VAT Ruling No. 104-92

August 27, 1992 VAT RULING NO. 104-92 NIRC Sec. 103 (j) Precedent Ruling 359-88 Philippine Heart Center East Avenue, Quezon City 1630 Attention: Dr. Esperanza I. Cabral Director Gentlemen : This refers to your letter dated December 2, 1991. As represented, the Philippine Heart Center has been organized and established pursuant to P.D. No. 673, promulgated on March 19, 1975. The salient provisions of this law are as follows: That specialized medical services should be provided for those suffering from heart and allied diseases; that, the necessary operational expenses thereof is provided for and appropriated by the Government (Sec. 8, P.D. 673); that, in case of dissolution, its remaining property shall revert to the Philippine Government for disposition in accordance with law (Sec. 11, ibid ); and, that its books of accounts shall be subject to periodic auditing by the Commission on Audit. In relation thereto, you now request for a ruling on whether or not your sales revenue from the operation of your pharmacy and cafeteria is covered by the value-added tax law. In reply, please be informed that pursuant to Section 9(b)(12) of Revenue Regulations No. 5-87, if a hospital clinic operates a pharmacy or drug store, the sale of drugs and medicines, if it exceeds P200,000 during a 18-month period is subject to VAT. Furthermore, your hospital's operation of cafeteria shall be subject to the caterer's tax and therefore exempt from VAT in accordance with Section 103(j) of the same Code. Please be guided accordingly. aCcADT Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue