CTA Case No. 2886

DECISION

.. _ 2 -· pursuant to Section 191-A of the National Internal Revenue Code.

Relying on the r·ecent case of Manila Golf a Cc:•untry Club v. Co••tissioner of Internal Revenue, CTA Case No.

26.30 .~ Narch .30, 1977, v1herein this Court ruled that Section 191-A of the Tax Code was vetoed by the President of the Philippines and that the same did not become a lav1 nor formed part of the Old Tax Code, petitioner on July 6, 1977 filed with the respondent a claim for refund of the aforementioned a mount of P3,273,020.35 representing caterer's ta>:

paid for the period.

In order to toll the period of the statute of limitations it ·filed the ins tant petition for- revievl on July 18, .1977.

The situation obtaining comes analogous in f ac t s and identical in question with the case brought on appeal to the Supreme Court in the Co••i ss i oner of Internal Revenue v. Han i 1 a Golf a Country Club, Inc., G.R. No. L- 47421, May 14, 1990, which disposed of the particLil ar i SSL\1?.

in controversy and unequivocably ruled that the presidential veto referred merely to the inclusion hotels, motels and resthouses in the 20% 2UJ..

•, ..

..... ·-· caterer's tax bracket but not to the whole Section 191-A of the then applicable National Internal Revenue Code.

In arriving at this ruling, the Supreme Court made observations, among others, as follm~s:

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 opines that the President could not veto words or phrases in a bill but only an entire item. Obviously, what the CTA meant by "item" was an entire section.

~.!Je do not agree.

But even assuming it to be so, it would also be to petitioner's favor.

The ineffectua l veto by the President rendered the whole Section 191-A as not having been vetoed at all and it, therefore, became law as an unconstitutional veto has no effect whatsoever.

(See Bolinao Electronics Corp. v. Valeria, No, l.-20740 .• ~7une 30 .• 1964, 11 SCRA 486.)

However, ~.!Je agree with then Solicitor General Estelito Mendoza and his associates that inclusion of hotels, motels and resthouses in the 20% caterer's ta>:

bracket are "items" in themselves within the meaning of Sec.

20(3), Art. VI of the 1935 Constitution which, therefore, the President has the power to veto.

An "i tern" in a revenue bill does not refer to an entire s ection imposing a particular kind of ta>:, but rather to the subject of the tax and tax rate.

In the portion of a revenue bi 11 which ac tua 11 y imposes a ta>:, a section identifies the tax and enumerates the persons liable therefor with the - -

- 4 - corresponding ta>: rate. To construe the word "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 e>:pense of foregoing the collection of the kind of tax altogether. The evil which was sought to be presented in giving the President the power to disapprove items in a revenue bill would be perpetrated rendering that power inutile.

(See Co••anwealth ex rei. Elkin v.

Barnett~ 199 Pa.

161~ 55 LRA 882 [19011.)

WHEREFORE, the petition for review in the above- entitled case is hereby dismissed.

No pronouncement as to costs.

I CONCUR:

CONS Judge 2Uu - -

- 5 -· C:ERTXFXC:ATXON I hereby certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the _sociate Judge C Jrt of Tax Appeals 2 U·.s -