BIR Ruling [DA-603-04]

November 25, 2004 BIR RULING [DA-603-04] RMO No. 33-2004 Rep. Edgar M. Chatto House of Representatives Quezon City S i r : This refers to your letter dated October 19, 2004 requesting on behalf of Ms. Angie Sarabia-Brunner, General Manager of Alona Palm Beach Resort and Restaurant, for a ruling on whether or not Revenue Memorandum Order (RMO) No. 33-2004 which provides a methodology for determining the correct tax liability of motels likewise applies to resorts in tourist destinations like Panglao Island. In reply, please be informed that Ballentine's Law Dictionary defines motel, hotel, inn and resort as follows: Motel a structure in several separate units, located along the highway or close to a highway, at which motorists may obtain lodging with parking space and, in some instances, meals. A place of accommodation where lodgings are available for hire, with a minimum of personal service furnished by the proprietor ( Schermer v Fremar Corp . 36 NJ Super 46, 114 A2d 757). Hotel usually considered synonymous with inn and defines it as a house which is held out to the public by the proprietor as a place where transient persons who come in a fit condition will be received and entertained as guests for compensation (29 Am J Rev ed Innk S 2). It is sometimes considered an inn of the better class ( Dixon v. Robbins , 246 NY 169, 158 NE 63, 53 ALR 986). Inn A public house of entertainment for all who choose to visit it (29 Am J Rev ed Innk S 2). Elaborately defined, a house held out to the public by the proprietor thereof as a place where transient persons who come in a fit condition will be received and entertained as guests for compensation (29 Am J Rev ed Innk S 2). Resort A place operated for the health or pleasure of its patrons, not for the entertainment of transients (29 Am J Rev ed Innk J 10). Clearly, a motel differs from a hotel, inn, and resort. Although various provisions of law and issuances had grouped hotels, motels, inns and resorts together, there is nothing in the context of RMO No. 33-2004 that would manifest or suggest the intention to have the RMO apply to establishments other than motels. Unless expressly mentioned in the issuance, the RMO cannot apply to hotels, inns, resorts and similar establishments since the issuance specifically and expressly provided in its subject: "Special Operations on Motels," that it covers only motels. It is basic in statutory construction that when the words of a statute are clear and unambiguous they must be held to mean what they plainly express. The statute must be literally construed ( Swarts vs. Siegel , 117 Fed. 13). Statutes creating a new liability or increasing an existing liability shall be strictly construed ( Millar vs. Town of Irondequot , 276 N.Y.S., 2d, 100). This is because tax laws operate to impose burdens on the public, or to restrict them in the enjoyment of their property and the pursuit of their occupations ( Alvea-Nichols vs. U.S. , 12 F. 2d., 998). Thus, in the interpretation of such statutes it is the established rule not to extend their provisions by implication, beyond the clear import of the language employed, or to enlarge their scope as to include matters not specifically pointed out. In case of doubt, they are construed most strongly against the government ( Gould vs. Gould , 62 L. ed., p. 211). EIcTAD In view of the foregoing, this Office hereby holds that RMO No. 33-2004 does not apply to Alona Palm Beach Resort and Restaurant and other resort businesses in, Panglao Island. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group