G.R. No. 83250. September 26, 1989
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. MANILA HOTEL CORPORATION AND THE COURT OF TAX APPEALS, RESPONDENTS.
GRIÑO-AQUINO, J.:
The Commissioner of Internal Revenue seeks a review of the
decision dated February 2, 1988 of the Court of Tax Appeals (CTA) in CTA Case
No. 2991 entitled, “Manila Hotel Corporation vs. Commissioner of Internal
Revenue” ordering the Commissioner “to
refund to the Manila Hotel Corporation the caterer’s tax paid in the
total amount of P2,463,576.30 without interest”
(p. 39, Rollo).
The respondent Manila Hotel Corporation (“Hotel” for
brevity) operates the Manila Hotel and the service and banquet outlets therein. During the period from January 20, 1977 to April 29, 1978, it paid to the petitioner the total sum of
P2,463,576.30 as caterer’s tax on the gross receipts
from the sale of food in its restaurants.
On December 18, 1978, the Hotel filed a claim for refund of that
amount on the ground that Section 191-A of the National Internal Revenue Code
which was the basis for the assessment and collection of the caterer’s tax
against it never became a law because Section 42 of House Bill 17839 (later
R.A. 6110), which inserted in the Tax Code a new Section 191-A imposing a
caterer’s tax of 3% on the gross receipts of restaurant operators, was
allegedly vetoed by President Marcos on August 4, 1969.
The Commissioner of Internal Revenue failed to act on the
petitioner’s claim for refund. On January 20, 1979, before the claim
had prescribed, the Manila Hotel Corporation filed CTA Case No. 2991.
On January 22, 1979,
the Hotel received a letter dated January
11, 1979 from the Commissioner of Internal Revenue denying its claim
for refund.
On February 2, 1988,
the Court of Tax Appeals rendered the assailed decision in favor of the
Hotel. It found that Congress has not
taken any step to override the
presidential veto of the proposed Section 191-A of the National Internal Revenue
Code, hence, Section 191-A did not become a law; there was no legal basis for
collecting the caterer’s tax.
The petitioner, on the
other hand, alleged that the CTA failed to consider the then current and
subsequent legislations on the caterer’s tax.
We have carefully
examined the pleadings and are persuaded that the petition is meritorious. The Manila Hotel may not claim a refund of the caterer’s tax that it paid on January
20, 1977 to April
20, 1978 because the
assessment and collection of the tax were lawful.
The payment of a
caterer’s tax was first required by law when Rep. Act No. 2376 was approved on
June 2, 1959 (55 O.G. 6936) amending Section 191 of the Tax Code by providing that caterers
in addition to keepers of restaurants, refreshment parlors and other eating
places, should pay a 3% tax on their gross receipts.
“SEC. 191. x x x x x x x x
x
“Keepers of restaurants, refreshment parlors and other
eating places, except those inside public market places, and caterers,
shall pay a tax of three per centum of their gross receipts. Keepers of bars and cafes where wines or
liquors are served shall pay a tax of seven per centum of their gross
receipts: Provided, however,
That two sets of sales or commercial invoices or receipts serially numbered in duplicate shall be separately prepared and
issued, one for each sale of food or refreshment served and another for each
sale of wine or liquor served, the originals of which shall be issued to the
purchaser or customer. Where such establishments are maintained
within the premises or compound of a race track or jai-alai or are accessible
to patrons of such race track or jai-alai by means of a connecting door or
passage, the keepers of such establishments shall pay a tax of twenty per
centum of their gross receipts.
Where the establishment is maintained within the premises of a cabaret or night club, or is
accessible to patrons thereof by means of a connecting door or passage, the
keeper of the establishment shall pay a tax of ten per centum of the
gross receipts.”
In 1969, Congress passed
House Bill No. 17839, Section 48 of which provided as follows:
“Sec. 48. A new section is hereby inserted between
sections one hundred and ninety-one and one hundred ninety-two, to be known as
section one hundred and ninety-one-A which shall read as follows:
‘Sec. 191-A. Caterer. A
caterer’s tax is hereby imposed as follows:
(1) On proprietors or operators of restaurants, refreshment
parlors and other eating places,
including clubs, and caterers, three per cent of their gross receipts.
(2) On proprietors or operators of restaurants, bars, cafes and
other eating places, including clubs, where distilled spirits, fermented
liquors, or wines are served, three per cent of their gross receipts from sale
of food or refreshments and seven per cent of their gross receipts from sale of distilled spirits, fermented liquors or wines. Two sets of commercial invoices or receipts serially numbered in
duplicate shall be separately prepared
and issued, one for sale of refreshments served, and another for each
sale of distilled spirits, fermented liquors or wines served, the originals of
the invoices or receipts to be issued to the purchaser or customer.
(3) On proprietors
or operators of restaurants; refreshment parlors, bars, cafes and other eating
places which are
maintained within the premises or compound of a hotel, motel, resthouse, cockpit,
race track, jai-alai cabaret, night or day club by means of a connecting door
or passage twenty per rent of their gross receipts.’
“Where the establishments are operated or maintained by
clubs of any kind or nature
(irrespective of the disposition of their net income and whether or not they
cater exclusively to members or their guests) the
keepers of the establishments shall pay the corresponding tax at the rate fixed
above.” (pp.
33-34, Rollo.)
In the consolidated tax bill bearing the same number H.B. 17839, Section 48 was renumbered as Section
42.
On August 4, 1969,
the President of the Philippines
sent the following veto message (Exhs. E, E-1),
insofar as Sec. 42 is concerned, to the
House of Representatives where the
bill originated:
MALACAÑANG
Manila
August
4, 1969
“Gentlemen of the House of Representatives:
“I have the honor to inform you
that I have this day
signed H.B. No. 17839, entitled:
‘AN ACT
AMENDING CERTAIN
PROVISIONS OF THE NATIONAL INTERNAL
REVENUE CODE,
AS AMENDED’
“Pursuant to the provisions of Section 20-(3), Article VI,
of the Constitution, however, I
have vetoed the
following items on this bill:
“x x
x x
x x x x x
p. 44, SEC. 42.
Inserting a new Section
191-A which imposes caterer’s tax of three percent of the gross receipts of proprietors or operators of
restaurants, refreshment parlors and other eating places; three percent of
gross receipts from sale of food or refreshment and seven percent on gross receipts from the sale of
distilled spirits, fermented liquors or wines, on proprietors or operators of
restaurants, bars, cafes and other eating places, including clubs, where distilled
spirits, fermented liquors, or wines are served; and twenty percent of gross
receipts on proprietor or operators of restaurants,
refreshment parlors, bars, cafes and other eating places maintained within the
premises or compound of a hotel, motel, resthouse,
cockpit, race track, jai?alai, cabaret, night or day club, or which are
accessible to patrons of said establishments by means of a connecting door or
passage.
‘The burden of taxation will be shifted to the consuming public.
‘The development of hotels,
essential to our tourist industry, may be restrained considering that a big
portion of hotel earnings comes from food sale.
x x x.’
“This bill, H.[B.] No. 17839, has become Republic Act No. 6110.
“Respectfully,
“(SGD.) FERDINAND E. MARCOS
(pp. 35-36, Rollo.)
Apparently, Congress understood the presidential veto to have
referred only to the higher caterer’s tax (20%) on hotels, motels
and resthouses provided in paragraph (3), Section
191-A of the Tax Code, for when H.B. 17839 was enacted into law (Rep. Act No.
6110) and published in Volume 66 of the Official Gazette issue of May 4, 1970,
pp. 4505, 4531, Section 191-A was there
in its entirety, except the words “hotel, motel and resthouse” which were struck off from paragraph (3) of
Section 191-A. Thus, Section 191-A of
Rep. Act No. 6110 provides as follows:
“SEC. 191-A. Caterers. A
caterer’s tax is hereby imposed as follows:
“(1) On proprietors or operators of restaurants, refreshment
parlors and other eating places including clubs, and caterers, three per cent
of their gross receipts;
“(2) On proprietors
or operators of restaurants,
bars, cafes and other eating places, including clubs, where distilled spirits,
fermented liquors, or wines are served, three per cent of their gross receipts
from sale of food or refreshments and seven per cent of their gross receipts
from sale of distilled spirits, fermented liquors or wines. Two sets of commercial invoices or receipts
serially numbered in duplicate shall be separately prepared and issued, one for
each sale of food or refreshment served and another for each sale of distilled
spirits, fermented liquors or wines served, the originals of the invoices or
receipts to be issued to the purchaser or customer.
“(3) On proprietors
or operators of restaurants, refreshment parlors, bars, cafes and other eating
places which are maintained within the premises or compound of a cockpit, race
track, jai-alai, cabaret, night or day club or which are accessible to patrons
of such cockpit, race track, jai-alai, cabaret, night or day club by means of a
connecting door or passage, twenty per cent of their gross receipts.
“Where the establishments enumerated above are operated or
maintained by clubs of
any kind or nature (irrespective of the disposition of their net income and
whether or not they cater exclusively to members or their guests) the keepers
of the establishments shall pay the corresponding tax at the rates fixed
above.”
P.D. 1158, otherwise known as the National Internal Revenue Code
of 1977 which was approved on June 3, 1977 (73 O.G. 9093) also
provided for the caterer’s tax in Section 206 thereof, as follows:
“SEC. 206. Caterers. – A
caterer’s tax is hereby imposed as follows:
“(1) On proprietors or operators of restaurants, refreshment
parlors and other eating places, including clubs and caterers, three per cent
of their gross receipts;
“(2) On proprietors or operators of restaurants, bars, cafes and
other eating places, including clubs, where distilled spirits, fermented
liquors or wines are served, three per cent of their gross receipts from sale
of food or refreshments and seven per cent of their gross receipts from sale of
distilled spirits, fermented liquors or wines.
Two sets of commercial invoices or receipts serially numbered in
duplicate shall be separately prepared and issued, one for each sale of food or
refreshment served and another for each sale of distilled spirits, fermented
liquors or wines served, the originals of the invoices or receipts to be issued
to the purchaser or customer;
“(3) On the proprietors or operators of restaurants,
refreshment parlors, bars, cafes and other eating places which are maintained
within the premises or compound of a cockpit, race track, jai-alai, cabaret,
night or day club or which are accessible to patrons of such cockpit, race
track, jai-alai, cabaret, night or day club by means of a connecting door or
passage, twenty per cent of their gross receipts.
“Where the establishments enumerated above are operated or maintained by clubs of any kind or
nature (irrespective of the disposition of their net income and whether or not
they cater exclusively to members or their guests), the keepers of the
establishments shall pay the corresponding tax at the
rates fixed above.”
On February 8, 1978,
the caterer’s tax in Section 206 of the Tax Code was amended by P.D. 1299 which imposed a 10% caterers tax on operators of restaurants inside a cockpit, 12% on those who operate inside a cabaret
or club, and 20% on those who operate inside a jai-alai or race track, as
follows:
“SEC. 206. Caterers.
– A caterer’s tax is hereby imposed as follows:
“(1) On
proprietors or operators of restaurants, refreshment parlors and other eating
places, including clubs and caterers, three per cent of their gross receipt;
“(2) On proprietors or operators of restaurants, bars, cafes and
other eating places, including clubs, where distilled spirits, fermented
liquors or wines are served, three per cent of their gross receipts from the
sale [of] food or refreshments and seven per cent of their gross receipts from
sale of distilled spirits, fermented liquors or wines. Two sets of commercial
invoices or receipts serially numbered in duplicate shall be separately
prepared and issued, one for each sale of food or refreshment served and another
for each sale of distilled spirits, fermented liquors or wines served, the
originals of the invoices or receipts to be issued to the purchaser or customer;
“(3) On proprietors or operators
of restaurant, refreshment parlors, bars, cafes and other eating places which
are maintained within the premises
or compound of a cockpit, cabaret, night or day club, jai-alai, race track, or which are accessible to patrons of such cockpit, cabaret, night or day
club, jai-alai, race track by means of a connecting door or passage, ten
per centum in the edge of cockpit, twelve per centum in the cases of cabaret, night or day club, and twenty per centum in the case of jai-alai and race
track, of their gross receipts.
“Where the establishments enumerated above are operated or
maintained by clubs of any
kind or nature (irrespective of the disposition of their net income or whether
or not they cater exclusively to members or their guests), the keepers of the
establishments shall pay the corresponding tax at the rates fixed above.”
The power of the State to impose the 3% caterer’s tax is not
debatable. The Court of Tax Appeals
erred, however, in holding that the tax was abolished as a result of the
presidential veto of August 4, 1969. It failed to examine the law then, and up to now, existing on the subject
which has always imposed a 3% caterer’s tax on operators of restaurants. Since the Manila Hotel operates restaurants in its premises, it is liable to pay
the tax provided in paragraph (1), Section 206 of the Tax Code.
WHEREFORE, the petition for review is granted. The decision of the Court of Tax Appeals in CTA
Case No. 2991 is annulled and set aside, and the claim of the respondent Manila
Hotel Corporation for a refund
of its payment of the caterer’s tax in 1977 to 1978 is dismissed. Costs against the private
respondent.
SO ORDERED.
Narvasa, (Chairman), Cruz, Gancayco, and Medialdea, JJ., concur.