Sale of Human Blood is Not a Taxable Activity for Business Tax Purposes, but the Agency is Liable for Income Tax

August 3, 1987 BIR RULING NO. 224-87 19 63-0058 224-87 Gentlemen : This refers to your letter dated March 25, 1987, requesting a legal opinion on the tax consequence of extracting, collecting and selling whole human blood for medical purposes. It is represented that you are a duly licensed agency authorized to extract, collect, store, dispense, distribute, or sell whole human blood; that you operate under the close supervision of the Bureau of Research and Laboratories of the Department of Health; and that, under Administrative Order No. 56, s. 1959, of said department, human blood dispensed by a blood banks is to be sold at cost. In reply, please be informed that whereas blood bank and blood processing laboratories can be operated by individuals, partnerships or corporations, the actual collection, processing, or dispensing of human blood is a highly professional activity, as gleaned from certain provisions of Administrative Order No. 56, s. 1959, in relation to Administrative Order No. 339, s. 1978, of the Department of Health requiring that professional equipment be acquired for the preliminary testing of donors; that only licensed physicians with at least three years of actual experience and/or training in blood bank operations are permitted to establish or operate a blood bank; and that the operation of a blood bank is intended to be on a non-profit basis. The fact that human blood, like other parts of the human body, cannot be considered objects of contract pursuant to Art. 1347 of the Civil Code because they are outside the commerce of men, the extracting, collecting and "selling" of human blood by you is an aspect of exercise of the medical profession and should not be considered a taxable activity for business tax purposes; otherwise, a serious ethical question would arise in a weird scenario of legitimate establishments, for the profit motive, keeping human beings in a state of semi-captivity to provide a steady supply of human blood available for sale. The word "donating" instead of "selling" should be used as the euphemism for the act of "giving away" or "transferring to another" any part of the human body for scientific purposes, to save life, or to advance the cause of medical science. Based on the foregoing considerations, it is our opinion, and so holds, that the so-called sale of human blood is not a taxable activity for business tax purposes. However, you are liable for income tax under Section 21 of the Tax Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner