DOCTRINE: The president may veto specific phrases in tax laws and is not limited to vetoing entire

sections of the said laws. To construe the word "item" as referring to the whole section would tie the
President's hand in choosing either to approve the whole section at the expense of also approving a
provision therein which he deems unacceptable or veto the entire section at the expense of foregoing the
collection of the kind of tax altogether. The evil which was sought to be prevented in giving the President
the power to disapprove items in a revenue bill would be perpetrated rendering that power inutile.
FACTS:
CIR contests the exclusion of respondent corporation from the application of RA6110 where petitioners
assessed the club fixed taxes as operators of golf links and restaurants, and also percentage tax
(caterer's tax) for its sale of foods and fermented liquors/wines for the period covering September 1969 to
December 1970 in the amount of P32,504.96.
The club protested claiming the assessment to be without basis because (the entire) Section 42 was
vetoed by then President Marcos. (quoted)
pp. 44, SEC. 42. Inserting a new Section 191-A which imposes a 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 protestation of the club was denied by the petitioner who maintains that Section 42 was not entirely
vetoed but merely the words "hotels, motels, resthouses" on the ground that it might restrain the
development of hotels which is essential to the tourism industry.
The CTA opined that the President could not veto words or phrases in a bill but only an entire item.
Hence, this petition.
ISSUE:
W/N the presidential veto is applicable only as against entire sections of tax laws and not mere portions of
such sections.
HELD: President may veto specific portions and is not limited to vetoing entire sections of tax laws.
Manila Golf & Country Club, Inc. is a non-stock corporation. True, it maintains a golf course and operates
a clubhouse with a lounge, bar and dining room, but these facilities are for the exclusive use of its
members and accompanied guests, and it charges on cost-plus-expense basis. As such, it claims it
should have been exempt from payment of privilege taxes were it not for the last paragraph of Section
191-A of R.A. No. 6110, otherwise known as the "Omnibus Tax Law."
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.
As already mentioned, the Court of Tax Appeals, upon petition by the club, sustained the latter's position
reasoning that the veto message was clear and unqualified, as in fact it was confirmed three years later
by the Office of the President.

The presidential veto referred merely to the inclusion of hotels, motels and resthouses in the 20%
caterer's tax bracket but not to the whole section. The CTA opined that the President could not veto words
or phrases in a bill but only an entire item.
Obviously, what the CTA meant by "item" was an entire section. We do not agree. But even assuming it to
be so, it would also be to petitioner's favor (as it would render the entire exemption nonexistent). 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 has no effect, whatsoever.
We agree with then Solicitor General Estelito Mendoza and his associates that inclusion of hotels, motels
and resthouses in the 20% caterer's tax bracket are "items" in themselves within the meaning of Sec.
20(3), Art. VI of the 1935 Constitution which, therefore, the President has the power to veto.
An "item" in a revenue bill does not refer to an entire section imposing a particular kind of tax, but rather
to the subject of the tax and the tax rate. In the portion of a revenue bill which actually imposes a tax, a
section identifies the tax and enumerates the persons liable therefor with the corresponding tax rate.
To construe the word "item" as referring to the whole section would tie the President's hand in choosing
either to approve the whole section at the expense of also approving a provision therein which he deems
unacceptable or veto the entire section at the expense of foregoing the collection of the kind of tax
altogether. The evil which was sought to be prevented in giving the President the power to disapprove
items in a revenue bill would be perpetrated rendering that power inutile.