Chattel Mortgage Contract Executed Abroad is Not Subject to Documentary Stamp Tax

April 26, 1991 BIR RULING NO. 072-91 195 068-83 072-91 Gentlemen : This refers to your letter dated March 15, 1991 requesting, in behalf of your client, GLOBAL AIRCRAFT LEASING, LTD., for a Ruling exempting from documentary stamp tax the registration of an aircraft mortgage executed abroad by your client in favor of its lenders/financiers. cdt It is represented that GLOBAL AIRCRAFT LEASING, LTD. ("GALL") is a corporation organized and existing under the laws of Cayman Islands; that in December 1990, the Credit Layonnais and U.S. West Financial Services, Inc. (the "lenders") agreed to finance, in the aggregate sum of US$160,000,000.00, the acquisition by GALL, among other aircraft, one Airbus 300 aircraft with Manufacturer's Serial Number 083 (the "Aircraft"), from a Northern Ireland Company (of GPA Group plc); that relative thereto, the GALL was required by the Lenders to execute outside of the Philippines, a deed of mortgage over the aircraft; that presently, the Aircraft is being leased to the Philippine Airlines, Inc. (PAL); that in order to protect the rights of the Lenders as mortgagee, GALL has deemed it best to register the chattel mortgage with the Register of Deeds of Pasay City in order to provide notice to third parties, specially those dealing with PAL. Based on the foregoing, you are of the opinion that the Mortgage is not subject to documentary stamp tax under Section 195 of the Tax Code, as amended, considering that the chattel mortgage was executed abroad by a non-resident owner-mortgagor in favor of non-resident mortgagees over a foreign-registered aircraft . In reply, please be informed that the aforesaid chattel mortgage is not subject to the documentary stamp tax imposed by Section 195 of the Tax Code, as amended, because being an excise tax it is applicable only to transaction effected and consummated within the Philippines. This ruling is being issued on the basis of the facts as represented. However, if it shall be found out, after investigation, that the facts are contrary to those stipulated, then this ruling shall be considered null and void. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner