Republic of the Philippines
‘HOUSE OF REPRESENTATIVES
Quezon City
15" CONGRESS
First Regular Session

HOUSE BILL NO. 1757

Introduced by REP. SALVADOR H. ESCUDERO Iii

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, ie. 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 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

v7
SALVADOR H. ESCUDERO I
Representative
1* District, Sorsogon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

15 CONGRESS
First Regular Session

1757

HOUSE BILL NO.

Introduced by SALVADOR H. ESCUDERO III

AN ACT
EXEMPTING PLEDGE OF PERSONAL PROPERTY COVERING A LOAN 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 House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 199 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows.

XXX

"SEC. 199. Documents and Papers not Subject to Stamp Tax - X X X

XXX

(0) DOCUMENTS OR OTHER PAPERS EVIDENCING THE RECEIPT OF
PERSONAL PROPERTY AS SECURITY FOR THE PAYMENT OF ANY
DEFINITE AND CERTAIN SUM OF MONEY WHERE THE PRINCIPAL
AMOUNT LOANED DOES NOT EXCEED TEN THOUSAND PESOS (Php
10,000.00)."

SEC. 2. Implementing Rules and Regulations - The Secretary of Finance shall, upon
the recommendation of the Commissioner of Intemal Revenue, promulgate and publish the
necessary rules and regulations for the effective implementation of this Act

SEC. 3. Repealing Clause - All laws, decrees, executive orders, rules and regulations
or parts thereof which are inconsistent with this Act, are hereby repealed, amended or
modified accordingly.

SEC. 4. Effectivity - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in any two (2) newspapers of general circulation.

Approved,