The reversal by respondent Court of Tax Appeals of a determination by the then Acting Commissioner of Customs, the late Norberto Romualdez, Jr., that private respondent Manila Electric Company was not exempt from the payment of the special import tax under Republic Act No. 1394 1 for shipment to it of insulating oil, respondent Court entertaining the contrary view, 2 led to this petition for review. The contention pressed in support of the petition is that as a tax exemption is to be construed strictly, the decision of the respondent Court, which assumed that insulating oil can be considered as insulators must be reversed and set aside. The appealed decision of respondent Court in the light of applicable authorities supplies the best refutation of such contention. It must be sustained.

The appealed decision 3 set forth that petitioner Manila Electric Co., nor private respondent, in appealing from a determination by the then Acting Commissioner of Customs, now petitioner, "claims that it is exempt from the special import tax not only by virtue of Section 6 of Republic Act No. 1394, which exempts from said tax equipment and spare parts for use in industries; but also under Paragraph 9, Part Two, of its franchise, which expressly exempts is insulators from all taxes of whatever kind and nature." 4 It then made reference to the franchise of private respondent Manila Electric Co.: "Par. 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay. In consideration of Part Two of the franchise herein granted, to wit, the right to build and maintain in the City of Manila and its suburbs a plant for the conveying and furnishing of electric current for light, heat, and power, and to charge for the same, the grantee shall pay to the City of Manila two and one-half per centum of the gross earnings received from the business under this franchise in the city and its suburbs: . . . and shall be in lieu of all taxes and assessments of whatsoever nature, and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted." 5 It noted that the above "exempts it from all taxes of whatever nature, and by whatever authority, with respect to its insulators in consideration for the payment of the percentage tax on its gross earnings." 6

The question then, according to such decision of respondent Court is: "Does the insulating oil in question come within the meaning of the term ’insulator’?" 7 Then it went on: "Insulating oils are mineral oils of high di-electrics strength and high flash point employed in circuit breakers, switches, transformers and other electric apparatus. An oil with a flash point of 285