulations to the
contrary, every married male employee in the private and public
sectors shall be entitled to a paternity leave of seven (7) days with full
pay for the first four (4) deliveries of the legitimate spouse with whom
he is cohabiting. The male employee applying for paternity leave shall
notify his employer of the pregnancy of his legitimate spouse and
the expected date of such delivery.
For purposes, of this Act, delivery shall include childbirth or any
miscarriage.
SECTION 3. Definition of Term. - For purposes of this
Act, Paternity Leave refers to the benefits granted to a married male
employee allowing him not to report for work for seven (7)
days but continues to earn the compensation therefor, on the condition
that his spouse has delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend
support to his wife in her period of recovery and/or in the nursing of
the newly-born child.
SECTION 4. The Secretary of Labor and Employment,
the Chairman of the Civil Service Commission and the Secretary of
Health shall, within thirty (30) days from the effectivity of
this Act, issue such rules and regulations necessary for the proper
implementation of the provisions hereof.
SECTION 5. Any person, corporation, trust, firm, partnership,
association or entity found violating this Act or the rules
and regulations promulgated thereunder shall be punished by a
fine not exceeding Twenty-five thousand pesos (P25,000) or
imprisonment of not less than thirty (30)days nor more than six (6)
months.
If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity, the penalty of
imprisonment shall be imposed on the entity's responsible officers,
including, but not limited to, the president, vice-president, chief
executive officer, general manager, managing director or partner
directly responsible therefor.
SECTION 6. Nondiminution Clause. - Nothing in this Act shall be
construed to reduce any existing benefits of any form granted under
existing laws, decrees, executive orders, or any
contract agreement or policy between employer and employee.
SECTION 7. Repealing Clause. - All laws, ordinances,
rules, regulations, issuances, or parts thereof which are
inconsistent with this Act are hereby repealed or modified
accordingly.
SECTION 8. Effectivity. - This Act shall take effect (15) days from
its publication in the Official Gazette or in at least two (2) newspapers
of national circulation.
MATERNITY LEAVES:
"SEC. 14A. Maternity Leave Benefit. A female member who has
paid at least three (3) monthly contributions in the twelvemonth
period immediately preceding the semester of her childbirth or
miscarriage shall be paid a daily maternity benefit equivalent to one
hundred percent (100%) of her average daily salary credit for sixty
(60) days or seventyeight (78) days in case of caesarean delivery,
subject to the following conditions:
"(a) That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth, which notice shall
be transmitted to the SSS in accordance with the rules and regulations
it may provide;
"(b) The full payment shall be advanced by the employer within thirty
(30) days from the filing of the maternity leave application;
"(c) That payment of daily maternity benefits shall be a bar to the
recovery of sickness benefits provided by this Act for the same period
for which daily maternity benefits have been received;
"(d) That the maternity benefits provided under this section shall be
paid only for the first four (4) deliveries or miscarriages;
"(e) That the SSS shall immediately reimburse the employer of one
hundred percent (100%) of the amount of maternity benefits advanced
to the employee by the employer upon receipt of satisfactory proof of
such payment and legality thereof; and
"(f) That if an employee member should give birth or suffer
miscarriage without the required contributions having been remitted
for her by her employer to the SSS, or without the latter having been
previously notified by the employer of the time of the pregnancy, the
employer shall pay to the SSS damages equivalent to the benefits
which said employee member would otherwise have been entitled to.
SOLO PARENTS
AN ACT PROVIDING FOR BENEFITS AND PRIVILEGES TO
SOLO PARENTS AND THEIR CHILDREN, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines Congress assembled:
Section 1. Title. - This Act shall be known as the "Solo Parents'
Welfare Act of 2000."
Section 2. Declaration of Policy. - It is the policy of the State to
promote the family as the foundation of the nation, strengthen its
solidarity and ensure its total development. Towards this end, it shall
develop a comprehensive program of services for solo parents and
their children to be carried out by the Department of Social Welfare
and Development (DSWD), the Department of Health (DOH), the
Department of Education, Culture and Sports (DECS), the Department
of the Interior and Local Government (DILG), the Commission on
Higher Education (CHED), the Technical Education and Skills
Development Authority (TESDA), the National Housing Authority
(NHA), the Department of Labor and Employment (DOLE) and other
related government and nongovernment agencies.
Section 3. Definition of Terms. - Whenever used in this Act, the
following terms shall mean as follows:
(a) "Solo parent" - any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape and
other crimes against chastity even without a final
conviction of the offender: Provided, That the mother
keeps and raises the child;
(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of
parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1)
year;
(4) Parent left solo or alone with the responsibility of
parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of
parenthood due to legal separation or de
facto separation from spouse for at least one (1) year, as
long as he/she is entrusted with the custody of the
children;
(6) Parent left solo or alone with the responsibility of
parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
 (7) Parent left solo or alone with the responsibility of
parenthood due to abandonment of spouse for at least
one (1) year;
(8) Unmarried mother/father who has preferred to keep
and rear her/his child/children instead of having others
care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care
and support to a child or children;
(10) Any family member who assumes the
responsibility of head of family as a result of the death,
abandonment, disappearance or prolonged absence of
the parents or solo parent.
A change in the status or circumstance of the parent
claiming benefits under this Act, such that he/she is no
longer left alone with the responsibility of parenthood,
shall terminate his/her eligibility for these benefits.
(b) "Children" - refer to those living with and dependent upon
the solo parent for support who are unmarried, unemployed and
not more than eighteen (18) years of age, or even over eighteen
(18) years but are incapable of self-support because of mental
and/or physical defect/disability.
(c) "Parental responsibility" - with respect to their minor
children shall refer to the rights and duties of the parents as
defined in Article 220 of Executive Order No. 209, as
amended, otherwise known as the "Family Code of the
Philippines."
(d) "Parental leave" - shall mean leave benefits granted to a
solo parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.
(e) "Flexible work schedule" - is the right granted to a solo
parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the
employer.
Section 4. Criteria for Support. - Any solo parent whose income in the
place of domicile falls below the poverty threshold as set by the
National Economic and Development Authority (NEDA) and subject
to the assessment of the DSWD worker in the area shall be eligible for
assistance: Provided, however, That any solo parent whose income is
above the poverty threshold shall enjoy the benefits mentioned in
Sections 6, 7 and 8 of this Act.
Section 5. Comprehensive Package of Social Development and
Welfare Services. - A comprehensive package of social development
and welfare services for solo parents and their families will be
developed by the DSWD, DOH, DECS, CHED, TESDA, DOLE, NHA
and DILG, in coordination with local government units and a
nongovernmental organization with proven track record in providing
services for solo parents.
The DSWD shall coordinate with concerned agencies the
implementation of the comprehensive package of social development
and welfare services for solo parents and their families. The package
will initially include:
(a) Livelihood development services which include trainings on
livelihood skills, basic business management, value orientation
and the provision of seed capital or job placement.
(b) Counseling services which include individual, peer group or
family counseling. This will focus on the resolution of personal
relationship and role conflicts.
(c) Parent effectiveness services which include the provision
and expansion of knowledge and skills of the solo parent on
early childhood development, behavior management, health
care, rights and duties of parents and children.
 (d) Critical incidence stress debriefing which includes
preventive stress management strategy designed to assist solo
parents in coping with crisis situations and cases of abuse.
(e) Special projects for individuals in need of protection which
include temporary shelter, counseling, legal assistance, medical
care, self-concept or ego-building, crisis management and
spiritual enrichment.
Section 6. Flexible Work Schedule. - The employer shall provide for a
flexible working schedule for solo parents: Provided, That the same
shall not affect individual and company productivity: Provided,
further, That any employer may request exemption from the above
requirements from the DOLE on certain meritorious grounds.
Section 7. Work Discrimination. - No employer shall discriminate
against any solo parent employee with respect to terms and conditions
of employment on account of his/her status.
Section 8. Parental Leave. - In addition to leave privileges under
existing laws, parental leave of not more than seven (7) working days
every year shall be granted to any solo parent employee who has
rendered service of at least one (1) year.
Section 9. Educational Benefits. - The DECS, CHED and TESDA
shall provide the following benefits and privileges:
(1) Scholarship programs for qualified solo parents and their
children in institutions of basic, tertiary and technical/skills
education; and
(2) Nonformal education programs appropriate for solo parents
and their children.
The DECS, CHED and TESDA shall promulgate rules and regulations
for the proper implementation of this program.
Section 10. Housing Benefits. - Solo parents shall be given allocation
in housing projects and shall be provided with liberal terms of payment
on said government low-cost housing projects in accordance with
housing law provisions prioritizing applicants below the poverty line
as declared by the NEDA.
Section 11. Medical Assistance. - The DOH shall develop a
comprehensive health care program for solo parents and their children.
The program shall be implemented by the DOH through their retained
hospitals and medical centers and the local government units (LGUs)
through their provincial/district/city/municipal hospitals and rural
health units (RHUs).
Section 12. Additional Powers and Functions of the DSWD. The
DSWD shall perform the following additional powers and functions
relative to the welfare of solo parents and their families:
(a) Conduct research necessary to: (1) develop a new body of
knowledge on solo parents; (2) define executive and legislative
measures needed to promote and protect the interest of solo
parents and their children; and (3) assess the effectiveness of
programs designed for disadvantaged solo parents and their
children;
(b) Coordinate the activities of various governmental and
nongovernmental organizations engaged in promoting and
protecting the interests of solo parents and their children; and
(c) Monitor the implementation of the provisions of this Act
and suggest mechanisms by which such provisions are
effectively implemented.
Section 13. Implementing Rules and Regulations. - An interagency
committee headed by the DSWD, in coordination with the DOH,
DECS, CHED, TESDA, DOLE, NHA, and DILG is hereby established
which shall formulate, within ninety (90) days upon the effectivity of
this Act, the implementing rules and regulations in consultation with
the local government units, nongovernment organizations and people's
organizations.
Section 14. Appropriations. - The amount necessary to carry out the
provisions of this Act shall be included in the budget of concerned
government agencies in the General Appropriations Act of the year
following its enactment into law and thereafter.1awphil.net
Section 15. Repealing Clause. - All laws, decrees, executive orders,
administrative orders or parts thereof inconsistent with the provisions
of this Act are hereby repealed, amended or modified accordingly.
Section 16. Separability Clause. - If any provision of this Act is held
invalid or unconstitutional, other provisions not affected thereby shall
continue to be in full force and effect.
Section 17. Effectivity Clause. - This Act shall take effect fifteen (15)
days following its complete publication in the Official Gazette or in at
least two (2) newspaper of general circulation.
SPECIAL LEAVE BENEFITS FOR WOMEN
Section 18. Special Leave Benefits for Women. - A woman employee
having rendered continuous aggregate employment service of at least
six (6) months for the last twelve (12) months shall be entitled to a
special leave benefit of two (2) months with full pay based on her
gross monthly compensation following surgery caused by
gynecological disorders.
SECTION 21. Special Leave Benefits for Women
A. Any female employee in the public and private sector regardless of
age and civil status shall be entitled to a special leave of two (2)
months with full pay based on her gross monthly compensation subject
to existing laws, rules and regulations due to surgery caused by
gynecological disorders under such terms and conditions:
1. She has rendered at least six (6) months continuous aggregate
employment service for the last twelve (12) months prior to surgery;
2. In the event that an extended leave is necessary, the female
employee may use her earned leave credits; and
3. This special leave shall be non-cumulative and non-convertible to
cash.
B. The CSC, in the case of the public sector including LGUs and other
State agencies, and the DOLE, in the case of the private sector, shall
issue further guidelines and appropriate memorandum circulars within
sixty (60) days from the adoption of these Rules and Regulations to
operationalize said policy, and monitor its implementation and act on
any violations thereof.
VICTIMS OF VIOLENCE AGAINST WOMEN AND
CHILDREN
SECTION 43. Entitled to Leave. Victims under this Act shall be
entitled to take a paid leave of absence up to ten (10) days in addition
to other paid leaves under the Labor Code and Civil Service Rules and
Regulations, extendible when the necessity arises as specified in the
protection order.
Any employer who shall prejudice the right of the person under this
section shall be penalized in accordance with the provisions of the
Labor Code and Civil Service Rules and Regulations. Likewise, an
employer who shall prejudice any person for assisting a co-employee
who is a victim under this Act shall likewise be liable for
discrimination.
Section 42. Ten-day paid leave in addition to other leave benefits. - At
any time during the application of any protection order, investigation,
prosecution and/or trial of the criminal case, a victim of VAWC who is
employed shall be entitled to a paid leave of up to ten (10) days in
addition to other paid leaves under the Labor Code and Civil Service
Rules and Regulations and other existing laws and company policies,
extendible when the necessity arises as specified in the protection
order. The Punong Barangay/kagawad or prosecutor or the Clerk of
Court, as the case may be, shall issue a certification at no cost to the
woman that such an action is pending, and this is all that is required for
the employer to comply with the 10-day paid leave. For government
employees, in addition to the aforementioned certification, the
employee concerned must file an application for leave citing as basis
R.A. 9262. The administrative enforcement of this leave entitlement
shall be considered within the jurisdiction of the Regional Director of
the DOLE under Article 129 of the Labor Code of the Philippines, as
amended, for employees in the private sector, and the Civil Service
Commission, for government employees.

The availment of the ten day-leave shall be at the option of the woman
employee, which shall cover the days that she has to attend to medical
and legal concerns. Leaves not availed of are noncumulative and not
convertible to cash.

The employer/agency head who denies the application for leave, and
who shall prejudice the victim-survivor or any person for assisting a
co-employee who is a victim-survivor under the Act shall be held
liable for discrimination and violation of R.A 9262.

The provision of the Labor Code and the Civil Service Rules and
Regulations shall govern the penalty to be imposed on the said
employer/agency head.
 Ninoy Aquino Day -Monday nearest
REPUBLIC ACT NO. 9492 August 21
All Saints Day -November 1
AN ACT RATIONALIZING THE CELEBRATION OF Last Day -December 31
NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE of the
SECTION 26, CHAPTER 7, BOOK 1 OF EXECUTIVE ORDER Year
NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE
ADMINISTRATIVE CODE OF 1987 c) In the event the holiday falls on a Wednesday, the holiday will
be observed on the Monday of that week. If the holiday falls on a
SECTION 1. Section 26, Chapter 7, Book 1 of Executive Order Sunday, the holiday will be observed on the Monday that follows:
No. 292, as amended, otherwise known as the Administrative Code of
1987, is hereby amended to read as follows: Provided, That for movable holidays, the President shall issue a
proclamation, at least six months prior to the holiday concerned, the
SEC. 26. Regular Holidays and Nationwide Special Days. specific date that shall be declared as a nonworking day:
(1) Unless otherwise modified by law, order or proclamation, the
following regular holidays and special days shall be observed in the Provided, however, That Eidul Adha shall be celebrated as a regional
country: holiday in the Autonomous Region in Muslim Mindanao.
a) Regular Holidays SECTION 2. All laws, orders presidential issuances, rules and
regulations or part thereof inconsistent with this Act are hereby repealed
New Years Day -January 1 or modified accordingly.
Maundy Thursday -Movable Date
Good Friday -Movable Date SECTION 3. This Act shall take effect after fifteen (15) days
Eidul Fitr -Movable Date following its publication in at least two newspapers of general
Araw ng Kagitingan (Bataan -Monday nearest April 9 circulation.
and Corregidor Day)

Labor Day -Monday nearest May 1

Independence Day -Monday nearest June 12

National Heroes Day -Last Monday of August

Bonifacio Day -Monday nearest November 30
Christmas Day -December 25
Rizal Day -Monday nearest December 30

b) Nationwide Special Holidays

 REPUBLIC ACT NO. 9256 EXECUTIVE ORDER NO. 203 June 30, 1987

AN ACT DECLARING AUGUST 21 OF EVERY YEAR, AS PROVIDING A LIST OF REGULAR HOLIDAYS AND
NINOY AQUINO DAY, A SPECIAL NONWORKING SPECIAL DAYS TO BE OBSERVED THROUGHOUT THE
HOLIDAY, AND FOR OTHER PURPOSES PHILIPPINES AND FOR OTHER PURPOSES

SECTION 1. Ninoy Aquino Day. In order to commemorate the death
anniversary of former Senator Benigno Ninoy S. Aquino, Jr., August
twenty-one of every year is hereby declared as the Ninoy Aquino day
which shall be a national nonworking holiday.
SECTION 2. Edsa Commission. The EDSA Commission created
pursuant to Executive Order No. 82 (s. 1999) shall plan and implement
appropriate ceremonies for the observance of the Ninoy Aquino Day.
WHEREAS, a Cabinet Assistance Secretariat Committee was
constituted to review all existing public holidays;
WHEREAS, there are too many holidays being observed which has
caused confusion among the public.
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the
Philippines, do hereby order:

SECTION 3. Funding. The operations of the EDSA Commission Sec. 1. Unless otherwise modified by law, order or proclamation, the
shall be funded from the Budget of the Office of the President and from following regular holidays and special days shall be observed in this
private donations. Funds accruing to and expenses made by the EDSA country:
Commission shall be subject to the usual accounting rules and
procedures. A. Regular Holidays

SECTION 4. Repealing Clause. All laws, presidential decrees, New Year's Day January
orders, issuances, rules and regulations and any part thereof
Maundy Thursday Movable date
inconsistent, which are inconsistent with provisions of this Act are
hereby amended or modified accordingly. Good Friday Movable date
Araw ng Kagitingan (Bataan and April 9
SECTION 5. Separability Clause. If any provision of this Act is held
Corregidor Day)
unconstitutional or invalid, all other provisions not affected thereby
shall remain valid. Labor Day May 1
Independence Day June 12
SECTION 6. Effectivity. This Act shall take effect fifteen (15) days
after its publication in at least two (2) newspapers of general circulation. National Heroes Day Last Sunday of
August
Bonifacio Day November 30
Christmas Day December 25
Rizal Day December 30
B. Nationwide Special Days WHEREAS, in order to foster closer family ties during All Saints Day,
as well as to enable our countrymen to observe Christmas more
All Saints Day November 1 meaningfully, declaring November 2 (Monday) and December 24
Last Day of the Year December 31 (Thursday) as additional special (non-working) day throughout the
country will strengthen the family relationship by providing longer
weekends and renew ties for a longer period of time, as well as to
Sec. 2. Henceforth, the terms "legal or regular holiday" and "special promote domestic tourism.
holiday", as used in laws, orders, rules and regulations or other
issuances shall now be referred to as "regular holiday" and "special
NOW, THEREFORE, I, GLORIA MACAPAGAL-
day", respectively. ARROYO, President of the Republic of the Philippines, by virtue of the
powers vested in me by law, do hereby order:
Sec. 3. All laws, orders, issuances, rules and regulations or parts
thereof inconsistent with this Executive Order are hereby repealed or SECTION 1. The following regular holidays and special days for the
modified accordingly. year 2009 shall be observed in the country:
Sec. 4. This Executive Order shall take effect immediately.
A. Regular Holidays
Done in the City of Manila, this 30th day of June, in the year of Our Maundy Thursday April 9
Lord, nineteen hundred and eighty-seven. Good Friday April 10
Araw ng Kagitingan April 6 (Monday), Monday nearest
PROCLAMATION NO. 1699 April 9
Labor Day May 1 (Friday)
DECLARING THE REGULAR HOLIDAYS AND THE Independence Day June 12 (Friday)
SPECIAL (NON-WORKING) DAYS FOR THE YEAR 2009 National Heroes Day August 31 (Monday), Last
Monday of August
WHEREAS, Republic Act (RA) No. 9492, dated July 24, 2007, Bonifacio Day November 30 (Monday)
amended Section 26, Chapter 7, Book 1 of Executive Order (EO) No. Christmas Day December 25 (Friday)
292, also known as the Administrative Code of 1987, by declaring
Rizal Day December 30 (Wednesday)
certain days (specific or movable) as special or regular holidays;
B. Special (Non-Working) Days
WHEREAS, RA No. 9492 provides that holidays, except those which Ninoy Aquino Day August 21 (Friday)
are religious in nature, are moved to the nearest Monday unless All Saints Day November 1 (Sunday)
otherwise modified by law, order or proclamation; Additional special (non-working) November 2 (Monday)
day
WHEREAS, May 1 (Labor Day) has been celebrated on its exact day Additional special (non-working) December 24 (Thursday)
as a long cherished tradition of workers who fought very hard to day
institutionalize such a holiday in the country, as well as an international Last Day of the Year December 31 (Thursday)
event celebrated on such exact date;
SECTION 2. The proclamation declaring a national holiday for the
observance of Eidl Fitr shall hereafter be issued after the approximate
date of the Islamic holiday has been determined in accordance with the
Islamic calendar (Hijra) or the lunar calendar, or upon Islamic
astronomical calculations, whichever is possible or convenient. To this
end, the Office on Muslim Affairs shall inform the Office of the
President on which day the holiday shall fall.
SECTION 3. The Department of Labor and Employment (DOLE) shall
promulgate the implementing guidelines for this Proclamation.
SECTION 4. This Proclamation shall take effect immediately.
SECTION 5. This Proclamation shall be published in a newspaper of
general circulation.
IN WITNESS WHEREOF, I have hereunto set my hand and caused
the seal of the Republic of the Philippines to be affixed.
DONE in the City of Manila, this 24th day of December in the year of
Our Lord, Two Thousand and Eight.
OMNIBUS RULES IMPLEMENTING LB3, R4, S6
RULE IV
Holidays with Pay
SECTION 6. Absences. (a) All covered employees shall be
entitled to the benefit provided herein when they are on leave of
absence with pay. Employees who are on leave of absence without pay
on the day immediately preceding a regular holiday may not be paid
the required holiday pay if he has not worked on such regular holiday.
(b) Employees shall grant the same percentage of the holiday pay as
the benefit granted by competent authority in the form of employee's
compensation or social security payment, whichever is higher, if they
are not reporting for work while on such benefits.
(c) Where the day immediately preceding the holiday is a non-working
day in the establishment or the scheduled rest day of the employee, he
shall not be deemed to be on leave of absence on that day, in which
case he shall be entitled to the holiday pay if he worked on the day
immediately preceding the non-working day or rest day.
1.5. FORMULA FOR COMPUTING WAGES
print 2.
1.6 13TH MONTH PAY LAW
PRESIDENTIAL DECREE No. 851 December 16, 1976
REQUIRING ALL EMPLOYERS TO PAY THEIR
EMPLOYEES A 13th-MONTH PAY
WHEREAS, it is necessary to further protect the level of real wages
from the ravage of worldwide inflation;
WHEREAS, there has been no increase in the legal minimum wage
rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to
show its concern for the plight of the working masses so they may
properly celebrate Christmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the
powers vested in me by the Constitution, do hereby decree as follows:
Section 1. All employers are hereby required to pay all their
employees receiving a basic salary of not more than P1,000 a month,
regardless of the nature of their employment, a 13th-month pay not
later than December 24 of every year.
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.
 MEMORANDUM ORDER NO. 28
MODIFYING PRESIDENTIAL DECREE NO. 851 REQUIRING ALL
EMPLOYERS TO PAY THEIR EMPLOYEES A 13TH MONTH PAY
Section 1 of Presidential Decree No. 851 is hereby modified to the
extent that all employees are hereby required to pay all their rank-and-
file employees a 13th month pay not later than December 24 of every
year.
REVISED GUIDELINES
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."
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 () 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.
BASIC INCOME TAX ON INDIVIDUAL CITIZENS: night shift differential pay and hazard pay received by such minimum
wage earners shall likewise be exempt from income tax.
SEC. 2. Section 24(A) of Republic Act No. 8424, as amended, "x x x."
otherwise known as the National Internal Revenue Code of 1997, is
hereby further amended to read as follows:
"SEC. 24. Income Tax Rates. - TAX ON INDIVIDUALS
"(A) Rates of Income Tax on Individual Citizen and Individual
Resident Alien of the Philippines. - SEC. 24. Income Tax Rates. -
"(1) x x x:
"x x x; and (A) Rates of Income Tax on Individual Citizen and Individual
"(c) On the taxable income defined in Section 31 of this code, other Resident Alien of the Philippines.-
than income subject to tax under Subsections (B), (C) and (D) of this
Section, derived for each taxable year from all sources within the (1) An income tax is hereby imposed:
Philippines by an individual alien who is a resident of the Philippines.
"(2) Rates of Tax on Taxable Income of Individuals. - The tax shall be
computed in accordance with and at the rates established in the
(a) On the taxable income defined in Section 31 of this Code, other
following schedule:
than income subject to tax under Subsections (B), (C) and (D) of this
"Not over P10,000 ........Section,
5% derived for each taxable year from all sources within and
"Over P10,000 but not over P30,000 ........without the Philippines
P500+10% be every
of the excess overindividual
P10,000 citizen of the Philippines
residing therein;
"Over P30,000 but not over P70,000 ........ P2,500+15% of the excess over P30,000
"Over P70,000 but not over P140,000 ........(b) On the taxableofincome
P8,500+20% defined
the excess over in Section 31 of this Code, other
P70,000
than income subject to tax under Subsections (B), (C) and (D) of this
"Over P140,000 but not over P250,000 ........Section, derived forofeach
P22,500+25% taxable
the excess overyear from all sources within the
P140,000
Philippines by an individual citizen of the Philippines who is residing
"Over P250,000 but not over P500,000 ........ P50,000+30% of the excess over P250,000
outside of the Philippines including overseas contract workers
"Over P5000,000 ........referred to in Subsection(C)
P125,000+32% of Section
of the excess over 23 hereof; and
P500,000
"For married individuals, the husband and wife, subject to the
(c) On the taxable income defined in Section 31 of this Code, other
provision of Section 51 (D) hereof, shall compute separately their
individual income tax based on their respective total taxable than income subject to tax under Subsections (B), (C) and (D) of this
income: Provided, that if any income cannot be definitely attributed to Section, derived for each taxable year from all sources within the
or identified as income exclusively earned or realized by either of the Philippines by an individual alien who is a resident of the Philippines.
spouses, the same shall be divided equally between the spouses for the
purpose of determining their respective taxable income. (2) Rates of Tax on Taxable Income of Individuals. [11] - The tax shall
"Provided, That minimum wage earners as defined in Section 22 (HH) be computed in accordance with and at the rates established in the
of this Code shall be exempt from the payment of income tax on their following schedule:
taxable income: Provided, further, That the holiday pay, overtime pay,
 Not over P10,000
5%
winnings), derived from sources within the Philippines: Provided,
Over P10,000 but
P500+10% of the excess however, That interest income received by an individual taxpayer
not over P30,000
over P10,000 (except a nonresident individual) from a depository bank under the
Over P30,000 but
P2,500+15% of the
not over P70,000
excess over P30,000
expanded foreign currency deposit system shall be subject to a final
Over P70,000 but
P8,500+20% of the income tax at the rate of seven and one-half percent (7 1/2%) of such
not over
excess over P70,000 interest income: Provided, further, That interest income from long-
P140,000
P22,500+25% of the
Over P140,000
excess over P140,000
term deposit or investment in the form of savings, common or
but not over individual trust funds, deposit substitutes, investment management
P50,000+30% of the
P250,00
excess over P250,000 accounts and other investments evidenced by certificates in such
Over P250,000
P125,000+32% of the
but not over
excess over
form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be
P500,000
P500,000.[12] exempt from the tax imposed under this Subsection: Provided,
Over P500,000
finally, That should the holder of the certificate pre-terminate the
For married individuals, the husband and wife, subject to the provision of Section 51 (D) deposit or investment before the fifth (5th) year, a final tax shall be
hereof, shall compute separately their individual income tax based on their respective total imposed on the entire income and shall be deducted and withheld by
taxable income: Provided, That if any income cannot be definitely attributed to or identified the depository bank from the proceeds of the long-term deposit or
as income exclusively earned or realized by either of the spouses, the same shall be divided
equally between the spouses for the purpose of determining their respective taxable income. investment certificate based on the remaining maturity thereof:

Provided, That minimum wage earners as defined in Section 22(HH)

of this Code shall be exempt from the payment of income tax on their
taxable income: provided, further, That the holiday pay, overtime pay,
night shift differential pay and hazard pay received by such minimum
wage earners shall likewise be exempt from income tax. [13]
(B) Rate of Tax on Certain Passive Income: -
(1) Interests, Royalties, Prizes, and Other Winnings. -
A final tax at the rate of twenty percent (20%) is hereby imposed
upon the amount of interest from any currency bank deposit and
yield or any other monetary benefit from deposit substitutes and
from trust funds and similar arrangements; royalties, except on
books, as well as other literary works and musical compositions,
which shall be imposed a final tax of ten percent (10%); prizes (except
prizes amounting to Ten thousand pesos (P10,000) or less which shall
be subject to tax under Subsection (A) of Section 24; and other
winnings (except Philippine Charity Sweepstakes and Lotto
Four (4) years to less than five (5) years - 5%;
Three (3) years to less than (4) years - 12%; and
Less than three (3) years - 20%
(2) Cash and/or Property Dividends. - A final tax at the following rates
shall be imposed upon the cash and/or property dividends actually or
constructively received by an individual from a domestic corporation
or from a joint stock company, insurance or mutual fund companies
and regional operating headquarters of multinational companies, or
on the share of an individual in the distributable net income after tax
of a partnership (except a general professional partnership) of which
he is a partner, or on the share of an individual in the net income after
tax of an association, a joint account, or a joint venture or consortium
taxable as a corporation of which he is a member or co-venturer:
Six percent (6%) beginning January 1, 1998;
Eight percent (8%) beginning January 1, 1999;
Ten percent (10%) beginning January 1, 2000.
Provided, however, That the tax on dividends shall apply only on
income earned on or after January 1, 1998. Income forming part of
retained earnings as of December 31, 1997 shall not, even if declared
or distributed on or after January 1, 1998, be subject to this tax.
(C) Capital Gains from Sale of Shares of Stock not Traded in the
Stock Exchange. - The provisions of Section 39(B) notwithstanding, a
final tax at the rates prescribed below is hereby imposed upon the net
capital gains realized during the taxable year from the sale, barter,
exchange or other disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of through the stock
exchange.
Not over P 100,000 5%
On any amount in excess of P 100,000 10%
(D) Capital Gains from Sale of Real Property. -
(1) In General. - The provisions of Section 39(B) notwithstanding, a
final tax of six percent (6%) based on the gross selling price or current
fair market value as determined in accordance with Section 6(E) of this
Code, whichever is higher, is hereby imposed upon capital gains
presumed to have been realized from the sale, exchange, or other
disposition of real property located in the Philippines, classified as
capital assets, including pacto de retro sales and other forms of
conditional sales, by individuals, including estates and trusts:
Provided, That the tax liability, if any, on gains from sales or other
dispositions of real property to the government or any of its political
subdivisions or agencies or to government-owned or controlled
corporations shall be determined either under Section 24 (A) or under
this Subsection, at the option of the taxpayer;
(2) Exception. - The provisions of paragraph (1) of this Subsection to
the contrary notwithstanding, capital gains presumed to have been
realized from the sale or disposition of their principal residence by
natural persons, the proceeds of which is fully utilized in acquiring or
constructing a new principal residence within eighteen (18) calendar
months from the date of sale or disposition, shall be exempt from the
capital gains tax imposed under this Subsection: Provided, That the
historical cost or adjusted basis of the real property sold or disposed
shall be carried over to the new principal residence built or acquired:
Provided, further, That the Commissioner shall have been duly
notified by the taxpayer within thirty (30) days from the date of sale or
disposition through a prescribed return of his intention to avail of the
tax exemption herein mentioned: Provided, still further, That the said
tax exemption can only be availed of once every ten (10) years:
Provided, finally, That if there is no full utilization of the proceeds of
sale or disposition, the portion of the gain presumed to have been
realized from the sale or disposition shall be subject to capital gains
tax. For this purpose, the gross selling price or fair market value at the
time of sale, whichever is higher, shall be multiplied by a fraction which
the unutilized amount bears to the gross selling price in order to
determine the taxable portion and the tax prescribed under paragraph
(1) of this Subsection shall be imposed thereon.
COMPUTATION OF GROSS INCOME
SEC. 32. Gross Income. -
(A) General Definition. - Except when otherwise provided in this Title,
gross income means all income derived from whatever source,
including (but not limited to) the following items:
(1) Compensation for services in whatever form paid, including, but
not limited to fees, salaries, wages, commissions, and similar items;
(2) Gross income derived from the conduct of trade or business or the
exercise of a profession;
(3) Gains derived from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and winnings;
(10) Pensions; and
(11) Partner's distributive share from the net income of the general
professional partnership.
(B) Exclusions from Gross Income. - The following items shall not be
included in gross income and shall be exempt from taxation under this
Title:
(1) Life Insurance. - The proceeds of life insurance policies paid to the
heirs or beneficiaries upon the death of the insured, whether in a single
sum or otherwise, but if such amounts are held by the insurer under an
agreement to pay interest thereon, the interest payments shall be
included in gross income.
(2) Amount Received by Insured as Return of Premium. - The
amount received by the insured, as a return of premiums paid by him
under life insurance, endowment, or annuity contracts, either during
the term or at the maturity of the term mentioned in the contract or
upon surrender of the contract.
(3) Gifts, Bequests, and Devises. - The value of property acquired by
gift, bequest, devise, or descent: Provided, however, That income
from such property, as well as gift, bequest, devise or descent of
income from any property, in cases of transfers of divided interest,
shall be included in gross income.
(4) Compensation for Injuries or Sickness. - amounts received,
through Accident or Health Insurance or under Workmen's
Compensation Acts, as compensation for personal injuries or sickness,
plus the amounts of any damages received, whether by suit or
agreement, on account of such injuries or sickness.
(5) Income Exempt under Treaty. - Income of any kind, to the extent
required by any treaty obligation binding upon the Government of the
Philippines.
(6) Retirement Benefits, Pensions, Gratuities, etc.-
(a) Retirement benefits received under Republic Act No. 7641 and
those received by officials and employees of private firms, whether
individual or corporate, in accordance with a reasonable private
benefit plan maintained by the employer: Provided, That the retiring
official or employee has been in the service of the same employer for
at least ten (10) years and is not less than fifty (50) years of age at the
time of his retirement: Provided, further, That the benefits granted
under this subparagraph shall be availed of by an official or employee
only once. For purposes of this Subsection, the term 'reasonable
private benefit plan' means a pension, gratuity, stock bonus or profit-
sharing plan maintained by an employer for the benefit of some or all
of his officials or employees, wherein contributions are made by such
employer for the officials or employees, or both, for the purpose of
distributing to such officials and employees the earnings and principal
of the fund thus accumulated, and wherein its is provided in said plan
that at no time shall any part of the corpus or income of the fund be
used for, or be diverted to, any purpose other than for the exclusive
benefit of the said officials and employees.
(b) Any amount received by an official or employee or by his heirs from
the employer as a consequence of separation of such official or
employee from the service of the employer because of death sickness
or other physical disability or for any cause beyond the control of the
said official or employee.
(c) The provisions of any existing law to the contrary notwithstanding,
social security benefits, retirement gratuities, pensions and other
similar benefits received by resident or nonresident citizens of the
Philippines or aliens who come to reside permanently in the
Philippines from foreign government agencies and other institutions,
private or public.
(d) Payments of benefits due or to become due to any person residing
in the Philippines under the laws of the United States administered by
the United States Veterans Administration.
(e) Benefits received from or enjoyed under the Social Security System
in accordance with the provisions of Republic Act No. 8282.
(f) Benefits received from the GSIS under Republic Act No. 8291,
including retirement gratuity received by government officials and
employees.
(7) Miscellaneous Items. -
(a) Income Derived by Foreign Government. - Income derived from
investments in the Philippines in loans, stocks, bonds or other
domestic securities, or from interest on deposits in banks in the
Philippines by (i) foreign governments, (ii) financing institutions
owned, controlled, or enjoying refinancing from foreign governments,
and (iii) international or regional financial institutions established by
foreign governments.
(b) Income Derived by the Government or its Political
Subdivisions. - Income derived from any public utility or from the
exercise of any essential governmental function accruing to the
Government of the Philippines or to any political subdivision thereof.
(c) Prizes and Awards. - Prizes and awards made primarily in
recognition of religious, charitable, scientific, educational, artistic,
literary, or civic achievement but only if:
(i) The recipient was selected without any action on his part to enter
the contest or proceeding; and
(ii) The recipient is not required to render substantial future services as
a condition to receiving the prize or award.
(d) Prizes and Awards in sports Competition. - All prizes and awards
granted to athletes in local and international sports competitions and
tournaments whether held in the Philippines or abroad and sanctioned
by their national sports associations.
(e) 13th Month Pay and Other Benefits. - Gross benefits received by
officials and employees of public and private entities: Provided,
however, That the total exclusion under this subparagraph shall not
exceed eighty-two thousand pesos (P82,000) which shall cover:
(i) Benefits received by officials and employees of the national and
local government pursuant to Republic Act No. 6686;
(ii) Benefits received by employees pursuant to Presidential Decree
No. 851, as amended by Memorandum Order No. 28, dated August 13,
1986;
(iii) Benefits received by officials and employees not covered by
Presidential decree No. 851, as amended by Memorandum Order No.
28, dated August 13, 1986; and
(iv) Other benefits such as productivity incentives and Christmas
bonus: Provided, That every three (3) years after the effectivity of this
Act, the President of the Philippines shall adjust the amount herein
stated to its present value using the Consumer Price Index (CPI), as
published by the National Statistics Office.
(f) GSIS, SSS, Medicare and Other Contributions. - GSIS, SSS,
Medicare and Pag-Ibig contributions, and union dues of individuals.
(g) Gains from the Sale of Bonds, Debentures or other Certificate of
Indebtedness. - Gains realized from the same or exchange or
retirement of bonds, debentures or other certificate of indebtedness
with a maturity of more than five (5) years.
(h) Gains from Redemption of Shares in Mutual Fund. - Gains
realized by the investor upon redemption of shares of stock in a
mutual fund company as defined in Section 22 (BB) of this Code.
FRINGE BENEFIT TAXES:
SEC. 33. Special Treatment of Fringe Benefit. -
(A) Imposition of Tax. - A final tax of thirty-four percent (34%)
effective January 1, 1998; thirty-three percent (33%) effective January
1, 1999; and thirty-two percent (32%) effective January 1, 2000 and
thereafter, is hereby imposed on the grossed-up monetary value of
fringe benefit furnished or granted to the employee (except rank and
file employees as defined herein) by the employer, whether an
individual or a corporation (unless the fringe benefit is required by the
nature of, or necessary to the trade, business or profession of the
employer, or when the fringe benefit is for the convenience or
advantage of the employer). The tax herein imposed is payable by the
employer which tax shall be paid in the same manner as provided for
under Section 57 (A) of this Code. The grossed-up monetary value of
the fringe benefit shall be determined by dividing the actual monetary
value of the fringe benefit by sixty-six percent (66%) effective January
1, 1998; sixty-seven percent (67%) effective January 1, 1999; and
sixty-eight percent (68%) effective January 1, 2000 and thereafter:
Provided, however, That fringe benefit furnished to employees and
taxable under Subsections (B), (C), (D) and (E) of Section 25 shall be
taxed at the applicable rates imposed thereat: Provided, further, That
the grossed -up monetary value of the fringe benefit shall be
determined by dividing the actual monetary value of the fringe benefit
by the difference between one hundred percent (100%) and the
applicable rates of income tax under Subsections (B), (C), (D), and (E)
of Section 25.
(B) Fringe Benefit Defined. - For purposes of this Section, the term
'fringe benefit' means any good, service or other benefit furnished or
granted in cash or in kind by an employer to an individual employee
(except rank and file employees as defined herein) such as, but not
limited to, the following:
(1) Housing;
(2) Expense account;
(3) Vehicle of any kind;
(4) Household personnel, such as maid, driver and others;
(5) Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted;
(6) Membership fees, dues and other expenses borne by the employer
for the employee in social and athletic clubs or other similar
organizations;
(7) Expenses for foreign travel;
(8) Holiday and vacation expenses;
(9) Educational assistance to the employee or his dependents; and
(10) Life or health insurance and other non-life insurance premiums or
similar amounts in excess of what the law allows.
(C) Fringe Benefits Not Taxable. - The following fringe benefits are
not taxable under this Section:
(1) Fringe benefits which are authorized and exempted from tax under
special laws;
(2) Contributions of the employer for the benefit of the employee to
retirement, insurance and hospitalization benefit plans;
(3) Benefits given to the rank and file employees, whether granted
under a collective bargaining agreement or not; and
(4) De minimis benefits as defined in the rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner.
The Secretary of Finance is hereby authorized to promulgate, upon
recommendation of the Commissioner, such rules and regulations as
are necessary to carry out efficiently and fairly the provisions of this
Section, taking into account the peculiar nature and special need of the
trade, business or profession of the employer.
TAX ON INCOME
SEC. 22. Definitions. - When used in this Title
(AA) The term 'rank and file employees' shall mean all employees
who are holding neither managerial nor supervisory position as
defined under existing provisions of the Labor Code of the Philippines,
as amended.
(CC) The term 'trade, business or profession' shall not include
performance of services by the taxpayer as an employee.

