CTA Case No. 3307 (Decision)

~� P U B LI C 0 F THE PHILIPPINES c. JUKf OF TAX APPEALS QUEZON CIT\' / CONSTRUCTION RESOURCES OF ASIA, INC. 1 Petitioner-Appellant, - versus - C.T.A. CASE NO~ 3307 THE COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. X - - - - .- - - - - - - - - X D E <!: I S I 0 N Section 53 (b) (2) .of the National Internal Revenue Code requires that a tax of 15% on interest on foreign loans payable to non-resident �foreign corporations be deducted and withheld by the borrower and paid to the Commissioner of Internal Revenue or his authorized collection agent. And as an incentive for Filipino overseas contractors, Section 4(a) (2) of Preside ntial Decree No. 1167 allows a tax credit for �� . such taxes withheld on interest payments on foreign loans incurred directly and exclusively for overseas ...... projects, provided no such credi~ is enjoyed by the lender-remittee in his country, and the overseas con- tractor has assumed the liability for payment. of the tax due from the lender-remittee. The pertinent facts are not disputed. As nar- rated by respondent Commi s sioner of Internal Revenue in his memorandum dated March 21, 1983: (pp. 67-691 CTA records.) � 33~

DECISION - CTA CASE NO. 3307 - 2- Petitioner is a domestic corpo- r at.ion, duly r egistered wi t h the � Overseas Construction Board as - ~n overseas contractor (pars. I and II , Peti tion) �. In July, 1977 , it entered into a contract with t he Malaysian "government for t he construction of a r oad a f Sabah (par. II , Petition) . I n connection ther e with, pet i tion ~ r i ncurred foreign loans in the amount of $3 , 900 , 000.00 at 9-3/ 16% inteTest ~e r annum (p. 73 , B. I. R. :rec .) . For� the period f rom December 7 , !977 to June 5 , 1978, peti- tioner paid the sum of $179,156.25 to the f oreign creditor s as i nteres t on its l oans (Ibid} ~ In an invest~gation conducted by r espondent ' ~ examiners , i t was ascettained t hat petitioner failed to f ile withholding tax r etrun and t o withhold 15% tax on interes t on foreign loans remitted abroad (pp . 72- 73, BIR rec .) . It was also as- cer t ained that petiticiner failed to pur- chase and affix the corresponding document- ary and science stamps on the stock c ertificates issued by it covering Pl7,800,000.00 worth of shares pursuant to Sections 222 and 224 of the Tax Code (p. 59, BIR rec. ) �. Thus, in a demand letter dated January 25, 1980 (pp . 86-87, BIR :rec. ) , respondent sought payment of withholdirig tax-at-source in the amoun~ofP300,170.46 , computed as fo l lows: ' 4th quarte r 1977 - - ~ - - -P 42,742 . 91 1st quarter (Jan . -March 1978) - 149,976.82 2nd quarter (Apr.-June 1978 ) ...:. 107,450.73 Total withholding tax with interest & pe~a1ties - - - -~~QQ&~ZQ~~� In ' a letter dated March 5 , 1980, respon- dent. demanded payment. o f petitione r ' s document- ary and science stamps 't:ax liabil i ty in the sum of P89,400 . 00, computation of which follows: 340

DECISION - CTA CASE NO. 3307 -3 - Pl 7,880,000.0 0 _ p 89 400 00 x . so doc._P44,700.00 200 ,. 50 sci.- 44,700.00 ' � Total - - Petitioner, in letters dated Novembe r 7, 1979 and February 15, 1980, protested the assessment for withholding tax-at~source, stating that the actual payment cif interest was made only on June 5, 1978 and, therefore, it had nothing yet to withhold in 1977. Petitioner further alleged that under the provisions of P~D. lr67, being an overseas contractor, it is exempt from the withholding tax-at-source provisions of the Tax Code (par. IV, Petition)~ As regards its documentary and science stamps tax liabi l ity, petitioner contends that up to the dat_e of the filing of � its petition with this Honorable Court, 'no actual f..ransfer of ownership of shares has been effected. Per investigation of respondent's examiners, however, it was ascertained that the shares have been duly issued and, therefore, the corresponding amount of documentary and science stamps should have been properly affixed and paid. Con- sequentiy, in a letter dated April 30, 1981 (p. 109 BIR rec.) respondent denied peti- tioner's protest. � Hence, the filing of the instant Petition for Review with this Honorable Court on May 28, 1981. ~ Petitioner assails the Government's right to impose and collect the withholding tax at source in the amount of P300,170.46 due on interest payments remitted abroad, and documentary and sci~nce stamp taxes in the �amount of P89,400.00. Is petitioner exempt frbm payment of the with- holding tax at source in the amount of P300,170.46 341 J

