Sale of Food or Beverage by a Restaurant Within Motel Premises is Not Subject to Caterer's Tax but Will Form Part of Gross Receipts from Room Occupancy

June 18, 1991 BIR RULING NO. 111-91 113 000-00 111-91 MEMORANDUM TO : All Regional Directors, Revenue District Officers and Other Internal Revenue Officers Concerned BIR Ruling No. 171-000-00-329-87 dated October 26, 1987 states: "In reply, please be informed that the 12% tax imposed on proprietors, operators and/or keepers of motels, hotels, etc., is based on gross receipts from room occupancy . (Section 171 Tax Code). This means that said gross receipts consists of payments made by hotel/motel guests for occupying rooms. It said proprietor or operator maintains and operates restaurant not open to public patronage, the cost of food and drinks ordered by and served to the hotel/motel guests shall be included as a part of the gross receipts subject to the 12% tax. "On the other hand, if the restaurant is open to public patronage, duly advertised, outside the motel premises , all the gross receipts derived from the operation of the restaurant which include the sale of food and drinks ordered by and served to hotel/motel guests, shall be subject to the caterer's percentage tax imposed by Section 172 of the Tax Code." Verification, however, disclosed that a restaurant operated within the motel premises cater, more often than not, exclusively to motel guests. It is not generally open to public patronage but is operated mainly as an incident to motel operations for the convenience of motel guests. Such being the case its gross receipts from sales of food or beverage whether or not it caters occasionally to non-motel guests, shall not be subject to caterer's tax; but it shall instead form part of the gross receipts derived from room occupancy which shall be subject to the 12% room occupancy tax pursuant to Section 113 (then Sec. 171) of the Tax Code, as amended. This modifies BIR Ruling No. 171-000-00-329-87 dated October 26, 1987 insofar as motels are concerned. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner