CTA Case No. 2905 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SULO- DOBBS FOOD SERVICES, C.T.A. CASE NO. 2905 Petitioner� , \ ~\ -- ver s u s -�� COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - X DEC I I0N Thi s c ase i s a c laim �for� r�e"fund o �f allf..?ged erroneou s 1 y paid ~aterer� ' s ta :-: as impos ed under Section 191 - A o �f the Ta :-: Code "for� the period in question. Petiti o ner is in the bus iness of catering "for international airlines by furnishing �food and beverages to a irc rafts that land at the Manila International Airport. For the period from the 3 rd quarter of 1975 to the 2nd quarter of 1977, inclus ive, petitioner declared for tax purposes all its gross receipts from the sale of food and beverages and paid the corresponding caterer's tax aggregating P208,974.36 purs uant to Section 191 - A of the Ta>: Code. Relying in this Court's decision in the Hanila Golf & Country Club v. CowHnissioner of Inten,al 200

DECISION CTA CASE NO. 2905 Revenue, CTA C~ s � No . 2 630, M~rch 30, 1977~ holding that Section 191. -A of the Ta>: Code was vetoed by the President. of the Phil i pp.i.nes and that it. did not become a law nor formed part of the Tax Code~ petitioner formally claimed for the r-efund t1f P208~874. 3 6 on September 2~ 1.977 with the Office of the Respondent Commissioner- and in or-der to to 11 the running of the two- year prescriptive period provided .in Section 3 06 of the Ta >: Code filed the ins tant pe tition. Be that a s it may~ this case comes; analogous in fact s ancl identic a 1 in i ssue with the cases brought on appea 1 t <:J the Supr-eme Court. And the issue now raised has since been adjudged in the case s ~ Co�wtissioner of Internal Revenue v. Hanila Hotel Corporation, et a 1 � .� G.R . No. September 26 , 1989 and Co��issioner of Internal Revenue v. CTA and Hanila Golf & Country Club, G.R. No. L- 474 2 1 .� Nay 14, 1 �.~'lO. Disposing of the que s tion in controver s y~ the Supreme Court set a s ide the appealed decision and ruled that the presidential veto referred merely to the inclusion of hotel s ~ motels and rest houses in the 20/. caterer' s ta x bracket but not to the whole Section 191 - A of the then applicable National Internal 2U u

DECISION CTA CASE NO. 2905 Revenue Code. In arriving at t h is ru l i n g~ the Supreme Court had this observation~ inter alia~ th<:d:. : As mentioned earlier~ We have alr�r.�~ady r� ul~:;.�d thc:�~t the pr� esidenti.:~l vet.n referred merely tn the inclusinn of hotels~ motels and rest.houses in the 20% caterer's tax bracket but nnt to the whole section. But.~ as mentioned earlier al~;o~ thr.? CTA Clpine!::; that the Pr� es-,ident could not veto words or phrases in a bill but only an entire item. Obviously~ wh at. the CTA nH:? ant by "item" wa s an ent.i.t��e r:;:,�,.ct.icm. We do n<::Jt: aqr�ee. But evE!n assu ming it. t.o be so~ it. would alsn be to petitioner's favor. The ineffectual veto by the President rendered the whole Section .1.9.1. ���(.~ .::~!:::. not. having beE�!n vetoed at al l r.:m d it:~ t. her�e�fotr� e~ became law as an uncon s titutional veto has no effect whats oever. (See Bolinao Electronics Cor p � v � Va 1 e r i a .� No � 1.. -2 0 7 4 0 .� ,7 u n e .3 0 ~ 1964, 11 SCRA 486.1 However �~ We i~q t�� ~?e ~�Ji t:h thr.?n Soli c itor General Estelito Mendoza and hi s associates that inclusion of hotel s ~ mot e ls and rest houses in the 20% c:atpr� pr�' !::; t.i::n: br�acket r.~r�e "it. E~ ms" in thPmsE?.lves within the meaning of Sec. 20 (3) ~ Ar"L. VI o �f t. h!:�~ .1.9 :::.~:.\ Cons.; t..i.tution which~ t:.hr.;> t��r.;>�for�p~ thE~ Pr�t7!sident h.':ls the t o pow &~r.. Vf.�~to. An "i t..::~m" in a n?.venue bill does not refer to an entire section .:i.rnpo!s inq ,,, par� ticulr.~r� kind o�f tr.:n: ~ but rather to the subject of thf.? tax and tax r�c:~t: e. In the por� t.:i.on Df a r�ev.:?nue bill ~o-Jh:i.c:h r.~ct:. ually :i.mposr.;>s "'' ta :-:~ '"' r..;;ect.i.r.:m id�?.ntifies the tax and enumerates the p.:?r�scms l.i.ab 1e t .hel"'efor� with the cnr� t�� r,~ spon d.i.ng tiiil.N r� a�t:.!?. To c:onstn.<e thE~ ~o-JcJr� d "item" as n;>fer-r-.i.nq to the whole section would tie the President's hand in choosing e.ithel"' to appl"'ove the whole section at the expense of a l so appt"'oving ,, pr�ov.i.s.ion ther�ein 1-'Jh.ich he deems unacceptab 1f.? or� veto the .:mt.i. r�e sec: tion at the expense of foreqoing the c:ollec:t.i.on of the kind of tax altoqethel"'. The evi l which was sought to be pt"'esented

DECISION - CTA CASE NO. 2905 -�- 4 ..... in giving the P~esident the power to disapprove items in a revenue bill would be pe~petrated rendering that power inutile. (See Co�~onwealth ex rei. Elkin v. Barnett , 199 Pa. 161, 55 LRA 882 {1'.':l0.1.}.) It c:cHne~::; clear.. therefor�e that thE' t.a>:es paid by the pet .it.i.mH?r� as c:aten;,~r- 's t.a>: for� the per� iod :i.n quest.ic.1n wen?. c:ollec:t.ecl in accor-cl<mce with la~'J on the m<~tte1�� . WHEREFORE, petition is hereby dismissed without pronouncement as to costs. SO ORDERED. Quezon City~ Metro Manila~ August 31~ 1990. I CONCUR: ,Judge CERTIFICATION I hereby c:e~t.ify that this decision was reached afte~ due consultation between the membe~s of the Cou~t of Tax Appeals in accordance with Section 13~ Arti c le VIII of the ROAQUIN ,Juci<Je Appeals 2 Uu