FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 2166 
Introduced by Senator FRANCIS G. ESCUDERO 
EXPLANATORY NOTE 
The Constitutional mandate that taxation be just, fair, equitable, and 
reasonable cannot be more profound than when taken in context of today's 
looming economic reality. Faced with the current situation of the economy, any 
tax reform effort and revenue scheme should not only be judged according to its 
fiscal adequacy, equity, and administrative feasibility, but more importantly its 
impact on poverty, income distribution, and economic growth. 
Recent amendments to the National Internal Revenue Code as amended, 
are proof positive that the legislature has, in fact, taken this stance. Both houses 
of congress are pushing for legislative measures that will provide relief to the 
taxpayers, recognizing that taxation is not solely about raising revenues, but is 
also to accomplish some desirable non-revenue or social objectives. 
This bill proposes that documents evidencing the receipt of personal 
property as security for the payment of certain sum of money, i.e. a contract of 
pledge, where the loaned amount does not exceed ten thousand pesos (PhP 
10,000.00) be exempt from payment of the documentary stamp tax (DST). 
Passage of this bill is justified by the reality that the transactions· of this 
value ordinarily and regularly occur among those belonging to the marginalized 
sectors of our society. Finding themselves in dire financial situation, they resort 
to pledging their personal properties in order to borrow money from individuals 
and/ or lending institutions. Because the Tax Code is indifferent on whose 
liability the payment of DST falls, it is often absorbed by the one making the 
pledge as a part of the cost of the loan transaction. This is ironic because while 
the pledge is the one pressed for cash, he still has to cut a share of the proceeds of 
the loan to pay for the DST. 
In this context, the urgent approval of this bill is earnestly recommended. 
FRANCIS G. ESCUDERO 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
) 
) 
) 
S. No. 2166 
-----~--------------
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
EXEMPTING 
PLEDGE 
OF 
PERSONAL 
PROPERTY 
COVERING A LOAN OF MONEY NOT EXCEEDING TEN 
THOUSAND PESOS FROM DOCUMENTARY STAMP TAX, 
AMENDING FOR THE PURPOSE SECTION 199 OF THE 
NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED 
Be it enacted by the Senate and the 110use of Representatives of tile Republic of the 
Philippines in Congress assembled: 
SECTION 1. Section 199 of the National Internal Revenue Code of 1997, as 
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amended, is hereby further amended to read as follows: 
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XXX 
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"SEC. 199. Documents and papers Not Subject to Stamp Tax - X X X 
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XXX 
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(0) DOCUMENTS OR OTHER PAPERS EVIDENCING TI-IE RECEIPT 
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OF PERSONAL PROPERTY AS SECUEITY FOR THE PAYMENT OF 
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ANY DEFINNITE AND CERTAIN SUM OF MONEY WHERE THE 
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PRINCIPAL AMOUNT LOANED DOES 
NOT EXCEED 
TEN 
10 
THOUSAND PESOS (Php 10,000.00)." 
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SEC. 2. Implementing Rules and Regulations - The Secretary of Finance shall, 
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upon the recommendation of. the Commissioner of Internal Revenue, 
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promulgate and publish the necessary rules and regulations for the effective 
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implementation of this Act. 
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• 
SEC. 3. Repealing Clause - All laws, decrees, executive orders, rules and 
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regulations or parts thereof which are inconsistent with this Act, are hereby 
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repealed, amended or modified accordingly. 
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SEC. 4. Effectivity - This Act shall take effect fifteen (15) days after its 
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publication in the Official Gazette or in any two (2) newspapers of general 
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circulation. 
Approved, 
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