BIR Ruling No. 087-63

November 21, 1963 BIR RULING NO. 087-63 The Regional Director Regional District No. 3 Manila S i r : Returned to you herewith is the entire docket bearing on the income tax case of CLINICA LOPEZ, INC., for the year 1956, which was referred to the Law Division for a ruling on the legal issue involved, viz: what corporate tax rate will be properly applicable in the computation of the income tax due from subject taxpayer. A private stock corporation, organized and operated for educational purposes, is subject to the special corporate income tax rate of 10% on its total net income pursuant to Section 24 of the Tax Code, as amended by Republic Act No. 2343. The records of this case show that Clinica Lopez, Inc., is a duly organized domestic stock corporation, established with/for the primary purpose of operating a college of medicine, nursing and midwifery. The establishment of "one or more hospitals, clinics, maternity wards and pharmacies, in connection with its college of medicine, nursing and/or midwifery" is among its secondary purposes . Hospitals and clinics indubitable from integral part of an educational institution operating a college of medicine, nursing and midwifery. Such hospitals and clinics perform coordinated and interrelated functions in furtherance of the primary object for which the stock corporation in this case is supposedly established and operated. Accordingly, income derived from the operation of the hospitals and clinics in this case, should be taxed at 10% together with all other income derived from exclusively and strictly educational sources. However, any profit or earnings from an activity which has no bearing or relation whatsoever to its educational purposes should be subject to the graduated corporate income tax rates of 22% to 30%. cdpr Very truly yours, (SGD.) RAMON T. OBEN Acting Commissioner of Internal Revenue