Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. 2207 
Introduced by Representative Ryan S. Recto 
EXPLANATORY NOTE 
Man does not work like a machine.  He cannot work indefinitely.  He needs 
ample time to rest and revitalize in order to prepare for another day’s work, while 
making sure that he performs to the best of his abilities at all times. 
This is why labor laws in many countries prescribe a maximum number of work 
hours. The Philippine Labor Code prescribed the normal hours of work for employees 
at eight (8) hours a day for six (6) consecutive days.  If the employee works beyond 
eight (8) hours, the employer is required to pay additional compensation equivalent to 
the employee’s regular wage plus at least twenty-five percent (25%) of his regular 
wage. If the employee renders overtime on a holiday or rest day, the rate is increased 
to thirty percent (30%)1.  
Employees in the government are also entitled to overtime pay but they are 
governed by Civil Service laws, rules and regulations. 
An employee who renders overtime work puts in additional hours of work and 
requires greater physical and mental effort. Instead of being able to rest early and 
spend more time with the family, the employee is forced to extend the working hours 
to achieve the organization’s goals.  Thus, it is only fitting that the employee be 
properly compensated for additional work hours rendered.  
Unfortunately, compensation received for overtime work forms part of an 
employee’s taxable income. This not only limits the full enjoyment of monetary 
benefits due the employee for putting in more hours of work but also diminishes the 
value of the additional physical and mental effort exerted.   
1 Labor Code of the Philippines. 
July 23, 2025
8:50 am


 
 
In order to give due recognition and compensation to the hours worked in 
excess of the prescribed working hours, this bill seeks to exclude overtime pay from 
the computation of taxable income, amending for the purpose Section 32(B)(7) of the 
National Internal Revenue Code of 1997, as amended.  
 
This proposal will cost the government foregone revenues. However, more 
money in taxpayers’ pockets will increase disposable income and boost consumer 
spending which in turn would trigger demand for more goods and services, thereby 
stimulating activities in the industrial and service sectors and eventually generate 
more taxes. 
 
 
The proposed legislation is expected to benefit an estimated 31.58 million 
wage and salary workers from the private and public sector2. 
  
 
Hence, the immediate passage of this bill is earnestly sought. 
 
 
 
 
 
 
 
 
 
 
                                     
 
 
 
 
        Ryan S. Recto 
        Representative 
      
             6th District, Batangas 
 
2 May 2025 Labor Force Survey 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative Ryan S. Recto 
AN ACT 
ENHANCING THE OVERTIME PAY FOR ALL EMPLOYEES, AMENDING FOR THE 
PURPOSE SECTION 32(B)(7) 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: 
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Section 1. Short Title. – This Act shall be known as the “Enhanced Overtime 
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Pay Act”. 
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Sec. 2. Section 32(B)(7) of the National Internal Revenue Code of 1997, as 
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amended, is hereby further amended to read as follows: 
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“Sec. 32. Gross Income. –  
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“(A) General Definition. – xxx 
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“(B) Exclusions from Gross Income. – xxx 
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“(1) xxx 
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“xxx 
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“(7) Miscellaneous items. – 
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“(a) xxx 
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“xxx 
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“(e) xxx  
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“(F) OVERTIME PAY – COMPENSATION DUE TO HOURS 
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WORKED IN EXCESS OF THE REQUIRED NORMAL WORKING 
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HOURS. 
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“[(f)] (G) xxx 
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“[(g)] (H) xxx 
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“[(h)] (I) xxx 
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2207


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“[(i)] (J) xxx” 
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Sec. 2.   Implementing Rules and Regulations. – Within thirty (30) days from 
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the effectivity of this Act, the Secretary of Finance, upon the recommendation of 
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the Commissioner of Internal Revenue, shall promulgate the necessary 
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implementing rules and regulations for its effective implementation. 
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Sec. 3.   Repealing Clause. – All other laws, decrees, orders, issuances and 
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rules and regulations or parts thereof inconsistent with this Act are hereby 
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amended or repealed accordingly.  
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Sec. 4.   Effectivity. – This Act shall take effect fifteen (15) days after its 
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publication either in the Official Gazette or in at least two (2) newspapers of 
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general circulation. 
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Approved,


 
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