REVENUE REGULATIONS NO. 03-98
SUBJECT : Implementing Section 33 of the National
Internal Revenue Code, as Amended by Republic Act No. 8424
Relative to the Special Treatment of Fringe Benefits
TO : All Internal Revenue Officers and Others Concerned
Pursuant to Section 244, in relation to Section 33 of the National
Internal Revenue Code of 1997, these Regulations are hereby
promulgated to govern the collection at source of the tax on fringe
benefits which have been furnished, granted or paid by the employer
beginning January 1, 1998.
SEC. 2.33. SPECIAL TREATMENT OF FRINGE BENEFITS
(A) Imposition of Fringe Benefits Tax A final withholding tax
is hereby imposed on the grossed-up monetary value of fringe benefit
furnished, granted or paid by the employer to the employee, except
rank and file employees as defined in these Regulations, whether such
employer is an individual, professional partnership or a corporation,
regardless of whether the corporation is taxable or not, or the
government and its instrumentalities except when: (1) the fringe
benefit is required by the nature of or necessary to the trade, business
or profession of the employer; or (2) when the fringe benefit is for the
convenience or advantage of the employer. The fringe benefit tax shall
be imposed at the following rates:
Effective January 1, 1998 - 34%
Effective January 1, 1999 - 33%
Effective January 1, 2000 - 32%
The tax imposed under Sec. 33 of the Code shall be treated as a final
income tax on the employee which shall be withheld and paid by the
employer on a calendar quarterly basis as provided under Sec. 57 (A)
(Withholding of Final Tax on certain Incomes) and Sec. 58 A
(Quarterly Returns and Payments of Taxes Withheld) of the Code.
The grossed-up monetary value of the fringe benefit shall be
determined by dividing the monetary value of the fringe benefit by the
following percentages and in accordance with the following schedule:
Effective January 1, 1998 - 66%
Effective January 1, 1999 - 67%
Effective January 1, 2000 - 68%
The grossed-up monetary value of the fringe benefit represents the
whole amount of income realized by the employee which includes the
net amount of money or net monetary value of property which has
been received plus the amount of fringe benefit tax thereon otherwise
due from the employee but paid by the employer for and in behalf of
his employee, pursuant to the provisions of this Section.
Coverage These Regulations shall cover only those fringe benefits
given or furnished to managerial or supervisory employees and not to
the rank and file.
The term, "RANK AND FILE EMPLOYEES" means all employees
who are holding neither managerial nor supervisory position. The
Labor Code of the Philippines, as amended, defines "managerial
employee" as one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.
"Supervisory employees" are those who, in the interest of the
employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. cdtai
Moreover, these regulations do not cover those benefits properly
forming part of compensation income subject to withholding tax on
compensation in accordance with Revenue Regulations No. 2-98.
Fringe benefits which have been paid prior to January 1, 1998 shall not
be covered by these Regulations.
Determination of the Amount Subject to the Fringe Benefit Tax In
general, the computation of the fringe benefits tax would entail (a)
valuation of the benefit granted and (b) determination of the proportion
or percentage of the benefit which is subject to the fringe benefit tax.
That the Tax Code allows for the cases where only a portion (i.e. less
than 100 per cent) of the fringe benefit is subject to the fringe benefit
tax is clearly stated in Section 33 (a) of R.A. 8424 which stipulates that
fringe benefits which are "required by the nature of, or necessary to the
trade, business or profession of the employer, or when the fringe
benefit is for the convenience or advantage of the employer" are not
subject to the fringe benefit tax. Thus, in cases where the fringe
benefits entail joint benefits to the employer and employee, the portion
which shall be subject to the fringe benefits tax and the guidelines for
the valuation of fringe benefits are defined under these rules and
regulations.
Unless otherwise provided in these regulations, the valuation of fringe
benefits shall be as follows:
(1) If the fringe benefit is granted in money, or is directly paid for
by the employer, then the value is the amount granted or paid for.
(2) If the fringe benefit is granted or furnished by the employer in
property other than money and ownership is transferred to the
employee, then the value of the fringe benefit shall be equal to the fair
market value of the property as determined in accordance with Sec. 6
(E) of the Code (Authority of the Commissioner to Prescribe Real
Property Values).
(3) If the fringe benefit is granted or furnished by the employer in
property other than money but ownership is not transferred to the
employee, the value of the fringe benefit is equal to the depreciation
value of the property.
Taxation of fringe benefit received by a non-resident alien
individual who is not engaged in trade or business in the Philippines
A fringe benefit tax of twenty-five percent (25%) shall be imposed
on the grossed-up monetary value of the fringe benefit. The said tax
base shall be computed by dividing the monetary value of the fringe
benefit by seventy-five per cent (75%).
Taxation of fringe benefit received by (1) an alien individual employed
by regional or area headquarters of a multinational company or by
regional operating headquarters of a multinational company; (2) an
alien individual employed by an offshore banking unit of a foreign
bank established in the Philippines; (3) an alien individual employed
by a foreign service contractor or by a foreign service subcontractor
engaged in petroleum operations in the Philippines; and (4) any of
their Filipino individual employees who are employed and occupying
the same position as those occupied or held by the alien employees.
A fringe benefit tax of fifteen per cent (15%) shall be imposed on the
grossed-up monetary value of the fringe benefit. The said tax base
shall be computed by dividing the monetary value of the fringe benefit
by eighty-five per cent (85%).
Taxation of fringe benefit received by employees in special economic
zones Fringe benefits received by employees in special economic
zones, including Clark Special Economic Zone and Subic Special
Economic and Free Trade Zone, are also covered by these regulations
and subject to the normal rate of fringe benefit tax or the special rates
of 25% or 15% as provided above.
(B) Definition of Fringe Benefit In general, except as otherwise
provided under these regulations, for purposes of this Section, the term
"FRINGE BENEFIT" means any good, service, or other benefit
furnished or granted by an employer in cash or in kind, in addition to
basic salaries, to an individual employee (except rank and file
employee as defined in these regulations) such as, but not limited to
the following:
(1) Housing;
(2) Expense account;
(3) Vehicle of any kind;
(4) Household personnel, such as maid, driver and others;
(5) Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted;
(6) Membership fees, dues and other expenses borne by the
employer for the employee in social and athletic clubs or other similar
organizations;
(7) Expenses for foreign travel;
(8) Holiday and vacation expenses;
(9) Educational assistance to the employee or his dependents; and
(10) Life or health insurance and other non-life insurance premiums
or similar amounts in excess of what the law allows.
For this purpose, the guidelines for valuation of specific types of fringe
benefits and the determination of the monetary value of the fringe
benefits are give below. The taxable value shall be the grossed-up
monetary value of the fringe benefit.
(1) Housing privilege
(a) If the employer leases a residential property for the use of his
employee and the said property is the usual place of residence of the
employee, the value of the benefit shall be the amount of rental paid
thereon by the employer, as evidenced by the lease contract. The
monetary value of the fringe benefit shall be fifty per cent (50%) of the
value of the benefit.
(b) If the employer owns a residential property and the same is
assigned for the use of his employee as his usual place of residence,
the annual value of the benefit shall be five per cent (5%) of the
market value of the land and improvement, as declared in the Real
Property Tax Declaration Form, or zonal value as determined by the
Commissioner pursuant to Section 6(E) of the Code (Authority of the
Commissioner to Prescribe Real Property Values), whichever is
higher. The monetary value of the fringe benefit shall be fifty per cent
(50%) of the value of the benefit. cda
The monetary value of the housing fringe benefit is equivalent to the
following:
MV = [5%(FMV or ZONAL VALUE] X 50%
WHERE:
MV = MONETARY VALUE
FMV = FAIR MARKET VALUE
(c) If the employer purchases a residential property on installment
basis and allows his employee to use the same as his usual place of
residence, the annual value of the benefit shall be five per cent (5%) of
the acquisition cost, exclusive of interest. The monetary value of fringe
benefit shall be fifty per cent (50%) of the value of the benefit.
(d) If the employer purchases a residential property and transfers
ownership thereof in the name of the employee, the value of the
benefit shall be the employer's acquisition cost or zonal value as
determined by the Commissioner pursuant to Section 6(E) of the Code
(Authority of the Commissioner to Prescribe Real Property Values),
whichever is higher. The monetary value of the fringe benefit shall be
the entire value of the benefit.
(e) If the employer purchases a residential property and transfers
ownership thereof to his employee for the latter's residential use, at a
price less than the employer's acquisition cost, the value of the benefit
shall be the difference between the fair market value, as declared in the
Real Property Tax Declaration Form, or zonal value as determined by
the Commissioner pursuant to Sec. 6(E) of the Code (Authority of the
Commissioner to Prescribe Real Property Values), whichever is
higher, and the cost to the employee. The monetary value of the fringe
benefit shall be the entire value of the benefit.
(f) Housing privilege of military officials of the Armed Forces of
the Philippines (AFP) consisting of officials of the Philippine Army,
Philippine Navy and Philippine Air Force shall not be treated as
taxable fringe benefit in accordance with the existing doctrine that the
State shall provide its soldiers with necessary quarters which are
within or accessible from the military camp so that they can be readily
on call to meet the exigencies of their military service.
(g) A housing unit which is situated inside or adjacent to the
premises of a business or factory shall not be considered as a taxable
fringe benefit. A housing unit is considered adjacent to the premises of
the business if it is located within the maximum of fifty (50) meters
from the perimeter of the business premises.
(h) Temporary housing for an employee who stays in a housing
unit for three (3) months or less shall not be considered a taxable
fringe benefit.
(2) Expense account
(a) In general, expenses incurred by the employee but which are
paid by his employer shall be treated as taxable fringe benefits, except
when the expenditures are duly receipted for and in the name of the
employer and the expenditures do not partake the nature of a personal
expense attributable to the employee.
(b) Expenses paid for by the employee but reimbursed by his
employer shall be treated as taxable benefits except only when the
expenditures are duly receipted for and in the name of the employer
and the expenditures do not partake the nature of a personal expense
attributable to the said employee.
(c) Personal expenses of the employee (like purchases of groceries
for the personal consumption of the employee and his family
members) paid for or reimbursed by the employer to the employee
shall be treated as taxable fringe benefits of the employee whether or
not the same are duly receipted for in the name of the employer.
(d) Representation and transportation allowances which are fixed
in amounts and are regular received by the employees as part of their
monthly compensation income shall not be treated as taxable fringe
benefits but the same shall be considered as taxable compensation
income subject to the tax imposed under Sec. 24 of the Code.
(3) Motor vehicle of any kind
(a) If the employer purchases the motor vehicle in the name of the
employee, the value of the benefit is the acquisition cost thereof. The
monetary value of the fringe benefit shall be the entire value of the
benefit, regardless of whether the motor vehicle is used by the
employee partly for his personal purpose and partly for the benefit of
his employer.
(b) If the employer provides the employee with cash for the
purchase of a motor vehicle, the ownership of which is placed in the
name of the employee, the value of the benefits shall be the amount of
cash received by the employee. The monetary value of the fringe
benefit shall be the entire value of the benefit regardless of whether the
motor vehicle is used by the employee partly for his personal purpose
and partly for the benefit of his employer, unless the same was
subjected to a withholding tax as compensation income under Revenue
Regulations No. 2-98.
(c) If the employer purchases the car on installment basis, the
ownership of which is placed in the name of the employee, the value
of the benefit shall be the acquisition cost exclusive of interest, divided
by five (5) years. The monetary value of the fringe benefit shall be the
entire value of the benefit regardless of whether the motor vehicle is
used by the employee partly for his personal purpose and partly for the
benefit of his employer.
(d) If the employer shoulders a portion of the amount of the
purchase price of a motor vehicle the ownership of which is placed in
the name of the employee, the value of the benefit shall be the amount
shouldered by the employer. The monetary value of the fringe benefit
shall be the entire value of the benefit regardless of whether the motor
vehicle is used by the employee partly for his personal purpose and
partly for the benefit of his employer.
(e) If the employer owns and maintains a fleet of motor vehicles
for the use of the business and the employees, the value of the benefit
shall be the acquisition cost of all the motor vehicles not normally used
for sales, freight, delivery service and other non-personal used divided
by five (5) years. The monetary value of the fringe benefit shall be
fifty per cent (50%) of the value of the benefit.
The monetary value of the motor vehicle fringe benefit is equivalent to
the following:
MV = [(A)/5] X 50%
where:
MV = Monetary value
A = acquisition cost
(f) If the employer leases and maintains a fleet of motor vehicles
for the use of the business and the employees, the value of the benefit
shall be the amount of rental payments for motor vehicles not normally
used for sales, freight, delivery, service and other non-personal use.
The monetary value of the fringe benefit shall be fifty per cent (50%)
of the value of the benefit.
(g) The use of aircraft (including helicopters) owned and
maintained by the employer shall be treated as business use and not be
subject to the fringe benefits tax.
(h) The use of yacht whether owned and maintained or leased by
the employer shall be treated as taxable fringe benefit. The value of the
benefit shall be measured based on the depreciation of a yacht at an
estimated useful life of 20 years.
(4) Household expenses Expenses of the employee which are
borne by the employer for household personnel, such as salaries of
household help, personal driver of the employee, or other similar
personal expenses (like payment for homeowners association dues,
garbage dues, etc.) shall be treated as taxable fringe benefits.
(5) Interest on loan at less than market rate
(a) If the employer lends money to his employee free of interest or
at a rate lower than twelve per cent (12%), such interest foregone by
the employer or the difference of the interest assumed by the employee
and the rate of twelve per cent (12%) shall be treated as a taxable
fringe benefit.
(b) The benchmark interest rate of twelve per cent (12%) shall
remain in effect until revised by a subsequent regulation.
(c) This regulation shall apply to installment payments or loans
with interest rate lower than twelve per cent (12%) starting January 1,
1998.
(6) Membership fees, dues, and other expenses borne by the
employer for his employee, in social and athletic clubs or other similar
organizations. These expenditures shall be treated as taxable fringe
benefits of the employee in full.
(7) Expenses for foreign travel
(a) Reasonable business expenses which are paid for by the
employer for the foreign travel of his employee for the purpose of
attending business meetings or conventions shall not be treated as
taxable fringe benefits. In this instance, inland travel expenses (such as
expenses for food, beverages and local transportation) except lodging
cost in a hotel (or similar establishments) amounting to an average of
US$300.00 or less per day, shall not be subject to a fringe benefit tax.
The expenses should be supported by documents proving the actual
occurrences of the meetings or conventions.
The cost of economy and business class airplane ticket shall not be
subject to a fringe benefit tax. However, 30 percent of the cost of first
class airplane ticket shall be subject to a fringe benefit tax.
(b) In the absence of documentary evidence showing that the
employee's travel abroad was in connection with business meetings or
conventions, the entire cost of the ticket, including cost of hotel
accommodations and other expenses incident thereto shouldered by the
employer, shall be treated as taxable fringe benefits. The business
meetings shall be evidenced by official communications from business
associates abroad indicating the purpose of the meetings. Business
conventions shall be evidenced by official invitations/communications
from the host organization or entity abroad. Otherwise, the entire cost
thereof shouldered by the employer shall be treated as taxable fringe
benefits of the employee.
(c) Travelling expenses which are paid by the employer for the
travel of the family members of the employee shall be treated as
taxable fringe benefits of the employee.
(8) Holiday and vacation expenses Holiday and vacation
expenses of the employee borne by his employer shall be treated as
taxable fringe benefits.
(9) Educational assistance to the employee or his dependents
(a) The cost of the educational assistance to the employee which
are borne by the employer shall, in general, be treated as taxable fringe
benefit. However, a scholarship grant to the employee by the employer
shall not be treated as taxable fringe benefit if the education or study
involved is directly connected with the employer's trade, business or
profession, and there is a written contract between them that the
employee is under obligation to remain in the employ of the employer
for period of time that they have mutually agreed upon. In this case,
the expenditure shall be treated as incurred for the convenience and
furtherance of the employer's trade or business.
(b) The cost of educational assistance extended by an employer to
the dependents of an employee shall be treated as taxable fringe
benefits of the employee unless the assistance was provided through a
competitive scheme under the scholarship program of the company.
(10) Life or health insurance and other non-life insurance premiums
or similar amounts in excess of what the law allows The cost of life
or health insurance and other non-life insurance premiums borne by
the employer for his employee shall be treated as taxable fringe
benefit, except the following: (a) contributions of the employer for the
benefit of the employee, pursuant to the provisions of existing law,
such as under the Social Security System (SSS), (R.A. No. 8282, as
amended) or under the Government Service Insurance System (GSIS)
(R.A. No. 8291), or similar contributions arising from the provisions
of any other existing law; and (b) the cost of premiums borne by the
employer for the group insurance of his employees.
(C) Fringe Benefits Not Subject to Fringe Benefits Tax In
general, the fringe benefits tax shall not be imposed on the following
fringe benefits:
(1) Fringe benefits which are authorized and exempted from
income tax under the Code or under any special law;
(2) Contributions of the employer for the benefit of the employee
to retirement, insurance and hospitalization benefit plans;
(3) Benefits given to the rank and file, whether granted under a
collective bargaining agreement or not;
(4) De minimis benefits as defined in these Regulations;
(5) If the grant of fringe benefits to the employee is required by
the nature of, or necessary to the trade, business or profession of the
employer; or
(6) If the grant of the fringe benefit is for the convenience of the
employer.
The exemption of any fringe benefit from the fringe benefit tax
imposed under this Section shall not be interpreted to mean exemption
from any other income tax imposed under the Code except if the same
is likewise expressly exempt from any other income tax imposed under
the Code or under any other existing law. Thus, if the fringe benefit is
exempted from the fringe benefits tax, the same may, however, still
form part of the employee's gross compensation income which is
subject to income tax, hence, likewise subject to a withholding tax on
compensation income payment.
The term "DE MINIMIS" benefits which are exempt from the fringe
benefit tax shall, in general, be limited to facilities or privileges
furnished or offered by an employer to his employees that are of
relatively small value and are offered or furnished by the employer
merely as a means of promoting the health, goodwill, contentment, or
efficiency of his employees such as the following:
(1) Monetized unused vacation leave credits of employees not
exceeding ten (10) days during the year;
(2) Medical cash allowance to dependents of employees not
exceeding P750 per semester or P125 per month;
(3) Rice subsidy of P350 per month granted by an employer to his
employees;
(4) Uniforms given to employees by the employer;
(5) Medical benefits given to the employees by the employer;
(6) Laundry allowance of P150 per month;
(7) Employee achievement awards, e.g. for length of service or
safety achievement, which must be in the form of a tangible personal
property other than cash or gift certificate, with an annual monetary
value not exceeding one-half () month of the basic salary of the
employee receiving the award under an established written plan which
does not discriminate in favor of highly paid employees; dctai
(8) Christmas and major anniversary celebrations for employees
and their guests;
(9) Company picnics and sports tournaments in the Philippines
and are participated exclusively by employees; and
(10) Flowers, fruits, books or similar items given to employees
under special circumstances, e.g. on account of illness, marriage, birth
of a baby, etc
(D) Tax Accounting for the Fringe Benefit Furnished to the
Employee and the Fringe Benefit Tax Due Thereon. As a general
rule, the amount of taxable fringe benefit and the fringe benefits tax
shall constitute allowable deductions from gross income of the
employer. However, if the basis for computation of the fringe benefits
tax is the depreciation value, the zonal value as determined by the
Commissioner pursuant to Section 6(E) of the Code or the fair market
value as determined in the current real property tax declaration of a
certain property, only the actual fringe benefits tax paid shall constitute
a deductible expense for the employer. The value of the fringe benefit
shall not be deductible and shall be presumed to have been tacked on
or actually claimed as depreciation expense by the employer.
Provided, however, that if the aforesaid zonal value or fair market
value of the said property is greater than its cost subject to
depreciation, the excess amount shall be allowed as a deduction from
the employer's gross income as fringe benefit expense.
Illustrations on fringe benefit furnished or granted by the employer to
an employee (other than a rank-and-file employee)
(1) During the year 1998, ABC Corporation paid for the monthly
rental of a residential house of its branch manager (Mr. Dela Cruz)
amounting to P66,000.00.
In this case, the monthly taxable grossed-up monetary value of the said
fringe benefit furnished or granted to its branch manager (Mr. Dela
Cruz) shall be P50,000.00, computed as follows:
Monthly rental for the residential house P66,000.00
Grossed-up monetary benefit granted
(P66,000.00 divided by 66% factor for
calendar year 1998 times 50% taxable portion) P50,000.00
Fringe benefit tax due thereon (34%) P17,000.00
=========
ABC Corporation shall take up in its books of accounts the P66,000.00
fringe benefit furnished to Mr. Dela Cruz, under account title "Fringe
Benefit Expense" and the amount of 17,000.00 under the account title
"Fringe Benefit Tax Expense". The aforesaid amounts shall be fully
allowed as deductions from the gross income of ABC Corporation and
shall be taken up in the said employer's books of accounts as follows:
Debit: Fringe Benefit Expense P66,000
Debit: Fringe Benefit Tax Expense P17,000
Credit: Cash P83,000
To record fringe benefit expense and fringe benefit tax paid on rental
of the residential property furnished to Mr. Dela Cruz for his
residential use. (Note: If the fringe benefit expense of P66,000.00 has
already accrued but not yet paid, use the account title "fringe benefit
payable". If the fringe benefit tax has already accrued but not yet paid,
use the account title "fringe benefit tax payable").
(2) XYZ Corporation owns a condominium unit. During the year
1998, the said corporation furnished and granted the said property for
the residential use of its Assistant Vice-President. The fair market
value of the said property as determined by the Commissioner
pursuant to Section 6(E) of the Code amounts P10,000,000.00 while its
fair market value as shown in its current Real Property Tax
Declaration amounts to P8,000,000.00. In this case, the higher fair
market value of P10,000,000.00 as determined by the Commissioner
shall be used in computing the monetary of the fringe benefit so
furnished or granted to said employee and the fringe benefit tax due
thereon shall be computed as follows:
Monthly rental value of the property
(P10,000,000 times 5% thereof times 50%
divided by 12 months) P20,833.33
Grossed-up monetary value thereof as fringe
benefit (P20,833.33 divided by 66% factor for
calendar year 1998) P31,565.66
Fringe Benefit tax due thereon (34%) P10,732.32 REPEALING CLAUSE All existing rules and regulations or parts
========= thereof which are inconsistent with the provisions of these regulations
In general, under this illustration, the XYZ Corporation shall not are hereby revoked. LibLex
further claim deduction for allowing its Assistant Vice-President the EFFECTIVITY These regulations shall take effect on fringe
use of its residential property since the cost for the use thereof has benefits furnished, granted or paid beginning January 1, 1998.
already been recovered as deduction from its gross income under TRANSITORY PROVISIONS No penalty shall be imposed for late
"Depreciation Expense". However, since the fringe benefit tax in the payment of the fringe benefit tax for the first quarter ending March
amount of P10,732.32, assumed and paid by XYZ corporation has not 1998: Provided, however, that the withholding tax return for the first
as yet been recovered by way of deduction from gross income, the quarter shall be filed and the tax is paid not later than July 25, 1998.
same shall be allowed as a deduction from its gross income. XYZ
Corporation shall take up the foregoing in its books of accounts, as
follows:
Debit: Fringe Benefit Tax Expense P10,732.32
Credit: Cash/Fringe Benefit Tax Payable P10,732.32
To record fringe benefit tax expense for the
residential property furnished to employees.
However, if the cost of the aforesaid condominium unit subject to
depreciation allowance (example: its acquisition cost is only
P7,000,000.00) is lesser that its fair market value as determined by the
Commissioner (i.e. P10,000,000.00), the excess amount (i.e.
P3,000,000.00) shall be amortized throughout the remaining estimated
useful life of the residential property used in computing the said
employer's depreciation expense and allowed as a deduction from the
said employer's gross income as fringe benefit expense. Thus, if the
remaining estimated useful life thereof during the year 1998 is fifteen
(15) years, its monthly amortization shall be computed as follows:
Monthly amortization (P3,000,000.00 divided by
15 years divided by 12 months) P16,666.67
In this case, XYZ Corporation shall take up the foregoing in its books
of accounts as follows:
Debit: Fringe benefit expense P16,666.67
Debit: Fringe benefit tax P10,732.32
Credit: Income constructively realized P16,666.67
Credit: Cash/Fringe benefit tax payable P10,732.32
To record fringe benefit and fringe benefit tax expenses and income
constructively realized from the use of company-owned residential
property furnished to employees.