Tax Liability of GBC Clinical Laboratory, Inc.

February 17, 1987 BIR RULING NO. 051-87 170 208-86 051-87 S i r : This refers to your letter dated December 12, 1986, requesting information as to the kind of tax or taxes your client is liable to pay based on the following facts: "GBC Clinical Laboratory, Inc. a domestic corporation was organized for the purpose of establishing medical clinic. Out patients are seen in consultation for medical problems. The medical history of the patients are taken and a physical examination is done. If the diagnosis requires laboratory examination, the necessary tests are done, after which, the necessary medicine is prescribed." In your supplementary letter dated January 12, 1986, you also stated that GBC Clinical Laboratory, Inc. does not provide bedspace for patients; and that the clinic services do not consist essentially of the sale of all kinds of services for a fee but are merely ancillary and incidental to the medical care and treatment of a patient. In reply, please be informed that on the basis of the foregoing facts, your client is not subject to any internal revenue tax on business. This Office has ruled that a hospital, the primary function of which is that of being a place of confinement where sick and injured persons receive medical care as patients requiring bed, board and other medical services does not fall within the purview of the term "independent contractor" under Section 170 of the Tax Code, as amended. (BIR Ruling dated June 20, 1973). Hospital services do not consist essentially of the sale of all kinds of services for a fee, but merely ancillary, supplementary and incidental to the medical care and treatment of patients. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner