Exemption of the Ship Mortgage from the Documentary Stamp Tax

April 12, 1989 BIR RULING NO. 074-89 195 068-83 074-89 Gentlemen : This refers to your letters dated February 21 and March 17, 1989 requesting in behalf of your client, The Hong Kong & Shanghai Banking Corporation, for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Fremont Transport (Panama) S.A. in favor of your client. It is represented that Fremont Transport (Panama) S.A. is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of Panama while The Hong Kong & Shanghai Banking Corporation is also a foreign corporation organized and existing under the laws of Hong Kong; that the former is the owner of motor vessel "Clipper Salamat"; and that to secure a loan, Fremont Transport (Panama) S.A. executed in Hong Kong a First Preferred Panamian Mortgage (copy attached) on the vessel m.v. "Clipper Salamat", in favor of your client. In reply, please be informed that the aforesaid First Preferred Panamian Mortgage being executed abroad, is not subject to the documentary stamp tax imposed by Section 195 of the Tax Code. This is in consonance with the rulings previously issued by this Office to the effect that documentary stamp tax, being an excise tax is applicable only to transactions effected and consummated within the Philippines. Very truly yours, (SGD.) JOSE U. ONG Commissioner