BIR Ruling No. 036-63

April 26, 1963 BIR RULING NO. 036-63 Hilado & Hilado Law Offices P.O. Box 199, Bacolod City Gentlemen : Reference is made to your letter dated December 19, 1962, requesting exemption from the occupation tax in behalf of the physicians, dentists, nurses and pharmacists employed in the Silay-Saravia Medical Center. Your request is, however, limited to those who devote their entire professional services to said establishment. prll In answer thereto, I have the honor to inform you that in view of a similar request of the Hawaiian Philippine Co., this Office had occasion to rule against the exemption from occupation tax of the aforementioned professionals (B.I.R. Ruling No. 490, s. 1960). And in an investigation conducted before said ruling was issued, it was found that while the Silay-Saravia Medical Center is a hospital not conducted for private gain, nevertheless, the same is operated jointly by the Hawaiian-Philippine Co. and the Association de Hacenderos (Plantadores) de Silay-Saravia, Inc. for the exclusive benefit of their respective officials and employees and the members of their families. These findings are practically admitted in your letter; in fact, the first-hospital not conducted for private gain-was advanced by you in support of your request. However, you contend that the hospital is not a 'company hospital' and that even if it is one the fact remains that the same is not conducted for private gain and, therefore, the physicians, dentists, etc. employed therein come within the purview of the exemption provided for in Section 182(6)(7) of the Tax Code. We regret not to share the view that the Silay-Saravia Medical Center is not a company hospital. As stated above, it is operated for the exclusive benefit of the officials and employees, and their families, of the Hawaiian-Philippine Co. and the Asociacion de Hacenderos (Plantaderos) de Silay-Saravia, Inc. And who are the persons composing the latter (the Asociacion) but those employed by the former (the company) in connection with its sugar industry? Therefore, unlike in the case of other hospitals, the hospital in question does not have its doors open to the public or community in general. In providing for the exemption of persons devoting for their entire professional service to a hospital, where the latter is not conducted for private gain, the law considers the charitable nature of the institution. In other words, the law rewards by exempting them from the tax persons who have something to do with the welfare of the poor and needy. Surely, a hospital maintained by a company for the benefit of its officials, employees and/or laborers cannot be considered as rendering charitable services, especially in the case of the Silay-Saravia Medical Center which as stated in your letter," is maintained through voluntary contributions by the Hawaiian-Philippine Co. and the planters, such contributions consisting of one per cent (1%) of the shares of both the central and the planters in the sugar produced by said central and planters". Accordingly, and this desposes of also your second argument, this office is of the opinion and so holds that to come within the purview of the exemption under Section 182(C)(7), it is not enough that a physician, dentist nurses or pharmacist be employed in a hospital not conducted for private gain, it being necessary that such hospital be a charitable institution. cdta In view of the foregoing consideration, this Office regrets its inability to grant your request. Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue The above ruling was duly signed by the Acting Commissioner of Internal Revenue on April 26, 1963. cdti (SGD.) P. F. LANDAS Revenue Operation Heads (Legal)