G.R. No. L-30644 March 9, 1987COMMISSIONER OF INTERNAL REVENUE,petitioner,vs.FIREMAN'S FUND INSURANCE COMPANY and the COURT OF TAX APPEALS,respondents.B.V. Abela, M.C. Gutierrez & F.J. Malate, Jr., for respondents.PARAS,J.:This is an appeal from the decision of the respondent Court of Tax Appeals dated May 24, 1969, in C.T.A. Case No. 1629, entitled"FIREMAN'S FUND INSURANCE COMPANY v. COMMISSIONER OF INTERNAL REVENUE,"which reversed the decision of petitioner Commissioner of Internal Revenue holding private respondent Fireman's Fund Insurance Company liable for the payment of the amount of P81,406.87 as documentary stamp taxes and compromise penalties for the years 1952 to 1958.Private respondent is a resident foreign insurance corporation organized under the laws of the United States, authorized and duly licensed to do business in the Philippines. It is a member of the American Foreign Insurance Association, through which its business is cleared (Brief for Respondents, pp. 1-2)The antecedent facts of this case are as follows:From January, 1952 to December, 1958, herein private respondent Fireman's Fund Insurance Company entered into various insurance contracts involving casualty, fire and marine risks, for which the corresponding insurance policies were issued. From January, 1952 to 1956, documentary stamps were bought and affixed to the monthly statements of policies issues; and from 1957 to 1958 documentary stamps were bought and affixed to the corresponding pages of the policy register, instead of on the insurance policies issued. On July 3, 1959, respondent company discovered that its monthly statements of business and policy register were lost. The loss was reported to the Building Administration of Ayala Building and the National Bureau of Investigation on July 6, 1959. Herein petitioner was also informed of such loss by respondent company, through the latter's auditors, Sycip, Gorres and Velayo, in a letter dated July 14, 1959. After conducting an investigation of said loss, petitioner's examiner ascertained that respondent company failed to affix the required documentary stamps to the insurance policies issued by it and failed to preserve its accounting records within the time prescribed by Section 337 of the Revenue Code by using loose leaf forms as registers of documentary stamps without written authority from the Commissioner of Internal Revenue as required by Section 4 of Revenue Regulations No. V-1. As a consequence of these findings, petitioner, in a letter dated December 7, 1962, assessed and demanded from petitioner the payment of documentary stamp taxes for the years 1952 to 1958 in the total amount of P 79,806.87 and plus compromise penalties, a total of P 81,406.87.A breakdown of the amount of taxes due and collectible are as follows:xxxxxThe compromise penalties consisted of the sum of P1,000.00 as penalty for the alleged failure to affix documentary stamps and the further sum of P 600.00 as penalty for an alleged violation of Revenue Regulations No. V-1 otherwise known as the Bookkeeping Regulations (Brief for Respondents, p. 4)In a letter dated January 14, 1963, respondent company contested the assessment. After petitioner denied the protest in a decision dated March 17, 1965, respondent company appealed to the respondent Court of Tax Appeals on May 8, 1965. After hearing respondent court rendered its decision dated May 24, 1969 (Rollo, pp. 16-21) reversing the decision of the Commissioner of Internal Revenue. The assailed decision reads in part:The affixture of documentary stamps to papersother than those authorized by lawis not tantamount to failure to pay the same. It is true that the mode of affixing the stamps as prescribed by law was not followed, but the fact remains that the documentary stamps corresponding to the various insurance policies were purchased and paid by petitioner. There is no legal justification for respondent to require petitioner to pay again the documentary stamp tax which it had already paid. To sustain respondent's stand would require petitioner to pay the same tax twice. If at all, the petitioner should be proceeded against for failure to comply with the requirement of affixing the documentary stamps to the taxable insurance policies and not for failure to pay the tax. (See Sec. 239 and 332, Rev. Code).It should be observed that the law allows the affixture of documentary stamps' to such other paper as may be indicated by law or regulations as the proper recipient of the stamp.' It appears from this provision that respondent has authority to allow documentary stamps to be affixed to papers other than the documents or instruments taxed. Although the practice adopted by petitioner in affixing the documentary stamps to the business statements and policy register was without specific permission from respondent but only on the strength of his ruling given to Wise & Company (see Petitioner's Memorandum, p. 176, CTA rec.; p. 24, t.s.n.), one of the general agents of petitioner, however, considering that petitioner actually purchased the documentary stamps, affixed them to the business statements and policy register and cancelled the stamps by perforating them, we hold that petitioner cannot be held liable to pay again the same tax.With respect to the 'compromise penalties' in the total sum of P 1,600.00, suffice it to say that penalties cannot be imposed in the absence of a showing that petitioner consented thereto. A compromise implies agreement. If the offer is rejected by the taxpayer, as in this case, respondent cannot enforce it except through a criminal action. (See Comm. of Int. Rev. vs. Abad, L-19627, June 27, 1968.) (CTA Decision, Rollo, pp. 20-21).Hence, this petition filed on June 26, 1969 (Rollo, pp. 1-8).The petition is devoid of merit.The principal issue in this case is whether or not respondent company may be required to pay again the documentary stamps it has actually purchased, affixed and cancelled.The relevant provisions of the National Internal Revenue Code provide:SEC. 210. Stamp taxes upon documents, instruments, and papers. Upon documents, instruments, and papers, and upon acceptances, assignments, sales, and transfers of the obligation, right, or property incident thereto, there shall be levied, collected and paid for and in respect of the transaction so had or accomplished, the corresponding documentary stamp taxes prescribed in the following sections of this Title, by the person making, signing, issuing, accepting, or transferring the same, and at the same time such act is done or transaction had. (Now. Sec. 222).SEC. 232. Stamp tax on life insurance policies. On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of thirty-five centavos on each two hundred pesos or fractional part thereof, of the amount issued by any such policy. (220) (As amended by PD 1457)Insurance policies issued by a Philippine company to persons in other countries are not subject to documentary stamp tax. (Rev. Regs. No. 26)Medical certificate attached to an insurance policy is not a part of the said policy. Insurance policy is subject to Section 232 of the Tax Code while medical certificate is taxable under Section 237 of the same Code.Insurance policies are issued in the place where delivered to the person insured. (As amended.)SEC. 221. Stamp tax on policies of insurance upon property. On all policies of insurance or other instruments by whatever name the same may be called, by which insurance shall be made or renewed upon property of any description, including rents or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be collected a documentary stamp tax of six centavos on each four persons, or fractional part thereof, of the amount of premium charged," (Now Sec. 233.)SEC. 237. Payment of documentary stamp tax. Documentary stamp taxes shall be paid by the purchase and affixture of documentary stamps to the document or instrument taxed or to such other paper as may be indicated by law or regulations as the proper recipient of the stamp, and by the subsequent cancellationof same, such cancellation to be accomplished by writing, stamping, or perforating the date of the cancellation across the face of each stamp in such manner that part of the writing, impression, or perforation shall be on the stamp itself and part on the paper to which it is attached;Provided,That if the cancellation is accomplished by writing or stamping the date of cancellation, a hole sufficiently large to be visible to the naked eye shall be punched, cut or perforated on both the stamp and the document either by the use of a hand punch, knife, perforating machine, scissors, or any other cutting instrument; but if the cancellation is accomplished by perforating the date of cancellation, no other hole need be made on the stamp. (Now Sec. 249.)SEC. 239. Failure to affix or cancel documentary stamps. Any person who fails to affix the correct amount of documentary stamps to any taxable document, instrument, or paper, or to cancel in the manner prescribed by section 237 any documentary stamp affixed to any document, instrument, or paper, shall be subject to a fine of not less than twenty pesos or more than three hundred pesos. (Emphasis supplied.) (Now Sec. 250.)As correctly pointed out by respondent Court of Tax Appeals, under the above-quoted provisions of law, documentary tax is deemed paid by: (a) the purchase of documentary stamps; (b) affixture of documentary stamps to the document or instrument taxed or to such other paper as may be indicated by law or regulations; and (c) cancellation of the stamps as required by law (Rollo, p. 18).It will be observed however, that the over-riding purpose of these provisions of law is the collection of taxes. The three steps above-mentioned are but the means to that end. Thus, the purchase of the stamps is the form of payment made; the affixture thereof on the document or instrument taxed is to insure that the corresponding tax has been paid for such document while the cancellation of the stamps is to obviate the possibility that said stamps will be reused for similar documents for similar purposes.In the case at bar, there appears to be no dispute on the fact that the documentary stamps corresponding to the various policies were purchased and paid for by the respondent Company. Neither is there any argument that the same were cancelled as required by law. In fact such were the findings of petitioner's examiner Amando B. Melgar who stated as follows:Investigation disclosed that the subject insurance company is a duly organized corporation doing business in the Philippines. It keeps the necessary books of accounts and other accounting records needed by the business. Further verification revealed that it has, since July, 1959, been using a "HASLER" franking machine, Model F88, which stamps the documentary stamps on the duplicates of the policies issued. Prior to the acquisition of the said machine,the company buys its stamps by allowing the Manager to issue a Manager's check drawn against the National City Bank of New York and payable to the City Treasurer of Manila. It was also found out that during this period (1952 to 1958), the total purchases of documentary stamps amounted to P77,837.67, while the value of the used stamps lost amounted to P65,901.11.Verification with the files revealed that most of the monthly statements of business and registers of documentary stamps corresponding to insurance policies issued were missing while some where the punched documentary stamps affixed were small in amount are still intact.The taxpayer was found to be negligent in the preservation and keeping of its records. Although the loss was found by the company's private investigator (see attached true copies of his reports) was not an "Inside Job," still the company should be held liable for its negligence, it appearing that the said records were placed in a bodega, where almost all patrons of the coffee shop nearby could see them. The company also violated the provision of Section 221 of the National Internal Revenue Code which provides that the documentary stamps should be affixed and cancelled on the duplicates of bonds and policies issued.In this case, the said stamps were affixed on the register of documentary stamps.(pp. 35-36, BIR rec.; Emphasis supplied.) (CTA Decision, Rollo, pp, 18-19.)Such findings were confirmed by the Memorandum of Acting Commissioner of Internal Revenue Jose B. Lingad, dated November 7, 1962 to the Chief, Business Tax Division, which states:The records show that the FIREMAN'S FUND INSURANCE COMPANY allegedly paid P 77,837.67 in documentary stamp taxes for the policies of insurance issued by it for the years 1952 to 1958 but could only present as proof of payment Pll,936.56 of said taxes as the rest of the amount of P 65,901.11 were lost due to robbery. Upon verification of this payment however it was found that the FIREMAN'S FUND INSURANCE COMPANY affixed the documentary stamps not on the individual insurance policies issued by it but on a monthly statement of business and a register of documentary stamps, the use of which was not authorized by this Office. It was claimed that the same procedure was used in the case of the lost documentary stamps aforementioned. As this practice is irregular and the remaining records are not conclusive proofs of the payment of the corresponding documentary stamp tax on the policies, the FIREMAN'S FUND AND INSURANCE COMPANY is still liable for the payment of the documentary stamp taxes on the policies found not affixed with stamps. (Original B I R Record, p. 87).Later, respondent Court of Tax Appeals correctly observed that the purchase of documentary stamps and their being affixed to the monthly statements of business and policy registers were also admitted by counsel for the Government as could clearly be gleaned from his Memorandum submitted to the respondent Court. (Decision, CTA Rollo, pp. 4-5).Thus, all investigations made by the petitioner show the same factual findings that respondent company purchased documentary stamps for the various policies it has issued for the period in question although it has attached the same on documents not authorized by law.There is no argument to petitioner's contention that the insurance policies with the corresponding documentary stamps affixed are the best evidence to prove payment of said documentary stamp tax. This rule however does not preclude the admissibility of other proofs which are uncontradicted and of considerable weight, such as: copies of the applications for manager's checks, copies of the manager's check vouchers of the bank showing the purchases of documentary stamps corresponding to the various insurance policies issued during the years 1952-1958 duly and properly Identified by the witnesses for respondent company during the hearing and admitted by the respondent Court of Tax Appeals (Brief for Respondent, p. 15).It is a general rule in the interpretation of statutes levying taxes or duties, that in case of doubt, such statutes are to be construed most strongly against the government and in favor of the subjects or citizens, because burdens are not to be imposed, nor presumed to be imposed beyond what statutes expressly and clearly import (Manila Railroad Co. v. Collector of Customs, 52 Phil. 950 [1929]).There appears to be no question that the purpose of imposing documentary stamp taxes is to raise revenue and the corresponding amount has already been paid by respondent and has actually become part of the revenue of the government. In the same manner, it is evident that the affixture of the stamps on documents not authorized by law is not attended by bad faith as the practice was adopted from the authority granted to Wise & Company, one of respondent's general agents (CTA Decision, Rollo, p. 20). Indeed, petitioner argued that such authority was not given to respondent company specifically, but under the general principle of agency, where the acts of the agents bind the principal, the conclusion is inescapable that the justification for the acts of the agents may also be claimed for the acts of the principal itself (Brief for the Respondents, pp. 12-13).Be that as it may, there is no justification for the government which has already realized the revenue which is the object of the imposition of subject stamp tax, to require the payment of the same tax for the same documents. Enshrined in our basic legal principles is the time honored doctrine that no person shall unjustly enrich himself at the expense of another. It goes without saying that the government is not exempted from the application of this doctrine (Ramie Textiles, Inc. v. Mathay Sr., 89 SCRA 587 [1979]).Under the circumstances, this court RESOLVED to DISMISS this petition and to AFFIRM the assailed decision of the Court of Tax Appeals.

[G.R. No. 107135.February 23, 1999]COMMISSIONER OF INTERNAL REVENUE,petitioner, vs.THE COURT OF APPEALS CENTRAL VEGETABLE MANUFACTURING CO., INC., and THE COURT OF TAX APPEALS,respondents.D E C I S I O NPURISIMA,J.:Before the Court is a Petition for Review onCertiorarifrom the judgment of the Court of Appeals affirmingin totothe decision of the Court of Tax Appeals which required the Commissioner of Internal Revenue to credit the sales taxes paid by Central Vegetable Oil Manufacturing Co., Inc. (CENVOCO) on containers and packaging materials of its milled products, against the deficiency miller's tax due thereon for the year 1986.As culled in the decision of the Court of Tax Appeals, the undisputed facts are, as follows:"Petitioner (private respondent CENVOCO herein) is a manufacturer of edible and coconut/coprameal cake and such other coconut related oil subject to the miller's tax of 3%.Petitioner also manufactures lard, detergent and laundry soap subject to the sales tax of 10%.In 1986, petitioner purchased a specified number of containers and packaging materials for its edible oil from its suppliers and paid the sales tax due thereon.After an investigation conducted by respondent's Revenue Examiner, Assessment Notice No. FAS-B-86-88-001661-001664 dated April 22, 1988 was issued against petitioner for deficiency miller's tax in the total amount ofP1,575,514.70 x x x .On June 29, 1988, petitioner filed with respondent a letter dated June 27, 1988 requesting for reconsideration of the above deficiency miller's tax assessments, contending that the final provision of Section 168 of the Tax Code does not apply to sales tax paid on containers and packaging materials, hence, the amount paid therefor should have been credited against the miller's tax assessed against it.Again, thru letter dated September 28, 1988, petitioner reiterated its request for reconsideration.On November 17, 1988, respondent wrote CENVOCO, the full text of which letter readsNovember 17, 1988Central Vegetable OilManufacturing Co. Inc.P.O. Box 2816ManilaAttention: Mr. James ChuaPresidentGentlemen:We have received your letter of September 28, 1988, relative to our assessment against your company in the amount ofP1,575,514.75, as deficiency miller's tax for the year 1986.Section 168 of the Tax Code provides that sales, miller's or excise taxes paid on raw materials or supplies used in the milling process shall not be allowed against the miller's tax due.You contend that since packaging materials are not used in the milling process then, the sales taxes paid thereon should be allowed as a credit against the miller's tax due because they do not fall within the scope of the prohibition.It is our position, however, that since the law specifically does not allow taxes paid on the raw materials or supplies used in the milling process as a credit against the miller's tax due, with more reason should the sales taxes paid on materials not used in the milling process be allowed as a credit against the miller's tax due.There is no provision of law which allows such a credit-to-be made.In view of the above, we are reiterating the assessment referred to above.We request that you make payment immediately so that this case may be considered closed and terminated.Very truly yours,(SGD) EUFRACIO D. SANTOSDeputy Commissioner(CA Decision, pp.31-33 Rollo)Dissatisfied with the adverse action taken by the BIR, CENVOCO filed a petition for review with the Court of Tax Appeals, which came out with a decision, dated December 3, 1990, in favor of CENVOCO, disposing, thus:"WHEREFORE, in view of the foregoing, petitioner Central Vegetable Oil Manufacturing Co., Inc., is not liable for deficiency miller's tax for the year 1986 in the amount ofP1,575,514.70.No pronouncement as to costs.SO ORDERED." (Rollo, p. 53)Appealed to the Court of Appeals, the said decision was affirmedin toto.