Taxes on Restaurants Selling Beer and Other Wines and Liquors in Excess of 5 liters

January 16, 1958 BIR RULING NO. 031-58 The Chief, Alcohol and Prohibited Drugs Division, B.I.R., Manila (Thru the Chief, Assessment Dept.) S i r : This is with reference to your request for a ruling on the question of whether or not restaurants selling beer and other wines and liquors in excess of five liters at one time as shown by a single sales invoice should be considered wholesalers and should accordingly be required to pay a higher privilege tax. The pertinent provisions of the National Internal Revenue Code reads as follows: "SEC. 194. Words and phrases defined . xxx xxx xxx "(g) 'Wholesale liquor dealer' comprehends every person who for himself for on commission sells or offers for sale wines or distilled spirits (other than denatured alcohol) in larger quantities than five liters at any one time, or who sells or offers the same for sale for the purpose of resale, irrespective of quantity. "(h) 'Wholesale dealer in fermented liquors' means any one who for himself or on commission sells or offers for sale fermented liquors in larger quantities than five liters at any one time, or who sells or offers for sale such fermented liquors (excluding tuba, basi, tapuy, and similar domestic fermented liquors) for the purpose of resale, regardless of quantity." It is clear from the abovequoted provisions of law that where it is known or apparent that the wine or fermented liquor sold is for resale, the seller is considered a wholesale liquor dealer or wholesale dealer in fermented liquors. The law considers the quantity of wine sold only in cases where it is not known if the wine will be for resale or for consumption. In the latter case, the law requires that the wine or fermented liquor sold should be in larger quantities than five liters at any one time. The reason behind this is that, where the wine sold is in larger quantities than five liters, there is no question that it will be for resale as it is more than what an individual can consume. In the case of restaurants and other eateries, the business of the owners thereof is to serve food and drinks to their customers. There is no question that whatever wine or liquor is sold by the owner or operator of the restaurant is consumed right in the premises of the restaurant or eatery. Where it is known that the liquor sold is for consumption, the quantity of liquor sold is immaterial. The owner or operator of the restaurant cannot be considered a wholesale liquor dealer or wholesale dealer in fermented liquors although he sells liquors or wines in quantities larger than five liters because the same are sold to consumers within the restaurant or premises of the establishment and nor for resale elsewhere. aisadc Please be guided accordingly. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue