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SIXTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )


First Regular Session )
SENATE
S. No. ________
Introduced by Senator Ralph G. Recto
Explanatory Note
Section 9, Article II of our Constitution states that: The State shall promote a ust and
dynamic social order that !ill ensure the prosperity and independence of the nation and free the
people from po"erty throu#h policies that pro"ide ade$uate social ser"ices, promote full
employment, a risin# standard of li"in#, and an impro"ed $uality of life for all.%
Corollary to this, it is also the State&s policy to affirm labor as a primary social economic
force by protectin# the ri#hts of !or'ers and promote their !elfare.
(ecause of these policies, our la!s e)clude the mandated *+th month pay and the
Christmas bonus from the co"era#e of income ta)es, but only up to the e)tent of Thirty
Thousand ,esos -,+.,....../ only. 0ther!ise, the e)cess !ould form part of an indi"idual&s
#ross income and !ould be subect to the income ta).
Specifically, Section +1 -(/ -2/ -e/ of the 3ational Internal Re"enue Code, as amended
e)cludes from the income ta) the benefits found under ,residential 4ecree 3o. 56* as amended
by 7emorandum 0rder 3o. 15 or the *+th month pay la!8 Republic Act 3o. 9959 or the la!
authori:in# the #rant of Christmas bonus to national and local #o"ernment officials and
employees8 and other benefits such as producti"ity incenti"es and other Christmas bonuses to the
e)tent of ,+.,...... only.
;o!e"er, the amount set in our Ta) Code as the ceilin# for the said ta) e)emption does
not mirror pre"ailin# circumstances. The ceilin# of ,+.,...... for the e)emption does not apply
today as it did !hen it !as incorporated in the Ta) Code.
This bill therefore aims to increase that ceilin# to Si)ty Thousand ,esos -,9.,....../, or
appro)imately the e$ui"alent amount of ,+.,...... today ta'in# into consideration inflation and
other factors. 4ata from the 3ational Statistics 0ffice illustrates that the purchasin# po!er of the
peso has been so eroded such that one has to pay ,*++.2. for a commodity or ser"ice !hich cost
0ne ;undred ,esos -,*...../ only in 1..9.
*
The nation!ide consumer price inde) -1..9<*../
as of =une 1.*+ for food, health and education are the hi#hest: >ood and 3on?Alcoholic
(e"era#es is at ,*@1.6.8 ;ealth, ,*+*.9.8 and Aducation, ,*@@.9.. 0n the other hand,
CARAGA !ith ,*@2... e)perienced the #reatest erosion of the purchasin# po!er of the peso.
The la! should al!ays be responsi"e to the needs of the people. An increase in the
ceilin# of this particular ta) e)emption is one of the reliefs the people need durin# these hard
times.
4ue to the fore#oin#, the passa#e of this measure is sincerely sou#ht.
RALPH G. RECTO
SIXTEENTH CONGRESS OF THE )
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http:BB!!!.census.#o".phBsitesBdefaultBfilesBattachmentsBitsdBcpiBcpi1..9C*+.9*5.pdf
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REPUBLIC OF THE PHILIPPINES )
First Regular Session )
SENATE
S. No. ________
Introduced by Senator Ralph G. Recto
AN ACT
INCREASING THE CEILING OF THE !TH "ONTH PA#$ CHRIST"AS BONUS AN%
OTHER BENEFITS EXCLU%E% FRO" THE CO"PUTATION OF GROSS INCO"E
FOR THE PURPOSES OF INCO"E TAXATION$ A"EN%ING FOR THE PURPOSE
SECTION !& 'B)$ CHAPTER (I OF THE NATIONAL INTERNAL RE(ENUE CO%E OF
))*$ AS A"EN%E%
Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:
Se+t,on . Section +1 -(/, Chapter DI of the 3ational Internal Re"enue Code of the
,hilippines -R.A. 3o. 5@1@/ is hereby amended as follo!s:
SECTION. !&. Gro-- In+o.e. /
0'A) General Definition. xxx
)))
'B) Exclusions from Gross Income. E The follo!in# items shall not be included in #ross
income and shall be e)empt from ta)ation under this title:
0xxx
0'*) ",-+ellaneo1- Ite.-. /
)))
-e/ *+
th
7onth ,ay and 0ther benefits. E Gross benefits recei"ed by officials
and employees of public and pri"ate entities: Provided, hoever, That the
total e)clusion under this subpara#raph shall not e)ceed FThirty thousand
pesos -, +.,.../G SIXT# THOUSAN% PESOS 'P 23$333) !hich shall
co"er:
-i/ (enefits recei"ed by officials and employees of the national and
local #o"ernment pursuant to Republic Act 3o. 99598
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-ii/ (enefits recei"ed by employees pursuant to ,residential 4ecree 3o.
56*, as amended by 7emorandum 0rder 3o. 15, dated Au#ust *+, *9598
-iii/ (enefits recei"ed by officials and employees not co"ered by
,residential decree 3o. 56*, as amended by 7emorandum 0rder 3o. 15,
dated Au#ust *+, *9598 and
-i"/ 0ther benefits such as producti"ity incenti"es and Christmas bonus:
Provided, further, That the ceilin# of FThirty thousand pesos -, +.,.../G
SIXT# THOUSAN% PESOS 'P23$333) may be increased throu#h rules
and re#ulations issued by the Secretary of >inance, upon
recommendation of the Commissioner, after considerin# amon# others,
the effect on the same of the inflation rate at the end of the ta)able year.
))).%
Se+. &. Repealing Clause. E All la!s, decrees, resolutions, orders or ordinances or parts
thereof inconsistent !ith this Act, are hereby repealed, amended or modified accordin#ly.
Se+. !. !ffectivity. E This Act shall ta'e effect fifteen -*6/ days after its publication in the
0fficial Ga:ette or in at least t!o -1/ ne!spapers of #eneral circulation.
Appro"ed,
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