13'h CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
SENATE 
133 
S. BILL NO. 
INTRODUCED BY HONORABLE RAJ,PH G. RECTO 
EXPLANATORY NOTE 
This bill seeks to amend Section 32 of Republic No. 8424, otherwise known as the 
National Internal Revenue Code of 1997 with the purpose of increasing the ceiling for 
total exclusion of the 13" month pay and other benefits from the computation of taxable 
income from P30,OOO to P60,OOO to augment the diminishing purchasing power of 
employees and workers both in the private and public sector thereby increasing their 
disposable income. 
The present tax code empowers the Secretary of Finance, upon favorable 
recomnlendation of the Bureau of htemal Revenue (SIR) Commissioner, to increase the 
ceiling through mere issuance of rules and regulations however to this day of spiraling 
cost of consumers goods and depreciating purchasing power of the currency, the 
Executive branch appears to be in deep slumber and undaunted by the woes of belt 
tightening measures of impoverished wage earners. 
The cap as provided under the existing law not only decreases the probability of workers 
and employees to receive additional monetary benefits from its equitable share in the 
fruits of production but also undermines management's acts of generosity. Hence, 
increasing the ceiling means financial flexibility. 
Further, it is 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. 
Hence, immediate passage of this bill is e a r n e s m  


UT” 
CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
At0 
S E N A T E  
I, 
i 
S. BILLNO. 
1 
Introduced by SENATOR RALPH G. RECTO 
AN ACT 
INCREASING THE CEILING FOR TOTAL EXCLUSION OF 13TH MONTH PAY 
AND OTHER BENEFITS FROM THE COMPUTATION OF TAXABLE 
INCOME FROM THIRTY THOUSAND PESOS (P30,OOO) 
TO SIXTY 
THOUSAND PESOS (P60,000), THEREBY, 
AMENDING SECTION 32 OF 
REPUBLIC ACT 8424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL 
REVENUE CODE OF 1997 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
CongYess assembled: 
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SECTION 1. Section 32 of Republic No. 
8424, otherwise known as the 
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“Sec. 32. 
Gross Income. - 
“National Internal Revenue Code of 1997,” is hereby amended to read as follows: 
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“(A) X X X 
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“(B) 
ExclusionsJi.om gross income. 
- 
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The following items shall not be included in gross income 
and shall be exempt from taxation under this Title: 
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“1. 
xxx 
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“2. 
x xx 
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“3. 
xxx 
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“4. x x x 
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“5. 
xx x 
13 
“6. 
X X X 
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“7. 
Miscellaneous items. - 
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a. 
xxx 
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b. 
xxx 
c. 
. xxx 
d. 
xxx 
e. 
13th month pay and other benefits. 
- Gross 
benefits received by officials and employees of public and 
private entities ; pvovided, however, that the total exclusion 
under this subparagraph shall not exceed [Thirty] SIXTY 
thousand pesos (p[3]60,000) which shall cover: 
6) 
(ii) 
(iii) 
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, further, that the ceiling of 
[Thirty] SIXTY thousand pesos 
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(P[3]60,000) 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. 
f. 
x x x  
€5 
x x x  
h. 
x x x  
SEC. 2. 
Implementing Rules and Regulations. - The Bureau of Internal 
Revenue (SIR), 
Department of Finance (DoF), Department of Labor and Employment 
(DOLE), Civil Service Commission (CSC) and other appropriate government agencies 
shall promulgate rules and regulations necessary for the effective implementation of this 
Act. 
SEC. 3. 
Repealing Clause. - A11 other laws, decrees, orders, issuances 
and rules and regulations or parts thereof inconsistent with this Act are hereby amended 
or repealed accordingly. 
SEC. 4. 
Separability Clause. - 
The provisions of this Act are hereby 
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declared to be separable and, in the event any of such provisions is declared 
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unconstitutional, the order provision which is not affected thereby shall remain in full 
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force and effect. 
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Approved, 
SEC. 5. 
Effectivity. -, This Act shall take effect fifteen (15) days after its 
complete publication in at least two (2) newspapers of general circulation. 
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