Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

H.No,_ 3974

Introduced by:
Representatives Estrellita “Ging” B, Suansing and Angelina D.L. Tan, M.D

EXPLANATORY NOTE

“Change will not come if we wait for some other person or some other time. We
are the ones we've been waiting for. We are the change that we seek’.

Such is the quote of President Barack Obama as he underscores change that
always happen in all walks of life, from the government to the ends of private life.

It is in this context that the change in the P30,000.00 cap for the income tax
exemption of the 13th month pay and Christmas bonuses is the focal point of this
proposed bill.

This bill therefore aims to increase that ceiling to P75,000 to make it more
responsive to the needs of the times.

The P30,000.00 ceiling was first introduced in 1994 upon the effectivity of
Republic Act No. 7833. At that time, the lowest monthly basic salary for government
‘employees in the Salary Grade 1, Step | level was P2,800.00; while those occupying
Salary Grade 33 positions was at P25,000.00. Nowadays the basic salaries have been
adjusted such that SG-I Step | positions now stand at P9,000.00 and SG-33 at
120,000.00.

As the highest law of the land, we should always be guided by the 1987
Constitution that mandates the following,


“Article Il, Section 9

"The State shall 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."

“Article Xill, Section 1

“The Congress shall give highest priority to the enactment of
measures that protect and enhance the right of all the people to human
dignity, reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power for the
common good.” xxx

“Article XIll, Section 2

The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-
reliance.

XXXX

not to mention the State's policy to affirm labor as a primary social economic force by
protecting the rights of workers and promoting their welfare.

As proposed by the bill, the ceiling of P75,000.00 shall be adjusted to its present
value using the Consumer Price Index (CPI) as published by the National Statistics
Office (NSO), three years after the bill's effectivity and every three years thereafter.

If enacted into law, this bill would not only reward the workers of the State and
private sector who tirelessly toil in contributing to the income generation of the
government and delivery of basic services to the people; it would likewise greatly help
in boosting their morale and improving their living conditions

indeed there will be revenue foregone with the passage of this bill, but such
revenue lost could be recouped through increased expenditures of our countrymen;
pump-priming cash flow to the economy in the process.

In view of the foregoing, approval of the bill is most earestly sought.

Ober

Rep. ESTRELLITA “GING” B, SUANSING Rep. ANGELINA “Helen” TAN, M.D.
41° District, Nueva Ecija 4" District, Quezon



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

3974

H. Bill No.

Introduced by
Representatives Estrellita “Ging” B, Suansing and Angelina D.L. Tan, M.D.

AN ACT
INCREASING THE CEILING OF THE 13TH MONTH PAY, CHRISTMAS BONUS
AND OTHER BENEFITS EXCLUDED FROM THE COMPUTATION OF GROSS
INCOME FOR THE PURPOSES OF INCOME TAXATION, AMENDING FOR THE
PURPOSE SECTION 32 (B), CHAPTER VI 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 32 (B), Chapter VI of the National Internal Revenue Code
of the Philippines (R.A. No, 8424) is hereby amended as follows:

SEC. 32. Gross Income. -
"(A) General Definition. - xxx

XXX

“(B) Exclusions from Gross Income. - The following items shall not be
included in gross income and shall be exempt from taxation under this title.

"XXX
"(7) Miscellaneous Items. -
"XXX

(e) 13th Month Pay and 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 [Thirty thousand pesos (P

1


30,000)) SEVENTY-FIVE THOUSAND PESOS (P75,000) which
shall cover:

()) Benefits received by officials and employees of the
national and local government pursuant to Republic
Act No, 6686;

(ii) 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: [Provided, further, That the
ceiling of Thirty thousand pesos (P30,000) may be
increased through rules and regulations issued by
the Secretary of Finance, upon recommendation of
the Commissioner, after considering among others,
the effect on the same of the inflation rate at the
end of the taxable year]

PROVIDED, THAT NOT LATER THAN THREE
YEARS AFTER THE EFFECTIVITY OF THIS ACT AND
EVERY THREE (3) YEARS THEREAFTER, THE AMOUNT
HEREIN STATED SHALL BE ADJUSTED TO ITS PRESENT
VALUE USING THE CONSUMER PRICE INDEX, AS
PUBLISHED BY THE NATIONAL STATISTICS OFFICE
(NSO).

"XXX.

SEC. 2. Repealing Clause, - All laws, decrees, resolutions,
orders or ordinances or parts thereof inconsistent with this Act, are
hereby repealed, amended or modified accordingly.

SEC. 3. Effectivity. - This Act shall take effect fifteen (15)
days after its publication in the Official Gazette or in at least two (2)
newspapers of general circulation.

Approved,