DECISION - CTA C~$E NO. 3307 - 4- � due on intere st payments remitted abroad? The position of petitioner Cons tructi on Re sources of Asia , Inc. , come s t o this: (pp. 83-84 , CTA records. ) But, in a certification then requested by Atty . Nicomedes P. Agag, �in b.ehalf of petitioner CRA, i n a l etter dated May 26, 1 982 , Mr . Re ynaldo A. Suarez, Assi stant Regiona l Director f or Rev enue Region No. 4-B, Qu e zon Ci ty, rul ed that. pet itione r CRA is exemp t ed f rom payment of gr oss receipts t ax on f oreign loans it obtained fr om the Philippine Veterans Bank, as agent. This letter d ated May 26, 1982, signed by Assistant. Regional Director Suarez of Region 4-B, Quezon City, has been submitted in evidence fo~ petitione r as Ex h i bits "H" , "H-1.'' and " H- 2n. Now while this gross r eceipts tax on � foreign loans was obtained by petitioner CRA from t he Philippine Veterans Bank as agent, the same does not. detract. fr om the fa ct t hat. petitioner ' s loan f rom the Ph ilippine Veterans Bank, as agen t, is the same and similar in all "respect with its l oan from Ayala Fi nance (Hongkong) Ltd. In other words, the ruling of Assfstant Regional Director Suarez of Revenue Re gi on 4-B, Exhi bits "H", "H-1" and "H-2" f or peti- ti one r, �ma y just as well equally apply with equal f orce and e ffec t, to petitioner's foreign loan with Ayala Finance (Hongkong) Ltd �. St ated otherwise, petitioner being exempt from the withholding tax on its gross receipts fr om its for~gn l oan obtained from the Philippine ' Veterans Ba nk a s agent, it must perforce l ogically and legally follow that it be exempted from t he wi thho ld ing t ax on its interest payments on foreign loans secured fr om Ayala Finance (Hongkong ) Ltd., in accord- ance with the aforequoted provision~ of law. And the �basis of petitioner ' s claim of exempti on from t he withhold i ng t ax on inten:Et payments on f oreign lqan i s the letter dated Ma y 26, 198 2 of Ass ist.ant 3 42

DECISION - CTA CApE NO. 330 7 - 5- Regional Director Reynaldo A. Suarez of Revenue Region No. 4-B, Quezon City (Exh. "W' , pp . 37-38 , CTA records)~ to wit : May 26, 1982 Atty . NICOMEDE S P. AGAG 240 Ibuna, San Juan Met.ro Manila Si r This is in answer to your letter dated May 12, 1982 requesting clarification on whether or not your client, CONSTRUCTION RESOURCES OF ASIA, INC., is exempt. from payment of the Gross Receipts Tax on� f oreign loan it obtained from the Philippine Veterans Bank as agent. You represented: 1. That our client is an over- seas contractor and registered as such with the Overseas Construction Board on August 14, 1978; 2 . That our clien t was awarded an overseas contract in Sabah, Malaysia, and because of its i mmediate need of cash for the purchase of construction materials and working capital , it secured a f oreign loan with the Philip- pine Veterans Bank as ag. ent~ 3. That in the contract executed between our client and the Philippine Veterans Bank as agent of the l ender , our said client assumed , as stat.ed in the contract , the payment of the Gross Receipts Tax of . lO%~ 4 . That the Philippine Veterans Bank now includsd said Gross Receipts Tax of 10% in its statement of account sent to our client~ 343

DECISDN - CTA CASE NO. 3307 - 6- 5. That in the conference had with the Philippine Veteran~ Bank's cfficial , we maintained that our client is exempted from the payment of sai4 Gross Receipts Tax of 10% under the aforecited provisions of PD 116 7. This is so becau se the foreign loan secured. by our. client was used directly and exclusively in its overseas construction project , and that, it assured the liability f or the payment of the tax due as part of the conditions af the contract it had wi th the Philippine Veterans Bank as agent of the lender-remittee. On the basis of the facts you have repre- sented we find that your client is exempt from the withhonding tax on interest payment on foreign loan, under P.D. No. 1167. Very truly your s, For the Regional Director: REYNALDO A. SUAREZ Asst. Regional Director TAN S6268-A0925-A-l The controlling statute is Section 4 of Presi- '' dential Decree No. 1167, which textually reads: SEC. 4. Incentives for Filipino Overse~s Contractors.- A duly regis- tered Filipino contractor w~o is engaged or will be engaged in an overseas cons- truction project, shall be granted the � incentives provided in Subsections (a ) and (b), or at his option, to the inceritive provided in Su bse ction (c) .of this Section: a) Tax credit-(1) Taxes paid by the Fil:lpino contractor 'to fore ign governments on income derived fr om ov~rs ea s projects subj e ct, rowever, to the limitation of Section 30 (c ) (4) (a) and ;(.b ) of the Na tionaJ. Internal Revenue � code; 34 4

DECISION - CTA CASE NO. 3307- - 7- (2) Tax credit f or t axes with- held on "interest payments o n f oreign loans incurred directly and exclusive- ly for overseas projects : Provided, That ( i) no such credit in enj oyed by the lender -r emittee in his country; and (ii) the overseas contractor has assumed ihe liability for payment of the tax due from the lender~remittee; and (3) Tax credit equivalent to the sales or �oompen:sating taxes paid on domestically ~anufactured or produced materials o products which are pur- chased by the overseas contractor and actually exported by him to be used in h is overseas projects : Provided, rhat the sales t axes are indicated as a separate item on t he sales invoice of the manufacturer or pr oducer . � b) Deduction from gross overseas income.~ (1) Accelerated depreciation - At the opt i ori of the Filipino construction contracto~ and in accordance wi th the procedures established by the Bureau of Internal Revenue fi xed assets actually used i n overseas operations may be: (i) depreciated to the extent of not mote than t wice as fast as the normal rate of depr ec i at i on if e xpected life thereof is ten (10) years or l ess; or {ii) depreciated over any number of yars , between five (5) years and ex- pected life if the latter is more than ten {10) ye ars . Such ~epreciat i on cost as may be chosen by t he said taxpayer shall be allowed as a deduct i on from taxable income: Provided , That he noti- fies the Bureau of Internal Revenue at the beginning of the depreciation period which depreciation rate allowed by this Section will be. used by him ; {2) Additional deduction - of labor training "expenses- . An additional deduc tion fr om t axab le income of one - half of the value 'O f l abor training expenses i ncurred for improving t h e

DECISION - CTA CASE NO. 3307 - 8- performance and efficiency of un- skilled labor: Provided, That such training program is duly approved by the Department of Labor: Provided, That such deduction shall not exceed ten percent {10 %) of the . direct labor wage; and (3) Net operating loss carry- over- A ~et operating loss incur r ed on overseas projects in any year of operation may be carried over as a deduction from taxable income earned fr om overseas. projects, within the three (3) years immediately following the year of such loss : Provided, That the loss carried over is computed net of incentives herein granted: Provided fur the r , That no impairment of loans or guarantees extended by the Philippine Government oi any of its instr~mentalities has occurred or will occur as a result of overseas construction operations dur i ng the taxable year. The net operating loss shall be computed in accordance with the ~rocedures established by the Bureau of Internal Revenue and shall be allowed only for purposes of income declaration i n the Philippines. c) In lieu of the i ncome tax payable as a r~sult of the application of the incentives provided for in the preceding subsections, the Fi l ipino contr actor may elect to pay a one and one-half percent (1~%) .tax on his over- seas gross income. ~ We are at a loss to see how Assistant Regional Director Reynaldo A. Suarez deduced from Sec t ion 4 of Presidential Decree No. 1167 that petitioner Constructi on Resources of Asia, Inc. is ~xempt from the withholding tax on interest. payments on its foreign loan. Adve rting to ~he ter ms of the law, it is very plain and apparent that a duly registe red ,. 34G

DECISION - CTA CASE NO . 3307 - 9- Filipino contractor who is engaged or will be engaged i n an overseas construction project, ' a s an incentive , i s entitled only, insofar as taxes withheld on interest payments on foreign l oans incurred directly and ex- clusively for overseas projects are ccincerned, to claim a t ax credi t for such taxes, if no such credit is enjoyed by the lender-remi'ttee in his country and the overseas contr actor has as s umed the li ability for payment of the tax due from the lender-remittee. The presidential decree employs t he term - "Tax credit for t axes withheld on interest payments em foreign loans incurred dire~tly and exclusively for overseas projects" - without .more. Absolutely nothing there said speaks of exemption f rom the withholding tax on interest payments on foreign loans. The law is spe- cific and maridatory . It _merely calls for appli cation .. as thus worded. We are not to indulge in statutory construction because there is no room for interpretation. And applying the law as it i s wri~ten, petitioner is clearly not exempt from payment of the withholding tax on interest payments on its foreign loan. The rule is well-established t hat one who claims to be exempt from the payment of a particular tax must do so under 6lear and unmistakable terms found in the statute. Tax exemptions are ' strictly const.rued against

DECISION - CTA CASE NO. 33 07 - 10 - the taxpayer, they being highly disfavored and may almos t be said "to be odiou s to the 1aw". He who claims an exemption must be able to point some posi- tive provision of law creating the right~ it cannot be allowed to exist upon a mere vague ' implicat ion or inference. (Manila Eletric Company vs. Vera, L-2 9987 & L-2 384 7 1 October 2~, 1975, 67 SCRA 35.) The right of taxation will not be held to have been surrendered unless the intention to sur render is manifested by words too plain to be mistaken (Ohio Life Insurance & Trust Co. vs. Debolt, 60 Howard, 416) .ctnd too categorical to be misinterpreted (Reagan vs. Commis- sioner of Internal ijevenue, L-26379, December 27, 1969, 30 SCRA 968) '� for the state cannot strip itself of the most essential power of taxation by doubtful words; it can no t by ~mbiguous language, be deprived of this .� highest attribute of sovereignty (Erie Railway Co. vs. CommonwelatA of Pennsylvania, 21 Wallace, 492, 499) �. So, when exemption is claimed, i~must be shown indubi- tably to exist, for every presumption is against it, and a well-founded doubt is fatal to the claim. (Asiatic Petro leum Co. vs. Llanes, 49 Phil. 466; ~anila Electric Co mpany vs. Vera, supra.) Petition~r avers that it "is not claiming out- right exemption, thus it applied for such exemption under BIR Form No. 04-B duly accomplished, Exhibit D'

DECISION - CTA CASE NO. 3307 - 11 - for petitioner. Bu t the same was denied by respondent Commissioner. " (p. 8 4 , CTA records .) . On the other hand, respondent contends that s i nce petitioner chose to avail of the incentive of tax credit and deduction from gross overseas income (las t sertEnce of paragraph v, Petition for Review)~ this option does not me an outright exemption a.s claimed by p et itioner . Implicit from the law is that the overseas contractor must first pay the withhold ing tax-at-source. Then, what- ever amount has be en paid by petitioner as withholdi ng tax-at-source, may be claimed as deductiQn from its overseas gross income. Unfortunately, however, peti- tioner did not pay its withholding ta x- ~t-~ource liab ility in the belief t hat it is outr ig htly exempt. (pp. 71-72, CTA records.) We do n0t� see in Section 4 of P re sidenti al Deere~ No. 116 7 , the l a w involved, supra, what may be con- sidered as ,"plain and unambiguou s terms" or " words too plain to be mistaken and too:...categor ical to be mi sinterprete d" declaring petitioner exempt from the withholding tax on its gross receipts from its foreign loan, or exempt from the withholding tax on its in- . t erest payments on foreign loans. (p. 84, CTA records.) I n fact, we c a nnot even infer or imply, contrary to the principles enumerated above, that there i s such an exe mp tion from taxation. 34 ~

DECISION - CTA CASE NO. 3307 - 12 - Note that what Section 4 of the law grants to a duly r egis tered Filipino contractdt engaged in overseas construction project are "incentive " (not tax exemptions} .provided in Subs:ctions (a} .and (b)'� or at his option, to the "incentive " ~rovided in Subsection (c) �. Subsection (a} .al l ows (1) .tax credit for taxes pa id by the Filipino contr actor to f oreign governments on income derived from overseas projects; (2} .tax credit for taxes withheld on interest payments on foreig n loans incurred directly and e xclusively for overseas projects; and (3) .tax credit:. equivalen t to the sales or com~ensa ting taxes paid on domestically manufactured or produced materials or products which are purchased by the overseas contractor and actually exported by him to be used in his overseas proilects. All of these� however are subject to the limitations or restrictions mentioned in the law. Su bsection (b)~ which is not pertinent hereto, allows the deduction from gross over seas income of (11 _accelerated depre- ciation; (2) _additional labor train i ng expenses; and (3) _n et operating loss carry-over. Or at the option of the Filipino overseas contractor, in lieu of the income tax payable as a result of the applic ation of the ince n tiv'es granted above, he may elect., as pro- vided in Subsection (c)~ to ' pay a one and one-half percent (1~%) tax on his overseas gross income. No 30

DECISION - CTA CASE NO . 3307 13 - legal justif ication, therefor e, can be found f or exempting petitioner Construction Re sources of Asia, Inc. from payment of the withholding tax-at- s ource in t he amount of ~300 ,17 0 .46 due on interest payments on foreign loans remitted abroad for the fourth quarter of 1977 and first and second quarte rs of 1978. Assuming that petitioner is under obligation to withhold, it next a rgue s that it is not covered by the withholding tax-at~source provision of the Tax Code on interest payments on its foreign#loan because actual payment of interest was made allegedly only on June 5, 1978. Thus, it had nothing yet to withhold in 1977 . The liability of petitioner to withhold and pay the income tcix withheld-at-source from interests due to a non-resident foreign corporation attaches at the time of the � accrual of said interests and not at the time of actual payment or remittdnce thereof. (BI R Ruling No. 71-003.) . As aptly stated by respondent Commissioner of Internal Revenue (p. 73, CTA records):. Payment of the withholding tax-at- source due from a foreign lender attaches upon accrual of the interest to be remit- ted abroad. The interest accrues at the time it � is earned. At such time, the tax on the interest attaches and the con- tractor is obligated to' remit the tax to the government since it already and pro- perly belongs to the government. Indeed, there is no reason why the overseas r 351 �

DECISION - CTA CA~E NO. 3307 - 14 - contractor 6 petitioner in t his case, who is based i n t he Philipp ines ,- should wait unti l it rerni ts th~r i n- . terest due the foreign lender before paying the withholding tax - at-~ource. Otherwise , the government wil ,l be at the mercy of the taxpayer who may take time i n remitting the interest to the f oreign lender . � � Corning to t he question of whe ther petitioner is .liable ". fo r ..docurnenta.ry . and sc.ience stamp t axes in the amount of P89,700.00, Construction Resources of Asia, Inc. alleges that it "is still unable up to the present to issue the corresponding cer t ificate of stocks to its s ockl1olders due to the.difficulty of the transfer of ownership over the capital equip- ment contributed by some stockholders as their cap it.al contribution t o pe ti tioner corporation . " (par . VII , Petition for Review, pp. 4-S., CTA records. ) " In support thereof, petit ioner presented a certif ication . ' dated October 23, 1982 of petitioner 's acting secretary marked as Exhibit "G" (p. 36, CTA records)~ which reads: "This is to certify that due to the difficulty of t he transfer of oweer- ship over t he capital equipment con- tribu ted by some stockholders on the capital position of petitioner corpo- rati on compl icated by subsequent problems on the use of said equ i pment, the corresponding certificate of st6ck in favo~ of stockholders concerned has as of now remain pending so much so that the claims for documentary atid science stamps tax in the amount of P89,700.00 by r espondent commiss ioner, has yet no f ~ct ual or legal basis." 35 2

