St. Catherine of Alexandria Foundation and Medical Center, Inc.

March 13, 2009 BIR RULING [NSNP-(S30E-037) 213-09] Section 30; BIR Ruling No. S30-080-2007 St. Catherine of Alexandria Foundation and Medical Center, Inc. #4163 Rizal Extension Brgy. Cutcut, Angeles City Attention: Dr. Corsino Torno President Gentlemen : This refers to your letter dated February 3, 2009 requesting for a certificate of tax exemption. aIHCSA Documentary evidence submitted disclosed that St. Catherine of Alexandria Foundation and Medical Center, Inc. ("St. Catherine" for brevity) is a non-stock, non-profit charitable corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. A200112217 dated August 29, 2001. Its primary purpose is ". . . to provide all aspects of the medical profession which includes healthcare, general medicine and hospitalization if necessary, to the general public more especially to the less privilege in society who are living in Angeles City and neighboring towns particularly those affected by lahar in Porac, Pampanga". In reply, please be informed that under Section 30 (E) of the Tax Code of 1997, as amended, a non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person is exempt from income taxation. Accordingly, as a non-stock, non-profit charitable organization, St. Catherine, therefore, is exempt from tax on all revenues derived in pursuance of its purpose as a charitable organization and used actually, directly and exclusively for charitable purposes. However, it is subject to internal revenue taxes on income from other activities the conduct of which is not related to the exercise or performance of its purposes or functions. Moreover it is subject to the corresponding taxes imposed under the Tax Code of 1997, as amended, on its income derived from any of its properties, real or personal, regardless of the disposition thereof, which income should be returned for taxation. Likewise, interest income from its currency bank deposits and yield or any other monetary benefits from deposit substitute instruments and from trust funds and similar arrangements received by the organization, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax: provided, however, that interest income derived by it from a depository bank under the expanded foreign currency deposit system shall be subject to 7-1/2% final withholding tax pursuant to Section 28 (A) (7) (a), in relation to Section 57 (A), both of the Tax Code of 1997, as amended. However, St. Catherine is liable to pay the 12% VAT billed to it on its purchases of goods and services because the said tax is an indirect tax which can be passed on or shifted as part of the cost of the goods sold/services rendered. Medical, dental, hospital, veterinary and other related activities/services rendered within the premises by professionals in their personal capacity are subject to VAT. [Section 4.109-1 (B) (1) (g), RR No. 16-2005]. Likewise, revenues on pharmacy, clinic rental, house case, records, school affiliates, right to practice, miscellaneous income, rental, other income on right to practice, other income on joining fee, processing fees are subject to VAT. Finally, as a tax-exempt organization, St. Catherine should file an annual information return on or before the 15th day of the 4th month following the end of its taxable year. Under Section 235 of the Tax Code of 1997, as amended, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liabilities, if any. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. EDIHSC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service