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    CIR vs. Club Filipino

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    Jay-ar Rivera Badulis
    The Collector of Internal Revenue assessed unpaid percentage taxes on the gross receipts of Club Filipino's bar and restaurant. Club Filipino argued it was a non-stock corporation and therefore not subject to the tax. The court agreed, finding that while Club Filipino was incorporated and had members owning shares, it was operated mainly through membership fees, had no cash dividend distributions, and upon dissolution its assets would be donated to charity rather than distributed to shareholders. As Club Filipino lacked authority to distribute profits to shareholders, it was ruled a non-stock corporation not engaged in business as a barkeeper or restaurateur, so the tax assessment was denied.

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    CIR vs. Club Filipino

    Uploaded by

    Jay-ar Rivera Badulis
    160 views1 page
    The Collector of Internal Revenue assessed unpaid percentage taxes on the gross receipts of Club Filipino's bar and restaurant. Club Filipino argued it was a non-stock corporation and therefore not subject to the tax. The court agreed, finding that while Club Filipino was incorporated and had members owning shares, it was operated mainly through membership fees, had no cash dividend distributions, and upon dissolution its assets would be donated to charity rather than distributed to shareholders. As Club Filipino lacked authority to distribute profits to shareholders, it was ruled a non-stock corporation not engaged in business as a barkeeper or restaurateur, so the tax assessment was denied.

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    Corporation Law

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    The Collector of Internal Revenue assessed unpaid percentage taxes on the gross receipts of Club Filipino's bar and restaurant. Club Filipino argued it was a non-stock corporation and therefore not subject to the tax. The court agreed, finding that while Club Filipino was incorporated and had members owning shares, it was operated mainly through membership fees, had no cash dividend distributions, and upon dissolution its assets would be donated to charity rather than distributed to shareholders. As Club Filipino lacked authority to distribute profits to shareholders, it was ruled a non-stock corporation not engaged in business as a barkeeper or restaurateur, so the tax assessment was denied.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    160 views1 page

    CIR vs. Club Filipino

    Uploaded by

    Jay-ar Rivera Badulis
    The Collector of Internal Revenue assessed unpaid percentage taxes on the gross receipts of Club Filipino's bar and restaurant. Club Filipino argued it was a non-stock corporation and therefore not subject to the tax. The court agreed, finding that while Club Filipino was incorporated and had members owning shares, it was operated mainly through membership fees, had no cash dividend distributions, and upon dissolution its assets would be donated to charity rather than distributed to shareholders. As Club Filipino lacked authority to distribute profits to shareholders, it was ruled a non-stock corporation not engaged in business as a barkeeper or restaurateur, so the tax assessment was denied.

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    of 1

    [Corporation Law] Sec.

    3 Classes of Corporations 01
    JRRB

    THE COLLECTOR OF INTERNAL REVENUE V. THE CLUB stockholders and members; that upon its dissolution, its
    FILIPINO, INC. DE CEBU remaining assets, after paying debts, shall be donated to a
    G.R. No. L-12719| May 31, 1962| Paredes, J.: charitable Philippine Institution in Cebu; that it is operated
    mainly with funds derived from membership fees and
    FACTS dues; that the Club's bar and restaurant catered only to its
    members and their guests; that there was in fact no cash
    dividend distribution to its stockholders and that whatever
    Nature of Club Filipino Inc. De Cebu was derived on retail from its bar and restaurant was used
    Club Filipino, Inc. de Cebu is a civic corporation with an to defray its overall overhead expenses and to improve its
    original authorized capital stock of P22,000.00, which was golf-course (cost-plus-expenses-basis), it stands to reason
    subsequently increased to P200,000.00, among others, to that the Club is not engaged in the business of an operator
    it provide, operate, and maintain x x x all sorts of games of bar and restaurant
    not prohibited under general laws and general ordinances; The fact that the capital stock of the respondent Club is
    and develop and cultivate sports of every kind and any divided into shares does not detract from the finding of the
    denomination for recreation and healthy training of its trial court that it is not engaged in the business of operator
    members and shareholders. Neither in the articles or by- of bar and restaurant. What is determinative of whether or
    laws is there a provision relative to dividends and their not the Club is engaged in such business is its object or
    distribution, although it is covenanted that upon its purpose, as stated in its articles and by-laws. It is a familiar
    dissolution, the Club's remaining assets, after paying rule that the actual purpose is not controlled by the
    debts, shall be donated to a charitable Philippine corporate form or by the commercial aspect of the
    Institution in Cebu. business prosecuted, but may be shown by extrinsic
    The Club owns and operates a club house, a bowling alley, evidence, including the by-laws and the method of
    a golf course, and a bar-restaurant for its members and operation. From the extrinsic evidence adduced, the Tax
    their guests, which was a necessary incident to the Court concluded that the Club is not engaged in the
    operation of the club. The club is operated mainly with business as a barkeeper and restaurateur.
    funds derived from membership fees and dues. Moreover, for a stock corporation to exist, two requisites
    must be complied with, to wit:
    Declaration of stock dividends due to capital surplus (1) a capital stock divided into shares and
    brought about by real property revaluation (2) an authority to distribute to the holders of such shares,
    As a result of a capital surplus, arising from the increased dividends or allotments of the surplus profits on the basis
    value due to the revaluation of its real properties, the Club of the shares held (sec. 3, Act No. 1459).
    declared stock dividends; but no actual cash dividends
    were distributed to the stockholders.
    A tax is a burden, and, as such, it should not be deemed
    imposed upon fraternal, civic, non-profit, nonstock
    BIR assessment organizations, unless the intent to the contrary is manifest
    and patent
    A BIR agent discovered that the Club has never paid
    percentage tax on the gross receipts of its bar and
    restaurant. The Collector of Internal Revenue assessed In the case at bar, nowhere in its articles of incorporation
    against and demanded from the Club the unpaid or by-laws could be found an authority for the distribution
    percentage tax on the gross receipts plus surcharges. The of its dividends or surplus profits. Strictly speaking, it
    Club requested for the cancellation of the assessment. The cannot, therefore, be considered a stock corporation,
    request having been denied, the Club filed the instant within the contemplation of the corporation law.
    petition for review.

    ISSUE(S)
    Whether or not Club Filipino is a stock corporation. DISPOSITIVE PORTION
    Petition is DENIED.
    RULING

    NO. It is a non-stock corporation.


    Having found as a fact that the Club was organized to
    develop and cultivate sports of all class and denomination,
    for the healthful recreation and entertainment of its

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