CTA Case No. 2917 (Decision)

REPUBLXC OF THE PHXLXPPXNEB COURT OF TAX APPEALS QUEZON CXTV RICARDO T. SALAS, DOING BUSINESS UNDER THE NAME "RIVER QUEEN HOTEL", F'F.~t.i. t.i.oner� , -- ver�� sus -�� C.T.A. CASE NO. 2917 COMMISSIONER OF INTERNAL REVENUE, R.::~s ponden t . --� - - - - - >: DE C I I DN This is a claim �for refund o'f the amount of ...... P73,67 2 .05 r� epr� esenting ~ ater�� er�' s ta>: paid by pet.i. tioner� F~.i.car� do T. Sal as, doing business under the name "River�� Queen Hotel", covering the period from the 4th quarter of 1975 to the 4th quarter of 19T7. There is no dispute on the facts of the case. As SUITHlli::\ r� .i. Zed by respondent Co mmis sione r of Internal Revenue: Petitioner is the owner and operator of River Queen Hotel, Iloilo City including a restaurant and bar therein.

DECISION CTA CASE NO. 2917 - 2- During the period from the 4th quarter of 1975 to the 4th quarter of 1977~ petitioner paid a total a mount of P73,672.05 as caterer's tax on the gross receipts from the sale of food and beverages in the hotel's restaurant and bar. On December 1, 1977, petitioner filed with respondent a c l aim for refund of the aforesaid a ll eging as basis therefor that Section 191 - A of the applicable Tax Code was vetoed by the Pr� eside n t and~ hence~ i t did not become a l aw and does not form part of the Tax Code. As respondent did not take action of the afor�� p"~t.:1tr"d c l .:d.m, pet.i.ticmer filed a petition for n~vi.evJ befon? this Honorable Court on January 6, .1.978. The issue is whether Section 191-A of the Tax Code become a law and formed part of sai d Code in view of the presidential veto. A sim.i.l ar� issue has already been settled recent 1y by the Supreme Court in Coa�i ss i oner of Internal Revenue vs. Hon. Court of Tax Appeals and Manila Golf & Country Club, Inc. , G.R. No. L-47421, Nay 14 .� 1 �.~�.~o ~ \.'Jherein the High Tr ibunal unequivocally ruled that the presi dential veto

DECISION CTA CASE NO. 2917 - 3- referred merely to the inclusion of hotels, motels and resthouses in the 20% caterer's tax bracket but not to the whole Section 191--A o�f the then applicable National Internal Revenue Code. In ;~rriving at this r�u l ing, the Supreme Court made observations, among others, as follows: As mention e d earlier, We have a 1 t�� e;~c:fy ru 1 e d that the pr�esidentia 1 veto referred merely to the inclusion of hotels, motel s and resthouses in the 20% caterer's tax bracket but not to the whole section. But, as mentioned earlier a 1 so, the CTA opined that the President could not veto words or phrases in a bill but only a n entire item. Obviously, what the CTA meant by "item" was an entire ~;ecticm. We do not agree. But even assuming .i.t to be so , it would also be to petitioner's favor. The ineffectual veto by the President rendered the whole S>.,>ction 191-A as not having been vetoed a t all and it, therefore, became law as an unconsti tu tiona 1 veto has no effect whatsoever. (See Bolinao Electronics Cor p � v � Va 1 e r i a .� No � L -- 2 Cl 7 4 0 .� ~1 u n e .3f} , 1964, 11 SCRA 486). Hm�Jeve r, We agree with then Solicitor General Estelito Mendoza and his associates that inclusion of hotels, motel s and resthouses in the 20% ca ter� er-� � s tax brae ket arro~ "i terns" in themselves within the rn~aning of Sec. 20(3), A1~t. VI of the 1935 Constitution which, t.herefc)re, the Pr�esiden t has the power to veto. An "i tern" in a revenue bill does not refer to an entire section imposing a par-ticular� kind o �f ta>:, bL1t

DECISION CTA CASE NO. 2917 - 4- rather to the subject of the tax and the t;::,>: rate. In the portion of a revenue bill which actually imposes a tax~ a section identifies the tax and enumerates the persons liable therefor with the c:or�r-e!5pond.i.ng ta:�: r�ate. To construe the v1ord "i tf::~m" a!:; r�efen��� .ing to the whole section would tie the President's hand in c hoosi ng either to approve the whole section at the expense of also approving o' pt�. ovi~;.ion ther�ein 111hic:h he deems unacceptable ot�� veto the l~nt.ire section at the expense of foregoing the collection of the kind of tax altogether. The evi l which was soug ht to be prevented in gi v ing the President the power to di sapprove items in a revenue bill would be perpetrated rendering that power inutile (See Co11t11tonwealth ex rei. Elkin v. Barnett, 199 Pa. 161, 55 LRA 8 G2 C.t'.=>O .t ..7). ACCORDINGLY, the petition for review in the above-entitled case is hereby dismissed with costs against petitioner. SO ORDERED. Quezon City~ Metro Manila~ May 29~ 1990. AMANTE Presidi

DECISION CTA CASE NO. 2917 - 5- CERTXFXCATXON I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. Pres idi ] Judge Court of Tax Appeals