BIR Ruling No. 335-2016

REPUBLICOFTHPHILIPPINES

BUREAU OFINTERNALREVENUE DEPARTMENT OF FINANCE Quezon City

RA 10026000-00 3352016 Person to ContactChief.Law Division

6-29-2016 Tel. Nos.926-55-36/927-09-63

SOUTHERN PHILIPPINES MEDICALCENTER Department of Health Center for Health Development for Southern Mindanao

Davao City Davao Medical Center

Attention: RICARDO SD.JUSTOLMARE,MPA

Gentlemen: Chief Administrative Officer

This refers to your letter dated April 5.2013.requesting for the issuance of a

Health. and therefore a National Government Agency entitled to tax exemption. certificate of tax exemption as one of the retained hospitals of the Department of

Documents submitted disclosed that Southern Philippines Medical Center is a Government hospital under the Department of Health of the Republic of the Philippines:that was created as the Davao Medical Center (then called Davao Public

Hospitalby virtue of Republic ActRANo.1859,enacted on June 22,1957;and that on November 19.2009.RA No.9792 was enacted increasing the number of beds to 1.200 and renamed the hospital as Southern Philippines Medical Center.

follows: In reply.please be informed that Section 1 of R.A.No. 10026 provides as

Section I Section 27 (C) of the National Internal Revenue

further amended to read as follows: Code (NIRC) of 1997.as amended by Republic Act No.9337.is hereby

"SEC. 27. Rates of Income Tax on Domestic Corporations

XXX XXX XXX

042356 or Instrumentalities. - The provisions of existing special or general laws CGovernment-owned or -Controlled Corporations,Agencies

Page 2 of 2 Southern Philippines Medical Center 6-29-2016 #335-2016

to thecontrary norwithstandingall corporations.agenciesor instrumentalities owned or controlled by the Government except the Government Service and Insurance System (GSIS)the Social Security System SSS)the Philippine Health Insurance Corporation (PHIC.the local water districts(LWD and the Philippine Charity Sweepstakes Office PCSOshall pav such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in a

similar business, industrv,or activity

namely.GSIS.SSS.PHIC.LWD and PCSO from the pavment of regular corporate The above-quoted provision specifically excepted only five (5) corporations

income tax. Thus. Southern Philippines Medical Center falls under All other government-owned or controlled corporations, agencies or instrumentalities owned and controlled by the government" and is subject to income tax on its taxable income.

Additionally.its charter.RA No.1859.as amended by RA 9792.is bereft of any provision expressly exempting Southern Philippines Medical Center from Tax

It is a governing principle in taxation that tax exemptions must he construed

in strictissimi juris against the taxpayer and liberally in favor of the taxing authority:

and one who claims an exemption must be able to justify the same by the clearest

grant of organic or statute law. An exemption from the common burden cannot be

permitted to exist upon vague implications.(CIR vs.Isabela Cultural Corporation.

G.R.No.172231 dated February 12.2007)

In view of the foregoing. all other government-owned or controlled

corporations. agencies or instrumentalities engaged in a similar business.industry or

activity as that of an ordinary taxable corporation. which are not mentioned in Section

27(C of the Tax Code of 1997,as amended,therefore are deemed taxable on their

gross income. hence. this Office regrets to deny your request for certificate of tax

exemption for lack of legal basis.

Very truly yours.

KIM S.JACINTO-HENARES

Commissioner of Internal Revenue

cc: Regional Director K-1-JRC Revenue Region 19-Davao City 042356 JUN 2 4 Z010