Release Schedule of the Mid-Year Bonus in the Philippines: A Comprehensive Legal Guide
1. Background and Legislative History
| Key Issuance | Date | Salient Point |
|---|---|---|
| Presidential Decree (PD) 851 | 16 Dec 1975 | Institutionalized the 13th-Month Pay for private-sector employees. Mid-year bonus was not yet a statutory concept. |
| Executive Order (EO) 201, s. 2016 | 19 Feb 2016 | Overhauled government compensation and—crucially—created a Mid-Year Bonus equal to one (1) month of basic salary for civilian and uniformed personnel. |
| DBM Budget Circular (BC) No. 2017-2 (superseding BC 2016-3) |
08 May 2017 | Codified the release window: “not earlier than 15 May and not later than 31 May of every year.” |
| Republic Act (RA) 10963 (TRAIN Law) | 19 Dec 2017 | Raised the tax-exempt ceiling for 13th-month pay and “other benefits,” which includes the Mid-Year Bonus, to ₱90,000 per annum. |
Definition. The Mid-Year Bonus is a distinct, government-mandated benefit—separate from the 13th-Month Pay and the Year-End Bonus—for employees of the public sector. In common private-sector parlance, “mid-year bonus” is voluntary unless provided by CBA or company policy.
2. Who Are Covered?
- National Government Agencies (NGAs) – all civilian officials and employees, including teachers, professors, and non-teaching personnel.
- Military & Uniformed Personnel (MUP) – AFP, PNP, BJMP, BFP, PCG, NAMRIA, PCG.
- Government-Owned or -Controlled Corporations (GOCCs) – only those under the Compensation and Position Classification System.
- Local Government Units (LGUs) – elective and appointive officials subject to availability of funds and Sanggunian authorization.
- Judiciary & Constitutional Offices – receive equivalent benefit through their own enabling resolutions but generally follow the same schedule.
Not Covered: Private-sector employees, contractuals paid on a piece-rate or job-order basis, and those hired through third-party manpower agencies.
3. Eligibility Requirements
| Criterion | Explanation |
|---|---|
| Length of Service | At least four (4) months of aggregate service from 1 July of the immediately preceding year to 15 May of the current year. |
| Employment Status | Must be in active government service as of 15 May. |
| Performance Rating | No unsatisfactory rating (or its equivalent) during the latest rating period. |
| Pending Administrative/Criminal Case | Benefit is withheld only upon conviction or dismissal; pending cases do not bar release. |
Partial or pro-rated payment is granted once an employee satisfies the 4-month rule after 15 May (e.g., new hires): computed as
$$ \text{Mid-Year Bonus} = \text{Monthly Basic Salary} \times \frac{\text{months served}}{12} $$
4. The Statutory Release Window
| Earliest Date | Latest Date | Legal Basis |
|---|---|---|
| 15 May | 31 May | § 5, DBM BC 2017-2; § 6, EO 201 (2016) |
- Agency Process. Budget officers prepare payrolls immediately after confirming the 15-May roster; disbursement officers must credit the bonus within the same fortnight unless a later pay-run is operationally required.
- Automatic Appropriation. Funds come from the agency’s Personnel Services allotment under the General Appropriations Act (GAA); no separate SARO is needed.
- LGUs. While LGUs enjoy fiscal autonomy, the Department of the Interior and Local Government (DILG) and DBM jointly “strongly recommend” synchronizing with the national release window to preserve parity.
5. Interaction with Other Statutory Benefits
| Benefit | Release Deadline | Statutory Reference |
|---|---|---|
| Mid-Year Bonus | 15–31 May | EO 201; BC 2017-2 |
| Year-End Bonus (also one month basic pay) | 15 Nov – 30 Nov | EO 201; BC 2017-2 |
| 13th-Month Pay (Private Sector) | 24 Dec | PD 851 & DOLE Guidelines |
| Productivity Enhancement Incentive (PEI) | On or after 15 Dec | AO No. 25-S.2011 |
Key Distinction: The Mid-Year and Year-End Bonuses are statutory for the public sector; the 13th-Month is statutory for the private sector; PEI is a performance-contingent cash incentive.
6. Tax Treatment
- Exemption Threshold. Section 32(B)(7)(e) of the National Internal Revenue Code, as amended by the TRAIN Law, exempts up to ₱90,000 of “13th-Month Pay and other benefits” (which includes the Mid-Year Bonus).
- Fringe-Benefits Tax. Not applicable; the bonus is a statutory compensation item, not a fringe benefit.
- BIR Reporting. The total amount is reflected in BIR Form 2316 under “13th-Month & Other Benefits.”
7. Special Scenarios
| Scenario | Treatment |
|---|---|
| Transfer to another Agency | Bonus prorated between old and new office, based on service months in each. |
| Resignation/Retirement on or before 15 May | Not entitled, because the “in-service-as-of-15 May” requirement is unmet. |
| Separation after 15 May | Already received in full; no claw-back. |
| Death of Employee | Paid to legal heirs, subject to the four-month service rule. |
| Suspension Without Pay | Period of suspension excluded from the four-month computation. |
8. Enforcement and Remedies
- Administrative Accountability. Heads of agency may be charged for Neglect of Duty or Inefficiency under the Revised Rules on Administrative Cases in the Civil Service if they delay or withhold the bonus without legal basis.
- Commission on Audit (COA) Notice of Disallowance – improper releases (e.g., to ineligible employees) are subject to disallowance and refund.
- Civil Service Commission (CSC) Petition – employees may file a request for assistance in payment of salaries and benefits.
- Judicial Recourse. In extreme cases, mandamus may lie with the regional trial court to compel ministerial payment obligations.
9. Private-Sector Practice (Non-Mandatory)
- Collective Bargaining Agreements (CBAs). Many unions negotiate a mid-year bonus pegged to a percentage of monthly wage.
- Corporate Policy. Large conglomerates often grant a “14th-month” or “mid-year” bonus around June or July to remain competitive in talent retention.
- Tax Treatment Parallel. Even if voluntary, such payments qualify under the same ₱90,000 exemption ceiling.
10. Key Take-Aways
- Fixed Schedule. For government personnel, agencies must release the Mid-Year Bonus between 15 May and 31 May every year.
- Eligibility Hurdles. Four-month aggregate service and a 15-May employment status are non-negotiable statutory gates.
- Funding Is Pre-Programmed. The bonus is already baked into the annual GAA; no supplemental release is required.
- Tax-Efficient. Up to ₱90,000 remains tax-free, aligning with the treatment of the 13th-Month Pay.
- Private Sector Not Covered. Any “mid-year bonus” outside the public sector is purely contractual or goodwill-based.
Annex A — Primary Legal References
- Presidential Decree No. 851 (16 Dec 1975)
- Executive Order No. 201, Series of 2016 (19 Feb 2016)
- DBM Budget Circular No. 2017-2 (08 May 2017)
- Republic Act No. 10963 (TRAIN Law, 19 Dec 2017)
- CSC Memorandum Circular No. 10, s. 2020 (guidelines on service credits vis-à-vis bonuses)
- COA Circular 2015-003 (disallowance and refund procedures)
This article aims to provide a consolidated, practitioner-friendly view of the statutory mid-year bonus landscape as of 30 May 2025. For agency-specific nuances, always cross-check the latest DBM Circulars and internal HR directives.