SC: Senior Citizen Discount Does Not Apply to Golf and Country Club Membership Dues
October 18, 2023
Non-profit, stock golf and country clubs are not mandated to give a 20% senior citizen discount to their senior members on membership dues. However, the senior citizen discount applies to fees for locker rentals and other charges pertaining to their use of the clubs’ facilities and equipment.
Thus ruled the Supreme Court’s First Division, in a Decision penned by Associate Justice Jose Midas P. Marquez, partially granting the consolidated petitions under Rule 45 filed by the Department of Social Welfare and Development (DSWD) and The Manila Southwoods Golf and Country Club, Inc. (Manila Southwoods).
The petitions arose from a complaint filed by Carlos T. Santos, Jr. before the Regional Trial Court (RTC) against the DSWD and Manila Southwoods. Santos, a member of Manila Southwoods, asked the RTC to invalidate Rule IV, Article 7, Section 4 (2) of the Implementing Rules and Regulations (IRR) of Republic Act No. (RA) 9994 or the Expanded Senior Citizens Act of 2010. The IRR was drafted by the DSWD.
Under the assailed IRR provision, non-profit, stock golf and country clubs, which are not open to the general public and are private and for exclusive membership only, are exempted from giving the 20% senior citizens discount.
Santos claims that this provision in the IRR is invalid for being contrary to the plain language of Section 4(a)(7) of the Expanded Senior Citizens Act, which includes services in hotels and similar lodging establishments, restaurants, and recreation centers among the services covered by the 20% senior citizen discount.
The RTC ruled in favor of Santos, declaring the assailed IRR provision invalid and ordering Manila Southwoods to grant Santos the senior citizen discount for the exclusive use, utilization, and enjoyment or availment of the services of the club’s recreation centers.
DSWD and Manila Southwoods were thus prompted to go to the Supreme Court and seek the reversal of the RTC Decision.
In partially granting the petitions, the Court clarified the scope of the 20% senior citizen discount mandated by Section 4(a) of the Expanded Senior Citizens Act.
The Court held that the senior citizen discount under Section 4(a) expressly applies to the sale of goods and services. “The plain language of the law thus requires the sale of a good or service for the 20% discount to apply. Absent the sale of a good or service, the 20% senior citizen discount does not apply.”
Applying this to membership fees, the Court reiterated its 2019 ruling in Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue, that when a club collects membership fees, it is not selling its service to the members. “Conversely, the members are not buying services from the club when dues are paid…As such, there could be no ‘sale, barter or exchange of goods or properties, or sale of a service’ to speak of, which would then be subject to [the Value Added Tax (VAT)].”
The Court held that the foregoing ruling that membership fees or dues do not involve the sale of a good or service for purposes of VAT liability under the Tax Code equally holds true with respect to the 20% senior citizen discount.
“Such [membership] fees are paid for the privilege of membership, and not for the purchase of a good or service,” said the Court.
The Court, however, made a distinction between membership dues and the fees collected by golf and country clubs for the rendition of services.
“In contrast, the payment of fees for locker rentals and other charges pertaining to the use of golf facilities and equipment involves the sale by the golf and country club of services to the availing member,” the Court held. “In paying these fees, the purchasing member is availing of the club’s services, and not for the privilege of membership in the club.”
Given the distinction, the treatment of fees for membership dues as well as for other charges must likewise be distinguished, ruled the Court.
Thus, the Court declared that associations charging membership dues are not required to give the 20% senior citizen discount, in accordance with Section 4(a) of the Expanded Senior Citizens Act, which does not grant the discount on the collection of dues for the privilege of membership.
However, golf and country clubs are required to provide qualified members with the 20% senior citizen discount on payment of fees for locker rentals as well as other charges pertaining to the members’ purchase of services provided by the club.
The Court further ruled that the assailed provision, Rule IV, Article 7, Section 4 (2), of the IRR, is invalid for carving out an exemption for non-profit, stock golf and country clubs, when the Expanded Senior Citizens Act, which mentions recreation centers in general, provides none.
“To create blanket exceptions beyond the contemplation of the law would run counter to the ‘inflexible rule’ that social legislation must be liberally construed in favor of the beneficiaries,” held the Court.
The Court also dismissed DSWD’s argument that the Expanded Senior Citizens Act should be limited to basic goods and services supplied to underprivileged senior citizens by establishments catering to the general public.
Reiterating its 2017 ruling in Southern Luzon Drug Corporation v. DSWD, the Court held that to “recognize all senior citizens as a group, without distinction as to income, is a valid classification.” It added that “[w]hen the Constitution declared its intention to prioritize the predicament of the underprivileged sick, elderly, disabled, women and children, it did not make any reservation as to income, race, religion, or any other personal circumstances. It was a blanket privilege afforded to the group of citizens in the enumeration in view of the vulnerability of their class.” (Courtesy of the Supreme Court Public Information Office)
Full text of G.R. No. 202417 (Soliman v. Santos) at: https://sc.judiciary.gov.ph/202417-203245-hon-corazon-j-soliman-in-her-capacity-as-secretary-of-the-department-of-social-welfare-and-development-vs-carlos-t-santos-the-manila-southwoods-golf-and-country-club-inc-vs-carlo/