HOUSE OF REPRESENTATIVES
RECEIVED
08 AUG 2016

SEVENTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES _)
First Regular Session )

DATE:
TINE:

BY lh

REGISTRATION UNIT
BILLS AND INDEX SERVICE

HOUSE OF REPRESENTA’
H.No._ 2600

Introduced by Representative Vilma Santos-Recto
6th District of Batangas

AN ACT
EXCLUDING 13™ MONTH PAY FROM THE COMPUTATION OF TAXABLE
INCOME AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (e) OF REPUBLIC
ACT NO. 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED

Explanatory Note

Itis the policy 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 Republic Act No. 8424, otherwise known as 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 in enacting Presidential Decree No. 851, as amended by Memorandum Order
No. 28, otherwise known as the “13" Month Pay Law” 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 purpose 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 39.8 M employees from the private
and public sector'.

Hence, immediate passage of this bill is earnestly sought.

VILMA SANTOS-RECTO

October 2015 Labor Force Survey.


SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
H.No. 2600

Introduced by Representative Vilma Santos-Recto
6th District of Batangas

AN ACT
EXCLUDING 13™ MONTH PAY FROM THE COMPUTATION OF TAXABLE
INCOME AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (¢) OF REPUBLIC
ACT NO, 8424 OTHERWISE KNOWN AS 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 Republic No. 8424, otherwise known as the
“National Internal Revenue Code of 1997,” as amended is hereby further amended to
read as follows:
“Sec. 32. Gross Income. —
“(A) General Definition. —x xx
“(B) Exclusions from Gross Income. ~xxx
“(xxx
“Q)xxx
“3)xxx
(4) xxx
“(xxx
“xxx
“(7) Miscellaneous items. -
(a) xxx
“(b) xxx
“()xxx
“@xxx
“@) 13" Month Pay fand Other Benefits}. - (Gross
benefits] THIRTEENTH MONTH PAY received by officials
and employees of public and private entities PURSUANT TO
PRESIDENTIAL DECREE NO. 851, AS AMENDED BY
MEMORANDUM ORDER NO. 28, DATED AUGUST 13,


1986. [: Provided, however, That the total exclusion under this
subparagraph shall not exceed eighty-two thousand pesos
(P82,000) which shall cover:

0)

i)

(iti)

(iv)

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

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

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

Other benefits such as _ productivity
incentives and Christmas bonus: Provided,
That every three (3) years after the
effectivity of this Act, the President of the
Philippines shall adjust the amount herein
stated to its present value using the
Consumer Price Index (CPI), as published
by the National Statistics Office (NSO).]

“) 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 EIGHTY-TWO THOUSAND PESOS
(P82,000) WHICH SHALL COVER:

@

(ii)

BENEFITS RECEIVED BY OFFICIALS
AND EMPLOYEES OF THE
NATIONAL AND LOCAL
GOVERNMENTS PURSUANT TO
REPUBLIC ACT NO, 6686;

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: PROVIDED,
THAT EVERY THREE (3) YEARS
AFTER THE EFFECTIVITY OF THIS
ACT, THE PRESIDENT OF THE
PHILIPPINES SHALL ADJUST THE
AMOUNT HEREIN STATED TO ITS
PRESENT VALUE USING THE
CONSUMER PRICE INDEX (CPI), AS
PUBLISHED BY THE PHILIPPINE
STATISTICS AUTHORITY (PSA).

“GOI xxx

“EDI XXX

“DIGI xxx.”

SEC. 2. Implementing Rules and Regulations. - The Bureau of Internal Revenue
(BIR), Department of Finance (DoF), and Department of Labor and Employment (DOLE) shall
promulgate not later that thirty (30) days upon the effectivity of this Act the necessary rules and
regulations for its effective impiementation.

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) newspapers of general circulation.

Approved,