iS RECEIVED a
EIGHTEENTH CONGRESS ) kg T 24 29
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )

HOUSE OF REPRESENTATIVES
5241

House Bil

Introduced by Representative VICTOR A. YAP

EXPLANATORY NOTE

Article II, Section 9 of the Constitution states that:

“The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the ration 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."(Atticle II, Section 9)

Following this Constitutional mandate, Presidential Decree No. 851 was enacted to requite
all employers to provide for an additional 13th-month Pay, equivalent to a one-month basic salary
to all rank-and-file employees before the end of each calendar year

The mandatory 13th-month Payis intended to improve the purchasing capabilities of the
working citizens who look forward to receiving it, especially for the celebration of Christmas and
New Year seasons. More importantly, this measure acts as both a recognition of the struggle of the
labor force, as well as an incentive for thom to continue their tireless hard work for the economy
and the development of society

Under the current law', the 13th-month
exempted from taxation, However, sucit law provi
ninety thousand pesos (P90,000.00). In other w
taxation if the basic salary r

yis excluded from gross income and is thus
or tite tax exemption to the amount of
themonth Paybenefit is subjected to
1e mentionedqualification

he cor

Thus, this bill seeks io exc
and therefore provide the fill,
promotion of the well-bei

putation of taxable incor
benefit of a 13th-month pay in

In view of the foregoing. ge of this bill is e

Holic Act No. 10963, exacted on 24


EIGHTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES — )
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No. ae a

Introduced by Representative Victor A. Yap

AN ACT
EXCLUDING 13" MONTH PAY FROM THE COMPUTATION OF TAXABLE
INCOME, AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (ec) OF THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 32 (B) (7) (¢) of the National Internal Revenue Code of 1997,
as amended, is hereby further amended to tead as follows:

“Sec, 32. Gross Income.-
“(A)_ General Definition. — x x x

“(B) Exclusions from Gross Income. =x x x
“() xx x

“Q xx x

“B) x x x

“@ x xx

“@) x x x

“O xxx

“(7)_ Miscellaneous items. —

“@ x x x

“b) x xx


“@) x xx

“@ x xx
“(€) 13 Month Pay [and Other Benefits]. — [Gross benefits]

THIRTEENTH MONTH PAY received by officials and employees of public and
private entities PURSUANT TO EXISTING LAWS, RULES AND
REGULATIONS. [:Provided, however, ‘That the total exclusion under this
subparagraph shall not exceed ninety thousand pesos (P90,000) which shall cover:

@ Benefits received by officials and employees of the national and local
governments pursuant to Republic Act No. 6686;

(i) Benefits received by employees pursuant to Presidential Decree No.
851, as amended by Memorandum Order No. 28, dated August 13, 1986;

(ii) 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.]

“(F) 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 NINETY THOUSAND
PESOS (P90,000) WHICH SHALL COVER:

(i) BENEFITS RECEIVED BY OFFICIALS AND EMPLOYEES OF
THE NATIONAL AND LOCAL GOVERNMENTS PURSUANT TO
REPUBLIC ACT NO. 6686;

(ii) 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

(iii) OTHER BENEFITS SUCH AS PRODUCTIVITY INCENTIVES
AND CHRISTMAS BONUS.

“GIO] x x x
“@DI@)] x x x
“@O[h)] x x x.”

SEC. 2. Implementing Rules and Regulations. — Within thirty (30) days
from the effectivity of this Act, the Secretary of Finance shall promulgate the
necessary implementing rules and regulations for its effective implementation.

SEC. 3. Repealing Clause. — All other laws, decrees, orders, issuances and
rules and regulations or parts thereof inconsistent with this Act are hereby amended
or repealed accordingly.


SEC. 4, Effectivity. — This act shall take effect fifteen (15) days after its
publication either in the Official Gazette or in at least two (2) newspaper of general circulation.

Approved,