CTA Case No. 2905

DECISION

Revenue, CTA C~ s • No . 2630, 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 306 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- 4742 1 .• Nay 14, 1 ·.~'lO.

Disposing of the ques 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 I .

Revenue Code.

In arriving at t his 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~ what.

the CTA nH:?ant by "item" was an ent.i.t··e r:;:,£,.ct.icm.

We do n<::Jt:

aqr·ee.

But evE!n assuming 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 • V a 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 ~ mote 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 pow &~r.. to Vf.·~to.

An "i t .

.::~m" in a n?.venue bill does not refer to an entire section .:i.rnpo!sinq ,,, 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 1 e 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 1 f.?

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

-·- 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.

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 2Uu ROAQUIN ,Juci<Je Appeals