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. 112-91 113-00 000-00 112-91 S i r : This refers to BIR Ruling No. 171-000-00-329-87 dated October 26, 1987 which was addressed to you stating that if the operator or proprietor of a hotel/motel maintains and operates a restaurant that is not open to public patronage, the cost of food and drink ordered by and served to the hotel/motel guests shall be included as part of the gross receipts subject to the 12% room occupancy 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 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 then 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 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. Very truly yours, (SGD.) JOSE U. ONG Commissioner