Taxability of Pledge of Personal Property to DST

February 1, 1988 BIR RULING NO. 018-88 208 305-87 018-88 Gentlemen : This refers to your letter dated November 26, 1987 requesting reconsideration of BIR Ruling No. 208-000-00-305-87 dated September 24, 1987 subjecting pawnshop tickets to documentary stamp tax imposed by Section 208 of the Tax Code. cdta In reply, please be informed that a "pawnshop ticket" is the pawnbroker's receipt for a pawn. It is neither a security nor a printed evidence of indebtedness. (Sec. 3, P.D. No. 114) It is described in Section 12 of P.D. No. 114 as follows: "Sec. 12. Pawn Ticket . Every pawnbroker shall, at the time of every such loan or pledge , deliver to each person pawning or pledging any article or thing a memorandum or ticket signed by such pawnbroker and containing the substance of the record required to be kept in such pawnbroker's memorandum book in section eleven hereof, excluding the description of the person so pawning or pledging such article or thing, and no compensation of any kind whatsoever shall be received by any pawnbroker for any such memorandum or ticket." (emphasis supplied) Considering the foregoing provisions, and since the contract between pawner and pawnee is one of pledge, it is clear that a pawn ticket is evidence of pledge transactions involving personal property. The taxability of pledge of personal property to the documentary stamp tax is indicated in the first paragraph of Section 208 of the Tax Code, as amended, which states: "Sec. 208. Stamp Tax on Mortgages, Pledges and Deeds of Trust . On every mortgage or pledge of lands, estate, or property, real or personal, . . . where the same shall be made as a security for the payment of any definite and certain sum of money lent . . . there shall be collected a documentary stamp tax. . . ." Accordingly, the pawn ticket is subject to the documentary stamp tax imposed by Section 208 of the Tax Code because it is indicative of a pledge transaction between pawner (borrower from a pawnshop) and a pawnee (the pawnshop or pawnbroker). "Nature. The documentary stamp tax is not intended to be a tax on the document alone. The law taxes the document because of the transaction. The documentary stamp tax is substantially a tax on transaction rather than on document. It is collectible and payable at the time a transaction is had." (Op. No. 177, S. of 1939. Sec. of Justice; cited in Outline of Taxation by Roman M. Umali, 1976 Ed., p. 168) cdti In view thereof, your request for reconsideration is hereby denied. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner