LALLABBAN, RAYMOND H.

COMMISSIONER OF INTERNAL REVENUE vs. COURT OF TAX APPEALS

G.R. No. L-47421 May14, 1990

FACTS:

In Commissioner of Internal Revenue V. Manila Hotel Corporation, SC overruled

Court of Tax Appeals decision that caterer’s tax under RA 6110 is illegal because it
was vetoed by Former President Marcos and Congress had not taken steps to
override the veto. SC ruled in this case that the law has always imposed a 3%
caterer’s tax, as provided in Par 1, Sec 206 of the Tax Code.

Presently, Manila Golf and Country Club, a non-stock corporation which maintains a
golf course and operates a clubhouse with a lounge, bar and dining room, claims
that it is exempt from the 3% on gross receipts because President Marcos vetoed
Sec 191-A of RA 6110 (Omnibus Tax Law).

President Marcos vetoed Sec 191-A because according to him it would 1) shift the
burden of taxation to the consuming public and 2) restrain the development of
hotels which are essential to the tourist industry. The protestation of the club was
denied by petitioners saying that Sec 42 was not entirely vetoed but merely the
words “hotels, motels, rest houses.” House of Ways and Means concurred with
petitioners stating that veto message only seems to object with certain portions of
191-A and that can be gleaned by the reasons given by the President.

ISSUE:

Whether the veto referred to the entire section or merely the tax on gross receipts of
operators and proprietors of eating places within hotels, motels and rest houses.

RULING:

No. As previously mentioned, the Supreme Court has already ruled that the
presidential veto referred merely to the inclusion of hotels, motels and rest houses in
the 20% caterer's tax bracket but not to the whole section. The ineffectual 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 that has no effect, whatsoever.
Assuming that the vetoed words in Sec 191-A could not apply to just one provision,
all would render the Presidential veto void and still in favor of petitioner.

President has the right to veto such item, that which is subject to tax and tax rate. It
does not refer to an entire section. To construe item as an entire section would be
to tie his hands to either completely agree with a section, he has objections with or
to disagree with an entire section where he only has a portion he disagrees with.

The Court GRANTED the petition and held that Section 191-A of RA No. 6110 is valid
and enforceable and, hence, the Manila Golf & Country Club Inc. is liable for the
amount assessed against it.