GR L 47421; (May, 1990) (Digest)
G.R. No. L-47421 May 14, 1990
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. HON. COURT OF TAX APPEALS and MANILA GOLF & COUNTRY CLUB, INC., respondents.
FACTS
The Commissioner of Internal Revenue assessed Manila Golf & Country Club, Inc. for caterer’s taxes under Section 191-A of Republic Act No. 6110 for the period September 1969 to December 1970. The private respondent, a non-stock corporation operating a clubhouse with dining facilities for its members, protested the assessment. It argued that Section 191-A, which was inserted into the law as Section 42 of House Bill No. 17839, had been entirely vetoed by President Ferdinand E. Marcos in his veto message dated August 4, 1969. The Commissioner denied the protest, contending the veto only applied to the specific inclusion of “hotels, motels, resthouses” in the 20% tax bracket for establishments within their premises, not the entire section.
ISSUE
Whether the presidential veto invalidated the entire Section 191-A of R.A. No. 6110, thereby absolving Manila Golf & Country Club from the caterer’s tax assessment.
RULING
The Supreme Court granted the petition, ruling that Section 191-A remained valid and enforceable. The Court held that the presidential veto did not nullify the entire section but only the specific provision imposing a 20% tax on restaurants within the premises of “hotels, motels, resthouses.” This interpretation aligns with the veto message’s stated concern about burdening the tourism industry. The Court rejected the Court of Tax Appeals’ position that the President could only veto an entire section, not parts thereof. It clarified that an “item” subject to veto in a revenue bill, under the 1935 Constitution, refers to the distinct subject of the tax and its corresponding rate, not necessarily an entire statutory section. The vetoed portion concerning hotels was a separable item. Consequently, the remainder of Section 191-A, including the 3% tax applicable to clubs like the respondent, became law. The Manila Golf Club, operating a dining room and bar, was therefore liable for the assessed caterer’s tax under the valid provisions of Section 191-A.