Exemption of a Chattel Mortgage Contract from DST

June 3, 1988 BIR RULING NO. 234-88 195 068-83 0 50-8 6 234-88 Gentlemen : This refers to your letter dated April 15, 1988 requesting a ruling on whether or not a chattel mortgage contract which was executed abroad is subject to documentary stamp tax under the National Internal Revenue Code, as amended. It is represented that Fairhope International Corporation S.A. (Fairhope) is a non-resident foreign corporation organized and existing under the laws of the Republic of Panama while Hong Kong and Shanghai Banking Corporation (Hong Kong Bank) is a non-resident foreign corporation organized and existing under the laws of Hong Kong; that to secure a loan, Fairhope executed a first priority naval mortgage in Hong Kong on the vessel M.V. "Manila Transport" in favor of Hong Kong Bank; and that at present the vessel is being leased by Fairhope under a bareboat charter to Trytrans Shipping Corporation ("Trytrans"), a domestic corporation. In reply, please be informed that the aforesaid chattel mortgage contract is not subject to the documentary stamp tax imposed under Section 195 of the Tax Code, as amended by P.D. 1959 and as renumbered by Executive Order No. 273, 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. (BIR Ruling Nos. 068-83 and 050-86) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner