Presidential Decree No. 1123




M a n i l a



WHEREAS, it is the policy of the State under the New Society to protect wages, incomes and employment against the erosion of imported as well as domestic inflation;

WHEREAS, in the pursuit of this policy the Government has subsidized wage goods, controlled the prices of essential commodities, and provided the workers with emergency allowance under PD 525, 13th month pay under PD 851, new minimum wages under PD 928 and 10 paid legal holidays under PD 442;

WHEREAS, recent oil price increases and other inflationary factors have caused new difficulties to the workers, especially the lowest-income groups;

NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested in me by the Constitution, do hereby decree the following:

Section 1. In the Private Sector. In the private sector, an across-the-board increase of sixty pesos (P60.00) in emergency allowance as provided in PD 525 shall be paid by all employers to their employees effective 1 May 1977. Accordingly, the monthly emergency allowance under PD 525 is hereby amended as follows:

(a) For workers being paid P50.00 P110

(b) For workers being paid P30.00 P 90

(c) For workers being paid P15.00 P 75

Sec. 2. In the Public Sector. Effective 1 May 1977, an across-the-board salary increase of ten per cent (10%) shall be paid to all employees of the Government receiving a monthly salary of not more than P600.

Sec. 3. Report on Compliance. All private employers shall report compliance with this Decree to the Labor Statistics Service of the Department of Labor in Manila, furnishing a copy thereof to the nearest Department of Labor Regional Office.

Sec. 4. The Secretary of Labor and the Commissioner of the Budget shall issue appropriate rules and regulations to implement this Decree for their respective sectors. Under such rules and regulations, distressed employers whether public or private may be exempted while in such condition in the interest of development and employment.

Sec. 5. This Decree shall take effect on 1 May 1977.

Done in the City of Manila, this 21st day of April, nineteen hundred and seventy-seven.


By virtue of the powers vested in me by Presidential Decree No. 1123, referred to herein as the Decree, the following Rules are hereby issued for strict compliance by all concerned.

Section 1. Coverage. These Rules shall apply to all employers except the following:

(a) The Government and any of its political subdivisions, including government-owned and/or controlled corporations; but private subsidiaries of government corporations directly chartered or established by special law, and private enterprises which have been taken over by the said corporations shall be covered by these Rules;

(b) Those already paying their employees wages of more than P650.00 a month including the emergency allowance under PD 525;

(c) Employers of household or domestic helpers and persons in the personal service of another;

(d) Employers of homeworkers;

(e) Retail and service establishments employing not more than five (5) workers;

(f) NACIDA-registered industries and duly registered cooperatives, employing not more than thirty (30) employees for a period of two (2) years from the effectivity of the Decree;

(g) Export-oriented or labor-intensive enterprises that may hereafter be established outside of the Metropolitan Manila Area, for the first three (3) years of their operations;

"Export-oriented enterprise" is one primarily devoted to the production of goods and services for export that demonstrably contributes foreign exchange to the economy.

"Labor-intensive enterprise" is one that employs labor at a ratio of one (1) worker for every thirty thousand (P30,000.00) pesos or less of its capital actually invested;

(h) Employers of apprentices and learners insofar as these types of workers are concerned, provided that their apprenticeship or learnership program is duly approved or recognized by the Department of Labor;

(i) Labor-intensive enterprises in depressed areas declared as such by the President or by the Secretary of Labor, for a period of three (3) years from the start of their operations;

(j) Educational institutions, until such time as they shall have been allowed to increase their tuition fees;

(k) Those that have granted, in addition to the allowance under PD 525, at least P60.00 monthly wage increase or on after January 1, 1977, provided that those who paid less than this amount shall pay the difference;

(l) Employers who are distressed, having incurred substantial losses for the last two (2) years in accordance with the criteria laid down by the Secretary of Labor in an appropriate issuance, and non-profit institutions and organizations which depend mainly on donations, contributions, grants and other similar sources, were their normal income therefrom for the last two (2) years has declined by more than 20%, provided that they comply with the provisions of Sec. 6 hereof.

Sec. 2. Contractual employers. Contractors or sub-contractors, including security and watchmen agencies, are covered by the Decree. If they fail to pay the allowances provided under Sec. 3 hereof, their principals shall be jointly and severally liable with them.

Sec. 3. Amount of allowances. Effective May 1, 1977 covered employers shall pay to their employees an across-the-board increase of sixty (P60.00) pesos in emergency allowance, in addition to the amount provided in PD 525. Accordingly, the emergency allowance under PD 525 is hereby adjusted as follows:

a) For workers falling under applicable rate of P50.00 P110.00
b) For workers falling under applicable rate of P30.00 P90.00
c) For workers falling under applicable rate of P15.00 P75.00

Employers who have integrated the benefits under LOI No. 174 and PD 525 into the basic wage shall pay as wage or allowance the increase prescribed by the Decree. The ceiling of P600 shall, for purposes of these Rules, be construed to be exclusive of the allowances granted both under PD 525 and PD 1123.

Sec. 4. Previous allowances to be credited. Emergency cost-of-living allowance given by employers or wage increases explicitly granted in lieu of such allowance, in excess of the amount provided in the scales under LOI 174 or PD 525, shall be credited to the allowance provided for under PD 1123.

Sec. 5. Allowance to be paid in cash. The allowances required by the Decree shall be paid in cash together with the regular wage on the customary pay days.

Sec. 6. Application for exemption. Employers falling under Section 1, paragraph (1) thereof, may apply for exemption with the Secretary of Labor within thirty (30) days from the effectivity of these Rules. The application shall be under oath showing their inability to implement the Decree and the reasons therefor which shall be accompanied by a certified copy of the Income Statement and the Statement of Assets and Liabilities for the last two (2) calendar years filed with Government entities such as the Securities and Exchange Commission and the Bureau of Internal Revenue, and such other proofs as may be required by the Secretary of Labor.

Any application not supported by the required documents shall be deemed as not having been duly filed.

Any person who willfully falsifies in any material respect any report, document or statement required herein shall be subject to the penalties provided by law.

Sec. 7. Processing of application. The application for exemption from the Decree shall be processed by the Department of Labor.

Whenever an application for exemption has been duly filed, action by the Regional Office of the Department of Labor on any complaint for alleged non-compliance with the Decree shall be held in abeyance pending the resolution of the application.

Sec. 8. Effect of disapproval. Upon disapproval of the application for exemption by the Secretary of Labor, the employer shall immediately pay to his employees the allowances due. No motion for reconsideration shall be entertained.

Sec. 9. Duration of exemption. Every exemption granted by the Secretary of Labor shall be valid for one (1) year from May 1, 1977, unless renewed.

Section 10. Special features of benefits. Allowances granted to employees in compliance with the Decree need not be considered as part of the regular wage of the employees for purposes of determining overtime and premium pay, fringe benefits, as well as premium contributions to the State Insurance Fund, social security, medicare, and private welfare and retirement plans. In lieu of the allowances, employers may grant wage increases which shall be considered as compliance with the Decree, provided the amount is not less than P60.00.

Section 11. Allowances of full-time and part-time employees. Employees shall be paid in full the monthly allowances on the basis of the scales provided in Sec. 3 hereof, regardless of the number of their regular working days, if they incur no absence during the month. If they incur absences, the amounts corresponding to the absences may be deducted from the monthly allowance.

In case of part-time employment, the allowance to be paid shall be proportionate to the time worked by the employee. This requirement shall apply to any employee with more than one employer.

Section 12. Leave of absence with pay. All covered employees shall be entitled to the allowance provided herein when they are on leave of absence with pay.

Section 13. Relation to workmen's compensation and social security payments. An employee who is receiving workmen's compensation or social security benefit in lieu of wages is entitled to the monthly allowance to the extent of such compensation or benefit.

Section 14. Determination of equivalent daily allowance. In determining the equivalent daily allowance, the adjusted applicable monthly allowance shall be divided by thirty (30) days.

Section 15. Effects on existing CBA. The implementation of the Decree and these Rules shall not be a ground for the renegotiation of existing collective agreements. Where the application of the adjusted applicable rate results in significant distortions of the pay structure in an establishment, the employer or the union may initiate negotiations but only for the purpose of correcting the resulting distortions. No complaint arising from the renegotiation of the existing collective agreements as a result of the promulgation of the Decree shall be entertained within a period of three (3) months from the effectivity of these Rules. Employers of non-unionized employees are urged to correct voluntarily any significant distortions in the pay structure arising from the grant of the new allowances.

Section 16. Relation to other agreements. Nothing herein shall prevent employers from granting allowances to their employees in excess of those provided under the Decree and these Rules nor shall if be construed to countenance any reduction of benefits already being enjoyed.

Section 17. Reporting requirements. All covered employers shall report to the Department of Labor the allowance granted to their employees not later than June 30, 1977. Two copies of the report shall be submitted to the Labor Statistics Service of the Department of Labor, in the form prescribed for the purpose, furnishing a copy thereof to the Regional or District Office having jurisdiction over the business or undertaking of the employer.

The report shall conform substantially to the following form:

Report on Compliance with PD No. 1123

(1) Name of establishment:

(2) Address:

(3) Principal products or business:

(4) Capital structure:

(a) Authorized capital _______________

(b) Paid-up capital _______________

(c) Total assets _______________

(5) Total employment:

(6) Particulars of the emergency benefits granted:

(a) Mode of payment: allowance/salary adjustment/others

(b) Date of effectivity:

(c) Mode of granting: voluntary, collective bargaining, etc.

(d) Total value of benefits granted per month under:

PD 525 PD No. 1123

___________ ___________

(e) Total number of workers benefited:

(f) Other details if necessary

(7) Name and signature, position and telephone number of the person filing the report:

Section 18. Enforcement and penalty. The enforcement of the Decree and these Rules shall be in accordance with the provisions of the Labor Code and its Implementing Rules and the memorandum of Agreement between the Department of Labor and the Department of National Defense.

Any violations of the Decree or of these Rules shall be subject to the penalties provided by PD 525.

Section 19. Effectivity. These Rules shall take effect on May 1,1977.

Done in the City of Manila, Republic of the Philippines, on this first day of May, 1977.

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