BIR Ruling No. 025-62

January 25, 1962 BIR RULING NO. 025-62 Messrs. Rodriguez & Rodriguez Counsellors at Law P. O. Box 76, Cebu City Gentlemen : Reference is made to your letter of the 6th instant, requesting information as follows: "Recently, it was decided that the operations or the bar and restaurant at the Club Filipino Inc. in Cebu City was to be turned over to the Bay View Hotel Management in Cebu. Heretofore all income derived from the operations of the bar and restaurant enjoyed the tax exemption granted to a club. With the turning over of the bar and restaurant to the Bay View Hotel, it was foreseen that tax exemption usually enjoyed by a club will not be extended to the Hotel Management. It was agreed therefore, that all income from the operations of the bar and restaurant would be liable to the payment of the taxes imposed by our laws and that the same would be paid by the Hotel Management. "The question arose however, with respect to the incomes which usually a club collector from its members, like club dues, green fees, locker rentals and other miscellaneous incomes. An opinion was advanced that, in the event of turning over the operations of the bar and restaurant by the Club to the Hotel Management, will result in the imposition of taxes on all the incomes henceforth received by the club. "It is the humble opinion of the undersigned counsel that the Club Filipino will not lose its tax exemption privileges by the mere fact that the bar and restaurant is to be operated by separate entity who is willing to absorb and assume all tax liabilities on the matter. "The question therefore are the following: 1. Will the Club Filipino Inc. completely lose its tax exemption privileged, at present enjoyed pursuant to a decision of our Supreme Court if the operation of the bar and restaurant is turned over to the Bay View Hotel, Inc., which company is willing to pay all the taxes due on the business. 2. In the event that the Hotel Management operates the bar and restaurant and pays the corresponding tax, will the Club Filipino lose its privileges on the other incomes now received by them from its members, etc?" In an interview had with a representative of yours, this Office was made to understand that not only the operation but also the ownership of the bar and restaurant would be transferred. If such be the case, the contemplated transfer will not affect in any way the tax-exemption privileges at present being enjoyed by the Club Filipino, provided that no change will be effected in the purpose or purposes for which the same was organized. lexlib Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue