SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
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SENATE 
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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 arrended, 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. 
4 
FRANCIS G. ESCUDERO 


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SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session, 
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SENATE 
S. B. No. 
606 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
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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: 
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"SEC. 199. Documents and papers Not Subject to Stamp Tax - X X X 
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(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)." 
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SEC. 2. Implementing Rules and Regulations - The Secretary of Finance shall, upon 
the recommendation of the Commissioner 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. 
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SEC. 4. Effectivity - This Act shall take effect fifteen (15) days after its publication 
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in the Official Gazette or in any two (2) newspapers of general circulation. 
Approved, 
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