(Rollo, p. 38)The Court of Appeals adopted the reasons cited and ratiocination by the Court of Tax Appeals for allowing the sales tax paid by CENVOCO on the containers and packaging materials of its millled products to be credited against the miller's tax due thereon, viz -"The main issue in this case is whether or not respondent CENVOCO is liable for deficiency miller's tax for the year 1986 in the amount ofP1,575,514.70. This in turn hinges on whether or not containers and packaging materials are raw materials used in the milling process within the contemplation of the final proviso of Section 168 of the National Internal Revenue Code, which reads:'Provided, finally, that credit for any sales, miller's or excise taxes paid on raw materials or supplies used in the milling process shall not be allowed against the miller's tax due, except in the case of a proprietor or operator of a refined sugar factory as provided hereunder.'xxxxxxxxx"xxx We agree with respondent Court that containers and packages cannot be considered "raw materials" utilized in the milling process.In arriving at the conclusion, respondent Court quoted with approval the reasons cited by CENVOCO, as follows:'FIRST; The raw materials used by Cenvoco in manufacturing edible oil are copra and/or coconut oil.In other words, the term "used" in the final proviso of Section 168 of the NIRC refers or is strictly confined to "raw materials" or supplies fed, supplied or put into the apparatus, equipment, machinery or its adjuncts that cause or execute the milling process.On the other hand, the containers, such as tin cans, and/or packages are not used or fed into the milling machinery nor were ever intended for conversion to form part of the finished product, i.e., refined coconut/edible oil.Consequently, it would be absurd to say that said containers and packages are "used in the milling process", for the process involves "grinding, crushing, stamping, cutting, shaping or polishing". (See THE DICTIONARY, by TIME, COPYRIGHT 1974, p. 444) x x x'SECOND; Petitioner's interpretation of the term raw materials is contrary to law and jurisprudence.Thus, raw materials as used in the definition of " manufacture", denotes materials from which final product is made (Black's Law Dictionary, 4th ed. citing State vs.Hennessy Co., 71 Mont. 301, 230, p. 64, 65).And consistent with said definition, Revenue Regulations Nos. 2-86 and 11-86 [effective January 1, 1986 and August 1, 1986, respectively] which govern the filing of quarterly percentage tax returns and payment thereof under the provisions, inter alia, of Section 168 of the NIRC, define raw materials or material, to wit:Any article which when used in the MANUFACTURE of another article becomes a homogenous part thereof, such that it can no longer be identified in its original state nor may be removed therefrom without destroying or rendering useless the finished article to which it has been merged, mixed or dissolved. x x x'"Tested in the light of the foregoing statutory definition, it is evident that containers and packages used by Cenvoco are not 'raw materials' and do not fall within the purview of the final proviso of Section 168 of the NIRC. x x x As a coup de grace, it is pertinent to note the case of Caltex (Phils.) Inc. vs.Manila Port Service (17 SCRA 1075) where the Supreme Court aptly defined containers and/or packages.'x x x a package or a bundle made up for transportation; a packet; a bale; a parcel; or that in which anything is packed:box, case, barrel, crate, etc. inwhich goods are packed:a container.'(Underscoring Ours)"The definition is an emphatic rejection of petitioner's construction that Cenvoco's containers and packages are raw materials used in the milling process. x x x"xxx Moreover, Section 168 of the Revenue Code expressly limits the articles subject to percentage tax (miller's tax) to: 'rope, sugar, coconut oil, palm oil, cassava flour or starch, desiccated coconuts, manufactured, processed or milled by them, including the by-product of the raw materials, from which said articles are produced, processed or manufactured'. x x x "(CA Decision, Rollo pp. 34-36)Hence, the petition under consideration, posing the issue:WHETHER OR NOT THE SALES TAX PAID BY CENVOCO WHEN IT PURCHASED CONTAINERS AND PACKAGING MATERIALS FOR ITS MILLED PRODUCTS CAN BE CREDITED AGAINST THE DEFICIENCY MILLER'S TAX DUE THEREON.Resolution of the issue posited by the petitioner hinges on the proper application of Section 168 of the then applicable National Internal Revenue Code, particularly the last proviso of said section, which reads:"Sec. 168.Percentage tax upon proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, palm oil mills, casava mills and desiccated coconut factories.Proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, palm oil mills, cassava mills, and desiccated coconut factories, shall pay a tax equivalent to three (3) percent of the gross value of money of all the rope, sugar, coconut, oil, palm oil, cassava flour or starch, dessiccated coconut, manufactured, processed or milled by them, including the by-product of the raw materials, from which said articles are produced, processed or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse: Provided, however, that this tax shall not apply to rope, coconut oil, palm oil and the by-product of copra from which it is produced or manufactured, and dessicated coconuts, if such rope, coconut oil, palm oil, copra by-products and dessicated coconuts, shall be removed for exportation by the proprietor of operator or the factory or mill himself, and are actually exported without returning to the Philippines, whether in their original state or as an ingredient or part of any manufactured article or product: Provided further, That where the planter or the owner of the raw materials is the exporter of the aforementioned milled or manufactured products, he shall be entitled to a tax credit of the miller's taxes withheld by the proprietor or operator of the factory or mill, corresponding to the quantity exported, which may be used against any internal revenue tax directly due from him: andProvided, finally, That credit for any sales, miller's orexcise taxes paid on raw materials or supplies used inthemilling process shall not be allowed against themiller's tax due, except in the case of a proprietor oroperator of a refined sugar factory as providedhereunder."(underscoring supplied)Notably, the law relied upon by the BIR Commissioner as the basis for not allowing Cenvoco's tax credit is just a proviso of Section 168 of the old Tax Code.The restriction in the said proviso, however, is limited only to sales, miller's or excise taxes paid "on raw materials used in the milling process".Under the rules of statutory construction, exceptions, as a general rule, should be strictly but reasonably construed.They extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provisions rather than the exception.Where a general rule is established by statute with exceptions, the court will not curtail the former nor add to the latter by implication. x x x (Samson vs.Court of Appeals, 145 SCRA 659 [1986]).The exception provided for in Section 168 of the old Tax Code should thus be strictly construed.Conformably, the sales, miller's and excise taxes paid on all other materials (except on raw materialsused in the milling process), such as the sales taxes paid on containers and packaging materials of the milled products under consideration, may be credited against the miller's tax due therefor.It is a basic rule of interpretation that words and phrases used in the statute, in the absence of a clear legislative intent to the contrary, should be given their plain, ordinary and common usage or meaning. (Mustang Lumber Inc. v. CA, 257 SCRA 430 [1996] citing Ruben E. Agpalo, Statutory Construction, second ed. [1990], 131).From the disquisition and rationalization aforequoted, containers and packaging materials are certainly not raw materials.Cans and tetrakpaks are not used in the manufacture of Cenvoco's finished products which are coconut, edible oil or coprameal cake.Such finished products are packed in cans and tetrapaks.Petitioner laments the pronouncement by the Court of Appeals that Deputy Commissioner Eufracio Santos' 1988 ruling may not reverse Commissioner Ruben Ancheta's favorable ruling on a similar claim of CENVOCO of October, 1984, which reads in part:"x x x This refers to your letter dated September 5, 1984 requesting that the 10% sales tax paid on container cans purchased by you, be credited against the 2% (now 3%) miller's tax due on the refined coconut edible oil.It is represented that you process copra and/or coconut oil and sell the refined edible oil in cans; that said cans are purchased from can manufacturers who in turn bill to you the price of the cans and the 10% tax paid thereon which are separately shown on the invoice; and that the cost of the cans, including the 2% millier's tax is computed.In reply, I have the honor to inform you that your request is hereby granted. x x x (Pacific Oxygen & Acetylene Co. vs. Commissioner, GR No. L-17708, April 30, 1965)."(Rollo p. 36)According to petitioner, to hold, as what the Court of Appeals did, that a reversal of the aforesaid ruling would be violative of the rule on non-retroactivity of rulings of tax officials when prejudicial to the taxpayer (Section 278 of the old Tax Code) would, in effect, create a perpetual exemption in favor of CENVOCO although there may be subsequent changes in circumstances warranting a reversal.This Court is mindful of the well-entrenched principle that the government is never estopped from collecting taxes because of mistakes or errors on the part of its agents, but this rule admits of exceptions in the interest of justice and fairplay. (ABS CBN Broadcasting Corp. vs.Court of Tax Appeals, 108 SCRA 151 [1981]) More so in the present case, where we discern no error in allowing the sales taxes paid by CENVOCO on the containers and packages of its milled products, to be credited against the deficiency miller's tax due thereon, for a proper application of the law.It bears stressing that tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construedstrictissimi juris againstthe government. (The Province of Bulacan, et. al, vs.Hon.CA, et. al., GR No. 126232, November 27, 1998; Republic vs.IAC, 196 SCRA 335[1991]; CIR vs.Firemen's Fund Ins.Co., 148 SCRA 315 (1987); CIR vs.CA, 204 SCRA 182 [1991])Then, too, it has been the long standing policy and practice of this Court to respect conclusions arrived at by quasi-judicial agencies, especially the Court of Tax Appeals which, by the nature of its functions, is dedicated exclusively to the study and consideration of tax problems, and which has thus developed an expertise on the subject, unless an abuse or improvident exercise of its authority is shown.Finding no such abuse or improvident exercise of authority or discretion under the premises, the decision of the Court of Appeals, affirming that of the Court of Tax Appeals, should be upheld. (Commissioner of Internal Revenue vs.Court of Appeals, 204 SCRA 189 [1991])WHEREFORE, the petition is hereby DISMISSEDand the decision of the Court of Appeals AFFIRMED.No pronouncement as to costs.SO ORDERED.SYNOPSISPrivate respondent Central Vegetable Oil Manufacturing Co., Inc. (CENVOCO) is a manufacturer of edible oil and coconut. Coprameal cake and such other coconut related oil subject to the miller tax of 3%. In 1986, CENVOCO purchased a specified number of containers and packaging materials for its edible oil from its suppliers, and paid the sales tax due thereon. After an investigation by the Revenue Examiner, CENVOCO was assessed for deficiency millers tax in the total amount of P1,575,514.70. CENVOCO wrote petitioner a letter requesting for reconsideration, contending that the final provision of Section 168 of the Tax Code does not apply to sales tax paid on containers and packaging materials, hence, the amount paid therefor should have been credited against the millers tax assessed against it. Petitioner, through a letter, reiterated the validity of its assessment. Dissatisfied, CENVOCO filed a petition for review with the Court of Tax Appeals, which came out with a decision in favor of CENVOCO. Petitioner appealed to the Court of Appeals. The assailed decision was affirmedin toto.The Supreme Court dismissed the petition and affirmed the decision of the Court of Appeals. The law relied upon by the BIR Comissioner as the basis for not allowing CENVOCOs tax credit is just a proviso of Section 168 of the old Tax Code. The restriction in said proviso, however, is limited only to sales, millers or excise taxes paid on raw materials used in the milling process. The Court ruled that under the rules of statutory construction, exceptions as a general rule, should be strictly but reasonably construed. They extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provisions rather than the exception. The exception provided for in section 168 of the old Tax Code should be strictly construed. The Court also ruled that it is a basic rule of interpretation that words and phrases used in the statute in the absence of a clear legislative intent to the contrary, should be given their plain, ordinary and common usage or meaning. Cans and tetrapaks are not used in the manufacture of CENVOCOs finished products which are coconut, edible oil or coprameal cake. Such finished products are packed in cans and tetrapaks. There is no error in allowing the sales taxes paid on the containers and packaging materials of the milled products should be credited against the millers tax due thereon.SYLLABUS1. STATUTORY CONSTRUCTION; EXCEPTIONS, AS A GENERAL RULE, SHOULD BE STRICTLY CONSTRUED; THE EXCEPTION PROVIDED FOR IN SECTION 168 OF THE OLD TAX CODE SHOULD BE STRICTLY CONSTRUED. Under the rules of statutory construction, exceptions, as a general rule, should be strictly but reasonably construed. They extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provisions rather than the exception. Where a general rule is established by statute with exceptions, the court will not curtail the former nor add to the latter by implication. xxx (Samson vs. Court of Appeals, 145 SCRA 659 [1986]). The exception provided for in Section 168 of the old Tax Code should thus be strictly construed. Conformably, the sales, millers and excise taxes paid on all other materials (except on raw materialsused in the milling process), such as the sales taxes paid on containers and packaging materials of the milled products under consideration, may be credited against the millers tax due therefor.2. ID.; BASIC RULES OF INTERPRETATION; RULES AND PHRASES USED IN THE STATUTE, IN THE ABSENCE OF A CLEAR LEGISLATIVE INTENT TO THE CONTRARY, SHOULD BE GIVEN THEIR PLAIN, ORDINARY AND COMMON USAGE OR MEANING. It is a basic rule of interpretation that words and phrases used in the statute, in the absence of a clear legislative intent to the contrary, should be given their plain, ordinary and common usage or meaning. (Mustang Lumber Inc. vs. CA, 257 SCRA 430 [1996] citing Ruben E. Agpalo, Statutory Construction, second ed. [1990], 131). From the disquisition and rationalization aforequoted, containers and packaging materials are certainly not raw materials. Cans and tetrapaks are not used in the manufacture of Cenvocos finished products which are coconut, edible oil or coprameal cake. Such finished products are packed in cans and tetrapaks.3. TAXATION; TAX BURDENS ARE NOT TO BE IMPOSED BEYOND WHAT THE STATUTE EXPRESSLY AND CLEARLY IMPORTS, TAX STATUTES BEING CONSTRUEDSTRICTISSIMI JURISAGAINST THE GOVERNMENT. This Court is mindful of the well-entrenched principle that the government is never estopped from collecting taxes because of mistakes or errors on the part of its agents, but this rule admits of exceptions in the interest of justice and fair play.(ABS CBN Broadcasting Corp. vs. Court of Tax Appeals, 108 SCRA 151 [1981]) More so in the present case, where we discern no error in allowing the sales taxes paid by CENVOCO on the containers and packages of its milled products, to be credited against the deficiency millers tax due thereon, for a proper application of the law. It bears stressing that tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construedstrictissimi jurisagainst the government.(The Province of Bulacan, et. al, vs. Hon. CA, et. al.,GR No. 126232, November 27, 1998; Republic vs. IAC,196 SCRA 335[1991];CIR vs. Firemens Fund Ins. Co.,148 SCRA 315 (1987);CIR vs. CA, 204 SCRA 182 [1991])

G.R. No. L-46787 August 12, 1991FLORO CEMENT CORPORATION,petitioner,vs.HON. BENJAMIN K. GOROSPE, Judge, CFI of Misamis Oriental, Branch I, and the MUNICIPALITY OF LUGAIT,respondents.Scarlet V. Santos and Advocates Circle Lawyers for petitioner.BIDIN,J.:pThis is a petition for review oncertiorariseeking to set aside and reverse the decision*of the then Court of First Instance of Misamis Oriental in Civil Case No. 4867, entitled "Municipality of Lugait, Misamis Oriental, (represented) by theMunicipal Treasurer and Provincial Treasurer vs. Floro Cement Corporation", ordering defendant to pay unto plaintiff the amount of P161,875.00 as manufacturer's and exporter's taxes plus surcharges for the period from January 1, 1974 to September 30, 1975 and that herein petitioner Floro Cement Corporation be declared exempted from the coverage of Ordinances Nos. 5 and 10 of the Municipality of Lugait and that the taxes and fees it has paid pursuant to said ordinances be refunded.The facts of the case, as summarized in the decision of the trial court, are as follows:The municipality of Lugait, province of Misamis Oriental, represented jointly in this action by its Municipal Treasurer and the Provincial Treasurer of the said province, filed with this Court a verified complaint for collection of taxes against the defendant Floro Cement Corporation, a domestic corporation duly organized and existing under the laws of the Republic of the Philippines with business establishment and office address at its compound in the aforementioned municipality of Lugait. The taxes sought to be collected by the plaintiff specifically refers to "manufacturers" and' exporter's "taxes for the period from January 1, 1974 to September 30, 1975, inclusive, in the total amount of P161,875.00 plus 25% thereof as surcharge. Plaintiff alleged that the imposition and collection of these taxes" is based on its Municipal Ordinance No. 5, otherwise known as the Municipal Revenue Code of 1974, which was passed pursuant to Presidential Decree No. 231 dated June 28, 1973 and also Municipal Ordinance No. 10 passed on June 11, 1974 pursuant to Presidential Decree No. 426 dated March 30,1974, amending Presidential Decree No. 231.In its answer to the complaint, the defendant set up the defense that it is not liable to pay manufacturer's and exporter's taxes alleging among others that the plaintiffs power to levy and collect taxes, fees, rentals, royalties or charges of any kind whatsoever on defendant has been limited or withdrawn by Section 52 of Presidential Decree No. 463 which provides:Sec. 52. Power to Levy Taxes on Mines, Mining Corporation and Mineral Products.Any law to the contrary notwithstanding, no province, city, municipality, barrio or municipal district shall levy and collect taxes, fees, rentals, royalties or charges of any kind whatsoever on mines, mining claims, mineral products, or on any operation, process or activity connected therewith.Defendant also set up several special/affirmative defenses, namely: (1) that plaintiff has no legal capacity to sue; (2) that the complaint states no cause; (3) that plaintiff has absolutely no cause of action against defendant; (4) that defendant was granted by the Secretary of Agriculture and Natural Resources a Certificate of Qualification for Tax Exemption, CQTE No. 22, dated July 7, 1960, entitling defendant to exemption for a period of five (5) years from April 30,1969 to April 29, 1974 from payment of all taxes, except income tax, and which Certificate was amended on November 5, 1974 CQTE P.D. 463-22), entitling defendant to exemption from all taxes, duties and fees except income tax, for five (5) years from the first date of actual commercial production of saleable mineral products that is from May 17, 1974 to January 1, 1978; and (5) that Republic Act No. 3823, as implemented by Mines Administrative Order No. V-25, and P.D. No. 463 which are the basis for the exemption granted to defendant are special laws whereas, the municipal ordinance mentioned in the complaint which are based on P.D. No. 231 and P.D No. 426, respectively, are general laws; and that it is axiomatic that a special law can not be amended and/or repealed by a general law unless there is an express intent to repeal or abrogate the provisions of the special law.After the issues were joined, the parties submitted a written stipulation of facts under date of May 21, 1976 the pertinent portion of which is quoted in full as follows:PLAINTIFF and DEFENDANT, by and through counsel, most respectfully submit the following stipulation of facts:1. That plaintiff is a political subdivision of the Republic of the Philippines created pursuant to EXECUTIVE ORDER NO. 425, entitled "CREATING THE MUNICIPALITY OF LUGAIT IN THE PROVINCE OF MISAMIS ORIENTAL", a xerox copy of said executive order is attached hereto marked ANNEX "A" and made an integral part hereof;2. That defendant is a corporation day organized and existing under and by virtue of the laws of the Philippines; with plant and office at Lugait, Misamis Oriental, and is engaged in the manufacture and selling, including exporting, of cement, one of the essential ingredients of which is limestone;3. That defendant, as a mining operator of mineral land lands situated at Lugait, Misamis Oriental, was granted by the Secretary of Agriculture and Natural Resources a Certificate of Qualification for Tax Exemption, CQTE No. 22, dated July 7, 1960, entitling defendant to exemption for a period of five (5) years from April 30, 1969 to April 29, 1974, from the payment of all taxes, except income tax, a xerox copy of which is attached marked ANNEX "A" to defendant's answer and made an integral part hereof;4. That the Certificate of Qualification for Tax Exemption mentioned in the next preceding paragraph was amended on November 5, 1974, when the Honorable Secretary of Natural Resources, Mr. Jose J. Leido Jr., upon recommendation of the Director of Mines, granted to defendant a Certificate of Qualification for Tax Exemption, CQTE P.D. 463-22, which entitled defendant to exemption from all taxes, duties, and fees, except income tax, for five (5) years from May 17, 1974 to January 1, 1978, a xerox copy of which is attached marked ANNEX "B" to defendant's answer and made an integral part hereof, and that a copy of the Certificate of Qualification for Tax Exemption, CQTE P.D. 463-22 was furnished the Municipal Treasurer of plaintiff on November 12, 1974, as shown by a xerox copy of the letter of the Assistant Director of the Bureau of Mines, Mr. Francisco A. Comsti, a copy of which is attached hereto marked ANNEX "B" and made an integral part hereof;5. That the Certificate of Qualification for Tax Exemption mentioned in the next preceding paragraph was issued pursuant to the provisions of Sec. 52, P.D. No. 463, which reads as follows:Sec. 52. Power to Levy Taxes on Mines, Mining Operations and Mineral Products.Any law to the contrary notwithstanding, no province, City, municipality, barrio or municipal district shall levy and collect taxes, fees, rentals, royalties or charges of any kind whatsoever on mines, mining claims, mineral products, or on any operation, process, or activity therewith.6. That on or about July 3, 1974, plaintiff through its Municipal Mayor, wired the Secretary of Finance, opposing the application of defendant for the extension of its exemption from all forms of taxation, including its application for extension of its exemption from realty taxes, which opposition was not favorably acted upon by the said Secretary of Finance, as evidenced by a xerox copy of the letter of the Honorable Secretary of Finance, Mr. Cesar Virata, attached hereto marked ANNEX "C" and made an integral part hereof;7. That plaintiff pursuant to P.D.No. 231 promulgated on June 28, 1973, passed Municipal Ordinance No. 5, otherwise known as Municipal Revenue Code of 1974, effective January 1, 1974, Section 3 of which is quoted in paragraph 2 of the complaint and made integral part hereof by reference;8. That plaintiff pursuant to P.D.No. 426 promulgated on March 30,1974, Municipal Revenue Ordinance No. 10, effective fifteen (15) days after its passage, of which Section 4, Title I is quoted in paragraph 3 of the complaint and made integral part hereof by reference;9. That pursuant(to)Municipal Ordinances Nos. 5 and 10, mentioned in paragraphs 7 and 8 hereof, respectively, plaintiff demanded of defendant the payment of the manufacturer's and exporter's taxes including surcharge for the period covering January 1, 1974 to September 30, 1975, broken down as shown in paragraph 5 of the complaint and made integral part hereof by reference; but defendant refused because of the allegations found in paragraphs 1, 2, 3, 4, 5 and 6 hereof.WHEREFORE, it is most respectfully prayed that the foregoing stipulation of facts be made the basis of the judgment of this Honorable Court, after the parties hereto have submitted their respective memoranda.Cagayan de Oro City, May 21,1976.(CFI Decision, pp. 1-6; Rollo, pp. 54-59),As aforementioned, the trial court rendered its decision on November 29, 1976, the dispositive portion of which reads, as follows:WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Floro Cement Corporation to pay unto plaintiff the amount of P161,875.00 as manufacturer's and exporter's taxes and surcharges for the period from January 1, 1974 to September 30, 1975, inclusive, and to pay the costs.SO ORDERED.Hence, this appeal.The petition was given due course by the First Division of this Court on January 6, 1978 and both parties were required to submit their simultaneous memoranda. Respondent complied on February 17,1978 while petitioner filed its memorandum on March 9,1978.The principal issue in this case is whether or not Ordinances Nos. 5 and 10 of Lugait, Misamis Oriental apply to petitioner Floro Corporation notwithstanding the limitation on the taxing power of local government as provided for in Sec. 52 of P.D. 231 and Sec. 52 of P.D. 463.Petitioner Floro Cement Corporation holds that since Ordinances Nos. 5 and 10 were enacted pursuant to P.D. No. 231 and P.D. No. 426, respectively, said ordinances do not apply to its business in view of the limitation on the taxing power of local government provided in Sec. 5m of P.D. No. 231, which reads:Sec. 5. Common Limitations on the Taxing Powers of Local Governments. The exercise of taxing power of provinces, cities, municipalities and barrios shall not extend to the imposition of the following:xxx xxx xxx(m) Taxes on mines, mining operations and mineral products and their by-products when sold domestically by the operator.Floro Cement Corporation likewise contends that cement is a mineral product, relying on the case ofCebu Portland Cement Company vs. Commissioner of Internal Revenue, G.R. No. L20563, October 29, 1968 (25 SCRA 789), and in the case ofPhilippine Pipes and Merchandising Corporation vs. Commissioner of Internal Revenue, CTA Case No. 1858, dated July 29, 1970 decided by the Court of Tax Appeals (Memorandum for the Petitioner, Rollo, pp. 89-90).Petitioner further contends that the partial exemption aforementioned was rendered absolute by Sec. 52 of P.D. No. 463 promulgated on May 17, 1974, which expressly prohibits the province, city municipality, barrio and municipal district from levying and collecting taxes, fees, rentals, royalties or charges of any kind whatsoever on mines, mining claims and mineral products, any law to the contrary notwithstanding. Said prohibition includes any operation, process or activity connected with its production. The manufacture of cement is a process inherently connected with the mining operation undertaken by petitioner Floro Cement Corporation (Ibid., pp. 92-93).On other hand, while respondent municipality admits that petitioner Floro Cement Corporation undertakes exploration, development and exploitation of mineral products, the taxes sought to be collected were not imposed on these activities in view of the mentioned prohibition under Sec. 52 of P.D. No. 463. Said taxes were levied on the corporation's business of manufacturing and exporting cement. The business of manufacturing and exporting cement does not fall under exploration, development nor exploitation of mineral resources as defined in Sec. 2 of P.D. No. 463, hence, it is outside the scope of application of Sec. 52 of said decree (Memorandum for Respondent, p. 10; Rollo, p. 85).The municipality's power to levy taxes on manufacturers and exporters is provided in Article 2, Sec. 19 of P.D. No. 231, as amended by P.D. No. 426 which provides that "The municipality may impose a tax on business except those for which fixed taxes are provided for in this Code:(a) On manufacturers, importers, or producers of any article of commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled spirits and/ or wines in accordance with the following schedule:xxx xxx xxx(a-1) On retailers, independent wholesalers and distributors in accordance with the following schedule:xxx xxx xxx(Comment of the Respondent, Rollo, p. 72)The petition is without merit.On the question of whether or not cement is a mineral product, this Court has consistently held that it is not a mineral product but rather a manufactured product (Commissioner of Internal Revenue vs. Cebu Portland Cement Company, 156 SCRA 535 [1987]; Commissioner of Internal Revenue vs. Philippine Pipes and Merchandising Corporation, 153 SCRA 113 [1987]; Commissioner of Internal Revenue vs. Republic Cement Corporation, 149 SCRA 487 [1987]). while cement is composed of 80'7c minerals, it is not merely an admixture or blending of raw materials, as lime, silica, shale and others. It is the result of a definite process-the crushing of minerals, grinding, mixing, calcining adding of retarder or raw gypsum In short, before cement reaches its saleable form, the minerals had already undergone a chemical change through manufacturing process (Commissioner of Internal Revenue vs. Cebu Portland Cement Company,supra, reiterating the ruling in Commissioner of Internal Revenue vs. Republic Cement Corporation, 124 SCRA 46 [1983]). It appears evident that the foregoing cases overruled the case ofCebu Portland Cement Company vs. Commissioner of Internal Revenue, 25 SCRA 789 [1969] which was cited by petitioner.On the exemption claimed by petitioner, this Court has laid down the rule that as the power of taxation is a high prerogative of sovereignty, the relinquishment is never presumed and any reduction or diminution thereof with respect to its mode or its rate, must be strictly construed, and the same must be coached in clear and unmistakable terms in order that it may be applied. More specifically stated, the general rule is that any claim for exemption from the tax statute should be strictly construed against the taxpayer (Luzon Stevedoring Corporation vs. Court of Appeals, 163 SCRA 647 [1988]). He who claims an exemption must be able to point out some provision of law creating the right; it cannot be allowed to exist upon a mere vague implication or inference. It must be shown indubitably to exist, for every presumption is against it, and a well-founded doubt is fatal to the claim (Manila Electric Company vs. Ver, 67 SCRA 351 [1975]). The petitioner failed to meet this requirement.As held by the lower court, the exemption mentioned in Sec. 52 of P.D. No. 463 refers only to machineries, equipment, tools for production, etc., as provided in Sec. 53 of the same decree. The manufacture and the export of cement does not fall under the said provision for it is not a mineral product (CFI Decision, Rollo, p. 62). It is not cement that is mined only the mineral products composing the finished product (Commissioner of Internal Revenue vs. Republic Cement Corporation,supra).Furthermore, by the parties' own stipulation of facts submitted before the courta quo, it is admitted that Floro Cement Corporation is engaged in the manufacturing and selling, including exporting of cement (CFI Decision, Rollo, p. 57). As such, and since the taxes sought to be collected were levied on these activities pursuant to Sec. 19 of P.D. No. 231, Ordinances Nos. 5 and 10, which were enacted pursuant to P.D. No. 231 and P.D. No. 426, respectively, properly apply to petitioner Floro Cement Corporation.WHEREFORE, the petition is DENIED for lack of merit and the decision dated November 29, 1976 of the then Court of First Instance of Misamis Oriental is Affirmed.SO ORDERED.

COMMISSIONER OF INTERNAL REVENUE,petitioner, vs.THE COURT OF APPEALS, THE COURT OF TAX APPEALS and ATENEO DE MANILA UNIVERSITY,respondents.D E C I S I O NPANGANIBAN,J.:In conducting researches and studies of social organizations and cultural values thru its Institute of Philippine Culture, is the Ateneo de Manila University performing the work of an independent contractor and thus taxable within the purview of then Section 205 of the National Internal Revenue Code levying a three percent contractors tax?This question is answered by the Court in the negative as it resolves this petition assailing the Decision[1]of the Respondent Court of Appeals[2]in CA-G.R. SP No. 31790 promulgated on April 27, 1994 affirming that of the Court of Tax Appeals.[3]The Antecedent FactsThe antecedents as found by the Court of Appeals are reproduced hereinbelow, the same being largely undisputed by the parties.Private respondent is a non-stock, non-profit educational institution with auxiliary units and branches all over the Philippines.One such auxiliary unit is the Institute of Philippine Culture (IPC), which has no legal personality separate and distinct from that of private respondent.The IPC is a Philippine unit engaged in social science studies of Philippine society and culture.Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies.On July 8, 1983, private respondent received from petitioner Commissioner of Internal Revenue a demand letter dated June 3, 1983, assessing private respondent the sum ofP174,043.97 for alleged deficiency contractors tax, and an assessment dated June 27, 1983 in the sum ofP1,141,837 for alleged deficiency income tax, both for the fiscal year ended March 31, 1978.Denying said tax liabilities,private respondent sent petitioner a letter-protest and subsequently filed with the latter a memorandum contesting the validity of the assessments.On March 17, 1988, petitioner rendered a letter-decision canceling the assessment for deficiency income tax but modifying the assessment for deficiency contractors tax by increasing the amount due toP193,475.55.Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified assessment.At the same time, it filed in the respondent court a petition for review of the said letter-decision of the petitioner.While the petition was pending before the respondent court, petitioner issued a final decision dated August 3, 1988 reducing the assessment for deficiency contractors tax fromP193,475.55 toP46,516.41, exclusive of surcharge and interest.On July 12, 1993, the respondent court rendered the questioned decision which dispositively reads:WHEREFORE, in view of the foregoing, respondents decision is SET ASIDE.The deficiency contractors tax assessment in the amount ofP46,516.41 exclusive of surcharge and interest for the fiscal year ended March 31, 1978 is hereby CANCELED.No pronouncement as to cost.SO ORDERED.Not in accord with said decision, petitioner has come to this Courtviathe present petition for review raising the following issues:1)WHETHER OR NOT PRIVATE RESPONDENT FALLS UNDER THE PURVIEW OF INDEPENDENT CONTRACTOR PURSUANT TO SECTION 205 OF THE TAX CODE; and2) WHETHER OR NOT PRIVATE RESPONDENT IS SUBJECT TO 3% CONTRACTORS TAX UNDER SECTION 205 OF THE TAX CODE.The pertinent portions of Section 205 of the National Internal Revenue Code, as amended, provide:Sec. 205.Contractor, proprietors or operators of dockyards, and others.- A contractors tax of three per centum of the gross receipts is hereby imposed on the following:x x xx x xx x x(16)Business agents and other independent contractors except persons, associations and corporations under contract for embroidery and apparel for export, as well as their agents and contractors and except gross receipts of or from a pioneer industry registered with the Board of Investments under Republic Act No. 5186:x x xx x xx x xThe term independent contractors include persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.x x xx x xx x xPetitioner contends that the respondent court erred in holding that private respondent is not an independent contractor within the purview of Section 205 of the Tax Code.To petitioner, the term independent contractor, as defined by the Code, encompasses all kinds of services rendered for a fee and that the only exceptions are the following:a.Persons, association and corporations under contract for embroidery and apparel for export and gross receipts of or from pioneer industry registered with the Board of Investment under R.A. No. 5186;b.Individuals occupation tax under Section 12 of the Local Tax Code (under the old Section 182 [b] of the Tax Code); andc.Regional or area headquarters established in the Philippines by multinational corporations, including their alien executives, and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communication and coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region (Section 205 of the Tax Code).Petitioner thus submits that since private respondent falls under the definition of an independent contractor and is not among the aforementioned exceptions, private respondent is therefore subject to the 3% contractors tax imposed under the same Code.[4]The Court of Appeals disagreed with the Petitioner Commissioner of Internal Revenue and affirmed the assailed decision of the Court of Tax Appeals.Unfazed, petitioner now asks us to reverse the CA through this petition for review.The IssuesPetitioner submits before us the following issues:1)Whether or not private respondent falls under the purview of independent contractor pursuant to Section 205 of the Tax Code2)Whether or not private respondent is subject to 3% contractors tax under Section 205 of the Tax Code.[5]In fine, these may be reduced to a single issue:Is Ateneo de Manila University, through its auxiliary unit or branch -- the Institute of Philippine Culture -- performing the work of an independent contractor and, thus, subject to the three percent contractors tax levied by then Section 205 of the National Internal Revenue Code?The Courts RulingThe petition is unmeritorious.Interpretation of Tax LawsThe parts of then Section 205 of the National Internal Revenue Code germane to the case before us read:SEC. 205.Contractors, proprietors or operators of dockyards, and others.--A contractors tax of threeper centumof the gross receipts is hereby imposed on the following:x x xx x xx x x(16)Business agents and other independent contractors, except persons, associations and corporations under contract for embroidery and apparel for export, as well as their agents and contractors, and except gross receipts of or from a pioneer industry registered with the Board of Investments under the provisions of Republic Act No. 5186;x x xx x xx x xThe term independent contractors include persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.The term independent contractor shall not include regional or area headquarters established in the Philippines by multinational corporations, including their alien executives, and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region.The term gross receipts means all amounts received by the prime or principal contractor as the total contract price, undiminished by amount paid to the subcontractor, shall be excluded from the taxable gross receipts of the subcontractor.Petitioner Commissioner of Internal Revenue contends that Private Respondent Ateneo de Manila University falls within the definition of an independent contractor and is not one of those mentioned as excepted; hence, it is properly a subject of the three percent contractors tax levied by the foregoing provision of law.[6]Petitioner states that the term independent contractor is not specifically defined so as to delimit the scope thereof, so much so that any person who x x x renders physical and mental service for a fee, is now indubitably considered an independent contractor liable to 3% contractors tax.[7]according to petitioner, Ateneo has the burden of proof to show its exemption from the coverage of the law.We disagree.Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes.It is obviously both illogical and impractical to determine who are exempted without first determining who are covered by the aforesaid provision. The Commissioner should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom.The Court takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that (a) statute will not be construed as imposing a tax unless it does soclearly,expressly, andunambiguously.x x x(A) tax cannot be imposed without clear and express wordsfor that purpose.Accordingly, the general rule of requiringadherence to the letter in construing statutes applies with peculiar strictness to tax lawsand the provisions of a taxing act arenot to beextended by implication.[8]Parenthetically, in answering the question of who is subject to tax statutes, it is basic that in case of doubt, such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import.[9]To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be engaged in the business of selling its services.Hence, to impose the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit of an independent business.And it is only after private respondent has been found clearly to be subject to the provisions of Sec. 205 that the question of exemption therefrom would arise.Only after such coverage is shown does the rule of construction -- that tax exemptions are to be strictly construed against the taxpayer -- come into play, contrary to petitioners position.This is the main line of reasoning of the Court of Tax Appeals in its decision,[10]which was affirmed by the CA.The Ateneo de Manila University Did Not Contractfor the Sale of the Services of its Institute of Philippine CultureAfter reviewing the records of this case, we find no evidence that Ateneos Institute of Philippine Culture ever sold its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic purposes of the university.Stressing that it is not the Ateneo de Manila Universityper sewhich is being taxed, Petitioner Commissioner of Internal Revenue contends thatthe tax is due on its activity of conducting researchesfor a fee.The tax is due on the gross receipts made in favor of IPC pursuant to the contracts the latter entered to conduct researches for the benefit primarily of its clients.The tax is imposed on the exercise of a taxable activity.x x x [T]he sale of services of private respondent is made under a contract and the various contracts entered into between private respondent and its clients are almost of the same terms, showing, among others, the compensation and terms of payment.[11](Underscoringsupplied.)In theory,the Commissioner of Internal Revenue may be correct.However, the records do not show that Ateneos IPC in fact contracted to sell its research services for a fee.Clearly then, as found by the Court of Appeals and the Court of Tax Appeals,petitioners theory is inapplicable to the establishedfactual milieu obtaining in the instant case.In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for sale of services were ever entered into by the private respondent.As appropriately pointed out by the latter:An examination of the Commissioners Written Formal Offer of Evidence in the Court of Tax Appeals shows that only the following documentary evidence was presented:Exhibit1BIR letter of authority no. 3318442Examiners Field Audit Report3Adjustments to Sales/Receipts4Letter-decision of BIR CommissionerBienvenido A. Tan Jr.None of the foregoing evidence even comes close to purport to be contracts between private respondent and third parties.[12]Moreover, the Court of Tax Appeals accurately and correctly declared that the funds received by the Ateneo de Manila University are technically not a fee.They may however fall as gifts or donations which are tax-exempt as shown by private respondents compliance with the requirement of Section 123 of the National Internal Revenue Code providing for the exemption of such gifts to an educational institution.[13]Respondent Court of Appeals elucidated on the ruling of the Court of Tax Appeals:To our mind, private respondent hardly fits into the definition of an independent contractor.For one, the established facts show that IPC, as a unit of the private respondent, is not engaged in business.Undisputedly, private respondent is mandated by law to undertake research activities to maintain its university status.In fact, the research activities being carried out by the IPC is focused not on business or profit but on social sciences studies of Philippine society and culture.Since it can only finance a limited number of IPCs research projects, private respondent occasionally accepts sponsorship for unfunded IPC research projects from international organizations, private foundations and governmental agencies.However, such sponsorships are subject to private respondents terms and conditions, among which are, that the research is confined to topics consistent with the private respondents academic agenda; that no proprietary or commercial purpose research is done; and that private respondent retains not only the absolute right to publish but also the ownership of the results of the research conducted by the IPC.Quite clearly, the aforementioned terms and conditions belie the allegation that private respondent is a contractor or is engaged in business.For another, it bears stressing that private respondent is a non-stock, non-profit educational corporation.The fact that it accepted sponsorship for IPCs unfunded projects is merely incidental.For, the main function of the IPC is to undertake research projects under the academic agenda of the private respondent.Moreover, the records do not show that in accepting sponsorship of research work, IPC realized profits from such work.On the contrary, the evidence shows that for about 30 years, IPC had continuously operated at a loss, which means that sponsored funds are less than actual expenses for its research projects.That IPC has been operating at a loss loudly bespeaks of the fact that education and not profit is the motive for undertaking the research projects.Then, too, granting arguendo that IPC made profits from the sponsored research projects, the fact still remains that there is no proof that part of such earnings or profits was ever distributed as dividends to any stockholder, as in fact none was so distributed because they accrued to the benefit of the private respondent which is a non-profit educational institution.[14]Therefore, it is clear that the funds received by Ateneos Institute of Philippine Culture are not given in the concept of a fee or price in exchange for the performance of a service or delivery of an object.Rather,the amounts are in the nature of an endowment or donation given by IPCs benefactors solely for the purpose of sponsoring or funding the researchwith no strings attached.As found by the two courts below, such sponsorships are subject to IPCs terms and conditions.No proprietary or commercial research is done,and IPC retains the ownership of the results of the research, including the absolute right to publish the same.The copyrights over the results of the research are owned by Ateneo and, consequently, no portion thereof may be reproduced without its permission.[15]The amounts given to IPC, therefore, may not be deemed, it bears stressing, as fees or gross receipts that can be subjected to the three percent contractors tax.It is also well to stress that the questioned transactions of Ateneos Institute of Philippine Culture cannot be deemed either as a contract of sale or a contract for a piece of work.By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.[16]By its very nature, a contract of sale requires a transfer of ownership.Thus, Article 1458 of the Civil Code expressly makes the obligation to transfer ownership as an essential element of the contract of sale, following modern codes, such as the German and the Swiss.Even in the absence of this express requirement, however, most writers, including Sanchez Roman, Gayoso, Valverde, Ruggiero, Colin and Capitant, have considered such transfer of ownership as the primary purpose of sale.Perez and Alguer follow the same view, stating that the delivery of the thing does not mean a mere physical transfer, but is a means of transmitting ownership.Transfer of title or an agreement to transfer it for a price paid or promised to be paid is the essence of sale.[17]In the case of a contract for a piece of work, the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation.x x x If the contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. x x x.[18]Ineludably, whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object.[19]In the case at bench, it is clear from the evidence on record that there was no sale either of objects or services because, as adverted to earlier, there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture.Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in pursuance of maintaining Ateneos university status and not in the course of an independent business of selling such research with profit in mind.This is clear from a reading of the regulations governing universities:31.In addition to the legal requisites an institution must meet, among others,the following requirements before an application for university status shall be considered:x x xx x xx x x(e)The institution must undertake research and operate with a competent qualified staff at least three graduate departments in accordance with the rules and standards for graduate education.One of the departments shall be science and technology.The competence of the staff shall be judged by their effective teaching, scholarly publications and research activities published in its school journalas well as their leadership activities in the profession.(f)The institution must show evidence of adequate and stable financial resources and support, a reasonable portion of which should be devoted to institutional development and research.(underscoring supplied)x x xx x xx x x32.University status may be withdrawn, after due notice and hearing, for failure to maintain satisfactorily the standards and requirements therefor.[20]Petitioners contention that it is the Institute of Philippine Culture that is being taxed and not the Ateneo is patently erroneous because the former is not an independent juridical entity that is separate and distinct from the latter.Factual Findings and Conclusions of the Court of Tax AppealsAffirmed by the Court of Appeals Generally ConclusiveIn addition, we reiterate that the Court of Tax Appeals is a highly specialized body specifically created for the purpose of reviewing tax cases.Through its expertise, it is undeniably competent to determine the issue of whether[21]Ateneo de Manila University may be deemed a subject of the three percent contractors tax through the evidence presented before it.Consequently, as a matter of principle, this Court will not set aside the conclusion reached by x x x the Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority x x x.[22]This point becomes more evident in the case before us where the findings and conclusions of both the Court of Tax Appeals and the Court of Appeals appear untainted by any abuse of authority, much lessgraveabuse of discretion.Thus, we find the decision of the latter affirming that of the former free from any palpable error.Public Service,Not Profit, is the MotiveThe records show that the Institute of Philippine Culture conducted its research activities at a huge deficit ofP1,624,014.00 as shown in its statements of fund and disbursements for the period 1972 to 1985.[23]In fact, it was Ateneo de Manila University itself that had funded the research projects of the institute, and it was only when Ateneo could no longer produce the needed funds that the institute sought funding from outside.The testimony of Ateneos Director for Accounting Services, Ms. Leonor Wijangco, provides significant insight on the academic and nonprofit nature of the institutes research activities done in furtherance of the universitys purposes, as follows:QNow it was testified to earlier by Miss Thelma Padero (Office Manager of the Institute of Philippine Culture) that as far as grants from sponsored research it is possible that the grant sometimes is less than the actual cost.Will you please tell us in this case when the actual cost is a lot less than the grant who shoulders the additional cost?AThe University.QNow, why is this done by the University?ABecause of our faculty development program as a university, because a university has to have its own research institute.[24]So, why is it that Ateneo continues to operate and conduct researches through its Institute of Philippine Culture when it undisputedly loses not an insignificant amount in the process?The plain and simple answer is that private respondent is not a contractor selling its services for a fee but an academic institution conducting these researches pursuant to its commitments to education and, ultimately, to public service.For the institute to have tenaciously continued operating for so long despite its accumulation of significant losses,we can only agree with both the Court of Tax Appeals and the Court of Appeals that education and not profit is [IPCs] motive for undertaking the research projects.[25]WHEREFORE,premises considered, the petition isDENIEDand the assailed Decision of the Court of Appeals is herebyAFFIRMEDin full.SO ORDERED.

G.R. No. 88291 June 8, 1993ERNESTO M. MACEDA,petitioner,vs.HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of the President, HON. VICENTE JAYME, ETC., ET AL.,respondents.Angara, Abello, Concepcion & Cruz for respondent Pilipinas Shell Petroleum Corporation.Siguion Reyna, Montecillo & Ongsiako for Caltex.NOCON,J.:Just like lightning which does strike the same place twice in some instances, this matter of indirect tax exemption of the private respondent National Power Corporation (NPC) is brought to this Court a second time. Unfazed by the Decision We promulgated on May 31, 19911petitioner Ernesto Maceda asks this Court to reconsider said Decision. Lest We be criticized for denying due process to the petitioner. We have decided to take a second look at the issues. In the process, a hearing was held on July 9, 1992 where all parties presented their respective arguments. Etched in this Court's mind are the paradoxical claims by both petitioner and private respondents that their respective positions are for the benefit of the Filipino people.IA Chronological review of the relevant NPC laws, specially with respect to its tax exemption provisions, at the risk of being repetitious is, therefore, in order.On November 3, 1936, Commonwealth Act No. 120 was enacted creating the National Power Corporation, a public corporation, mainly to develop hydraulic power from all water sources in the Philippines.2The sum of P250,000.00 was appropriated out of the funds in the Philippine Treasury for the purpose of organizing the NPC and conducting its preliminary work.3The main source of funds for the NPC was the flotation of bonds in the capital markets4and these bonds. . . issued under the authority of this Act shall be exempt from the payment of all taxes by the Commonwealth of the Philippines, or by any authority, branch, division or political subdivision thereof and subject to the provisions of the Act of Congress, approved March 24, 1934, otherwise known as the Tydings McDuffle Law, which facts shall be stated upon the face of said bonds. . . . .5On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed for the initial operations of the NPC and reiterating the provision of the flotation of bonds as soon as the first construction of any hydraulic power project was to be decided by the NPC Board.6The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended nor deleted.On September 30, 1939, C.A. No. 495 was enacted removing the provision on the payment of the bond's principal and interest in "gold coins" but adding that payment could be made in United States dollars.7The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended nor deleted.On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines to guarantee, absolutely and unconditionally, as primary obligor, the payment of any and all NPC loans.8He was also authorized to contract on behalf of the NPC with the International Bank for Reconstruction and Development (IBRD) for NPC loans for the accomplishment of NPC's corporate objectives9and for the reconstruction and development of the economy of the country.10It was expressly stated that:Any such loan or loans shall be exempt from taxes, duties, fees, imposts, charges, contributions and restrictions of the Republic of the Philippines, its provinces, cities and municipalities.11On the same date, R.A. No. 358 was enacted expressly authorizing the NPC, for the first time, to incur other types of indebtedness, aside from indebtedness incurred by flotation of bonds.12As to the pertinent tax exemption provision, the law stated as follows:To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities and municipalities.13On July 10, 1952, R.A. No. 813 was enacted amending R.A. No. 357 in that, aside from the IBRD, the President of the Philippines was authorized to negotiate, contract and guarantee loans with the Export-Import Bank of of Washigton, D.C., U.S.A., or any other international financial institution.14The tax provision for repayment of these loans, as stated in R.A. No. 357, was not amended.On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax exemption for real estate taxes. As enacted, the law states as follows:To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, except real property tax, and from all duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities, and municipalities.15On September 8, 1955, R.A. No. 1397 was enacted directing that the NPC projects to be funded by the increased indebtedness16should bear the National Economic Council's stamp of approval. The tax exemption provision related to the payment of this total indebtedness was not amended nor deleted.On June 13, 1958, R.A. No. 2055 was enacted increasing the total amount of foreign loans NPC was authorized to incur to US$100,000,000.00 from the US$50,000,000.00 ceiling in R.A. No. 357.17The tax provision related to the repayment of these loans was not amended nor deleted.On June 13, 1958, R.A. No. 2058 was enacting fixing the corporate life of NPC to December 31, 2000.18All laws or provisions of laws and executive orders contrary to said R.A. No. 2058 were expressly repealed.19On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation into a stock corporation with an authorized capital stock of P100,000,000.00 divided into 1,000.000 shares having a par value of P100.00 each, with said capital stock wholly subscribed to by the Government.20No tax exemption was incorporated in said Act.On June 17, 1961, R.A. No. 3043 was enacted increasing the above-mentioned authorized capital stock to P250,000,000.00 with the increase to be wholly subscribed by the Government.21No tax provision was incorporated in said Act.On June 17, 1967, R.A. No 4897 was enacted. NPC's capital stock was increased again to P300,000,000.00, the increase to be wholly subscribed by the Government. No tax provision was incorporated in said Act.22On September 10, 1971, R.A. No. 6395 was enacted revising the charter of the NPC, C.A. No. 120, as amended. Declared as primary objectives of the nation were:Declaration of Policy. Congress hereby declares that (1) the comprehensive development, utilization and conservation of Philippine water resources for all beneficial uses, including power generation, and (2) the total electrification of the Philippines through the development of power from all sources to meet the needs of industrial development and dispersal and the needs of rural electrification are primary objectives of the nation which shall be pursued coordinately and supported by all instrumentalities and agencies of the government, including the financial institutions.23Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a) (Authority to incur Domestic Indebtedness) and Section 8 (b) (Authority to Incur Foreign Loans).As to the issuance of bonds by the NPC, Paragraph No. 3 of Section 8(a), states as follows:The bonds issued under the authority of this subsection shall be exempt from the payment of all taxes by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof which facts shall be stated upon the face of said bonds. . . .24As to the foreign loans the NPC was authorized to contract, Paragraph No. 5, Section 8(b), states as follows:The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the Corporation, paid from the proceeds of any loan, credit or indebtedeness incurred under this Act, shall also be exempt from all taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or any of its agencies and political subdivisions.25A new section was added to the charter, now known as Section 13, R.A. No. 6395, which declares the non-profit character and tax exemptions of NPC as follows:The Corporation shall be non-profit and shall devote all its returns from its capital investment, as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation is hereby declared exempt:(a) From the payment of all taxes, duties, fees, imposts, charges costs and service fees in any court or administrative proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines, its provinces, cities, and municipalities and other government agencies and instrumentalities;(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities;(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods required for its operations and projects; and(d) From all taxes, duties, fees, imposts and all other charges its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power.26On November 7, 1972, Presidential Decree No. 40 was issued declaring that the electrification of the entire country was one of the primary concerns of the country. And in connection with this, it was specifically stated that:The setting up of transmission line grids and the construction of associated generation facilities in Luzon, Mindanao and major islands of the country, including the Visayas, shall be the responsibility of the National Power Corporation (NPC) as the authorized implementing agency of the State.27xxx xxx xxxIt is the ultimate objective of the State for the NPC to own and operate as a single integrated system all generating facilities supplying electric power to the entire area embraced by any grid set up by the NPC.28On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to enable it to fulfill its role under aforesaid P.D. No. 40. Its authorized capital stock was raised to P2,000,000,000.00,29its total domestic indebtedness was pegged at a maximum of P3,000,000,000.00 at any one time,30and the NPC was authorized to borrow a total of US$1,000,000,000.0031in foreign loans.The relevant tax exemption provision for these foreign loans states as follows:The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and ot