Monday, February 22, 2016

Medicard Philippines, Inc. vs. Commissioner of Internal Revenue (CIR)

FACTS: Petitioner provides services to its members by arranging for the provision by the affiliated hospitals and clinics of medical and/or hospital services. They also provide, on their own, medical and laboratory services and only endorse to the hospitals those that are beyond the competence of the doctors hired by petitioner. For their services, petitioner is compensated in either of two ways – Cost-Plus Program (CPP) which is an administrative expense over and above the covered expenses of the members or Standard Corporate Program which imposes management fee of 20% of the total premiums paid. For both cases, petitioner claims that the amounts eventually paid to the affiliated doctors and hospitals are just funds held in trust and earmarked for such purpose and should not form part of its gross receipts for VAT purposes as the same do not redound to their benefit.

ISSUE: Whether or not petitioner is liable for VAT on the amounts which are paid by it to its affiliate doctors and hospitals

RULING: Yes. The Court distinguished this from the earlier case of Tours Specialists Inc.where the payments for hotel lodging by tourists where turned over/paid to travel agents just for the convenience and economy of the said tourists. In short, the travel agents merely accommodated the tourists and they (agents) had nothing to do with the contract between the tourists and the hotels. This is different in the case of HMOs since all the moneys are paid to them lump sum in exchange for the provision of medical services. Thus, the arrangement negates the concept of “money in trust.” Neither can the regulation stating that “amounts earmarked for payment to unrelated 3rd parties” are excluded from the gross receipts be used as basis since it is not the members who are obligated to the doctors and hospitals but it is actually the HMOs since the contractual vinculum is between them (HMO and hospitals).

Digg Google Bookmarks reddit Mixx StumbleUpon Technorati Yahoo! Buzz DesignFloat Delicious BlinkList Furl

0 comments: on "Medicard Philippines, Inc. vs. Commissioner of Internal Revenue (CIR)"

Post a Comment