Appeal from a  decision of the Court of Tax Appeals dated December 15, 1956, assessing a tax of P5,639.17, on the  gross receipts in the  mixed  sales  and  installation amounting to P1,021,600.44, received by the Eternit Corporation, from January,  1951 to June,  1955, which gross receipts  is  itemized  as  follows:

"For asbestos products.	P772,244.88
For accessories	98,970.63
For Labor	149,044.63
For delivery charges	1,340.30

(p. 12, Brief for Appellant-Appellee
Eternit Corporation)

The Eternit Corporation is engaged in the manufacture of asbestos cement products, particularly asbestos  corrugated  sheets for roofing.  Upon  its petition, it  had been granted exemption from tax by reason of the fact that it is an essential and necessary industry, in accordance with the provisions of Republic Act  Nos. 35 and 901.  The  exemption granted by the Secretary of Finance was extended until December 31, 1958  pursuant  to  said  Republic Act No.  901,  as per  letter dated  July 1,  1954, of the said Secretary.

The Collector of Internal Revenue assessed  a  tax of 3 per  cent on the  Eternit  Corporation as contractor on the  total  sum of  P1,021,600.44, as above  set forth.  Not satisfied with this assessment Eternit Corporation appealed to the Court of Tax Appeals, claiming that no tax on  the above amount is  collectible for the same is free from any tax in accordance  with the above-mentioned laws  (Rep. Act Nos. 35  and 901).  The Court of Tax  Appeals held that the sum of P772,244.88, which represents the selling price  of the  asbestos products delivered, as well as  the item of P98,970.63 for accessories, should be  exempt from tax, but held that contractor's tax of 3 percent be  assessed on the amount of  P149,044.63.  The tax assessed in accordance  with this  ruling  is  P5,639.17.   Against  this decision,  both parties have  appealed  to this Court.

The Collector of Internal Revenue argues that the gross receipts of  the Eternit Corporation in the mixed  sales-installation represents only  11.3 per cent of its total sales, so that the  installation of the  asbestos  roofing manufactured by said corporation  is not necessary to encourage the sale of its products and is not a  part of such sales. It is further  argued on behalf of the Collector that if the installation of the asbestos roofing were  to be undertaken by another contractor, not the  Eternit  Corporation,  the contractor would  be required to pay a 3 per cent tax  on the gross receipts as required  by Section 191 of  the National Internal Revenue Code.   It is  finally argued  that to exempt the Eternit Corporation from paying 3 per cent contractor's tax  on  its gross  receipts  on  the  so-called mixed sales and  installation is  a violation of the rule of equality and  uniformity of  taxation  and of the further rule that a statutory grant of  exemption from taxation is to  be  strictly  construed.

In answer  to the above  contentions, the Eternit Corporation claims  that  difficulty  in  the  sale of its corrugated asbestos  sheets   is encountered because of  difficulty  in their installation; that to  overcome this difficulty, it  has been necessary to organize its  own force of  employees or laborers to make the  installation of its  sheets,  especially for all customers who cannot afford to pay for competent engineers, or  whose constructions  do not justify  the employment of  such  competent engineers.

The Court of  Tax Appeals adopted a middle ground, holding that the exemption  in favor  of  the  Eternit  Corporation should extend up to the end of the process of the manufacture and sale; that asbestos sheets can be  manufactured without installation, and, on  the other hand, installation is  distinct and separate from  manufacture.  It ruled  that to extend the exemption up to installation would be to  unduly strain or stretch the idea of  manufacture and also unduly extend the exemption granted under the law. It, therefore, held that the contractor's tax should  be assessed on the amount of P149,044.63.

But it also refused to give validity to the  contention of the Collector  of Internal  Revenue, reasoning that  to impose the  contractor's tax on the  cost  of the sheets installed, and not on the installation cost alone, would frustrate  the exemption granted to petitioner Eternit  Corporation from the  payment of the "percentage tax on the sales  of the manufactured  products in respect to  which exemption is granted."  The exemption of the Eternit Corporation was, therefore,  extended to the sale and delivery, of  the  asbestos  roof manufactured.   In such  sale, the court  said,  the Eternit  Corporation was engaged  in the manufactured thereof, which is tax  free; but in installing the same in the houses of  its customers, it engages  in another occupation, that of  installation,  which should be subject to tax.

We agree to the above reasoning and  conclusions  of the Court of Tax Appeals, in holding that the cost of the products installed should be free from tax  under the exemption granted by  Republic Act No.  901,  but  refusing the claim of the corporation for exemption  from paying the contractor's tax  on the  cost of the installation of sheets they had sold and delivered, because in this latter respect it is performing the work of a contractor, which is subject to another tax provisions.   The  law granting the exemption does not state exemption for the act of installation of its manufactured products, and under  the rule of strict interpretation  of laws granting  tax exemptions, the sums received for installation can not  be included in the general exemption.   Such sums, therefore, must be held subject to contractor's tax.

Wherefore, the decision appealed from is hereby affirmed, without  costs.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Concepcion, and Endencia, JJ., concur.