MANILA POLO CLUB, PLAINTIFF AND APPELLEE, VS. BIBIANO L. MEER, ETC., DEFENDANT AND APPELLANT.

The appellee, a non-stock corporation organized to promote social
intercourse among its members, has established within its premises a
restaurant and bar which serves food and drinks to its members and
their families and friends. In view of the ruling of the appellant
exempting the Baguio Country Club from the fixed and percentage taxes
imposed under Sections 182 and 191 of the National Internal Revenue
Code, as amended, the appellee filed on November 25, 1949, a claim for
refund of the percentage taxes amounting to P6,792.60 it paid for the
period covering the 4th quarter of 1947 to the 3rd quarter of 1949.
Upon denial of the claim, the appellee filed the present action in the
Court of First Instance of Manila, which after hearing, ordered that
the taxes be refunded. The decision is sought to be reversed by the
appellant in this Court.

It is admitted by appellant that appellee is a social club, and that
it would be exempt from the payment of the fixed and percentage taxes
in question should it be able to prove that the sales in its restaurant
and bar were made strictly on the “cost-plus-expenses-basis”. By this
formula is meant that the appellee should have charged its patrons for
only the procurement costs of the food and drink served, plus an amount
merely sufficient to cover the expenses for the operation of its bar
and restaurant. Since it has been shown that this method of operation
had been pursued by the appellee, it cannot be considered as engaged in
business as a keeper of restaurant and bar, and is not therefore
subject to the fixed and percentage taxes imposed .by Sections 182 and
191 of the National Internal Revenue Code, as amended.

Inasmuch as the records also show that appellant admits that the
appellee, as a club, has for its objective the promotion of the game of
polo, other athletic sports and outdoor recreations, and to give
opportunity for social intercourse to its members, and that the
establishment or operation of the bar and restaurant is only incidental
to the alleged objectives of appellee’s existence as a polo club, we
hold that the appellee is not a commercial concern, run for profit.^[1]

Wherefore, the decision appealed from is affirmed, without costs. So ordered.

Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, Barrera, and Gutierrez David, JJ., concur.

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^[1] See also Collector of Internal Revenue vs. Manila Lodge No. 761 of the Benevolent & Protective Order of Elks et al., 105 Phil., 983; Collector of Internal Revenue vs. Sweeney et al., supra, p. 59.