FOLLOWING the controversial resignation of Department of Education (DepEd) Undersecretary for legal affairs Jaime Jacob, the UST Hospital’s (USTH) tax exemption case, which caused Jacob’s resignation, was reopened after the Department of Finance (DOF) and the Bureau of Customs (BOC) blocked the hospital’s latest importation of 30 Durastar Hydraulic Stretchers with I.V. poles and accessories last month.

According to Atty. Arnold Cacho, legal representative of USTH, the DOF began to question the hospital’s tax exemption after Jacob sent a letter to Department of Finance head Atty. Fidel Conrado inquiring on the hospital’s tax-free status.

In the letter, Jacob questioned why the hospital’s day-to-day management is not handled by the Dominican fathers, who run UST, but a private management group. In addition, Jacob said the Santo Tomas University Hospital (STUH) is not a registered corporation with the Securities and Exchange Commission (SEC), which would disallow the hospital to legally transact business with the public.

Last April, Jacob held the release of MRI scanners imported by USTH before the hospital could submit its articles of incorporation to prove its tax-exempt status. The STUH complied with the request, but Jacob still denied the hospital’s request, alleging that the MRI scanner would not be used for educational purposes and that UST was not the owner of STUH.

The USTH appealed to Education Secretary Raul Roco, who reversed Jacob’s decision after examining the documents that the hospital forwarded to Jacob. Roco’s approval of the USTH’s tax exemption prompted Jacob to resign.

In the letter to Roco, Cacho said, “The management group is only an agent of the STUH and the latter being the principal, still retains the functions pertaining to policy and decision making… STUH, although incorporated, is a non-stock, non-profit, medical institution devoted exclusively to educational purposes and for the benefit of the public whose income does not inure to the benefit of any individual, natural or juridical, including its stockholders and members.”

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In addition, Cacho wrote that UST clearly owns and operates STUH because majority of its incorporators are Dominican fathers. He also said that a Bureau of Internal Revenue ruling dated on January 31, 1990, which declared STUH as tax-exempt from all of its importations, is still effective.

The MRI scanners were released last June.

However, the latest USTH importation consisting of 30 stretchers were put on hold by the BOC’s Tax Exempt Division’s chief tax specialist, Dr. Edna Garcia, after she questioned the Hospital’s tax-exemption status. Garcia, basing her findings from the certifications provided by the SEC for the DepEd last May, said the STUH or USTH is not registered with the SEC and therefore does not have “juridical personality”, barring it from legally transacting business with the public.

Garcia’s findings led to another inquiry by DOF’s Conrado on USTH’s tax exempt status. Cacho said Conrado has again asked USTH to submit its comment on the hospital’s tax-exempt status and to forward pertinent documents.

Cacho added that they have already submitted the response and are awaiting the reply of Conrado at the expense of paying storage fees for the pieces of equipment stored at the BOC’s compound.

“My point is, why do we have to show them the documents bearing the reasons and the proof why we should be exempted from tax every time we import something?” Cacho said. Teodoro Lorenzo A. Fernandez and Jennifer B. Fortuno


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