EIGHTLEINTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S. No
SENATE
274
r
-8 P2-41
Introduced by Senator Ralph G. Recto
AN ACT
EXCLUDING 13'11 MONTH PAY FROM THE COMPUTAIION OF TAXABLE 
INCOME, AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (c) OF THE 
NATIONAL INTERNAL REV ENUE CODE OF 1997, AS AMENDED
Explanatory Note
It is the poliey of the State to promote a just and dynamic social order that will ensure the 
prosperity and independence of the nation and free the people from poverty through policies that 
provide adequate social services, promote full employment, a rising standard of living, and an 
improved quality of life for all.
It is with the same objective that this measure is being proposed. This bill seeks to 
exclude the 13"' month pay from the computation of taxable income amending for the purpose 
Section 32 (B) (7) (e) of the National Internal Revenue Code of 1997, as amended. This would 
help cushion the diminishing purchasing power of employees and workers both in the private and 
public sector thereby increasing their disposable income.
The intent of the law in providing for a mandatory 13,h month pay to all employees is to 
provide the working masses additional income in time for the celebration of Christmas and New 
Year. Therefore, subjecting the same to income tax would defeat the very puipose of the law.
The amount to be excluded from the computation of taxable income would mean greater 
financial flexibility for employees and would put more food on the table and help ensure their 
children’s education.
The proposed legislation will benefit an estimated 26.7 million wage and salary workers 
from the private and public sector1.
Hence, immediate passage of this bill is earnestly sought.
/jiao
April 2019 Labor Force Survey.


EIGHTEEN rn  c o n g r e s s o f t h e  
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
- •i'iOn:rr Ol! I' -■ ••
S. No.
Introduced by Senator Ralph G. Recto * 1 1
AN ACT
EXCLUDING 13™ MONTH PAY FROM THE COMPUTAIION OF TAXABLE 
INCOME, AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (e) OF IHE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
1 
SECTION 1. Section 32 (B) (7) (e) of the National Internal Rc\ cnue Code of 1997. as
2 
amended is hereby further amended to read as follows:
3 
“Sec. 32. Gross Income. -
4 
“(A) 
General Definition. -  x x x
5 
“(B) 
Exclusions from Gross Income. -  x x x
6  
“ (1 ) X X X
7 
“(2) XXX
8 
“(3) XXX
9 
“(4) XXX
10 
“(5) X X X
11 
“(6) XXX
12 
“(7) 
Miscellaneous items. -
13 
“(a) XXX
14 
“(b) XXX
15 
“(c) X X X
16 
“(d) XXX
17 
“(e) 
13th Month Pay [and Other Benefits]. - [Gross benefits)
18 
THIRTEENTH MONTH PAY received by officials and employees of public
19 
and private entities PURSUANT TO EXISTING LAWS, RULES AND
20 
REGULATIONS. |: Provided, however. That the total exclusion under this
21 
subparagraph shall not exceed ninety thousand pesos (P90.000) which shall cover:
22 
(i) 
Benefits received by officials and employees of the national and
23 
local governments pursuant to Republic Act No. 6686;
24 
(ii) 
Benefits received by employees pursuant to Presidential Decree
25 
No. 851, as amended by Memorandum Order No. 28, dated August 13, 1986;


1 
(iii) 
Benefits reeeived by officials and employees not covered by
2 
Presidential Decree No. 851, as amended by Memorandum Order No. 28, dated
3 
August 13, 1986; and
4 
(iv) 
Other benefits such as productivity incentives and Christmas
5 
bonus.]
6 
“(F) OTHER BENEFITS. -  GROSS BENEFITS RECEIN ED BY
7 
OFFICIALS AND EMPLOYEES OF PUBLIC AND PRIVATE ENTITIES:
8 
PROVIDED, HOWE] ER, THAT THE TOTAL EXCLUSION UNDER THIS
9 
SUBPARAGRAPH SHALL NOT EXCEED NINETY THOI SAND PESOS
10 
(P90,000) WHICH SHALL COVER:
11 
(i) BENEFITS RECEIVED BY OFFICIALS AND EMPLOYEES
12 
OF THE NATIONAL AND LOCAL GO\ ERNMENTS PURSUANT TO
13 
REPUBLIC ACT NO. 6686:
14 
(ii) BENEFITS RECEI\ ED BY OFFICIALS AND EMPLOYEES
15 
NOT COVERED BY PRESIDENTIAL DECREE NO. 851, AS AMENDED
16 
BY MEMORANDUM ORDER NO. 28, DATED AUGUST 13, 1986; AND
17 
(iii) OTHER 
BENEFITS 
SUCH 
AS 
PRODUCTIVITY
18 
INCENTIVES AND CHRISTMAS BONUS.
19 
“(G)|(f)j XXX
20 
“ (H)l(g)I XXX
21 
“(I)|(h)j X X X.”
22 
SEC. 2. 
Implementing Rules and Regulations. -  Within thirty (30) days from the
23 
effectivity of this Act, the Secretary of Finance shall promulgate the necessary implementing
24 
rules and regulations for its effective implementation.
25 
SEC. 3. 
Repealing Clause. - 
All other laws, decrees, orders, issuances and rules
26 
and regulations or parts thereof inconsistent with this Act are hereby amended or repealed
27 
accordingly.
28 
SEC. 4. 
Effectivity. - This Act shall take effect fifteen (15) days after its
29 
publication either in the Official Gazette or in at least two (2) newspapers of general circulation.
30 
Approved,