THIRTEENTH CONGRESS OF THE REPUBLiC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) *  
SENATE 
Introduced by Senator Juan M. Flavier 
EXPLANATORY NOTE 
This bill was reviously filed by my estc":med 
colleague Sen. Juan Ponce 
the impact it would have on the lives of our people I sought his permission to re- 
file it again, to which he graciously agreed to. 
Enrile during the I 1  ph Congress. Considering the social relevance of the bill and 
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 make both ends meet and "stretch the peso." 
Indeed, our 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 cost 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 tooms in the horizon. 
The oil price increase 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 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. 
The proposed measure seeks to incresse 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 feed 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. 
In light of the foregoing, the immediate passage of this measure is 
therefore important . 


THIRTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
I 
h 
Introduced by Senator Juan M. Flavier 
AN ACT 
INCREASING THE ALLOWABLE PERSONAL 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 in Congress 
assembled: 
SECTION I. 
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 General. 
- 
For purpose 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] 
P 48,000 


"For head of the family 
[P25,000] 
P 54,000 
"For each married individual 
[P32,000] 
P 64,000 
"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 the purpose of 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)l SIXTEEN THOUSAND 
PESOS (16,000) for each dependent not exceeding four (4). 
- 
The additional exemption for dependents.shal1 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 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 he rein al I owed. 
"For purposes of this Subsection, 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 twer,iy-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 
or physical defect. 
SECTION 2. 
If any position 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. 
Repealing Clause. - 
All 
provisions 
of 
law, 
orders, decrees, including rules and regulations inconsistent therewith are 
hereby repealed or modified accordingly. 
SECTION 4. 
Effectivity. 
- 
This Act shall take effect fifteen 
Separability Clause. - 
(15) days following its publication in the Official Gazette or at least two (2) 
national newspapers of general circulation. 
Approved,