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Republic of the Philippines wm
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Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO.17 3 7

Introduced by Representative Ryan S. Recto

EXPLANATORY NOTE

This bill seeks to exclude the 13" Month Pay from the computation of taxable
income, by amending certain provisions of the National Internal Revenue Code. The
measure hopes to provide a more equitable and responsive tax system that genuinely
supports the financial well-being of Filipino workers. It shall do so by removing the
13th month pay entirely from the P90,000.00 total exclusion cap for other benefits,
ensuring that this specific, mandatory benefit is fully exempt from income tax.

The 13" month pay is the most anticipated additional income for all Filipino
workers, just in time for the celebration of Christmas and New Year. Subjecting this
additional income to taxation, even partially, defeats the original purpose of the law,
which is to provide a genuine financial boost to employees. 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.

twill truly be the gift that keeps on giving if we help our fellow countrymen out
during the holiday season by rewarding them with their 13" month pay in full.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

fan S. Recto
Representative
6" District, Batangas


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. 1737

Introduced by Representative Ryan S. Recto

AN ACT
ENHANCING THE 13TH MONTH PAY AND OTHER BENEFITS, 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:

Section 1. Short Title. - This Act shall be known as the “Enhanced 13 Month
Pay and Other Benefits Act”.

Sec. 2. Section 32(B)(7) of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

"SEC. 32. Gross Income. -
"(A) General Definition. - xxx
"(B) Exclusions from Gross Income. — xxx
*(1) xxx
XXX

(7) Miscellaneous items. -

"(@) xxx

“XXX

“(@) 13th Month Pay [and—Other—Benefits]. - [Gross—benefits]
THIRTEENTH (13") MONTH PAY received by officials and employees of
public and private entities PURSUANT TO EXISTING LAWS, RULES AND

REGULATIONS. [: Provided,however, That the total-exclusion-under- this



Christmas-bonus.)

“(F) 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 NINETY THOUSAND PESOS
(P90,000) WHICH SHALL COVER:

(i) BENEFITS RECEIVED BY OFFICIALS AND EMPLOYEES OF THE
NATIONAL AND LOCAL GOVERNMENTS PURSUANT TO REPUBLIC ACT
NO. 6686;

(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

(iii) OTHER BENEFITS SUCH AS PRODUCTIVITY INCENTIVES AND
CHRISTMAS BONUS.

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“OIA 0x."

Sec. 3. Implementing Rules and Regulations (IRR). - Within thirty (30) days from
the effectivity of this Act, the Secretary of Finance, upon the recommendation of the
Commissioner of Internal Revenue, shall promulgate the necessary rules and

regulations for its effective implementation.


Sec. 4. Separability Clause. - If any provision or part hereof is declared
unconstitutional, the remainder of this Act or any provision not affected thereby shall
remain in full force and effect.

Sec. 5. Repealing Clause. - All laws, acts, decrees, executive orders, issuances,
and rules and regulations or parts thereof which are contrary to and inconsistent with
this Act are hereby repealed, amended or modified accordingly.

Sec. 6. Effectivity. - This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) newspapers of general

circulation.

Approved,