Commissioner on Internal Revenue V. Court of Tax Appeals Facts In Commissioner of Internal Revenue V.

Manila Hotel Corporation, SC overruled Court of Tax Appeals decision that caterers 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% caterers tax, as provided in Par 1, Sec 206 of the Tax Code. Presently, Manila Golf and Country Club, a non-stock corporation 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, resthouses. 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 WON veto referred to the entire section or merely the 20% tax on gross receipts of operators and proprietors of eating places within hotels, motels and resthouses. Held and Ratio President does not have the power to repeal an existing tax. Therefore, he could not have repealed the 2% caterers tax. CTA agreed with respondent club that president vetoed only a certain part. CTA mentioned that President can veto only an entire item, and not just words. The President intentionally only vetoed a few words in Sec 191-A. Assuming that the veto could not apply to just one provision but all would render the Presidential veto void and still in favor of petitioner. Inclusion of hotels, motels, resthouses in the 20% caterers tax bracket are items. 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.