DECISION - CTA CASE NO. 3307 - 15 - A documentary stamp tax � is in th~ nature of an excise. It is not imposed upon the ~usiness tran- sacted but iS an excise upon the privilege , oppor- tunity or facility offered at exchanges for the transaction of the business. It is an excise upon the facilities used in the transaction of the business separate and apart from th'e business itself. With respect to stock certificates, it is levied upol) th~ privilege of issuing them; not on__the n: ney or.J?�9,- perty re ceive d by tl}e ~ssuing company for _such c er ti- fic ates. Neither is it - imposed upon the ~hares of stock . As Justice Learned Hand pointed out in one case, a documentary fotamp tax is levied on the document and not on the property whic h it described. (Commi s- sioner of I n ternal Revenue vs. Heald Lumber, L-16340, Feb. 29, 1964 -, 10 SCRA 372, citing Du Pont vs. U.S., ,' 300 u.s. 150; Nicol vs. Ames, 173 u.s. 509; Empire Trust Co. vs. Joey, 103 F. 2d. 430.) The documentary stamp tax is"",due and payab le at the time the transaction is had or accomplished, i.e., at the time of the issuance of the document. (Sec. 212, now S c. 224, National Internal Revenue Code.) A document is not deemed issued unless and until it is delivered. � Delivery is esse ntial to constitu t e an issue of bonds or certificate~. (Sec. 4, Regs. No. 26; Ph~lipp in e Consolidated Coconut In dustries vs. Com- missione r of Internal Revenue, L-25424, Marc h 8, 1976, 35J

DECISION - CTA CASE NO. 3307 - .16 - 70 SCRA 22.) While in a memorandum report dat!ed May 3, 1979 for the Commissioner of Internal Revenue (pp. 60-61 , BIR records)~ respondent's examiners stated that peti- tioner ' ~ "paid in capital of Pl7,880,0UO.OO which was originally issued was not subjected to documentary and science stamp (uAder Sec . 212 old Code)~ and this "was fully taken up in the conference with t he Vice- President, Accountant and Member of the Board of Directors and they are willing to pay the assessment on Doc. & Science stamp. upon receipt of bhe assessment notice", there is absolutely nothing in the records which will show or indicate that the stock cer tificates on the paid-in capital of ~17 ,880 ,000.00 were issue d or delivered, actually or construc t ively, to the stockholders,� granting that such paid-in capital was ~riginally issued". In fact, as required, no perti- nent document or evidence establishing or indicating issuance or d~livery of the stock" certificates was submitted by the BIR examiners to support their claim. Considering that Exhibit "G" of petitioner was not disputed or contxoverted by respondent, the bare state- ment of respondent's examiners that the paid-in capital � of ~17, 88 0, 0O�O. 00 wl:-.ich was origin ally issued Ha s not subjected to documentary and �science stamp taxes, un.accompanied by adequate evidence, does not const.i tl..fu 354 )

DECISION - CTA CASE NO . 3307 - 17 - sufficient basis to s ~ s tain the imposition of documentary and science stamp taxes in the amount of ~ 8 9,700 . 00 on pe titio ner. It is true t hat an assess- ment is presumed correct, but the asses sment must be based on actual fac ts. In the case under consider- a tion , there are no substant i al facts to support the assessment o f P8 9,700~oo as documentary and science s t amp taxes for the year 1977. (Collector of Internal Revenue vs. Benipayo , L-13656, January 31, 1962, 4 SCRA 182 . ) Accordingly, petitioner Construc tion~Resources of Asia, Inc. is hereby ordered to p ay to respondent Commissioner of In te rnal Revenue the amount of ~299 , 720.46 as deficiency withholding tax-at-source for the fourth quarter of 19 77 and first and second quarters of 1 9 78 plus 5% surcharge and 14% annual interest thereon from January 25, 1980 to July 31, 1980 and 20% . annual interest from August 1, 1 980 to the date of full payment. pursuant.,-..to Section 51 (e) (2) (3) of the National Internal Revenue Code of 1977, as amended, provided that the maximum amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three ye a rs. �The compromise penalties suggested by respondent. in his assessment. cannot be imposed as it does not appe ar. that pet.i tioner agreed to theii. 355

I� DECISION - CTA CASE NO . 33 0 7 - 18 - imposition. The rule has been es t abli shed that compromise penalty cannot be imposed or c ollec ted without t he agreement and c onformity of the taxpayer . (Wonder Mechanical Engineering Corporation vs. Court of Tax Appeals, L-22805 & 27858, June 30, 19 75, 64 SCRA 555.) WHEREFORE, the decision appealed from is modi fied as indicated in the above opinion of the Court. With costs . SO ORDERED. Quezon City, Me tr o Manila, November l5, 1983 . WE CONCUR: 35b