Amount of Documentary Stamp Tax Due on the Indenture

November 10, 1958 BIR RULING NO. 656-58 Messrs. Ross, Selph & Carrascoso P. O. Box 781, Manila Gentlemen : This is in connection with your request for a ruling as to the amount of documentary stamp tax due on the Indenture executed by the Manila Electric Co. on December 31, 1957 in favor of the holders of bond certificates issued by the same company thru the Peoples Bank and Trust Company. cdti Bonds issued by any association or corporation are subject to the documentary stamp tax of thirty centavos on each two hundred pesos or fractional part thereof, of the face value of such document pursuant to Section 211 of the National Internal Revenue Code. The documentary stamp tax on mortgage of real or personal property is P1.50 on the amount secured by the mortgage in excess of P1,000.00 but not exceeding P3,000.00 and P1.50 on each P3,000.00 or fractional part thereof in excess of the first P3,000.00 pursuant to Section 232 of the Tax Code. However, Section 236 of the same Code provides in part: "SEC. 236. . . . When any bond, note, or other obligation is secured by a mortgage, pledge, deed or trust, or by the assignment or transfer of any documentary security, one tax only shall be collected upon such papers, such tax to be at the highest rate imposed on such mortgage, bond, note, obligation, or other documents, as the case may be. (As amended by Sec. 24, Republic Act No. 40.)" It appears that the Indenture executed by the Manila Electric Company, Inc., a copy of which is attached to your letter, is a contract whereby the company mortgaged all its property, real as well as personal listed on Appendix "A", to guarantee payment of the amounts covered by the bonds issued by the company. In accordance with the above-quoted provision of law, only one tax shall be imposed on the bond and the mortgage, such tax to be as that imposed on the bond or mortgage, whichever is higher. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue