Chattel Mortgage Indentures in Favor of Chase Manhattan Bank Not Subject to Documentary Stamp Tax

April 28, 1986 BIR RULING NO. 050-86 208 068-83 050-86 Gentlemen : This refers to your letter dated October 11, 1985 requesting in behalf of your client, TMX, Philippines, Inc., a ruling on whether or not a chattel mortgage executed abroad is subject to documentary stamp tax under the National Internal Revenue Code. cdti It is represented that Timex Corporation, a Delaware U.S.A. corporation and TMX, Ltd., a Bermuda corporation entered into in New York, U.S.A. an Amended and Restated Credit Agreement dated June 1, 1984, with several banks, all of the United States of America including the Chase Manhattan Bank, N.A., which is designated as agent for the banks, whereby the latter agreed to extend loans, issue letters of credit, and extend other credits to, or for the account of Timex Corporation and TMX Ltd., that among the conditions set forth in the said credit agreement is that all obligations of Timex Corporation and TMX Ltd., (as obligors) shall be secured by certain affiliates and subsidiaries of Timex Corporation and TMX Ltd.; that among such affiliates and subsidiaries bound as guarantor under said credit agreement is TMX Philippines, Inc. (as guarantor), a corporation organized and existing under Philippine law; that for this purpose, the obligors executed a security document denominated as the Second Amended and Restated Pledge and Security Agreement also dated June 1, 1984; that as guarantor, TMX Philippines Inc., is a signatory to both the Credit Agreement and the Security Agreement which were both executed in New York on January 31, 1985; that pursuant to its undertaking as guarantor, TMX Philippines, Inc. executed two Chattel Mortgage Indentures, namely: 1. Chattel Mortgage Indenture in favor of the Chase Manhattan Bank, N.A., as agent for itself and the banks, constituted over the entirety of its movable production machinery and equipment, as well as of its expendable aspects, which are all located at its premises situated in the export Processing Zone at Lapu-Lapu, Cebu; and 2. Chattel Mortgage Indenture in favor also of the Chase Manhattan Bank, N.A., jointly executed with TMX Ltd., and constituted over inventory consigned therewith by TMX Ltd. for processing at its premises in the Export Processing Zone at Lapu-Lapu, Cebu. that both of these Chattel Mortgage Indentures were executed by Representatives of TMX Philippines, Inc. (and TMX Ltd., in respect of the second one) in New York, New York, U.S.A. on January 31, 1985; and that you now want to register these chattel mortgage indentures in the Philippines, under the provisions of the Chattel Mortgage Law, (Act 1508). In reply, please be informed that the aforesaid chattel mortgage indentures are not subject to the documentary stamp tax imposed by Section 208 (formerly Sec. 244) of the Tax Code because being an excise tax, it is applicable only to transactions effected and consummated within the Philippines but which, as represented, is not so in this case. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner