SEVENTEENTH CONGRESS OF THE

REPUBLIC OF THE PHILIPPINES

First Regular Session

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)
)

HOUSE OF REPRESENTATIVES
H. No. 2600
Introduced by Representative Vilma Santos-Recto
6th District of Batangas
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2
AN ACT
TH
3EXCLUDING 13 MONTH PAY FROM THE COMPUTATION OF TAXABLE INCOME
4AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (e) OF REPUBLIC ACT NO.
58424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF
61997, AS AMENDED
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8
Explanatory Note
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It is the policy of the State to promote a just and dynamic social order that will ensure the
11prosperity and independence of the nation and free the people from poverty through policies that
12provide adequate social services, promote full employment, a rising standard of living, and an
13improved quality of life for all.
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15
It is with the same objective that this measure is being proposed. This bill seeks to
16exclude the 13th month pay from the computation of taxable income amending for the purpose
17Section 32 (B) (7) (e) of Republic Act No. 8424, otherwise known as the National Internal
18Revenue Code of 1997, as amended. This would help cushion the diminishing purchasing
19power of employees and workers both in the private and public sector thereby increasing their
20disposable income.
21
22
The intent in enacting Presidential Decree No. 851, as amended by Memorandum Order
23No. 28, otherwise known as the 13th Month Pay Law is to provide the working masses
24additional income in time for the celebration of Christmas and New Year. Therefore, subjecting
25the same to income tax would defeat the very purpose of the law.
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27
The amount to be excluded from the computation of taxable income would mean greater
28financial flexibility for employees and would put more food on the table and help ensure their
29childrens education.
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31
The proposed legislation will benefit an estimated 39.8 M employees from the private
32and public sector1.
33
34Hence, immediate passage of this bill is earnestly sought.
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42
11 October 2015 Labor Force Survey.

VILMA SANTOS-RECTO

SEVENTEENTH CONGRESS OF THE

REPUBLIC OF THE PHILIPPINES
First Regular Session

)
)
)

HOUSE OF REPRESENTATIVES
H. No. 2600
Introduced by Representative Vilma Santos-Recto
6th District of Batangas
1
2
AN ACT
TH
3EXCLUDING 13 MONTH PAY FROM THE COMPUTATION OF TAXABLE INCOME
4AMENDING FOR THIS PURPOSE SECTION 32 (B) (7) (e) OF REPUBLIC ACT NO.
58424 OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF
61997, AS AMENDED
7
8
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
9assembled:
10
11
SECTION 1. Section 32 (B) (7) (e) of Republic No. 8424, otherwise known as the
12

National Internal Revenue Code of 1997, as amended is hereby further amended to

13

read as follows:

14

Sec. 32.

Gross Income.

15

(A)

16

(B) Exclusions from Gross Income. x x x

General Definition. x x x

17

(1) x x x

18

(2) x x x

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(3) x x x

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(4) x x x

21

(5) x x x

22

(6) x x x

23

(7)

Miscellaneous items. -

24

(a) x x x

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(b) x x x

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(c ) x x x

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(d) x x x

28

(e)

13th Month Pay [and Other Benefits]. - [Gross

29

benefits] THIRTEENTH MONTH PAY received by officials and

30

employees of public and private entities PURSUANT TO

31

PRESIDENTIAL DECREE NO. 851, AS AMENDED BY

32

MEMORANDUM ORDER NO. 28, DATED AUGUST 13,

33

1986. [: Provided, however, That the total exclusion under this

1
2

subparagraph shall not exceed eighty-two thousand pesos

(P82,000) which shall cover:

(i)

Benefits received by officials and employees of the

national

Republic Act No. 6686;

(ii)

and local governments

pursuant to

Benefits received by employees pursuant to

Presidential Decree No. 851, as amended by

Memorandum Order No. 28, dated August 13, 1986;

(iii)

Benefits received by officials and employees not

10

covered by Presidential Decree No. 851, as

11

amended by Memorandum Order No. 28, dated

12

August 13, 1986; and

13

(iv)

Other benefits such as productivity

incentives and Christmas bonus:

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Provided, That every three (3) years after the effectivity of this Act, the

15

President of the Philippines shall adjust the amount herein stated to its

16

present value using the Consumer Price Index (CPI), as published by the

17

National Statistics Office (NSO).]

18

(F)

19

RECEIVED BY OFFICIALS AND EMPLOYEES OF

20

PUBLIC AND PRIVATE ENTITIES: PROVIDED,

21

HOWEVER,

22

UNDER

23

EXCEED

24

(P82,000) WHICH SHALL COVER:

25

OTHER BENEFITS. GROSS BENEFITS

(i)

THAT

THIS

THE

TOTAL

EXCLUSION

SUBPARAGRAPH

EIGHTY-TWO

SHALL

THOUSAND

NOT
PESOS

BENEFITS RECEIVED BY OFFICIALS AND

26

EMPLOYEES OF THE NATIONAL AND

27

LOCAL GOVERNMENTS PURSUANT TO

28

REPUBLIC ACT NO. 6686;

29

(ii)

BENEFITS RECEIVED BY OFFICIALS AND

30

EMPLOYEES

NOT

31

PRESIDENTIAL

DECREE

32

AMENDED BY MEMORANDUM ORDER NO.

33

28, DATED AUGUST 13, 1986; AND

34

(iii)

OTHER

COVERED

BENEFITS

NO.

BY

851,

SUCH

AS

35

PRODUCTIVITY

36

CHRISTMAS

37

EVERY THREE (3) YEARS AFTER THE

38

EFFECTIVITY

1
2

INCENTIVES

AS

BONUS:
OF

PROVIDED,
THIS

ACT,

AND
THAT
THE
4

PRESIDENT OF THE PHILIPPINES SHALL

ADJUST THE AMOUNT HEREIN STATED TO

ITS

CONSUMER

PRICE

PUBLISHED

BY

STATISTICS AUTHORITY (PSA).

(G)[(f)] x x x

(H)[(g)] x x x

(I)[(h)] x x x.

PRESENT

VALUE

USING

INDEX
THE

(CPI),

THE
AS

PHILIPPINE

10

SEC. 2.

Implementing Rules and Regulations. The Bureau of Internal Revenue

11(BIR),

Department of Finance (DoF), and Department of Labor and Employment (DOLE) shall

12promulgate

not later that thirty (30) days upon the effectivity of this Act the necessary rules and

13regulations

for its effective implementation.

SEC. 3.

14
15and

Repealing Clause. -

All other laws, decrees, orders, issuances and rules

regulations or parts thereof inconsistent with this Act are hereby amended or repealed

16accordingly.
17
18either

SEC. 4.

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.

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Approved,