SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. a 61 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Labor Code provides that a retiring employee shall be entitled to 
retirement pay equivalent to at least one-half (1/2) month salary for every year of 
service, a fraction of at least six (6) months being considered as one whole year, 
in the absence of a retirement plan, employment contract, or collective 
bargaining agreement granting higher retirement benefits. 
The retirement pay of employees is exempted from tax, subject to certain 
conditions and requirements provided under the Tax Code and RA 4917, 
However, there are certain instances wherein employers fail to comply with these 
requirements, the most common of which is their failure to register their 
retirement plans. 
When the request for tax exemption is denied by the Bureau of Internal 
Revenue, it is usually the retiring employees who bear the full burden of the tax, 
even though it is wholly the fault of the employer. This is unfair and unjust to the 
retirees, especially to those who would be receiving a meager retirement pay. 
This bill seeks to reaffirm the tax-exempt status of retirement benefits, and 
to pass the tax burden to the employers 'in the event that the request for tax 
exemption is denied by the BIR for any reason, as long as the retiring employee 
is without fault. 
Hence, the immediate passage of this bill is therefore earnestly solicited. 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 3 61 
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) 
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JlIL -3 
P12 :58 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO, 442, AS 
AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE 
PHILIPPINES, 
BY 
REQUIRING 
EMPLOYERS 
TO 
RELEASE 
THE 
RETIREMENT PAY OF EMPLOYEES WITHIN FIFTEEN DAYS FROM 
SUBMISSION OF COMPLETE DOCUMENTARY REQUIREMENTS 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Article 287 of Presidential Decree No. 442, as amended, 
otherwise known as the Labor Code of the Philippines, is hereby amended to 
read as follows: 
"ART. 287. Retirement. - Any employee may be retired upon 
reaching the retirement age established in the collective bargaining 
agreement or other applicable employment contract. "In case of 
retirement, the employee shall be entitled to receive such 
retirement benefits as he may have earned under existing laws 
and any collective bargaining agreement and other agreement/;: 
Provided, however, that an employee's retirement benefits under 
any collective bargaining and other agreements shall not be less 
than those provided herein. 
"In the absence of a retirement plan or agreement providing 
for retirement benefits of employees in the establishment, an 
employee upon reaching the age of sixty (60) years or more, but 
not beyond sixty-five (65) years which is hereby declared the 
compulsory retirement age, who has served at least five (5) years 
in the said establishment, may retire and shall be entitled to 
retirement pay equivalent to at least one-half (1/2) month salary for 
every year of service, a fraction of at least six (6) months being 
considered as one whole year. 
"Unless the parties provide for broader inclusions, the term 
one-half (1/2) month salary shall mean fifteen (15) days plus one-
twelfth (1112) of the 13th month pay and the cash equivalent of not 
more than five (5) days of service incentive leaves. 
"THE RETIREMENT PAY OF EMPLOYEES, INCLUDING 
HIS OTHER EMPLOYMENT BENEFITS, SHALL BE RELEASED 
BY THE EMPLOYER AS A SINGLE LUMP-SUM AMOUNT IN 


LEGAL TENDER WITHIN FIFTEEN (15) DAYS FROM HIS 
SUBMISSION 
OF 
COMPLETE 
DOCUMENTARY 
REQUIREMENTS, BUT NOT EARLIER THAT THE DATE OF HIS 
RETIREMENT. 
"An underground mining employee upon reaching the age of 
fifty (50) years or more, but not beyond sixty (60) years which is 
hereby declared the compulsory retirement age for underground 
mine workers, who has sewed at least five (5) years as 
underground mine worker, may retire and shall be entitled to all the 
retirement benefits provided for in this Article. 
"Retciil, service and agricultural establishments or operations 
employing not more than ten (10) employees or workers are 
exempted from the coverage of this provision. 
"Violation of this provision is hereby declared, unlawful and 
subject to the penal provisions provided under Article 288 of this 
Code. 
"Nothing in this Article shall deprive any employee of 
benefits to which he may be entitled under existing laws or 
company policies or practices." 
SECTION 2. This Act shall take effect fifteen (15) days after its complete 
publication in the Official Gazette or in at least two (2) national papers of general 
circulation whichever comes earlier. 
Approved,