2013 (Taxation) Bar Exam Questions: Essay Question 2

[Discuss/answer the question below. Or see Taxation Instructions; Taxation Essay Questions: 13, 4, 5, 6, 7, 8, 9, 10, 11 and 12; Taxation Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]


A group of philanthropists organized a non-stock, non-profit hospital for charitable purposes to provide medical services to the poor. The hospital also accepted paying patients although none of its income accrued to any private individual; all income were plowed back for the hospital’s use and not more than 30% of its funds were used for administrative purposes.

Is the hospital subject to tax on its income? If it is, at what rate? (6%)


      1. With respect to its paying patients, St. Luke’s is subject to the 10% preferential tax rate of proprietary non-profit hospitals under Section 27(B).

  1. we should try to reconsider again and again the case of St. Lukes. it has almost a billion pesos income and only 200 million plus lang ang expenses.sabi ng SC dahil dito, inaplyan ng 10% preferential tax ang st. lukes

  2. try to read the book of vitug.sabi doon exclusively does not mean solely but primarily.at saka in the case at bar, all income were plowd back for the hospital’s use and it is clear na da hospital was orgarnized as non stock non profit private institution.

    1. YES we all know yung actually, exclusively at directly na yan. the problem is yung facts were similar to the case of st lukes. besides, you dont have to argue your point. depende na sa examiner yan at useless na din to argue who is right from wrong. tapos na ang checking. magdasal na lang tayo.

  3. the acceptance of paying patients does not negate its exemption because it would jive withe word “exclusively” of justice vitug na which means primarily not solely.hehe

  4. so kahit na may paying patients andg hospital; sa case ay exempt pa rin ito. palinlang lang yang case sa St. Lukes.hehe.so dat we would jump easily to the preferential tax application.

  5. the case of st. lukes in conclusion ay isa itong non stock non profit proprietary hospital but not exclusively for charitable purpose not like sa case sa bar 2013 exam.hehe.we must review st. lukes.case

  6. finally ,non of the hospital’s income accrued to any private individual.sa st. lukes tingnan natin at saka basahin.doon natin malalaman.suggestion lang po.

  7. pero jedi isn’t the facts given in the problem the same as st.lukes? And since may decision na ang sc regarding that set of facts we should apply the “law of the case doctrine” or “stare decisis”?

    Although may point ka naman kasi di naman magkakaron ng mga bagong doctrines kung walang mag challenge ng mga existing jurisprudence. Siguro sa manner na lang ng pag present ng argument magkakatalo.

    Anyway either case mali rin ako talaga dito sabi ko income from paying subject to normal tax. Di ko nabasa st.lukes eh.

      1. Peevy when i said di ko siya nabasa i meant prior to the exam. Siyempre after the exam may nagsabi na sa akin st.luke’s siya so i read it after kaya alam ko facts.

        Alam ko mali ako kasi ang basis ko was the case ng non profit school na nagparent na sinabi ng sc normal corporate income tax. Kaya yun sagot ko.

        I do hope di ka na nalabuan bro as to why i know the facts 🙂

      2. and i didn’t say rin naman na mali si jedi. i was just clarifying his opinion kasi kakaiba nga yung view niya. The same way na i have been asking sa mga tao na may kakaibang attake sa mga questions.

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