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FOURTEENTH CONGRESS OF THE REPUBLIC) 
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Introduced by Senator JUAN PONCE ENRILE 
EXPLANATORY NOTE 
In the face of the economic downtrend being experienced by the country today, 
our attention is drawn to the plight of the great majority of our taxpaying public who are 
now struggling to male both ends meet and “stretch the peso.” 
Indeed, OUT working people find themselves in a “no win” situation in this 
economic war of survival. They are told that their wages could not be augmented 
because the economy has slowed down and business is bad. But, with a stagnant level of 
earnings, they are now expected to cope with rising fuel prices, rising costs of 
commodities, higher water and electricity bills and an unbridled rise in the cost of 
providing education for their children. The value of the peso continues to deteriorate. 
And, as if these were not enough, a dramatic increase in government imposed fees and 
additional taxes ominously looms in the horizon. 
The oil price increases could not be arrested, with the deregulation of the oil 
industry leaving the Government helpless and finding itself pleading with the oil 
companies. 
The currency deterioration is expected to continue as a necessary 
consequence of our poor economic conditions. As to the rising cost of almost everything 
under the sun, our people can only beg for mercy and appeal to the social conscience of 
big businessmen, monopolies and cartels. 
How is Juan dela Cruz expected to hurdle all these? 
It is the author’s humble belief that Congress is not only mandated but duty bound 
to exercise its lawmaking powers to cushion the impact of these financial blows that are 
hitting the public hard. 
This proposed measure seeks to increase the current levels of personal and 
additional exemptions for individual income tax under the National Internal Revenue 
Code (Republic Act No. 8424, as amended). 
It is submitted that this bill will help balance the drastic erosion in the purchasing 
power of our people’s hard-earned money brought about by the inordinate rise in the cost 
of living. It is further submitted that the portion of our taxpayer’s income which will be 
freed through these increased levels of exemption will enable families to spend more on 
their food, sustenance and other basic needs. Hence, while providing a much-needed tax 
break for our income earners, this same measure will likewise put the tax-free portion of 
individual income to good use by increasing consumption and thereby triggering 
economic activity and dynamism. 


As urgently as the people are demanding for relief from their present financial 
difficulties, the immediate passage of this bill is earnestly sought. 
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5TRI4TE 
ICE Us' 3 *E ~~~~A~ 
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FOURTEENTH CONGRESS OF THE REPUBLlC ) 
OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
S. B. No. 
125 
Introduced by Senator JUAN PONCE ENRILE 
AN ACT 
INCREASING 
THE 
ALLOWABLE 
PERSONAL 
AND 
ADDITIONAL 
EXEMPTIONS OF INDIVIDUAL TAXPAYERS, AMENDING FOR THE 
PURPOSE SECTION 35 (A) AND (B) OF THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 35 (A) and (B) of the National Internal Revenue Code of 
1997, as amended, is hereby amended to read as follows: 
"SEC. 
35. 
Allowance of Personal Exemption for Individual 
Taxpayers.- 
(A) 
In GeneruZ. - For purposes of determining the tax 
provided in Section 24 (A) of this Title, there shall 
be allowed a basic personal exemption as follows: 
For single individual or 
married individual 
judicially decreed as 
legally separated with 
qualified dependents 
[P20,000.00] P48,OOO.OO 
For bead of the family 
Ip25,000.00] P54,OOO.OO 
For each married individual [P32,000.00] P64,OOO.OO 


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In the case of married individuals where only one of 
the spouses is deriving gross income, only such spouse 
shall be allowed the personal exemption. 
For purposes o f  this paragraph, the term “head of 
the family” means an unmarried or legally separated man 
or woman with one or both parents, or with one or more 
brothers and sisters, or with one or more legitimate, 
recognized natural or legally adopted children living with 
and dependent upon him for their chief support, where such 
brothers or sisters or children are not more than twenty-one 
(21) years of age, unmarried and not gainfully employed or 
when such children, brothers or sisters, regardless of age 
are incapable of self-support because of mental or physical 
defect. 
(B) 
Additional Exemption for Dependents. - There shall 
be allowed an additional exemption of [Eight 
Thousand 
Pesos 
(P8,OOO.OO)l 
SIXTEEN 
THOUSAND PESOS (P16,OOO.OO) 
for 
each 
depended not exceeding four (4). 
The additional exemption for dependents shall be 
claimed by only one of the spouses in the case of married 
individuals. 
In the case of legally separated spouses, additional 
exemptions may be claimed only by the spouse who has 


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custody of the child or children: Provided, That the total 
amount of additional exemptions that may be claimed by 
both shall not exceed the maximum additional exemptions 
herein allowed. 
For purposes of this Subsections, a “dependent” 
means a legitimate, illegitimate or legally adopted child 
chiefly dependent upon and living with the taxpayer if such 
dependent is not more than twenty one (21) years of age, 
unmarried and not gainfully employed or if such 
dependent, regardless of age, is incapable of self support 
because of mental physical defect.” 
SECTION 2. SepurubiliQ Cluuse. - If any provision of this Act is declared 
invalid or unconstitutional, other provisions hereof which are not affected thereby shall 
continue to be in full force and effect. 
SECTION. 3. Rqeuling Clume. - All provisions of law, orders, decrees, 
executive orders, including rules and regulations or parts thereof which are contrary to or 
inconsistent with the provisions of this Act are hereby repealed or modified accordingly. 
SECTION. 4. EgectiviQ Clume. - This Act shall take effect fifteen (15) days 
following its publication in the Official Gazette or at least two (2) national newspapers of 
general circulation. 
Approved,