Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

16" CONGRESS
First Regular Session

HOUSE BILL NO. 2115

Introduced by REP. EVELINA 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.

EVELINA G. ESCUDERO.


v

Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon

16" CONGRESS
First Regular Session

2115

HOUSE BILL NO.

Introduced by REP. ELINA 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 House of Representatives of the Republic 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 XX
XXX
(0) DOCUMENTS OR OTHER PAPERS EVIDENCING THE RECEIPT OF
PERSONAL PROPERTY AS SECURITY FOR THE PAYMENT OF ANY
DEFINNITE 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 Commi

ioner of Internal 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.


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

Approved,