BIR Ruling No. 293-61

July 29, 1961 BIR RULING NO. 293-61 Messrs. Carlos J. Valdes & Co. Certified Public Accountants 6th Floor, San Luis Terraces 640 San Luis, Ermita Manila Gentlemen : Reference is made to your query dated May 30, 1961, requesting information regarding the taxes to be paid by your client, the Servants of the Holy Ghost. The following facts are stated in your letter: "Our client, the SERVANTS OF THE HOLY GHOST, is a non-stock, non-profit, religious organization, presently owning and operating a hospital. The hospital accepts pay patients in order to generate the funds required for maintaining the charity wards. Furthermore, the hospital also maintains a pharmacy department which dispenses the drugs prescribed by the physicians for the hospital's patients." The Supreme Court in the case of "Collector of Internal Revenue vs. St. Paul's Hospital of Iloilo", G.R. No. L-12127 promulgated May 25, 1959, made the following statements: cdt "In this connection, it should be noted that respondent herein is a corporation organized for 'charitable, educational and religious purposes'; that no part of its net income inures to the benefit of any private individual; that it is exempt from paying income tax; that it operates a hospital in which medical assistance is given to destitute persons free of charge; that it maintains a pharmacy department within the premises of said hospital, to supply drugs and medicines only to charity and paying patients confined therein; and that only the paying patients are required to pay the medicines supplied to them, for which they are charged the cost of the medicines, plus an additional 10% thereof, to partly offset the cost of medicines supplied free of charge to charity patients. Under these facts, we are of the opinion, and so hold that the Hospital may not be regarded as engaged in 'business' by reason of said sale of medicines to its paying patients." In accordance with the abovequoted decision of the Supreme Court, your client is not subject to any tax for operating the hospital and for maintaining a pharmacy department which dispenses drugs prescribed by physicians for the hospital's patients. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue By: (SGD.) MISAEL P. VERA Deputy Commissioner of Internal Revenue