CTA Case No. 2899 (Decision)

REPUBLIC OF THE PHILIPPIMIS COURT OF TAX APPEALS QUEZOM CITY PLANTERS PRODUCTS, INC., C.T.A. CASE NO. 2899 Petitioner~ - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. H- - - - - DE C I I 0 N Th.i s appea 1 invo 1ves petitioner � s c 1aim for refund of erroneously paid caterer's tax and fixed tax for the period 1975 and 1977. F'eti tioner is a domestic corporation engaged in the business of manufacturing, importing and selling fertilizers and agricultural chemicals. It operates a cafeteria in its main office in Makati, Metro Manila. (Admitted in respondent's a nswer~ par. 1~ p. 24, CTA rec.) For the period beginning November 5, 1975 LIP to July 15, 1977, petitioner paid fixed and caterer's taxes, pursuant to Sections 182 and 191- A of the Old Ta>t Code, totalling P8,021.97 itemized as follows: Date of Kind of Q...!-~.J'i9....!.. B.f.!JQ_q_o_t ~..1~h.'!.. E.~YJJ.u;m t.. I_~x Nov. 5~ 1975 Fixed F5249866 p 50.00 A Oct. 1"L' ' 1976 Catet-er � s 3 137951 1,982.46 B 98

DECISION CTA CASE NO. 2899 - 2- Jan . 14, 1977 Fi xed 0731955 50.00 c Jan. 14, 1977 Caterer's 3222320 2,044.74 D Apr. 1<......, 1977 Caterer's 08409984 1,908.11 E July 15, 1977 Caterer's 10724184 E!. ~9!3._~_�.J:!Q_ F e,~=~S?,~-1 ._,'%�, Petitioner paid the 3% caterer's tax based on its gross receipts from the sale of food and beverages pursuant to Section 191-A. Section 191-A provides for the imposition of a 3% caterer's tax on gross receipts of proprietors or operators of restaurants, refreshments parlors and other eating places inc luding clubs and caterers. In the case of Hani la Golf a Country Club v. Coaaissioner of Internal Re~�enue, C.T.A. Case No. 2630, Ma r ch 30, 1977, the Court of Tax Appeals ruled in favor of petitioner stating that the provision imposing the 3% caterer's tax uhder Section 191-A has never been enacted into law. Section 42 of the Omnibus Tax Law (Republic Act No. 6110) vJhfch inserted Section 191-A was vetoed by the Pr�esident in his speech to Congress on August 4, 1969. Congress did not override the veto. Hence, it did not form part of our ta:< laws as embodied in the Old Ta :{ Code. Accordingly, the Court ruled in petitioner's favor. Petitioner relying in the CTA deci sion of the Manila Golf case filed the instant petition for 9

DECISION CTA CASE NO. 2899 - 3- review claiming a right to the refund of P8,021.97, representing erroneous! y paid f i:{ed and caterer � s taxes from November 5, 1975 up to July 15, 1977. After an answer has been filed and the issue has been joined the parties wai ved their right to present evidence. Instead they submitted the case for decision. The law on this matter has finally been put to rest �. In the case of Co��issioner of Internal Revenue v. Hanila Hotel Corporation and the Court of Tax Appeals, G.R. No. 83250, September 26, 1989, the Supreme Court, thru Justice Medialdea, stated thus: "The power of the State to impose the 3 'l. caterer 's ta:-: is not � deba tab 1e. The Court of Tax Appeals erred, however, in holding that the ta:-: was abolished as a result of the presidential veto of ?ktgust 4, 1969. It failed to e:-:amine the law then, and up to now, existing on the subject which has always imposed a 3'l. caterer's tax on operators of restaurants. Since the Manila Hotel opera tes restaurants in its premises, it is liable to pay the tax provided in paragraph (1) Section 206 of the Tax Code." In Co�aissioner of Internal Revenue v. Hon. Court of Tax Appeals and Hanila Golf & Country Club, Inc., G.R. No. L-47421, May 14, 1990, again the Supreme Court citing the Manila Golf case held: 100

DECISION CTA CASE NO. 2899 - 4- "As mentioned earlier~ We have already ruled that the presidential veto referred merely to the inclusion of hotels, motels and resthouses in the 20% caterer 's tax bracket but not to the whole section. But~ as mentioned earlier also, the CTA opined that the President cou ld not veto words or phrases in a bill but only an entire item. Obviously~ what the CTA meant by 11 item" was an entire sec tion. We do not agree. But even assuming it to be so, it would also be to petitioner's favor. The ineffectual veto by the President rendered the whole section 191-A as not having been vetoed e>,t all and it, therefore, became law as an unconstitutional veto has no effect whatsoever. (See Bolinao Electronics Corp. v. Valeria, No. L-20740, June 30, 1964, 11 SCRA 486.) However, We agree with then Solicitor General Estelito Mendoza and his associates that inclusion of hotels, motels and resthouses in the 20% caterer's ta x bracket are "items" in themsel ves within the mea ning of Sec. 20(3), Art. VI of the 193 5 Constitution which, thet-efore ~ the President has the power to veto. An 11 item" in a revenue bill does not refer to an entire section imposing a pat- ticul ar kind of ta >: , but rather to the subject of the tax and the ta:-: rate. tn the pot-tion of a revenue bill which actually imposes a tax , a section identifies the ta x and enumerates the persons liable therefor with the cot-responding ta:< rate. To construe the wor�d "item" as referring to the whole section would tie the President's hand in choosing either to approve the whole section at the expense of also approving a provision therein which he deems unacceptable or veto the �entire section at the expense of foregoing the collection of the kind of tax altogether. The evil which was sought to be prevented 10 1

DECISION - CTA CASE NO. 2899 - 5- in giving the president the power to disapprove items in a revenue bill would be perpetrated rendering that power inutile (See Commonwealth ex rel. Elkin v. Barnett, 199 Pa. 161, 55 LRA 882 [1901].)" Following the aforementioned rulings of the Supreme Court, our only function now is to apply as expected the law of the case on the matter. Without a leg to stand on, the claim for refund is hereby denied. WHEREFORE, We find the petition for review without merit and the same is hereby DISMISSED without pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila, 1992. "4t;~ CONS NTE/C. ROAQUIN A socia'te Judge I CONCUR: l!~a. ~ ERNESTO D. ACOSTA Presiding Judge 102

.. DECISION CTA CASE NO. 2899 - 6- CERT I F I CAT I 0 N I hereby certify that this decision was reached after due cons ultation between the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Constitution. ~~� ..-p;.. R.. (2. ~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 103