Club Serving Food and Drinks to Its Members and Their Guests

December 26, 1958 BIR RULING NO. 721-58 1st Indorsement Returned to the Regional Director, Regional District No. 3, Manila, the entire docket of the case of Ambassador Club, Inc. LibLex Opinion is requested as to whether or not the Club, for serving food and drinks to its members and their guests, is subject to the fixed and percentage taxes prescribed in Sections 182 and 191 of the Tax Code. From the investigations conducted by agents of this Office, it appears that the Ambassador Club, Inc. is a non-stock, non-profit corporation, organized for social purposes with the view of promoting friendly intercourse among, and affording entertainment and recreation for its members and their guests. The club caters exclusively to its members and the income realized by it is used for the maintenance and improvements of the club. The case of the Ambassador Club, Inc. is in all fours with the cases of the Manila Lodge No. 761 of the Benevolent and Protective Order of Elks vs. Blaquera, CTA Case No. 140, July 31, 1956, J. M. Sweeny, A. O. Baigrie and Ramon Burgos vs. the Commissioner of Internal Revenue, CTA Case No. 179, February 8, 1957, and Club Filipino, Inc., de Cebu vs. The Collector of Internal Revenue, CTA Case No. 15, July 11, 1957. In all these cases, the Court of Tax Appeals held that those clubs are not subject to tax, they not being engaged in business. aisadc However, it is the policy of this Office not to be bound by the decisions of the Court of Tax Appeals where they are appealed to the Supreme Court. Until the decisions of the Court of Tax Appeals in the cases mentioned above are upheld, the collection of the fixed and percentage taxes assessed against the Ambassador Club, Inc. should be enforced. (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue