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G.R. No. 175356. December 3, 2013.*

MANILA MEMORIAL PARK, INC. and LA FUNERARIA
PAZ-SUCAT, INC., petitioners, vs. SECRETARY OF THE
DEPARTMENT
OF
SOCIAL
WELFARE
AND
DEVELOPMENT and THE SECRETARY OF THE
DEPARTMENT OF FINANCE, respondents.
Constitutional Law; Courts; Judicial Review; Requisites of
Judicial Review.·When the constitutionality of a law is put in
issue, judicial review may be availed of only if the following
requisites concur: „(1) the existence of an actual and appropriate
case; (2) the existence of personal and substantial interest on the
part of the party raising the [question of constitutionality]; (3)
recourse to judicial review is made at the earliest opportunity; and
(4) the [question of constitutionality] is the lis mota of the case.‰
Same; Same; Same; An actual case or controversy exists when
there is „a conflict of legal rights‰ or „an assertion of opposite legal
claims susceptible of judicial resolution.‰·An actual case or
controversy exists when there is „a conflict of legal rights‰ or „an
assertion of opposite legal claims susceptible of judicial resolution.‰
The Petition must therefore show that „the governmental act being
chal_______________
* EN BANC.

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VOL. 711, DECEMBER 3, 2013

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Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development

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lenged has a direct adverse effect on the individual challenging it.‰
In this case, the tax deduction scheme challenged by petitioners has
a direct adverse effect on them. Thus, it cannot be denied that there
exists an actual case or controversy.
Taxation; Tax Deductions; Police Power; Thus, even if the
current law, through its tax deduction scheme (which abandoned the
tax credit scheme under the previous law), does not provide for a
peso for peso reimbursement of the 20% discount given by private
establishments, no constitutional infirmity obtains because, being a
valid exercise of police power, payment of just compensation is not
warranted.·The present case, thus, affords an opportunity for us to
clarify the above-quoted statements in Central Luzon Drug
Corporation, 456 SCRA 414 (2005) and Carlos Superdrug
Corporation, 526 SCRA 130 (2007). First, we note that the abovequoted disquisition on eminent domain in Central Luzon Drug
Corporation is obiter dicta and, thus, not binding precedent. As
stated earlier, in Central Luzon Drug Corporation, we ruled that the
BIR acted ultra vires when it effectively treated the 20% discount as
a tax deduction, under Sections 2.i and 4 of RR No. 2-94, despite the
clear wording of the previous law that the same should be treated
as a tax credit. We were, therefore, not confronted in that case with
the issue as to whether the 20% discount is an exercise of police
power or eminent domain. Second, although we adverted to Central
Luzon Drug Corporation in our ruling in Carlos Superdrug
Corporation, this referred only to preliminary matters. A fair
reading of Carlos Superdrug Corporation would show that we
categorically ruled therein that the 20% discount is a valid exercise
of police power. Thus, even if the current law, through its tax
deduction scheme (which abandoned the tax credit scheme under
the previous law), does not provide for a peso for peso
reimbursement of the 20% discount given by private
establishments, no constitutional infirmity obtains because, being a
valid exercise of police power, payment of just compensation is not
warranted. We have carefully reviewed the basis of our ruling in
Carlos Superdrug Corporation and we find no cogent reason to
overturn, modify or abandon it. We also note that petitionersÊ
arguments are a mere reiteration of those raised and resolved in
Carlos Superdrug Corporation. Thus, we sustain Carlos Superdrug
Corporation.
Police Power; Eminent Domain; „Police Power‰ and „Eminent
Domain,‰ Distinguished.·Police power is the inherent power of the

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Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
State to regulate or to restrain the use of liberty and property for
public welfare. The only limitation is that the restriction imposed
should be reasonable, not oppressive. In other words, to be a valid
exercise of police power, it must have a lawful subject or objective
and a lawful method of accomplishing the goal. Under the police
power of the State, „property rights of individuals may be subjected
to restraints and burdens in order to fulfill the objectives of the
government.‰ The State „may interfere with personal liberty,
property, lawful businesses and occupations to promote the general
welfare [as long as] the interference [is] reasonable and not
arbitrary.‰ Eminent domain, on the other hand, is the inherent
power of the State to take or appropriate private property for public
use. The Constitution, however, requires that private property shall
not be taken without due process of law and the payment of just
compensation.
Same; In the exercise of police power, a property right is
impaired by regulation, or the use of property is merely prohibited,
regulated or restricted to promote public welfare. In such cases, there
is no compensable taking, hence, payment of just compensation is not
required.·In the exercise of police power, a property right is
impaired by regulation, or the use of property is merely prohibited,
regulated or restricted to promote public welfare. In such cases,
there is no compensable taking, hence, payment of just
compensation is not required. Examples of these regulations are
property condemned for being noxious or intended for noxious
purposes (e.g., a building on the verge of collapse to be demolished
for public safety, or obscene materials to be destroyed in the interest
of public morals) as well as zoning ordinances prohibiting the use of
property for purposes injurious to the health, morals or safety of the
community (e.g., dividing a cityÊs territory into residential and
industrial areas). It has, thus, been observed that, in the exercise of
police power (as distinguished from eminent domain), although the
regulation affects the right of ownership, none of the bundle of
rights which constitute ownership is appropriated for use by or for
the benefit of the public.
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10:23 AM Eminent Domain. property interests are appropriated and applied to some public purpose which 305 VOL. it is a settled rule that the acquisition of title or total destruction of the property is not essential for „taking‰ under the power of eminent domain to be present.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Congress may be compelled to adopt or experiment with different measures to promote the general http://central.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 4 of 158 . Examples include the acquisition of lands for the construction of public highways as well as agricultural lands acquired by the government under the agrarian reform law for redistribution to qualified farmer beneficiaries. It may not always be easy to determine whether a challenged governmental act is an exercise of police power or eminent domain. DECEMBER 3. payment of just compensation is warranted because of the burden placed on the property for the use or benefit of the public.·In the exercise of the power of eminent domain. In the exercise of the power of eminent domain. In these cases. vs. Normally. The very nature of police power as elastic and responsive to various social conditions as well as the evolving meaning and scope of public use and just compensation in eminent domain evinces that these are not static concepts. property interests are appropriated and applied to some public purpose which necessitates the payment of just compensation therefor. Because of the exigencies of rapidly changing times. the title to and possession of the property are transferred to the expropriating authority. Secretary of the Department of Social Welfare and Development necessitates the payment of just compensation therefor. Examples of these include establishment of easements such as where the land owner is perpetually deprived of his proprietary rights because of the hazards posed by electric transmission lines constructed above his property or the compelled interconnection of the telephone system between the government and a private company. Police Power. However. Same. 2013 305 Manila Memorial Park.·It may not always be easy to determine whether a challenged governmental act is an exercise of police power or eminent domain. 711. although the private property owner is not divested of ownership or possession. Inc.com.

in need of subsidy in purchasing basic commodities. or senior citizens for that matter. and. thus.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. at their age. the profitability of a private establishment. It may not be amiss to mention also that the discount serves to honor senior citizens who presumably spent the productive years of their lives on contributing to the development and progress of the nation. whether the act is the exercise of police power or eminent domain. and the amount of profits or income/gross sales that such private http://central. it does not purport to appropriate or burden specific properties. In turn. hence. is to look at the nature and effects of the challenged governmental act and decide. therefore. for the use or benefit of the public. Senior Citizen Discount. are less likely to be gainfully employed. vs. at their age.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 5 of 158 . Inc. The judicious approach. Secretary of the Department of Social Welfare and Development who. and. senior citizens.·The 20% discount is intended to improve the welfare of senior citizens 306 306 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. The 20% discount is intended to improve the welfare of senior citizens who. in need of subsidy in purchasing basic commodities. In other words. but merely regulates the pricing of goods and services relative to.com. thus. on the basis thereof. used in the operation or conduct of the business of private establishments. 10:23 AM welfare which may not fall squarely within the traditionally recognized categories of police power and eminent domain. This distinct cultural Filipino practice of honoring the elderly is an integral part of this law. the subject regulation affects the pricing. the 20% discount is a regulation affecting the ability of private establishments to price their products and services relative to a special class of individuals. more prone to illnesses and other disabilities. this affects the amount of profits or income/gross sales that a private establishment can derive from senior citizens. we now look at the nature and effects of the 20% discount to determine if it constitutes an exercise of police power or eminent domain. are less likely to be gainfully employed. for which the Constitution affords preferential concern. and. As to its nature and effects. However. Thus. more prone to illnesses and other disabilities.

oppressive or confiscatory. Because all laws enjoy the presumption of constitutionality.·Because all laws enjoy the presumption of constitutionality. 711.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. resulting in that unfortunate statement that the tax http://central. which will be required to extend the 20% discount. the discounts resulting from sales to senior citizens will not be confiscatory or unduly oppressive. This was the case in Central Luzon Drug Corporation. statements made relative thereto are not always necessary in resolving the actual controversies presented before it. vs.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 6 of 158 . Same. Concurrently. On its face. Congress may have. Statutes. in resolving cases before it. senior citizens. courts will uphold a lawÊs validity if any set of facts may be conceived to sustain it. 2013 307 Manila Memorial Park. Inc. courts will uphold a lawÊs validity if any set of facts may be conceived to sustain it. As a result. Secretary of the Department of Social Welfare and Development products not subject of discounts. 456 SCRA 414 (2005). can be recouped through higher mark​ups or from other 307 VOL. However. Congress may have legitimately concluded that business establishments have the capacity to absorb a decrease in profits or income/gross sales due to the 20% discount without substantially affecting the reasonable rate of return on their investments considering (1) not all customers of a business establishment are senior citizens and (2) the level of its profit margins on goods and services offered to the general public. likewise. in resolving cases before it. have the capacity to revise their pricing strategy so that whatever reduction in profits or income/gross sales that they may sustain because of sales to senior citizens.com. DECEMBER 3. 10:23 AM establishments may derive from.·A court. may look into the possible purposes or reasons that impelled the enactment of a particular statute or legal provision. we find that there are at least two conceivable bases to sustain the subject regulationÊs validity absent clear and convincing proof that it is unreasonable. A court. legitimately concluded that the establishments. may look into the possible purposes or reasons that impelled the enactment of a particular statute or legal provision.

·The Dissent discusses at length the doctrine on „taking‰ in police power which occurs when private property is destroyed or placed outside the commerce of man. burden the conduct of the affairs of business 308 308 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. The senior citizen discount law falls under this latter category. Indeed. vs. it is equally true that there is another class of police power measures which do not involve the destruction of private property but merely regulate its use. in turn. Secretary of the Department of Social Welfare and Development establishments. Inc. that the 20% discount is an exercise of the power of eminent domain. safety or welfare. Police Power. laws limiting the working hours to eight. http://central. morals. and Section 7 of the Pag-IBIG Fund Law.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. These laws merely regulate or. The minimum wage law. no compensation is required. laws regulating the operation of motels and hotels. led to the erroneous conclusion. In such cases.com. zoning ordinances. As earlier mentioned. price control laws. there is a whole class of police power measures which justify the destruction of private property in order to preserve public health. by deductive reasoning.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 7 of 158 . payment of just compensation is not required because they fall within the sphere of permissible police power measures. morals. In such cases. Sections 19 and 18 of the Social Security Law. to use the term of the Dissent. Indeed. likewise. there is a whole class of police power measures which justify the destruction of private property in order to preserve public health. is contrary to settled principles in police power and eminent domain analysis. However. This. safety or welfare. The examples cited by the Dissent. and the like would fall under this category. 10:23 AM credit „can be deemed‰ as just compensation. as will be shown below. these would include a building on the verge of collapse or confiscated obscene materials as well as those mentioned by the Dissent with regard to property used in violating a criminal statute or one which constitutes a nuisance. fall under this category: Article 157 of the Labor Code. The Dissent essentially adopts this theory and reasoning which.

The cost of most. if not all. does not justify the wholesale nullification of these measures. DECEMBER 3. a business establishment may be subject to State regulations. It is a basic postulate of our democratic system of government that the Constitution is a social contract whereby the people have surrendered their sovereign powers to the State for the common good. Prior to the sale of goods or services. It is a basic postulate of our democratic system of government that the Constitution is a social contract whereby the people have surrendered their sovereign powers to the State for the common good.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest 309 Page 8 of 158 . Eminent Domain. a ground to declare it unconstitutional for this goes into the wisdom and expediency of the law. Taking.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Senior Citizen Discount. by itself. 2013 http://central. by itself. Indubitably. Same. oppressive or confiscatory. It should be noted though that potential profits or income/gross sales are relevant in police power and 309 VOL. 10:23 AM Same.‰ Yet.·Prior to the sale of goods or services. or has gone „too far‰ as to amount to a „taking. such as the 20% senior citizen discount. a business establishment may be subject to State regulations. which may impact the level or amount of profits or income/gross sales that can be generated by such establishment. here. the one assailing the law has the heavy burden of proving that the regulation is unreasonable. For this reason. All persons may be burdened by regulatory measures intended for the common good or to serve some important governmental interest. such as the 20% senior citizen discount.com. the validity of the discount is to be determined based on its overall effects on the operations of the business establishment. the Dissent would have this Court nullify the law without any proof of such nature. regulatory measures of the government on business establishments is ultimately passed on to the consumers but that. which may impact the level or amount of profits or income/gross sales that can be generated by such establishment.·That there may be a burden placed on business establishments or the consuming public as a result of the operation of the assailed law is not. 711. such as protecting or improving the welfare of a special class of people for which the Constitution affords preferential concern.

com. in the past. establishments subject to price and rate of return on http://central. in the past. in appropriate cases. what is actually taken is capital and the right of the business establishment to a reasonable return on investment. When the deprivation or reduction of profits or income/gross sales is shown to be unreasonable. The State has. oppressive or confiscatory. this type of regulatory measures is traditionally recognized as police power measures so that the senior citizen discount may be considered as a police power measure as well. If the business losses are not halted because of the continued operation of the regulation. when the regulation causes an establishment to incur losses in an unreasonable. serve as an indicia when a regulation has gone „too far‰ as to amount to a „taking‰ under the power of eminent domain. oppressive or confiscatory.·The State has. serve as an indicia when a regulation has gone „too far‰ as to amount to a „taking‰ under the power of eminent domain. In other words.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 9 of 158 . oppressive or confiscatory manner. this eventually leads to the destruction of the business and the total loss of the capital invested therein. In such a case. regulated prices and profits of business establishments. What is more.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. it is not profits or income/gross sales which are actually taken and appropriated for public use. again. But. Secretary of the Department of Social Welfare and Development eminent domain analyses because they may. this type of regulatory measures is traditionally recognized as police power measures so that the senior citizen discount may be considered as a police power measure as well. In contrast. the substantial distinctions between price and rate of return on investment control laws vis-à-vis the senior citizen discount law provide greater reason to uphold the validity of the senior citizen discount law. then the challenged governmental regulation may be nullified for being a „taking‰ under the power of eminent domain. Rather. 10:23 AM Manila Memorial Park. Inc. petitioners in this case failed to prove that the subject regulation is unreasonable. in appropriate cases. Senior Citizen Discount. As previously discussed. Police Power. In other words. regulated prices and profits of business establishments.·It should be noted though that potential profits or income/gross sales are relevant in police power and eminent domain analyses because they may. the ability to adjust prices allows the establishment subject to the senior citizen discount to prevent or mitigate any reduction of profits or income/gross sales arising from the giving of the discount. vs.

Thus. cannot and should not be summarily invalidated on a mere allegation that it reduces the profits or income/gross sales of business establishments. business establishments may be compelled to contribute to uplifting the plight of vulnerable or marginalized groups in our society provided that the regulation is not arbitrary. Inc. 526 SCRA 130 (2007). Thus. use. On the contrary. and disposition‰ of property and its increments. ownership. ownership. National Power Corporation. On the contrary. the deprivation or reduction of profits or income/gross sales must be clearly shown to be http://central.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 10 of 158 . under the social justice policy of the Constitution. use. Secretary of the Department of Social Welfare and Development Constitutional Law. 10:23 AM investment control laws cannot adjust prices accordingly. or is not in breach of some specific constitutional limitation.·There is nothing in the Constitution that prohibits Congress from regulating the profits or income/gross sales of industries and enterprises without franchises. 310 310 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. which has been in operation for many years and promotes the welfare of a group accorded special concern by the Constitution. A law. 24 SCRA 172 (1968). oppressive or confiscatory. and followed in Carlos Superdrug Corporation. This may cover the regulation of profits or income/gross sales of all businesses. Statutes. the social justice provisions of the Constitution enjoin the State to regulate the „acquisition.com.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. to attain the objective of diffusing wealth in order to protect and enhance the right of all the people to human dignity. consistent with long standing principles in police power and eminent domain analysis. vs. without qualification.·We maintain that the correct rule in determining whether the subject regulatory measure has amounted to a „taking‰ under the power of eminent domain is the one laid down in Alalayan v. and disposition‰ of property and its increments. There is nothing in the Constitution that prohibits Congress from regulating the profits or income/gross sales of industries and enterprises without franchises. the social justice provisions of the Constitution enjoin the State to regulate the „acquisition.

the Court must clarify taking in police power and taking in eminent domain. DECEMBER 3. the taking of private property by the government under eminent domain has to be for public use and there must be just http://central. vs. View that taking under the exercise of police power does not require any compensation because the property taken is either destroyed or placed outside the commerce of man. such determination can only be made upon the presentation of competent proof which petitioners failed to do. 311 VOL. 2013 311 Manila Memorial Park. Thus. which has been in operation for many years and promotes the welfare of a group accorded special concern by the Constitution. When police power is exercised. Dissenting Opinion: Police Power. Secretary of the Department of Social Welfare and Development CARPIO. 10:23 AM unreasonable. In order to be valid. While it is true that police power is similar to the power of eminent domain because both have the general welfare of the people for their object.·As regards Carlos Superdrug Corporation. Government officials cannot just invoke police power when the act constitutes eminent domain. 711. a second look at the case shows that it barely distinguished between police power and eminent domain. When eminent domain is exercised. there is no just compensation to the citizen who loses his private property. J. Inc. Same. there must be just compensation.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Same.com. we need to clarify the concept of taking in eminent domain as against taking in police power to prevent any claim of police power when the power actually exercised is eminent domain. cannot and should not be summarily invalidated on a mere allegation that it reduces the profits or income/gross sales of business establishments. Eminent Domain..ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 11 of 158 . 526 SCRA 130 (2007). A law. Under the specific circumstances of this case. View that when police power is exercised. When eminent domain is exercised. there must be just compensation. there is no just compensation to the citizen who loses his private property. oppressive or confiscatory.

A. the taking of private property by the 312 312 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. In order to be valid.·Clearly.A. money or cash is private property because it is something of value that is subject to private ownership. Inc. 10:23 AM compensation. View that the taking of property under Section 4 of R. The only direct constitutional qualification is that „private property should not be taken for public use without just compensation. The taking of property under Section 4 of R.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 12 of 158 . It is a right to take or reassert dominion over property within the state for public use or to meet public exigency. taking under the exercise of police power does not require any compensation because the property taken is either destroyed or placed outside the commerce of man. 7432 is an exercise of the power of eminent domain and not an exercise of the police power of the State.com. Secretary of the Department of Social Welfare and Development government under eminent domain has to be for public use and there must be just compensation. A clear http://central. Eminent Domain. including the mandatory discounts given to senior citizens which form part of the gross sales of the private establishments that are forced to give them.·In Section 4 of R. vs. Private property is anything that is subject to private ownership. 7432 is an exercise of the power of eminent domain and not an exercise of the police power of the State. it is undeniable that there is taking of property for public use.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. It is said to be an essential part of governance even in its most primitive form and thus inseparable from sovereignty. For sure.A. the power of eminent domain has been described as · x x x Âthe highest and most exact idea of property remaining in the governmentÊ that may be acquired for some public purpose through a method in the nature of a forced purchase by the State. The property taken for public use applies not only to land but also to other proprietary property. The amount of mandatory discount is money that belongs to the private establishment. On the other hand.‰ This proscription is intended to provide a safeguard against possible abuse and so to protect as well the individual against whose property the power is sought to be enforced. 7432.

the 20% discount applies to non-profit establishments like country. the private establishments cannot recover the full amount of the discount they give and thus there is taking to the extent of the amount that cannot be recovered. social. DECEMBER 3. mortgaged.com. 711. 10:23 AM and sharp distinction should be made because private property owners will be left at the mercy of government officials if these officials are allowed to invoke police power when what is actually exercised is the power of eminent domain. Senior Citizen Discount. Secretary of the Department of Social Welfare and Development Same. that could make up for the 68% balance of the mandatory discount. or golf clubs which are open to the public and not only for exclusive membership.·Article 157 is a burden imposed by the State on private employers to complement a government program of promoting a healthy http://central. View that Section 9. Article III of the 1987 Constitution speaks of private property without any distinction.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 13 of 158 . Same. or any other form of payment. donated. 2013 313 Manila Memorial Park. part of the gross sales of private establishments. It does not state that there should be profit before the taking of property is subject to just compensation. Clearly. It does not state that there should be profit before the taking of property is subject to just compensation. vs. The 20% discount granted to senior citizens belongs to private establishments. purchased.·Section 9.‰ 313 VOL. In fact. Article III of the 1987 Constitution speaks of private property without any distinction. They are all private property and any taking should be attended by a corresponding payment of just compensation. View that in the case of the senior citizenÊs discount. The private property referred to for purposes of taking could be inherited. Inc. There are no services rendered by the senior citizens. whether these establishments make a profit or suffer a loss.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Just compensation is „the full and fair equivalent of the property taken from its owner by the expropriator. or as in this case. The issue of profit or loss to the establishments is immaterial. the private establishment is compensated only in the equivalent amount of 32% of the mandatory discount.

Inc. One example is the two-day liquor ban during elections under Article 261 of the Omnibus Election Code but this. In the case of the senior citizenÊs discount. Clearly. Secretary of the Department of Social Welfare and Development the regulation is reasonable. again. the cost of maintaining the clinic and staff is part of the legislated wages for which the private employer is fully compensated by the services of the employees. but when the regulation amounts to http://central. the private establishments cannot recover the full amount of the discount they give and thus there is taking to the extent of the amount that cannot be recovered. is only for a limited period. View that the State cannot compel private establishments without franchises to grant discounts.·The State cannot compel private establishments without franchises to grant discounts. The employer itself.com. the private establishment is compensated only in the equivalent amount of 32% of the mandatory discount. Same.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 14 of 158 . Article VI of the 1987 Constitution but only for a limited period and subject to such restrictions as Congress may provide. Police Power. the State may also temporarily limit or suspend business activities. This is a valid exercise of police power of the State. that could make up for the 68% balance of the mandatory discount. or to operate at a loss. because that constitutes taking of private property for public use without just compensation. Moreover. or any other form of payment. There are no services rendered by the senior citizens. vs. Under its police power. or to operate at a loss. The State can take over private property without compensation in times of war or other national emergency under Section 23(2).SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Same. 10:23 AM workplace. because that constitutes taking of private property for public use without just compensation. View that the State has the power to regulate the conduct of the business of private establishments as long as 314 314 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. benefits fully from this burden because the health of its workers while in the workplace is a legitimate concern of the private employer. Same. however.

A. 9257. Concurring Opinion: Police Power. or Section 4 of R. the practice of allowing taking of private property without just compensation is an abhorrent policy.·Indeed. which allows the 20% discount as tax credit. Same. as amended by R. providing that private establishments may claim the 20% discount to senior citizens as tax deduction.·Any form of permanent taking of private property is an exercise of eminent domain that requires the State to pay just compensation. the old law. The State has the power to regulate the conduct of the business of private establishments as long as the regulation is reasonable. It is. 4 of RA 9257.·Due to the patent unconstitutionality of Section 4 of R. it is my humble opinion that Sec. but when the regulation amounts to permanent taking of private property for public use.A. providing that private establishments may claim the 20% discount to senior citizens as tax deduction. or Section 4 of R. An amendatory law. Where amendments to a statute are declared unconstitutional. 9257. is automatically reinstated. as amended by R. VELASCO.A. J. 4 of RA 9257 is no 315 http://central. which allows the 20% discount as tax credit. in legal contemplation does not exist.A. The police power to regulate business cannot negate another provision of the Constitution like the eminent domain clause. I do not agree that such policy underpins Sec. Rather. 7432. 7432..A. However. 7432.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 15 of 158 . View that due to the patent unconstitutionality of Section 4 of R. 10:23 AM permanent taking of private property for public use. the original statute as it existed before the amendment remains in force. 7432. there must be just compensation because the regulation now reaches the level of eminent domain. is automatically reinstated. The private establishments should therefore be allowed to claim the 20% discount granted to senior citizens as tax credit. a valid exercise of the police power of the State.A.com. thus. if declared null and void. there must be just compensation because the regulation now reaches the level of eminent domain. View that Sec. which requires just compensation to be paid for the taking of private property for public use. 4 of RA 9257 is no more than a regulation of the right to profits of certain taxpayers in order to benefit a significant sector of society. the old law.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Senior Citizen Discount.

Same. the State is empowered to regulate this right to the acquisition of this financial gain to benefit senior citizens by ensuring that the good or service be sold to them at a price 20% less than the regular selling price. Similarly. View that the right to profit. 2013 9/2/15. as distinguished from profit itself. Contractual rights are also subject to the regulatory police power of the State.·The right to profit. Without the sale and corresponding purchase by senior citizens. It is. This nebulous nature of the financial gain of the seller deters the acquisition by the state of the „domain‰ or ownership of the right to such financial gain through expropriation. View that the imposition of price control is recognized as a valid exercise of police power that does not give businessmen the right to be compensated for the amount of what they could have earned considering the demand of the market. The right to profit is not immune from http://central. there is no gain derived by the taxpayer. this Court has recognized the fundamental police power of the State to regulate the exercise of various rights holding that „equally fundamental with the private right is that of the public to regulate it in the common interest. Same. Secretary of the Department of Social Welfare and Development more than a regulation of the right to profits of certain taxpayers in order to benefit a significant sector of society.com. 711. for instance. as distinguished from profit itself. Inc. DECEMBER 3. recognized the power of the State to regulate and temper the right of employers to dismiss their employees. is not subject to expropriation as it is of a mercurial character that denies the possibility of taking for a public purpose.·Time and again.SUPREME COURT REPORTS ANNOTATED VOLUME 711 VOL. thus. 10:23 AM 315 Manila Memorial Park. is not subject to expropriation as it is of a mercurial character that denies the possibility of taking for a public purpose. We have sustained the StateÊs power to regulate the right to acquire and possess arms. Senior Citizen Discount. It is a right solely within the discretion of the taxpayers that cannot be appropriated by the government. Same. Such percentage of the sale price may include both the markup on the cost of the good or service and the income to be gained from the sale. vs. The effect of RA 9257 is not dissimilar to a price control law. The mandated 20% discount for the benefit of senior citizens is not a property already vested with the taxpayer before the sale of the product or service. At best.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 16 of 158 . a valid exercise of the police power of the State.‰ This Court has.

Same. the imposition of price control is recognized as a valid exercise of police power that does not give businessmen the right to be compensated for the amount of what they could have earned considering the demand of the market. Same. View that as it is a regulatory law.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Inc. Thus.. it simply regulated the right to the attainment of these profits. this Court 316 316 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. the assertion that the http://central. not a law implementing the power of eminent domain. View that RA 9257 has to be sure not obliterated the right of taxpayers to profit nor divested them of profits already earned. It is an acknowledgment that proprietors can and will factor in the potential deduction of 20% of the price given to some of their customers. i.com. Same. in the overall pricing strategy of their products and services. Secretary of the Department of Social Welfare and Development has rejected the doctrine of laissez faire as an axiom of economic theory and has upheld the power of the State to regulate businesses even to the extent of limiting their profit. The enforcement of the 20% discount in favor of senior citizens does not.·The fact that the State has not fixed an amount to be deducted from the selling price of certain goods and services to senior citizens indicates that RA 9257 is a regulatory law under the police power of the State.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 17 of 158 . it simply regulated the right to the attainment of these profits. As such. RA 9257 has to be sure not obliterated the right of taxpayers to profit nor divested them of profits already earned. As early as the first half of the past century. 10:23 AM this regulatory power of the State intended to promote the common good and the attainment of social justice. The enforcement of the 20% discount in favor of senior citizens does not. partake the nature of „taking‰ in the context of eminent domain. The effect of RA 9257 is not dissimilar to a price control law. Same. therefore. the senior citizens.e. partake the nature of „taking‰ in the context of eminent domain. therefore. vs. proprietors like petitioners cannot insist that they are entitled to a peso-for-peso compensation for complying with the valid regulation embodied in RA 9257 that restricts their right to profit.

SUPREME COURT REPORTS ANNOTATED VOLUME 711

9/2/15, 10:23 AM

use of the 20% discount as a deduction negates its role as a „just
compensation‰ is mislaid and irrelevant.·As it is a regulatory law,
not a law implementing the power of eminent domain, the assertion
that the use of the 20% discount as a deduction negates its role as a
„just compensation‰ is mislaid and irrelevant. In the first place, as
RA 9257 is a regulatory law, the allowance to use the 20% discount,
as a deduction from the gross income for purposes of computing the
income tax payable to the government, is not intended as
compensation. Rather, it is simply a recognition of the fact that no
income was
317

VOL. 711, DECEMBER 3, 2013

317

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
realized by the taxpayer to the extent of the 20% of the selling price
by virtue of the discount given to senior citizens. Be that as it may,
the logical result is that no tax on income can be imposed by the
State. In other words, by forcing some businesses to give a 20%
discount to senior citizens, the government is likewise foregoing the
taxes it could have otherwise earned from the earnings pertinent to
the 20% discount. This is the real import of Sec. 4 of RA 9257. As
RA 9257 does not sanction any taking of private property, the
regulatory law does not require the payment of compensation.
BERSAMIN, J., Concurring Opinion:
Police Power; Senior Citizen Discount; View that the imposition
of the discount does not emanate from the exercise of the power of
eminent domain, but from the exercise of police power.·The
petitionersÊ claim of unconstitutionality of the tax deduction scheme
under the Expanded Senior Citizens Act rests on the premise that
the 20% senior citizen discount was enacted by Congress in the
exercise of its power of eminent domain. Like the Majority, I cannot
sustain the claim of the petitioners, because I find that the
imposition of the discount does not emanate from the exercise of the
power of eminent domain, but from the exercise of police power.
Eminent Domain; View that the StateÊs exercise of the power of
eminent domain is not without limitations, but is constrained by
Section 9, Article III of the Constitution, which requires that private
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property shall not be taken for public use without just compensation,
as well as by the Due Process Clause found in Section 1, Article III of
the Constitution.·The StateÊs exercise of the power of eminent
domain is not without limitations, but is constrained by Section 9,
Article III of the Constitution, which requires that private property
shall not be taken for public use without just compensation, as well
as by the Due Process Clause found in Section 1, Article III of the
Constitution. According to Republic v. Vda. de Castellvi, 58 SCRA
336 (1974), the requisites of taking in eminent domain are as
follows: first, the expropriator must enter a private property;
second, the entry into private property must be for more than a
momentary period; third, the entry into the property should be
under warrant or color of legal authority; fourth, the property must
be devoted to a public use or otherwise informally appropriated or
injuriously affected; and, fifth, the utilization of the property for
public use must
318

318

SUPREME COURT REPORTS ANNOTATED

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
be in such a way as to oust the owner and deprive him of all
beneficial enjoyment of the property.
Same; View that the essential component of the proper exercise
of the power of eminent domain is, therefore, the existence of
compensable taking.·The essential component of the proper
exercise of the power of eminent domain is, therefore, the existence
of compensable taking. There is taking when · [T]he owner is
actually deprived or dispossessed of his property; when there is a
practical destruction or a material impairment of the value of his
property or when he is deprived of the ordinary use thereof. There
is a „taking‰ in this sense when the expropriator enters private
property not only for a momentary period but for a more permanent
duration, for the purpose of devoting the property to a public use in
such a manner as to oust the owner and deprive him of all
beneficial enjoyment thereof. For ownership, after all, „is nothing
without the inherent rights of possession, control and enjoyment.‰
Where the owner is deprived of the ordinary and beneficial use of
his property or of its value by its being diverted to public use, there
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is taking within the Constitutional sense.
Same; Senior Citizen Discount; View that the nature and effects
of the 20% senior citizen discount do not meet all the requisites of
taking for purposes of exercising the power of eminent domain as
delineated in Republic v. Vda. de Castellvi, 58 SCRA 336 (1974),
considering that the second of the requisites, that the taking must be
for more than a momentary period, is not met.·The nature and
effects of the 20% senior citizen discount do not meet all the
requisites of taking for purposes of exercising the power of eminent
domain as delineated in Republic v. Vda. de Castellvi, 58 SCRA 336
(1974), considering that the second of the requisites, that the taking
must be for more than a momentary period, is not met. I base this
conclusion on the universal understanding of the term momentary,
rendered in Republic v. Vda. de Castellvi thusly: „Momentary‰
means, „lasting but a moment; of but a momentÊs duration‰ (The
Oxford English Dictionary, Volume VI, page 596); „lasting a very
short time; transitory; having a very brief life; operative or
recurring at every moment‰ (WebsterÊs Third International
Dictionary, 1963 edition.) The word „momentary‰ when applied to
possession or occupancy of (real) property should be construed to
mean „a limited period‰ · not indefinite or permanent.
319

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319

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development

Same; Same; View that under the Expanded Senior Citizens
Act, the 20% senior citizen discount is a special privilege granted
only to senior citizens or the elderly, as defined by law, when a sale
is made or a service is rendered by a covered establishment to a
senior citizen or an elderly.·In concept, discount is an abatement or
reduction made from the gross amount or value of anything; a
reduction from a price made to a specific customer or class of
customers. Under the Expanded Senior Citizens Act, the 20% senior
citizen discount is a special privilege granted only to senior citizens
or the elderly, as defined by law, when a sale is made or a service is
rendered by a covered establishment to a senior citizen or an
elderly. The income or revenue corresponding to the amount of the
discount granted to a senior citizen is thus unrealized only in the
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Page 20 of 158

com. insofar as it is being exercised by the State. the Expanded Senior Citizens Act does not intend to prevent any evil or destroy anything obnoxious. the Expanded Senior Citizens Act remains a http://central. View that police power. insofar as it is being exer320 320 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Secretary of the Department of Social Welfare and Development cised by the State.·The 20% senior citizen discount forbids a covered establishment from selling certain goods or rendering services to senior citizens in excess of 80% of the offered price. Although a form of regulation of or limitation on property right is thereby manifest. to recognize his important role in society. however. prohibiting. View that the amount corresponding to the discount. vs. is depicted as a regulating. Same. thereby causing a diminution in the revenue or profits of the covered establishment. It is neither benevolent nor generous. Verily.·Police power.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Same. prohibiting. and to maximize his contribution to nation-building. Same. Unlike traditional regulatory legislations. is retained by the senior citizen to be used by him in order to promote his well-being. however. and punishing power. Same. is retained by the senior citizen to be used by him in order to promote his well-being. Even so. what the law clearly and primarily intends is to grant benefits and special privileges to senior citizens. Unlike traditional regulatory legislations. It is neither benevolent nor generous. the discount is not availed of when there is no sale or service rendered to a senior citizen. to recognize his important role in society. the Expanded Senior Citizens Act remains a valid exercise of the StateÊs police power. and to maximize his contribution to nation-building. and punishing power. Even so. instead of being converted to income of the covered establishments. is depicted as a regulating. The amount corresponding to the discount. Inc. the Expanded Senior Citizens Act does not intend to prevent any evil or destroy anything obnoxious. instead of being converted to income of the covered establishments.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 21 of 158 . 10:23 AM event that a sale is made or a service is rendered to a senior citizen.

BusinessesÊ discretion to fix the regular price or improve the costs of the goods or the service that they offer to the public · and therefore determine their profit · is not affected by the law. Therein. Concurring and Dissenting Opinion: Police Power. losses are not inevitable. There will be two prices for every good or service: one is the regular price for everyone except for senior citizens who get a twenty percent (20%) discount. Senior Citizen Discount. which include qualifications such as exemptions. View that the imposition of a discount for senior citizens affects the price. exclusions and deductions. LEONEN. proves instructive. Put simply. are not guaranteed by the change in legislation challenged in this Petition. Domingo. 711. will be part of the cost of doing business for all such businesses. It is thus an inherently regulatory function. 2013 http://central. to be taken out of the unappropriated available existing funds from the Municipal Treasury. the constitutional challenge should 321 VOL. Constitutional Law. The ruling in Binay v. therefore. which involves police power as exercised by a local government unit pursuant to the general welfare clause..·Losses. On this basis alone. It is thus an inherently regulatory function. 201 SCRA 508 (1991).ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest 321 Page 22 of 158 . 10:23 AM valid exercise of the StateÊs police power. J. Legislation interferes with the autonomy of contractual arrangements in that it imposes a twotiered pricing system. Taxes. the barriers to entry that will make possible the expansion of suppliers should there be a change in the prices and the profits that can be made in that industry.com.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.·The imposition of a discount for senior citizens affects the price. nothing in the law controls the prices of the goods subject to such discount. the erstwhile Municipality of Makati had passed a resolution granting burial assistance of P500. rational businesses will take into consideration economic factors such as price elasticity. the kind of competition businesses face.00 to qualified beneficiaries. the market structure. View that the Supreme Court does not decide constitutional issues on the basis of inchoate losses and uncertain burdens. Of course. However. DECEMBER 3.

‰ The scope of the legislative power to tax necessarily includes not only the power to determine the rate of tax but the method of its collection as well.·The power to tax is „a principal attribute of sovereignty. We do not decide constitutional issues on the basis of inchoate losses and uncertain burdens. There is no factual basis for that kind of certainty. Furthermore. the methods of assessment. income and profits are not vested rights.·While the power to tax has been considered the strongest of all of governmentÊs powers http://central.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. the StateÊs power is entitled to presumption of validity x x x. View that while the power to tax has been considered the strongest of all of governmentÊs powers with taxes as the „lifeblood of the government.‰ this power has its limits. why it should be imposed.‰ In fact.‰ This means that the power to tax also allows Congress to determine matters as whether tax rates will be applied to gross income or net income and whether costs such as discounts may be allowed as a deduction from gross income or a tax credit from net income after tax. They are the results of good or bad business judgments occasioned by the proper response to their economic environment. We have held that Congress has the power to „define what tax shall be imposed. Same. Taxation. the kind of property.‰ Such inherent power of the State anchors on its „social contract with its citizens [which] obliges it to promote public interest and common good.com. vs. View that the power to tax also allows Congress to determine matters as whether tax rates will be applied to gross income or net income and whether costs such as discounts may be allowed as a deduction from gross income or a tax credit from net income after tax. Profits and the maintenance of a steady stream of income should be the reward of business acumen of entrepreneurship. 10:23 AM Manila Memorial Park. Inc. the State has the power „to make reasonable and natural classifications for the purposes of taxation x x x [w]hether it relates to the subject of taxation.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 23 of 158 . how much tax shall be imposed. Secretary of the Department of Social Welfare and Development fail. We should not allow ourselves to become the tools for good business results for some businesses. The case is premised on the inevitable loss to be suffered by the petitioners. or the amounts to be raised. against whom (or what) it shall be imposed and where it shall be imposed. the rates to be levied. valuation and collection. Courts read law and in doing so provide the givens in a business environment.

x x x x It is said that taxes are what we pay for civilized society. Second.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. But even as we concede the inevitability and indispensability of taxation. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation. Without taxes. For all the awesome power of the tax collector. On the other hand. First. If it is not.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 24 of 158 . for its part. The government. that the law has not been observed. is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. he may still be stopped in his tracks if the taxpayer can demonstrate. such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. as follows: Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.·The Constitution provides for http://central. In a number of cases. vs. 158 SCRA 9 (1988). the government would be paralyzed for lack of the motive power to activate and operate it. despite the natural reluctance to surrender part of oneÊs hard-earned income to the taxing authorities. Secretary of the Department of Social Welfare and Development case of Commissioner of Internal Revenue v.‰ this power has its limits. taxes must neither be confiscatory nor arbitrary as to amount to a deprivation of property without due process of law. as it has here. Algue. every person who is able to must contribute his share in the running of the government. View that the Constitution provides for limitations on the power of taxation. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. then the taxpayer has a right to complain and the courts will then come to his succor. Hence. we have referred to our discussion in the 1988 322 322 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. 10:23 AM with taxes as the „lifeblood of the government. the rule of taxation shall be uniform and equitable.com. Inc. may be achieved. which is the promotion of the common good. Constitutional Law. Same.

oppressive or confiscatory.‰ The tax deduction scheme for the 20% discount applies equally and uniformly to all the private establishments covered by the law.‰ In Chamber of Real Estate and BuildersÊ Associations. 2013 323 Manila Memorial Park. „[t]he rule of taxation shall be uniform and equitable. petitioners questioned the constitutionality of the Minimum Corporate Income Tax (MCIT) alleging among others that „pegging the tax base of the MCIT to a corporationÊs gross income is tantamount to a confiscation of capital because gross income. Thus. v. however. http://central. is not Ârealized gain. 24 SCRA 172 (1968). it explained that this is due to the absence of any clear showing that the discount is unreasonable. View that while the main opinion held that the 20% senior citizen discount is a valid exercise of police power.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 25 of 158 . Secretary of the Department of Social Welfare and Development Romulo. Alalayan v.com. open to the possibility that eminent domain will apply. 10:23 AM limitations on the power of taxation. Second. National Power Corporation. ·The ponencia is. it complies with this limitation. or the required 20% senior citizens discount. and Carlos Superdrug Corp. Inc. v. First. oppressive or confiscatory as to amount to a taking under eminent domain requiring the payment of just compensation. Inc. 711.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Executive Secretary 323 VOL. 614 SCRA 605 (2010). taxes must neither be confiscatory nor arbitrary as to amount to a „[deprivation] of property without due process of law. were cited as examples when there was failure to prove that the limited rate of return for franchise holders. 526 SCRA 130 (2007). While the main opinion held that the 20% senior citizen discount is a valid exercise of police power. DECEMBER 3. it explained that this is due to the absence of any clear showing that the discount is unreasonable. „were arbitrary. vs.Ê ‰ Same. oppressive or confiscatory as to amount to a taking under eminent domain requiring the payment of just compensation.‰ It found that petitioners similarly did not establish the factual bases of their claims and relied on hypothetical computations. Department of Social Welfare and Development.‰ This requirement for uniformity and equality means that „all taxable articles or kinds of property of the same class [shall] be taxed at the same rate. unlike net income.

ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 26 of 158 . In a sense. Secretary of the Department of Social Welfare and Development public highway for example. the expropriator must enter a private property. Same. Second. de Castellvi. x x x. the rules governing expropriation proceedings.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. View that in Republic of the Philippines v. Vda.com. Vda. specifically that of land. the entrance into private property must be for more than a momentary period. this Court also laid down five (5) „circumstances [that] must be present in the ÂtakingÊ of property for purposes of eminent domain‰ as follows: First. de Castellvi. most tangible personal or movable property need not be subject of a forced sale when the government can procure these items in a public bidding with several able and willing private sellers. The common situation is that the government needs a specific plot. the property must be devoted to a public use or otherwise informally appropriated or http://central. 58 SCRA 336 (1974).‰ this refers to tangible personal property for which the court will deliberate as to its value for purposes of just compensation. vs. x x x. 58 SCRA 336 (1974). the entry into the property should be under warrant or color of legal authority. Inc.‰·Eminent domain has been defined as „an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Although Rule 67 of the Rules of Court. Third. for the construction of a 324 324 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Fourth. 10:23 AM Eminent Domain. On the other hand. the Supreme Court laid down five (5) „circumstances that must be present in the ÂtakingÊ of property for purposes of eminent domain. View that eminent domain has been defined as „an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. the forced nature of a sale under eminent domain is more justified for real property such as land. and the private owner cannot move his land to avoid being part of the project.‰·In Republic of the Philippines v. x x x.‰ Most if not all jurisprudence on eminent domain involves real property. requires the complaint to „describe the real or personal property sought to be expropriated.

View that when the 20% discount is given to customers who are senior citizens.· Profits are not only intangible personal property. However. and cost in order to manage potential outcomes of profit or loss at any given point. An inchoate right means that the right „has not fully developed. x x x. Fifth. is uncertain. However.com. View that profits are considered as „future economic benefits‰ which. DECEMBER 3. this moment is fleeting and the perceived loss can easily be recouped by sales to ordinary citizens at higher prices. Republic Act http://central. quantity. this moment is fleeting and the perceived loss can easily be recouped by sales to ordinary citizens at higher prices. Business decisions are made every day dealing with factors such as price. 711.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.‰ It may or may not ripen. entitles petitioners only to an inchoate right. They are also inchoate rights. matured. Just compensation has been defined „to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation. 10:23 AM injuriously affected. at best. Senior Citizen Discount. vs. the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property.·When the 20% discount is given to customers who are senior citizens. As it stands. Secretary of the Department of Social Welfare and Development Police Power. Same. The existence of profits. at best. there is a perceived loss for the establishment for that same amount at that precise moment. 2013 325 Manila Memorial Park. there is a perceived loss for the establishment for that same amount at that precise moment. or vested. This is not the private property referred in the Constitution that can be taken and would require the payment of just compensation. x x x. Inc.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 27 of 158 . The requirement for „entry‰ or the element of „oust[ing] the owner‰ is not possible for intangible personal property such as profits.‰ 325 VOL. Profits are thus considered as „future economic benefits‰ which. more so its specific amount. This is not the private property referred in the Constitution that can be taken and would require the payment of just compensation. The concern that more consumers will suffer as a result of a price increase is a matter better addressed to the wisdom of the Congress. entitles petitioners only to an inchoate right.

Necessarily. actual or specific for taking in this scenario. We cannot consider this fluid concept of possible loss and potential profit as private property belonging to private establishments. Thus. and disposition of property and its increments. The facts are stated in the opinion of the Court. ownership. Montecillo & Ongsiako for petitioners. the State shall regulate the acquisition. To this end. 9257 does not establish a price control. the state may regulate the acquisition. some of which are within the control of the private establishments. View that in the exercise of its police power and in promoting senior citizensÊ welfare. Business decisions like these have been made even before the 20% discount became law. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity. use. vs. For this purpose. http://central.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. in the exercise of its police power and in promoting senior citizensÊ welfare. Secretary of the Department of Social Welfare and Development SPECIAL CIVIL Prohibition. and will continue to be made to adapt to the ever changing market. ACTION in the Supreme Court. For non-profit establishments. they may cut down on costs and make other business decisions to optimize performance.‰ 326 326 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. ownership. use. 10:23 AM No. there is nothing to compensate. They are inchoate. Same. Inc. economic.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 28 of 158 . the government „can impose upon private establishments the burden of partly subsidizing a government program. the government „can impose upon private establishments [like petitioners] the burden of partly subsidizing a government program. Siguion Reyna. reduce social. They may or may not exist depending on many factors. There is nothing concrete. Same. viz. and disposition of property and its increments. and political inequalities.‰·Article XIII was introduced in the 1987 Constitution to specifically address Social Justice and Human Rights. and remove cultural inequities by equitably diffusing wealth and political power for the common good. earmarked.: Section 1.com.

2013 327 Manila Memorial Park. 501 (1990). [2] Rollo. GRANT BENEFITS CONTRIBUTION AND OF SENIOR CITIZENS SPECIAL PRIVILEGES AND FOR TO OTHER PURPOSES.. _______________ [1] Cordillera Broad Coalition v. Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 29 of 158 . 260 Phil. 3-36. Approved February 26. 327 VOL. [3] AN ACT TO MAXIMIZE THE CONTRIBUTION BUILDING. Inc. 1992.‰ otherwise known as the Expanded Senior Citizens Act of 2003. Secretary of the Department of Social Welfare and Development Factual Antecedents http://central. 7432. against public respondents Secretaries of the Department of Social Welfare and Development (DSWD) and the Department of Finance (DOF). the burden of proof rests upon him. vs.[1] Before us is a Petition for Prohibition[2] under Rule 65 of the Rules of Court filed by petitioners Manila Memorial Park. 181 SCRA 495.[3] as amended by RA 9257. DECEMBER 3. GRANT BENEFITS AND OF SENIOR CITIZENS SPECIAL PRIVILEGES AND FOR TO NATION OTHER PURPOSES.[4] and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction. OTHERWISE MAXIMIZE THE NATION BUILDING. [4] AN ACT GRANTING ADDITIONAL BENEFITS CITIZENS AMENDING KNOWN AS „AN ACT FOR THE TO AND PRIVILEGES TO SENIOR PURPOSE REPUBLIC ACT NO. 7432. 535. and La Funeraria Paz-Sucat. Inc. J. otherwise known as the Senior Citizens Act.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Inc. 10:23 AM The Solicitor General for respondents. DEL CASTILLO. 528.: When a party challenges the constitutionality of a law. pp. domestic corporations engaged in the business of providing funeral and burial services. 2004. Approved April 23.com. Commission on Audit. 711.

subject to guidelines to be issued by the Department of Health. and amusement. That private establishments may claim the cost as tax credit. hotels and similar lodging establishment[s]. circuses. restaurants and recreation centers and purchase of medicine anywhere in the country: Provided. c) exemption from the payment of individual income taxes: Provided. granting senior citizens the following privileges: SECTION 4. Revenue Regulations (RR) No. as are enjoyed by those in actual service. 0294 was issued to implement RA 7432. d) exemption from training fees for socioeconomic programs undertaken by the OSCA as part of its work. leisure. f) to the extent practicable and feasible. e) free medical and dental services in government establishment[s] anywhere in the country. RA 7432 was passed into law. cinema houses and concert halls. Tax Credit · refers to the amount representing the 20% http://central. b) a minimum of twenty percent (20%) discount on admission fees charged by theaters. DEFINITIONS.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. That their annual taxable income does not exceed the property level as determined by the National Economic and Development Authority (NEDA) for that year. 1993. Inc. 10:23 AM On April 23. the Government Service Insurance System and the Social Security System. On August 23. 1992. as the case may be. Sections 2(i) and 4 of RR No.·For purposes of these regulations: i.·The senior citizens shall be entitled to the following: a) the grant of twenty percent (20%) discount from all establishments relative to utilization of transportation services.com. Privileges for the Senior Citizens. vs. Secretary of the Department of Social Welfare and Development Sec. the continuance of the same benefits and privileges given by the Government Service Insurance System (GSIS). 2.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 30 of 158 . 02-94 provide: 328 328 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. carnivals and other similar places of culture. Social Security System (SSS) and PAGIBIG.

at pp.e. which shall include the name. Secretary of the Department of Social Welfare and Development RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts they grant.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. gross sales/ receipts. carnivals and other similar places of culture.] leisure and amusement.·Private establishments. transport services. Central Luzon Drug Corporation. hotels and similar lodging establishments.[6] thus: _______________ [5] 496 Phil. In Commissioner of Internal Revenue v. DECEMBER 3. 325-326 and 332-333. restaurants. xxxx Sec. theaters. discounts. 307. 2013 329 Manila Memorial Park. dates of transactions and invoice number for every transaction. drugstores. 02-94 as erroneous because these contravene RA 7432. In turn.[5] the Court declared Sections 2(i) and 4 of RR No. hotels and similar lodging establishments. cinema houses. pp. vs.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 31 of 158 . concert halls. 456 SCRA 414 (2005). the http://central. circuses. The amount of 20% discount shall be deducted from the gross income for income tax purposes and from gross sales of the business enterprise concerned for purposes of the VAT and other percentage taxes. Inc.. restaurants. 711. circuses. recreation centers. i.com. theaters. 10:23 AM discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services. recreation centers. cinema houses. leisure and amusement. identification number. 329 VOL. 434-435 and 440-441. RECORDING/BOOKKEEPING REQUIRE​-​MENTS FOR PRIVATE ESTABLISHMENTS.. drugstores. [6] Id. carnivals and other similar places of culture[. 4. which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. giving 20% discounts to qualified senior citizens are required to keep separate and accurate record[s] of sales made to senior citizens. concert halls.

considering that the latter has to be deducted from gross sales in order to compute the gross income in the income statement and cannot be deducted again.‰ or „a reduction from the full amount or value of something.‰ In ordinary business language. The option to avail of the tax credit benefit depends upon the existence of a tax liability. This contrived definition is improper.i and 4 of Revenue Regulations No. even for purposes of computing the income tax. is indefensible. the definition given by petitioner is erroneous. it is in business parlance „a deduction or lowering of an amount of money. plain and simple. Secretary of the Department of Social Welfare and Development · when claimed · shall be treated as a reduction from any tax liability. In effect. the tax credit benefit under RA 7432 is related to a sales discount. First. a discount is an „abatement or reduction made from the gross amount or value of anything.‰ To be more precise. 10:23 AM Implementing Rules and Regulations.‰ In business there are many kinds of discount. It refers to tax credit as the amount representing the 20 percent discount that „shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for valueadded tax or other percentage tax purposes. the tax credit represents the amount of such discount.com. xxxx Sections 2. despite the plain mandate of the law and the regulations carrying out that mandate. the manner by which the discount shall be credited against taxes has not been clarified by the revenue regulations. provide the procedures for its availment. When the law says that the cost of the discount may be claimed as a tax credit. However. but to limit the benefit to a sales discount · which is not even identical to the http://central. especially a price. Inc. (RR) 2-94 define tax credit as the 20 percent discount deductible from gross income for income tax purposes. issued pursuant thereto. it means that the amount 330 330 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 32 of 158 . or from gross sales for VAT or other percentage tax purposes. To deny such credit. the most common of which is that affecting the income statement or financial report upon which the income tax is based.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. vs. By ordinary acceptation.

In the present case.i and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides. Laws Not Amended by Regulations Second. RA 9257[8] amended certain provisions of RA 7432. the law cannot be amended by a mere regulation.‰ it cannot prevail. Courts. Their interpretation has muddled x x x the intent of Congress in granting a mere discount privilege. the tax authorities have given the term tax credit in Sections 2. Inc.‰ Conversely. Our tax authorities fill in the details that „Congress may not have the opportunity or competence to provide. the need for certainty and predictability in the implementation of tax laws is crucial. Secretary of the Department of Social Welfare and Development lation or any portion thereof not adopted pursuant to law is no law and has neither the force nor the effect of law. who are certain that these will be followed by the courts. erroneous or improper. A „regulation adopted pursuant to law is law. a regu331 VOL.com.[7] On February 26. It is a cardinal rule that courts „will and should respect the contemporaneous construction placed upon a statute by the executive officers whose duty it is to enforce it x x x. it cannot engraft additional requirements not contemplated by the legislature. DECEMBER 3. to wit: http://central. will not uphold these authoritiesÊ interpretations when clearly absurd. however. 2004.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. the law must prevail. vs. The administrative agency issuing these regulations may not enlarge. a regulation that „operates to create a rule out of harmony with the statute is a mere nullity.‰ The regulations these authorities issue are relied upon by taxpayers.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 33 of 158 . In fact. not a sales discount. In case of conflict. alter or restrict the provisions of the law it administers. 2013 331 Manila Memorial Park.‰ In the scheme of judicial tax administration. 10:23 AM discount privilege that is granted by law · does not define it at all and serves no useful purpose. The definition must. therefore. be stricken down. 711.

Secretary of the Department of Social Welfare and Development SEC. AS AMENDED. including funeral and burial services for the death of senior citizens. Provided. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted.. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. xxxx The establishment may claim the discounts granted under (a).com. (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. pp. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM GROSS INCOME. 325-333. the pertinent provision of which provides: _______________ [7] Id. further. [8] Amended by Republic Act No. the Secretary of Finance issued RR No. vs. 7432. 2010). GRANT BENEFITS AND SPECIAL PRIVILEGES AND FOR OTHER PURPOSES.·The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and similar lodging establishments. as amended. Privileges for the Senior Citizens. 434-441. FURTHER AMENDING REPUBLIC ACT NO. 9994 (February 15. restaurants and recreation centers. OTHERWISE KNOWN ACT OF SENIOR CITIZENS TO MAXIMIZE THE CONTRIBUTION TO „AN AS NATION BUILDING. 4-2006. AN ACT GRANTING ADDITIONAL BENEFITS AND PRIVILEGES TO SENIOR CITIZENS.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. (f). shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. at pp.‰ 332 332 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 34 of 158 . To implement the tax provisions of RA 9257. 8. 10:23 AM SECTION 4. Inc. That the total amount of the claimed tax deduction net of value added tax if applicable.· Establishments enumerated in subparagraph (6) hereunder granting sales discounts to senior citizens on the sale of goods and/or services specified thereunder are entitled to deduct the said http://central.

(5) The business establishment giving sales discounts to qualified senior citizens is required to keep separate and accurate record[s] of sales. sales discount granted. if applicable. 2013 333 Manila Memorial Park. (4) The discount can only be allowed as deduction from gross income for the same taxable year that the discount is granted. for income tax purposes. for VAT or other percentage tax purposes. namely: xxxx (i) Funeral parlors and similar establishments · http://central.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.com. (3) Only the actual amount of the discount granted or a sales discount not exceeding 20% of the gross selling price can be deducted from the gross income. TIN. CONSUMED OR ENJOYED BY THE SENIOR CITIZEN shall be eligible for the deductible sales discount. vs. 711. (2) The gross selling price and the sales discount MUST BE SEPARATELY INDICATED IN THE OFFICIAL RECEIPT OR SALES INVOICE issued by the establishment for the sale of goods or services to the senior citizen. net of value added tax. OSCA ID. which shall include the name of the senior citizen. gross sales/ receipts. [date] of [transaction] and invoice number for every sale transaction to senior citizen. 10:23 AM discount from gross income subject to the following conditions: (1) Only that portion of the gross sales EXCLUSIVELY USED. Inc. and from gross sales or gross receipts of the business enterprise concerned. Secretary of the Department of Social Welfare and Development may claim the said discount granted as deduction from gross income.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 35 of 158 . DECEMBER 3. (6) Only the following business establishments which granted sales discount to senior citizens on their sale of goods and/or services 333 VOL.

Sea and Land Transportation as tax deduction based on the net cost of the goods sold or services rendered: Provided. Secretary of the Department of Social Welfare and Development as amended by RA 9257. Inc. Section 9. Medical and Dental Services in Private Facilities and Sections 10 and 11 · Air. such as casket. vs. as amended. embalmment. Tax Deduction of Establishments. Section 4 · Discounts for Establishments. and the implementing rules and regulations issued by the DSWD and the DOF be declared unconstitutional insofar as these allow business http://central. finally. Provided. 10:23 AM The beneficiary or any person who shall shoulder the funeral and burial expenses of the deceased senior citizen shall claim the discount. Provided.com. That the total amount of the claimed tax deduction net of value added tax if applicable. Feeling aggrieved by the tax deduction scheme. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. praying that Section 4 of RA 7432. 334 334 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. petitioners filed the present recourse. cremation cost and other related services for the senior citizen upon payment and presentation of [his] death certificate. further.·The establishment may claim the discounts granted under Rule V.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. to wit: Rules and RULE VI DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS Article 8. The DSWD likewise issued its own Regulations Implementing RA 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 36 of 158 . that the implementation of the tax deduction shall be subject to the Revenue Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF).

383.[10] Petitioners posit that the tax deduction scheme contravenes Article III. p. DECEMBER 3. 10:23 AM establishments to claim the 20% discount given to senior citizens as a tax deduction. Inc. at p.. and that the tax credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be reinstated. that the DSWD and the DOF be prohibited from enforcing the same. vs. Issues Petitioners raise the following issues: A. 2013 335 Manila Memorial Park. WHETHER SECTION 4 OF REPUBLIC ACT NO. Secretary of the Department of Social Welfare and Development http://central. [10] Id.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 37 of 158 . ARE INVALID AND UNCONSTITUTIONAL. B. which provides _______________ [9] Rollo. 335 VOL. 711.[9] PetitionersÊ Arguments Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but are only assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules and regulations issued by the DSWD and the DOF. Section 9 of the Constitution.com. 392. INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%) DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE ESTABLISHMENTS. 9257 AND X X X ITS IMPLEMENTING RULES AND REGULATIONS.

 4. [12] Supra note 5. at p. [21] Sec. 410-420. [14] 553 Phil. The family has the duty to care for its elderly members but the State may also do so through just programs of social security. pp.. petitioners cite Central Luzon Drug Corporation. [16] Supra..[12] where it was ruled that the 20% discount privilege constitutes taking of private property for public use which requires the payment of just compensation. 411-412.[13] and Carlos Superdrug Corporation v. 405-409. 402-403. [19] Id.‰[11] In support of their position.[14] where it was acknowledged that the tax deduction scheme does not meet the definition of just compensation.‰[19] Petitioners further claim that the legislature. [17] Rollo. 526 SCRA 130 (2007). relied on an erroneous contemporaneous construction that prior payment of taxes is required for tax credit. 427-436.[15] Petitioners likewise seek a reversal of the ruling in Carlos Superdrug Corporation[16] that the tax deduction scheme adopted by the government is justified by police power. 413..SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. in amending RA 7432.. [18] Id. at pp. [20] Id.com. pp. there are still traditional distinctions between the two‰[18] and that „eminent domain cannot be made less supreme than police power. 120.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 38 of 158 . Section 4[21] and Article XIII. pp. 336 http://central. Section 11[22] of _______________ [11] Id. 401-420. at pp.[20] Petitioners also contend that the tax deduction scheme violates Article XV. 10:23 AM that: „[p]rivate property shall not be taken for public use without just compensation. at pp. [15] Rollo. Department of Social Welfare and Development. [13] Rollo.[17] They assert that „[a]lthough both police power and the power of eminent domain have the general welfare for their object.

) [25] Rollo. pp. women. 425. 148. The State shall endeavor to provide free medical care to paupers..[29] As to the constitutionality of RA 9257 and its implementing rules and regula_______________ [22] Sec. 9337.[28] They likewise assert that there is no justiciable controversy as petitioners failed to prove that the tax deduction treatment is not a „fair and full equivalent of the loss sustained‰ by them.SUPREME COURT REPORTS ANNOTATED VOLUME 711 336 9/2/15. 119. p. 121.com. Secretary of the Department of Social Welfare and Development the Constitution because it shifts the StateÊs constitutional mandate or duty of improving the welfare of the elderly to the private sector. 109. AND FOR OTHER PURPOSES.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 39 of 158 . 394-401. and children. 237 AND 228 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997. http://central. [24] Now 30% (Section 27 of the National Internal Revenue Code. 112. [26] Id. on the other hand. as amended by Republic Act No. 113. 107. There shall be priority for the needs of the underprivileged sick. 28.[25] Consequently. 116. 424. 10:23 AM SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. the implementation of the tax deduction scheme prescribed under Section 4 of RA 9257 affects the businesses of petitioners. question the filing of the instant Petition directly with the Supreme Court as this disregards the hierarchy of courts. Inc. elderly. [27] Id. AS AMENDED.[27] RespondentsÊ Arguments Respondents.[23] Under the tax deduction scheme.. health and other social services available to all the people at affordable cost. 111.[26] Thus. 11. the private sector shoulders 65% of the discount because only 35%[24] of it is actually returned by the government. 236. at pp. disabled. 421-427. 151. at p. 110. 106. The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods. 108. vs. AN ACT AMENDING SECTIONS 27. 34. [23] Rollo. 117. 114. there exists an actual case or controversy of transcendental importance which deserves judicious disposition on the merits by the highest court of the land.

respondents contend that petitioners failed to overturn its presumption of constitutionality..com. An actual case or controversy exists when there is „a conflict of legal rights‰ or „an assertion of opposite legal claims susceptible of judicial resolution.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. at pp. DECEMBER 3. There exists an actual case or controversy. When the constitutionality of a law is put in issue. at pp. and (4) the [question of constitutionality] is the lis mota of the case. judicial review may be availed of only if the following requisites concur: „(1) the existence of an actual and appropriate case. [31] Our Ruling The Petition lacks merit. [29] Id. 359-363. Inc..‰[32] In this case. oppose the Petition on the ground that there is no actual case or controversy. at pp.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 40 of 158 . however. (3) recourse to judicial review is made at the earliest opportunity.. We shall first resolve the procedural issue. vs. 10:23 AM [28] Id. 2013 337 Manila Memorial Park. Secretary of the Department of Social Welfare and Development tions.[30] More important. (2) the existence of personal and substantial interest on the part of the party raising the [question of constitutionality].‰[33] The Petition must there_______________ [30] Id. We do not agree with respondents. 711. Respondents. 368-370. petitioners are challenging the constitutionality of the tax deduction scheme provided in RA 9257 and the implementing rules and regulations issued by the DSWD and the DOF. 337 VOL. respondents maintain that the tax deduction scheme is a legitimate exercise of the StateÊs police power. 363-364. http://central.

the tax deduction scheme challenged by petitioners has a direct adverse effect on them.[35] In that case. v. 2011. it constitutes taking of private property without payment of just compensation. 191560. Secretary of the Department of Social Welfare and Development fore show that „the governmental act being challenged has a direct adverse effect on the individual challenging it. G. [33] Republic Telecommunications Holdings. 242. 2007.‰[34] In this case. has already been settled in Carlos Superdrug Corporation. 338 338 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. no just compensation is warranted. 140338.com. at pp. Petitioners posit that the resolution of this case lies in the determination of whether the legally mandated 20% senior citizen discount is an exercise of police power or eminent domain.. and 2) the law http://central. [32] General v. 364-368. August 7.R. March 29. 577. No. Thus. But if it is eminent domain. The validity of the 20% senior citizen discount and tax deduction scheme under RA 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 41 of 158 . If it is police power. At the outset.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.R. 646 SCRA 567. Thus. 10:23 AM [31] Id. Santiago. the tax deduction scheme is unconstitutional because it is not a peso for peso reimbursement of the 20% discount given to senior citizens. No. we note that this question has been settled in Carlos Superdrug Corporation. Inc. Inc. G. as an exercise of police power of the State. 529 SCRA 232. vs. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines. Urro. it cannot be denied that there exists an actual case or controversy. we ruled: Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private property.

were it not for R. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments. The word just is used to intensify the meaning of the word compensation.A. it is apparent that what petitioners are ultimately questioning is the validity of the tax deduction scheme as a reimbursement mechanism for the twenty percent (20%) discount that they extend to senior citizens. a tax-deductible expense that is subtracted from the gross income and results in a lower taxable income. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 9257. No. the tax deduction scheme does not fully reimburse petitioners for the discount privilege accorded to senior citizens. the discount does not reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.com. 562 SCRA 251.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 42 of 158 . it is an amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of tax which is due. 339 VOL. 2013 339 Manila Memorial Park. No. 270. 10:23 AM failed to provide a scheme whereby drugstores will be justly compensated for the discount. _______________ [34] Abakada Guro Party List v. 2008. the treatment of the discount as a deduction reduces the net income of the private establishments concerned. Being a tax deduction. vs. DECEMBER 3. Based on the afore-stated DOF Opinion. and to convey the idea that the equivalent to be rendered for the property to be http://central. [35] Supra note 14. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. This constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation. This is because the discount is treated as a deduction. G. Inc. August 14. Theoretically. Purisima. 166715. 711. Stated otherwise. The measure is not the takerÊs gain but the ownerÊs loss. Secretary of the Department of Social Welfare and Development Examining petitionersÊ arguments.R.

10:23 AM taken shall be real. In addition to this. The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself. and to grant benefits and privileges to them for their improvement and wellbeing as the State considers them an integral part of our society. There shall be priority for the needs of the http://central. Section 4 of the Constitution. Declaration of Policies and Objectives. Section 11. it is the duty of the family to take care of its elderly members while the State may design programs of social security for them.·Pursuant to Article XV. the Act provides: SEC. Article XIII. full and ample. in promoting the health and welfare 340 340 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. it would not meet the definition of just compensation. Having said that.‰ Further. Section 10 in the Declaration of Principles and State Policies provides: „The State shall provide social justice in all phases of national development. Secretary of the Department of Social Welfare and Development of a special group of citizens. vs. As such. this raises the question of whether the State. A tax deduction does not offer full reimbursement of the senior citizen discount. substantial. Inc. can impose upon private establishments the burden of partly subsidizing a government program. provides: „The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods. The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-building.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 43 of 158 . 7432 is hereby amended to read as SECTION 1. follows: Republic Act No. Thus. 2.com. health and other social services available to all the people at affordable cost. The Court believes so.

Secretary of the Department of Social Welfare and Development (f) To recognize the important role of the private sector in the improvement of the welfare of senior citizens and to actively seek their partnership. To implement the above policy.‰ It is „[t]he power vested in the legislature by the constitution to make. The law is a legitimate exercise of police power which.‰ Consonant with these constitutional principles the following are the declared policies of this Act: ⁄   ⁄   ⁄ 341 VOL. Accordingly. vs. and establish all manner of wholesome and reasonable laws. admission fees charged by theaters. women and children. disabled.com. Inc. insistent and the least limitable of powers. extending as it does to all the great public needs. 10:23 AM underprivileged sick. concert halls. the law grants a twenty percent discount to senior citizens for medical and dental services. but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances. statutes. DECEMBER 3. air and sea travel.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 44 of 158 . restaurants and recreation centers. and purchases of medicines for the exclusive use or enjoyment of senior citizens. utilization of services in hotels and similar lodging establishments. and ordinances. As a form of reimbursement. and other similar places of culture. carnivals.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. not repugnant to the constitution. has general welfare for its object. 2013 341 Manila Memorial Park. 711. it has been described as „the most essential. and diagnostic and laboratory fees. as they shall judge to be for the good and welfare of the commonwealth. thus assuring the greatest benefits. elderly. fares for domestic land. either with penalties or without. and http://central. the law provides that business establishments extending the twenty percent discount to senior citizens may claim the discount as a tax deduction. ordain. circuses. similar to the power of eminent domain. Police power is not capable of an exact definition. leisure and amusement.

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of the subjects of the same.‰
For this reason, when the conditions so demand as determined
by the legislature, property rights must bow to the primacy of police
power because property rights, though sheltered by due process,
must yield to general welfare.
342

342

SUPREME COURT REPORTS ANNOTATED

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
Police power as an attribute to promote the common good would
be diluted considerably if on the mere plea of petitioners that they
will suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the
alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity
which every law has in its favor.
Given these, it is incorrect for petitioners to insist that the grant
of the senior citizen discount is unduly oppressive to their business,
because petitioners have not taken time to calculate correctly and
come up with a financial report, so that they have not been able to
show properly whether or not the tax deduction scheme really
works greatly to their disadvantage.
In treating the discount as a tax deduction, petitioners insist
that they will incur losses because, referring to the DOF Opinion,
for every P1.00 senior citizen discount that petitioners would give,
P0.68 will be shouldered by them as only P0.32 will be refunded by
the government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug cited the
anti​hypertensive maintenance drug Norvasc as an example.
According to the latter, it acquires Norvasc from the distributors at
P37.57 per tablet, and retails it at P39.60 (or at a margin of 5%). If
it grants a 20% discount to senior citizens or an amount equivalent
to P7.92, then it would have to sell Norvasc at P31.68 which
translates to a loss from capital of P5.89 per tablet. Even if the
government will allow a tax deduction, only P2.53 per tablet will be
refunded and not the full amount of the discount which is P7.92. In
short, only 32% of the 20% discount will be reimbursed to the
drugstores.
PetitionersÊ computation is flawed. For purposes of

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reimbursement, the law states that the cost of the discount shall be
deducted from gross income, the amount of income derived from all
sources before deducting allowable expenses, which will result in
net income. Here, petitioners tried to show a loss on a per
transaction basis, which should not be the case. An income
statement,
343

VOL. 711, DECEMBER 3, 2013

343

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
showing an accounting of petitionersÊ sales, expenses, and net profit
(or loss) for a given period could have accurately reflected the effect
of the discount on their income. Absent any financial statement,
petitioners cannot substantiate their claim that they will be
operating at a loss should they give the discount. In addition, the
computation was erroneously based on the assumption that their
customers consisted wholly of senior citizens. Lastly, the 32% tax
rate is to be imposed on income, not on the amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law
because they cannot raise the prices of their medicines given the
cutthroat nature of the players in the industry. It is a business
decision on the part of petitioners to peg the mark​-up at 5%. Selling
the medicines below acquisition cost, as alleged by petitioners, is
merely a result of this decision. Inasmuch as pricing is a property
right, petitioners cannot reproach the law for being oppressive,
simply because they cannot afford to raise their prices for fear of
losing their customers to competition.
The Court is not oblivious of the retail side of the pharmaceutical
industry and the competitive pricing component of the business.
While the Constitution protects property rights, petitioners must
accept the realities of business and the State, in the exercise of
police power, can intervene in the operations of a business which
may result in an impairment of property rights in the process.
Moreover, the right to property has a social dimension. While
Article XIII of the Constitution provides the precept for the
protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public
utilities, continuously serve as x x x reminder[s] that the right to
property can be relinquished upon the command of the State for the

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promotion of public good.
Undeniably, the success of the senior citizens program rests
largely on the support imparted by petitioners and the other private
establishments concerned. This be344

344

SUPREME COURT REPORTS ANNOTATED

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
ing the case, the means employed in invoking the active
participation of the private sector, in order to achieve the purpose or
objective of the law, is reasonably and directly related. Without
sufficient proof that Section 4 (a) of R.A. No. 9257 is arbitrary, and
that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain
from quashing a legislative act.[36] (Bold in the original; underline
supplied)

We, thus, found that the 20% discount as well as the tax
deduction scheme is a valid exercise of the police power of
the State.
No compelling reason has been
proffered to overturn, modifying
or abandon the ruling in Carlos
Superdrug Corporation.
Petitioners argue that we have previously ruled in
Central Luzon Drug Corporation[37] that the 20% discount
is an exercise of the power of eminent domain, thus,
requiring the payment of just compensation. They urge us
to re​examine our ruling in Carlos Superdrug
Corporation[38] which allegedly reversed the ruling in
Central Luzon Drug Corporation.[39] They also point out
that Carlos Superdrug Corporation[40] recognized that the
tax deduction scheme under the assailed law does not
provide for sufficient just compensation.
We agree with petitionersÊ observation that there are
statements in Central Luzon Drug Corporation[41]
describing the 20% discount as an exercise of the power of
eminent domain, viz.:

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ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 48 of 158 . but also to the promptness in its release. of the equivalent amount it needs to cope with the reduction in its revenues. As a result of the 20 percent discount imposed by RA 7432. public benefit. such issuance · when not done within a reasonable time from the grant of the discounts · cannot be considered as just compensation. The concept of public use is no longer confined to the traditional notion of use by the public. but held synonymous with public interest. This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the discounts given. The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. 711.. [38] Supra note 14. the tax credit benefit granted to these establishments can be deemed as their just compensation for private property taken by the State for public use. vs. [40] Supra note 14. public welfare. at pp.com. 10:23 AM _______________ [36] Id.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Secretary of the Department of Social Welfare and Development [T]he privilege enjoyed by senior citizens does not come directly from the State. and public convenience. respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt. [41] Supra note 5. respondent becomes entitled to a just compensation. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned. but rather from the private establishments concerned. Inc. Accordingly. DECEMBER 3. In effect. 345 VOL. 128-147. through the certificate. [39] Supra note 5. Equivalent to the payment of property taken by the State. Besides. the taxation power can also be used as an implement for http://central. [37] Supra note 5. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. 2013 345 Manila Memorial Park. were it not for RA 7432.

vs. the power to tax has indeed become a most effective tool to realize social justice.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Worse. profitgenerating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing. public welfare. Inc. social justice „cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. it will realize that the tax credit limitation under RR 2-94 is inutile. It is in the tax credit that our legislators find support to realize social justice. Tax measures are but „enforced contributions exacted on pain of penal sanctions‰ and „clearly imposed for a public purpose. Secretary of the Department of Social Welfare and Development While it is a declared commitment under Section 1 of RA 7432. 346 346 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.com. because no taxes are due from the latter. and if all its sales come from retail purchases by senior citizens.‰ For this reason. if not improper. it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales. 10:23 AM the exercise of the power of eminent domain. emphasis supplied) The above was partly incorporated in our ruling in Carlos Superdrug Corporation[43] when we stated preliminarily that · Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private property. Compelling http://central. a private establishment that merely breaks even · without the discounts yet · will surely start to incur losses because of such discounts. and the equitable distribution of wealth. The same effect is expected if its markup is less than 20 percent. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto.‰ In recent years. Aside from the observation we have already raised earlier. Operating at a loss through no fault of its own.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 49 of 158 . a just compensation for income that is taken away from respondent becomes necessary. and no administrative body can alter that fact. To put it differently.[42] (Italics in the original.

a tax-deductible expense that is subtracted from the gross income and results in a lower taxable income. Theoretically. 10:23 AM drugstore owners and establishments to grant the discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines. Being a tax deduction. This is because the discount is treated as a deduction. DECEMBER 3. Inc. 711. Examining petitionersÊ arguments. it is an amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of tax which is due. The word just is used to http://central. the discount does not reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed. the treatment of the discount as a deduction reduces the net income of the private establishments concerned. 335-337. vs.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 50 of 158 . This constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation. at pp. The measure is not the takerÊs gain but the ownerÊs loss. it is apparent that what petitioners are ultimately questioning is the validity of the tax deduction scheme as a reimbursement mechanism for the twenty percent (20%) discount that they extend to senior citizens. the tax deduction scheme does not fully reimburse petitioners for the discount privilege accorded to senior citizens..SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 347 VOL. 2013 347 Manila Memorial Park. Based on the afore-stated DOF Opinion. and 2) the _______________ [42] Id.A. 9257. No. [43] Supra note 14. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments. were it not for R. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. Secretary of the Department of Social Welfare and Development law failed to provide a scheme whereby drugstores will be justly compensated for the discount. Stated otherwise.com.

not binding precedent. we went on to rule in Carlos Superdrug Corporation[45] that the 20% discount and tax deduction scheme is a valid exercise of the police power of the State. The Court believes so. thus. full and ample. substantial. therefore.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. affords an opportunity for us to clarify the above-quoted statements in Central Luzon Drug Corporation[46] and Carlos Superdrug Corporation. under Sections 2. Inc. A fair reading of Carlos Superdrug Corporation[52] would http://central. we note that the above-quoted disquisition on eminent domain in Central Luzon Drug Corporation[48] is obiter dicta and. As stated earlier. in promoting the health and welfare of a special group of citizens. in Central Luzon Drug Corporation. despite the clear wording of the previous law that the same should be treated as a tax credit. vs.[51] this referred only to preliminary matters. and to convey the idea that the equivalent to be rendered for the property to be taken shall be real. The present case. although we adverted to Central Luzon Drug Corporation[50] in our ruling in Carlos Superdrug Corporation. 348 348 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. this raises the question of whether the State. can impose upon private establishments the burden of partly subsidizing a government program.[47] First.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 51 of 158 . A tax deduction does not offer full reimbursement of the senior citizen discount. not confronted in that case with the issue as to whether the 20% discount is an exercise of police power or eminent domain. We were. 2-94.[49] we ruled that the BIR acted ultra vires when it effectively treated the 20% discount as a tax deduction. Second. thus. Secretary of the Department of Social Welfare and Development Having said that.[44] This. notwithstanding. 10:23 AM intensify the meaning of the word compensation.i and 4 of RR No. As such. it would not meet the definition of just compensation.com.

in what follows. even if the current law.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 52 of 158 . through its tax deduction scheme (which abandoned the tax credit scheme under the previous law). 349 VOL. be considered as an exercise of the power of eminent domain contrary to the obiter in Central Luzon Drug Corporation. We have carefully reviewed the basis of our ruling in Carlos Superdrug Corporation[53] and we find no cogent reason to overturn. vs.[54] Thus. Thus. under the specific circumstances of this case.com. DECEMBER 3. [50] Id. [47] Supra note 14. we sustain Carlos Superdrug Corporation.. no constitutional infirmity obtains because. 711.[57] http://central. does not provide for a peso for peso reimbursement of the 20% discount given by private establishments. we deem it proper. Inc.[55] Nonetheless. [48] Supra note 5.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 2013 349 Manila Memorial Park. at pp. to amplify our explanation in Carlos Superdrug Corporation[56] as to why the 20% discount is a valid exercise of police power and why it may not. [46] Supra note 5. Secretary of the Department of Social Welfare and Development cally ruled therein that the 20% discount is a valid exercise of police power. We also note that petitionersÊ arguments are a mere reiteration of those raised and resolved in Carlos Superdrug Corporation. [52] Id. being a valid exercise of police power. [49] Id. payment of just compensation is not warranted. modify or abandon it. [51] Supra note 14. 10:23 AM show that we categori_______________ [44] Id. [45] Supra note 14. 128-130.

714 (2007).[59] In other words. is the inherent power of the State to take or appropriate private property for public use. not oppressive.[63] The Constitution. http://central. [56] Id. requires that private property shall not be taken without due process of law and the payment of just compensation. „property rights of individuals may be subjected to restraints and burdens in order to fulfill the objectives of the government. [57] Supra note 5.[58] The only limitation is that the restriction imposed should be reasonable. Inc.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.‰[61] The State „may interfere with personal liberty. Secretary of the Department of Social Welfare and Development valid exercise of police power. [64] Traditional distinctions exist between police power and eminent domain. to be a _______________ [53] Id. property. 10:23 AM Police power versus eminent domain. [59] Mirasol v. Police power is the inherent power of the State to regulate or to restrain the use of liberty and property for public welfare. however. [54] Id. [58] Gerochi v. lawful businesses and occupations to promote the general welfare [as long as] the interference [is] reasonable and not arbitrary. 523 Phil. 350 350 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. it must have a lawful subject or objective and a lawful method of accomplishing the goal. 554 Phil. 527 SCRA 696. 563. Department of Energy. on the other hand.com.‰[62] Eminent domain. 713. 747. 490 SCRA 318. Department of Public Works and Highways. 579.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 53 of 158 . vs. [60] Under the police power of the State. 351 (2006). [55] Id.

a property right is impaired by regulation.. although the regulation affects the right of ownership. 1. 351 VOL. Atienza. Jr. G. 328 SCRA 137. G.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 144 (2000).[69] http://central. Land Bank. 375 (1989). The 1987 Constitution of the Republic of the Philippines: A Commentary. at pp. Jr.g.[68] It has. In such cases.g.. payment of just compensation is not required. 676. 545 SCRA 92.R. Philippine Constitutional Law: Principles and Cases Vol. Inc. 808-809. No.. none of the bundle of rights which constitute ownership is appropriated for use by or for the benefit of the public. 688. [63] Apo Fruits Corporation v.[65] or the use of property is merely prohibited. 139. 139-140. 420 (2003). City of Mandaluyong. been observed that. 632 SCRA 727. 777. Inc. Examples of these regulations are property condemned for being noxious or intended for noxious purposes (e. No. Secretary of Agrarian Reform. October 12. 696 (2012).ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 54 of 158 . morals or safety of the community (e. v. 164195. there is no compensable taking. 256 Phil. at p. at p. in the exercise of police power (as distinguished from eminent domain). 2010. dividing a cityÊs territory into residential and industrial areas). or obscene materials to be destroyed in the interest of public morals)[67] as well as zoning ordinances prohibiting the use of property for purposes injurious to the health. 175 SCRA 343. vs. [61] Social Justice Society (SJS) v. [65] Bernas.com. 156052. [62] Id. 739. [66] De Leon and De Leon. thus. 384 Phil. a building on the verge of collapse to _______________ [60] Association of Small Landowners in the Phils.R. 2013 351 Manila Memorial Park. February 13. 711. Secretary of the Department of Social Welfare and Development be demolished for public safety.. hence. 2008. regulated or restricted[66] to promote public welfare.. [64] Heirs of Suguitan v. 10:23 AM In the exercise of police power. DECEMBER 3..

204 (1931) cited in Bernas. 193 SCRA 1 (1991) cited in Bernas. at p. it is a settled rule that the acquisition of title or total destruction of the property is not essential for „taking‰ under the power of eminent domain to be present. 1. 10:23 AM On the other hand. p. The 20% senior citizen discount is an exercise of police power. http://central. Normally. [69] Bernas.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 55 of 158 .[72] In these cases.. Examples include the acquisition of lands for the construction of public highways as well as agricultural lands acquired by the government under the agrarian reform law for redistribution to qualified farmer beneficiaries. supra. the title to and possession of the property are transferred to the expropriating authority. supra at p. v. 352 352 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.. although the private property owner is not divested of ownership or possession. Gutierrez. supra at pp. in the exercise of the power of eminent domain.[70] Examples of these include establishment of easements such as where the land owner is perpetually deprived of his proprietary rights because of the hazards posed by electric transmission lines constructed above his property[71] or the compelled interconnection of the telephone system between the government and a private _______________ [67] Association of Small Landowners in the Phils. However. Inc. 56 Phil. 370. 271 Phil. Earnshaw. supra note 60 at p. [71] National Power Corporation v. [70] Id. 420. 804. v. Secretary of the Department of Social Welfare and Development company. payment of just compensation is warranted because of the burden placed on the property for the use or benefit of the public. 421.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.com. Inc. [68] Seng Kee & Co. property interests are appropriated and applied to some public purpose which necessitates the payment of just compensation therefor. 422-423. vs. Secretary of Agrarian Reform.

423-424. The 20% discount is intended to improve the welfare of senior citizens who. 478.. City of Davao.com. Philippine Long Distance Telephone Co. p. 247 (1965). and. in need of subsidy in purchasing basic commodities. whether the act is the exercise of police power or eminent domain. 489. 15 SCRA 244. 210 Phil. v. Inc. Secretary of the Department of Social Welfare and Development thus. Secretary of Agrarian Reform. vs. are less likely to be gainfully employed. 353 VOL. Thus. 125 SCRA 220. 136 Phil. we now look at the nature and effects of the 20% discount to determine if it constitutes an exercise of police power or eminent domain. Inc. The judicious approach. 2013 353 Manila Memorial Park. Because of the exigencies of rapidly changing times. _______________ [72] Republic v. Reyes. is to look at the nature and effects of the challenged governmental act and decide. therefore. 819-822. 20. supra note 60 at pp. supra at pp.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 56 of 158 . [74] See Heirs of Ardona v. 197-201. 711. 26 SCRA 620 (1969) cited in Bernas.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. It may not be amiss to mention also that the discount serves http://central. more prone to illnesses and other disabilities. at their age. 376. 122 Phil. 10:23 AM It may not always be easy to determine whether a challenged governmental act is an exercise of police power or eminent domain. [75] See Association of Small Landowners in the Phils. [73] Philippine Long Distance Telephone Company v. The very nature of police power as elastic and responsive to various social conditions[73] as well as the evolving meaning and scope of public use[74] and just compensation[75] in eminent domain evinces that these are not static concepts.. 231 (1983). DECEMBER 3. Congress may be compelled to adopt or experiment with different measures to promote the general welfare which may not fall squarely within the traditionally recognized categories of police power and eminent domain. on the basis thereof. 187.

this affects the amount of profits or income/gross sales that a private establishment can derive from senior citizens. The State shall endeavor to provide free medical care to paupers. 279. 113 (1877). and. hence. [77] See Munn v. for the use or benefit of the public. the profitability of a private establishment. the subject regulation affects the pricing. and the amount of profits or income/gross sales that such private establishments may derive from. used in the operation or conduct of the business of private establishments.com. and children.[76] In turn. senior citizens. However. 94 U. People v. There shall be priority for the needs of the underprivileged sick.S. for which the Constitution affords preferential concern. disabled. women. it does not purport to appropriate or burden specific properties. 92 Phil. health and other social services available to all the people at affordable cost. As to its nature and effects. The subject regulation may be said to be similar to. The rate-making or rate354 http://central. 24 SCRA 172 (1968). National Power Corporation. elderly. This distinct cultural Filipino practice of honoring the elderly is an integral part of this law. senior citizens. In other words. Section 11 of the Constitution provides: The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods. or senior citizens for that matter. price control or rate of return on investment control laws which are traditionally regarded as police power measures. but merely regulates the pricing of goods and services relative to. the 20% discount is a regulation affecting the ability of private establishments to price their products and services relative to a special class of individuals. 977 (1953).[77] These laws generally _______________ [76] Article XIII. 10:23 AM to honor senior citizens who presumably spent the productive years of their lives on contributing to the development and progress of the nation. 133 Phil. Chu Chi. and Alalayan v. but with substantial distinctions from. Illinois.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 57 of 158 .

The reason is that (1) the discount would have formed part of the gross sales of the establishment were it not for the law prescribing the 20% discount. which impacts the pricing and.SUPREME COURT REPORTS ANNOTATED VOLUME 711 354 9/2/15.[78] however. vs. then all price and rate of return on _______________ regulation by governmental bodies of public utilities is included in this http://central. 10:23 AM SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. and (2) the permanent reduction in total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. to the degree material to the resolution of this case. under the previous law. Secretary of the Department of Social Welfare and Development regulate public utilities or industries/enterprises imbued with public interest in order to protect consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of return on investment of these corporations considering that they have a monopoly over the goods or services that they provide to the general public. The flaw in this reasoning is in its premise. It presupposes that the subject regulation. equivalent to the amount of discount given as the just compensation therefor. the 20% discount may be properly viewed as belonging to the category of price regulatory measures which affect the profitability of establishments subjected thereto.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 58 of 158 . On its face. describes the 20% discount as an exercise of the power of eminent domain and the tax credit. the profitability of a private establishment. and (2) the discount does not apply to all customers of a given establishment but only to the class of senior citizens. Inc. the subject regulation is a police power measure. The subject regulation differs therefrom in that (1) the discount does not prevent the establishments from adjusting the level of prices of their goods and services. Nonetheless. If this were so.com. therefore. hence. automatically amounts to a deprivation of property without due process of law. The obiter in Central Luzon Drug Corporation.

No formula or rule can be devised to answer the questions of what is too far and when regulation becomes a taking. DECEMBER 3.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. The obiter is. the regulated establishmentÊs profits or income/gross sales.S.‰ On many other occasions as well. Justice Holmes recognized that it was „a question of degree and therefore cannot be disposed of by general propositions. the U. While property may be regulated to a certain extent. which reduce the profits or income/gross sales of private establishments. and.com. the profitability of business establishments in order to pursue legitimate State objectives for the common good. or http://central.‰ When regulation reaches a certain magnitude. at odds with the settled doctrine that the State can employ police power measures to regulate the pricing of goods and services.. Supreme Court has said that the issue of when regulation constitutes a taking is a matter of considering the facts in each case. 355 VOL. It would also mean that government cannot set price or rate of return on investment limits. The Court asks whether justice and fairness require that the economic loss caused by public action must be compensated by the government and thus borne by the public as a whole. hence. in most if not in all cases there must be an exercise of eminent domain and compensation to support the act. if no just compensation is paid even if the measure is not confiscatory. In Mahon.‰[79] In City of Manila v. 2013 355 Manila Memorial Park. Laguio. at some level. 10:23 AM category of police power measures. if regulation goes too far it will be recognized as a taking. Jr. vs. provided that the regulation does not go too far as to amount to „taking. yet there is no provision for payment of just compensation.[80] we recognized that · x x x a taking also could be found if government regulation of the use of property went „too far. Inc. Secretary of the Department of Social Welfare and Development investment control laws would have to be invalidated because they impact. thus. [78] Supra note 5. 711.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 59 of 158 .

thus. challenged the validity of a law limiting their allowable net profits to no more than 12% per annum of their investments plus two-month operating expenses. Illinois. under the specific circumstances of this case. be determined on a caseto-case basis. 10:23 AM _______________ [79] See Munn v. Whether that line between permissible regulation under police power and „taking‰ under eminent domain has been crossed must. we ruled that. National Power Corporation. The time-honored rule is that the burden of proving the unconstitutionality of a law rests upon the one assailing it and „the burden becomes heavier when police power is at issue. oppressive or confiscatory.[83] petitioners.com.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 289. it was found that 12% is a reasonable rate of return and that petitioners failed to prove that the aforesaid rate is confiscatory in view of the presumption of constitutionality. [84] We adopted a similar line of reasoning in Carlos Superdrug Corporation[85] when we ruled that petitioners therein failed to http://central. must. Secretary of the Department of Social Welfare and Development whether the loss should remain concentrated on those few persons subject to the public action. 356 356 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.S. 455 SCRA 308 (2005).[81] The impact or effect of a regulation. In Alalayan v. Inc. In rejecting their plea. 113 (1877). such as the one under consideration.‰[82] The 20% senior citizen discount has not been shown to be unreasonable. who were franchise holders of electric plants.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 60 of 158 . be subject to proof and the one assailing the constitutionality of the regulation carries the heavy burden of proving that the measure is unreasonable. vs. 94 U. in an earlier case. oppressive or confiscatory. [80] 495 Phil.

fail. the present recourse must. supra note 59. 24 SCRA 172 (1968). In the case at bar. 320-321. DECEMBER 3. Secretary of the Department of Social Welfare and Development prove that the 20% discount is arbitrary. oppressive or confiscatory. Department of Public Works and Highways. 711. Inc. such as a financial report. to establish the impact of the 20% discount on the overall profitability of petitioners was presented in order to show that they would be operating at a loss due to the subject regulation or that the continued implementation of the law would be unconscionably detrimental to the business operations of petitioners. at pp.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 61 of 158 . Concurrently. Petitioners went directly to this Court without first establishing the factual bases of their claims. likewise. Congress may http://central. Hence.. We noted that no evidence. courts will uphold a lawÊs validity if any set of facts may be conceived to sustain it. pp.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Congress may have legitimately concluded that business establishments have the capacity to absorb a decrease in profits or income/gross sales due to the 20% discount without substantially affecting the reasonable rate of return on their investments considering (1) not all customers of a business establishment are senior citizens and (2) the level of its profit margins on goods and services offered to the general public. 186. [83] 133 Phil. [82] Mirasol v. we find that there are at least two conceivable bases to sustain the subject regulationÊs validity absent clear and convincing proof that it is unreasonable. p. 292. [84] Id.[87] On its face. [85] Supra note 14. 10:23 AM _______________ [81] Id. 279. petitioners proceeded with a hypothetical computation of the alleged loss that they will suffer similar to what the petitioners in Carlos Superdrug Corporation[86] did. 2013 357 Manila Memorial Park. Because all laws enjoy the presumption of constitutionality. vs..com. oppressive or confiscatory. 340-341. at p. 357 VOL.

we sustain our ruling in Carlos Superdrug Corporation[88] that the 20% senior citizen discount and tax deduction scheme are valid exercises of police power of the State absent a clear showing that it is arbitrary. 358 358 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. this goes into the wisdom. As already mentioned. 323. Congress may be reasonably assumed to have foreseen this eventuality. But. The general public. legitimately concluded that the establishments. In a way.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 62 of 158 . [87] Basco v. thus. 274 Phil. we note that petitioners hypothesize. Philippine Amusement and Gaming Corporation. 197 SCRA 52. Conclusion In closing. can be recouped through higher mark​ups or from other products not _______________ [86] Id. Secretary of the Department of Social Welfare and Development subject of discounts. in petitionersÊ view. Inc. more importantly. made to effectively shoulder the subsidy for senior citizens. the discounts resulting from sales to senior citizens will not be confiscatory or unduly oppressive. this law pursues its social equity http://central. efficacy and expediency of the subject law which is not proper for judicial review. or those not belonging to the senior citizen class. oppressive or confiscatory. consistent with our previous ratiocinations. are. This. likewise. is unfair. 10:23 AM have. that the discount will force establishments to raise their prices in order to compensate for its impact on overall profits or income/gross sales.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. which will be required to extend the 20% discount. As a result. In sum.com. 335. vs. 66 (1991). have the capacity to revise their pricing strategy so that whatever reduction in profits or income/gross sales that they may sustain because of sales to senior citizens.

Section 9[90] of the Constitution. 359 VOL. the validity of the assailed law must be sustained. arising from the mandatory discount. 2013 359 Manila Memorial Park. I http://central. Refutation of the Dissent The main points of Justice CarpioÊs Dissent may be summarized as follows: (1) the discussion on eminent domain in Central Luzon Drug Corporation[89] is not obiter dicta. is limited to property that is destroyed or placed outside the commerce of man for public welfare. who enjoys the rights. 711. _______________ [88] Supra note 14. vs. without the requisite showing of a clear and unequivocal breach of the Constitution. in police power. Inc. benefits and privileges of living in a democratic polity. (2) allowable taking.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 63 of 158 . and (4) the permanent reduction in a private establishmentÊs total revenue. This is only fair. an exercise of the power of eminent domain requiring the payment of just compensation. among others. (3) the amount of mandatory discount is private property within the ambit of Article III. must bear his share in supporting measures intended for the common good. In the process. Verily. Congress must be given sufficient leeway in formulating welfare legislations given the enormous challenges that the government faces relative to. resource adequacy and administrative capability in implementing social reform measures which aim to protect and uphold the interests of those most vulnerable in our society.com. hence.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. is a taking of private property for public use or benefit. 10:23 AM objective in a non-traditional manner unlike past and existing direct subsidy programs of the government for the poor and marginalized sectors of our society. DECEMBER 3. the individual. Secretary of the Department of Social Welfare and Development In fine.

 Private property shall not be taken for public use without just compensation. viz. a tax deduction. restaurants and recreation centers and purchase of medicines anywhere in the country: Provided.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 64 of 158 . Thus. Inc. RA 7432 unconditionally grants a tax credit to all covered entities.com. Secretary of the Department of Social Welfare and Development a) The grant of twenty percent (20%) discount from all establishments relative to utilization of transportation services. Basic is the rule that administrative regulations http://central.: The 20 percent discount required by the law to be given to senior citizens is a tax credit. pursuant to Sections 2. vs. the provisions of the revenue regulation that withdraw or modify such grant are void. as a tax deduction instead of a tax credit despite the clear provision in that law which stated · SECTION 4. As previously discussed. the Court ruled that the subject revenue regulation violated the law. That private establishments may claim the cost as tax credit. in Central Luzon Drug Corporation. 360 360 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. before the tax is computed. treated the senior citizen discount in the previous law.i and 4 of RR No. 2-94.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 10:23 AM We maintain that the discussion on eminent domain in Central Luzon Drug Corporation[91] is obiter dicta. [90] Section 9. (Emphasis supplied) Thus. not merely a tax deduction from the gross income or gross sale of the establishment concerned.·The senior citizens shall be entitled to the following: _______________ [89] Supra note 5. [92] Id. RA 7432.[92] the BIR. [91] Supra note 5. A tax credit is used by a private establishment only after the tax has been computed. Privileges for the Senior Citizens. hotels and similar lodging establishment.

. However. 10:23 AM cannot amend or revoke the law. A close reading of Central Luzon Drug Corporation[95] would show that the Court went on to state that the tax credit „can be deemed‰ as just compensation only to explain why the _______________ [93] Id. DECEMBER 3. the discussion on eminent domain was not necessary in order to arrive at this conclusion.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 65 of 158 . the discussion on eminent domain is obiter dicta. statements made relative thereto are not always necessary in resolving the actual controversies presented before it. [95] Id.[93] As can be readily seen. And. The Court surmised that the tax credit was a form of just compensation given to the establishments covered by the 20% discount. in resolving cases before it. This was the case in Central Luzon Drug Corporation[96] http://central. Inc. All that was needed was to point out that the revenue regulation contravened the law which it sought to implement. at p. this was done in Central Luzon Drug Corporation[94] by comparing the wording of the previous law vis-à-vis the revenue regulation. Secretary of the Department of Social Welfare and Development previous law provides for a tax credit instead of a tax deduction. Hence. 2013 361 Manila Memorial Park. may look into the possible purposes or reasons that impelled the enactment of a particular statute or legal provision. vs. and applying the settled principle that a regulation cannot amend the law it seeks to implement. employing the rules of statutory construction. A court. the reason why the previous law provided for a tax credit and not a tax deduction was not necessary to resolve the issue as to whether the revenue regulation contravenes the law.com. [94] Id. However. 361 VOL. 315. precisely. 711.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.

these would include a building on the verge of collapse or confiscated obscene materials as well as those mentioned by the Dissent with regard to property used in violating a criminal statute or one which constitutes a nuisance. laws limiting the working hours to eight. it is equally true that there is another class of police power measures which do not involve the destruction of private property but merely regulate its use. likewise. The minimum wage law.com. Indeed. As earlier mentioned. 10:23 AM resulting in that unfortunate statement that the tax credit „can be deemed‰ as just compensation. as will be shown below. Sections 19 and 18 of the Social Security Law. morals. II The Dissent discusses at length the doctrine on „taking‰ in police power which occurs when private property is destroyed or placed outside the commerce of man. In such cases.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. no compensation is required. in turn. by deductive reasoning. and Section 7 of the Pag-IBIG Fund Law. fall under this category: Article 157 of the Labor Code. Inc. price control laws.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 66 of 158 . The examples cited by the Dissent. is contrary to settled principles in police power and eminent domain analysis. 362 362 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. led to the erroneous conclusion. safety or welfare. These laws merely http://central. zoning ordinances. vs. that the 20% discount is an exercise of the power of eminent domain. there is a whole class of police power measures which justify the destruction of private property in order to preserve public health. This. and the like would fall under this category. _______________ [96] Id. The Dissent essentially adopts this theory and reasoning which. Secretary of the Department of Social Welfare and Development However. laws regulating the operation of motels and hotels.

to use the term of the Dissent.[97] But this is not the case here. III The Dissent proceeds from the theory that the permanent reduction of profits or income/gross sales. by imposing the senior citizen discount. Jr. 363 VOL. is arbitrary. due to the 20% discount. oppressive or confiscatory. Secretary of the Department of Social Welfare and Development In the case at bar.com. for instance. To be sure. wholly unsupported by competent evidence.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 711. In such cases. 10:23 AM regulate or. 2013 363 Manila Memorial Park. At the outset. does not take any of the properties used by a business establishment like. the assailed law. is a „taking‰ of private property for public purpose without payment of just compensation. payment of just compensation is not required because they fall within the sphere of permissible police power measures. First. it must be emphasized that petitioners never presented any evidence to establish that they were forced to suffer enormous losses or operate at a loss due to the effects of the assailed law. Inc. on its face. the land on which a http://central. The senior citizen discount law falls under this latter category. _______________ [97] See. the Court can invalidate a law which.. They came directly to this Court and provided a hypothetical computation of the loss they would allegedly suffer due to the operation of the assailed law. thus. The central premise of the DissentÊs argument that the 20% discount results in a permanent reduction in profits or income/gross sales. evidence is indispensable before a determination of a constitutional violation can be made because of the following reasons. Laguio. say.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 67 of 158 . supra note 80. vs. burden the conduct of the affairs of business establishments. City of Manila v. or forces a business establishment to operate at a loss is. DECEMBER 3.

On the other hand..e. free to adjust the prices of the goods or services it provides to the general public.00 to the general public. because the law impacts the prices of the goods or services of a particular establishment relative to its sales to senior citizens. The extent of the impact would. Thus.00 (i.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. thus. P20. then it shall be sold at P8. rather than taking specific properties of a business establishment.00 less 20%) to senior citizens.00 to produce and is sold at P10.00 but is required to sell it at P16. Third.00.00 to senior citizens yet the business _______________ [98] Profit= selling price-cost price.00 (i. vs. Second.00 less 20%) to senior citizens. A business establishment is.e.00 to produce and is http://central. its profits or income/gross sales are affected.com.50 364 364 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. 10:23 AM manufacturing plant is constructed or the equipment being used to produce goods or services. the senior citizen discount law merely regulates the prices of the goods or services being sold to senior citizens by mandating a 20% discount. if the product costs P9.00[99] or a profit margin[100] of 50%. only that a 20% discount shall be given to senior citizens based on the price set by the business establishment. Note that the law does not impose at what specific price the product shall be sold. it can increase the price of the above product to P20. then the profit[98] is P5. however. [99] 10-5=5 [100] Profit margin= profit/selling price. depend on the profit margin of the business establishment on a particular good or service. P10. Inc.00[102] or a 30%[103] profit margin. Accordingly. the aforesaid product would have to be sold at P8. If a product costs P5. Secretary of the Department of Social Welfare and Development would still earn P3.[101] Under the assailed law. if a product is sold at P10.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 68 of 158 . [101] 5/10= ..

P10. 10:23 AM required to be sold at P8.00.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 69 of 158 . the business will not only earn a profit of P3. 711. To illustrate.00. P11.11 per piece. Secretary of the Department of Social Welfare and Development http://central. By revising its pricing strategy. it does not prevent the business establishment from revising its pricing strategy.00 (P10.00 (P8..00 less 20%) so that his income/gross sales would be P18.00 from non-senior citizens which.89 (i.com. vs. and Y. DECEMBER 3. Inc. a non-senior citizen. A decides to increase the price of his products to P11.00. as in supra note 102.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.00 because the business may claim the 20% discount as a tax deduction so that the loss may be less than P1. [103] 3/10= . 365 VOL.11 less 20%) and to Y at P11. then the business would experience a loss of P1. his income/gross sales would still be _______________ [102] 8-5=3 This example merely illustrates the effect of the 20% discount on the selling price and profit.00 to senior citizens.00. To prevent this from happening.e.. In short. As a result. suppose A has two customers: X. 2013 365 Manila Memorial Park. To be more accurate.e.00 a piece to X and Y resulting in income/gross sales of P20. a business establishment can recoup any reduction of profits or income/gross sales which would otherwise arise from the giving of the 20% discount.00 (i.00 + P10.00).00 but will also be entitled to a tax deduction pertaining to the 20% discount given. With the passage of the law.11. in turn. the business establishment may continue to earn P1.[104] But note that since not all customers of a business establishment are senior citizens. the profit would be greater than P3.30 [104] By parity of reasoning. Prior to the law. the exact loss will not necessarily be P1. when the law imposes the 20% discount in favor of senior citizens.00) or lower by P2. A must now sell his product to X at P8. can offset any loss arising from sales to senior citizens. he sells his product to X at P8. Thus.00 + P10. a senior citizen. however. A sells his products at P10. Fourth.

com.A.11 a piece. he would not only retain his previous income/gross sales of P20. 366 366 SUPREME COURT REPORTS ANNOTATED http://central. Such an economic justification is selfdefeating. 10:23 AM P20.11). will suffer no reduction in its profits or income/gross sales (or suffer some reduction but continue to operate profitably) despite giving the discount.89 + P11.[106] But. The Dissent.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 70 of 158 . however. if A were to raise the price of his products to P11. 7432. 14. what would be the basis to strike down the law? If it is possible that the _______________ [105] This merely illustrates how a company can adjust its prices to recoup or mitigate any possible reduction of profits or income/gross sales under the operation of the assailed law. In other words.00 but would be better off because he would be able to claim a tax deduction equivalent to the 20% discount he gave to X.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. the establishment becomes more profitable than it was before the implementation of R. states that · The explanation by the majority that private establishments can always increase their prices to recover the mandatory discount will only encourage private establishments to adjust their prices upwards to the prejudice of customers who do not enjoy the 20% discount. to be more accurate. of business establishments to revise their pricing strategy makes it possible for them not to suffer any reduction in profits or income/gross sales. mitigate the reduction of their profits or income/gross sales even after the passage of the law. Even then. for more consumers will suffer from the price increase than will benefit from the 20% discount. despite the application of the 20% discount. 711 SCRA 302. in the alternative. or. [106] Dissenting Opinion. It was likewise suggested that if a company increases its prices. if it is possible that the business establishment. such ability to increase prices cannot legally validate a violation of the eminent domain clause. by adjusting its prices. p. The capacity. business establishments have the capacity to adjust their prices so that they may remain profitable even under the operation of the assailed law. However. then.00[105] (P8. 400.

the Dissent would have this Court nullify the law without any proof of such nature. this Court is not the proper forum to debate the economic theories or realities that impelled Congress to shift from the tax credit to the tax deduction scheme. It is a basic postulate of our democratic system of government that the Constitution is a social contract whereby the people have surrendered their sovereign powers to the State for the common good. Indubitably. how can there be a finding that the assailed law is an unconstitutional exercise of police power or eminent domain? That there may be a burden placed on business establishments or the consuming public as a result of the operation of the assailed law is not. a ground to declare it unconstitutional for this goes into the wisdom and expediency of the law.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. The cost of most. Further. Inc.‰ Yet. vs. The shift from the tax credit to tax deduction scheme is a policy determination by Congress and the Court will respect it for as long as there is no show_______________ http://central. Secretary of the Department of Social Welfare and Development business establishment. by adjusting its prices. the one assailing the law has the heavy burden of proving that the regulation is unreasonable.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 71 of 158 . or has gone „too far‰ as to amount to a „taking. regulatory measures of the government on business establishments is ultimately passed on to the consumers but that. if not all. oppressive or confiscatory. 10:23 AM Manila Memorial Park. by itself.com. will not be unduly burdened. thereafter. It is not within our power or competence to judge which scheme is more or less burdensome to business establishments or the consuming public and. to choose which scheme the State should use or pursue. such as protecting or improving the welfare of a special class of people for which the Constitution affords preferential concern. does not justify the wholesale nullification of these measures. by itself.[107] All persons may be burdened by regulatory measures intended for the common good or to serve some important governmental interest. here.

To repeat. there is no actual proof to back up this claim. we cannot assume that such reduction is arbitrary.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. The necessity of proof is all the more pertinent in this case because. Manglapus. we cannot assume that the 20% discount results in a permanent reduction in profits or income/gross sales.[108] and not all private establishments make a 20% profit margin (which conversely implies that there are those who make more and. vs. DECEMBER 3.[109] In fine. Secretary of the Department of Social Welfare and Development ing. Unavoidably. and it could be that the loss suffered by a business establishment was occasioned through its fault or negligence in not adapting to the effects of the assailed law. the lack of evidence constrains the Dissent to rely on speculative and hypothetical argumentation when it states that the 20% discount is a significant amount and not a minimal loss (which erroneously assumes that the discount automatically results in a loss when it is possible that the profit margin is greater than 20% and/or the pricing strategy can be revised to prevent or mitigate any reduction in profits or income/gross sales as illustrated above). Inc.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 72 of 158 . 723 (1989). even if we gratuitously assume that the 20% discount results in some degree of reduction in profits or income/gross sales. There is. that the subject regulation has transgressed constitutional limitations. 504. much less that business establishments are forced to operate at a loss under the assailed law. oppressive or confiscatory. 10:23 AM [107] Marcos v. 479. 367 VOL. the law has been in operation for http://central. 711. therefore. And. 2013 367 Manila Memorial Park. as similarly observed by Justice Velasco in his Concurring Opinion. no unjust discrimination as the aforesaid business establishments are faced with the same constraints. because of the possible scenarios discussed above.com. The law uniformly applies to all business establishments covered thereunder. 177 SCRA 668. would not be greatly affected by this regulation). 258 Phil. thus. as here.

the presumption of constitutionality must prevail. [109] Id. we note that the Dissent modified its original arguments by including a new paragraph.com.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. to wit: Section 9.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 73 of 158 . we cannot invalidate the assailed law based on assumptions and conjectures. whether these establishments make a profit or suffer a loss. However. which should have led to the closure of numerous business establishments. Verily. The issue of profit or loss to the establishments is immaterial. has not come to pass. purchased. it contradicts the rest of the arguments of the http://central. or as in this case. donated. vs. 368 368 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. 10:23 AM over nine years now. social. The 20% discount granted to senior citizens belong to private establishments. Secretary of the Department of Social Welfare and Development by business establishments. First. They are all private property and any taking should be attended by corresponding payment of just compensation. Inc. mortgaged. part of the gross sales of private establishments. It does not state that there should be profit before the taking of property is subject to just compensation. The private property referred to for purposes of taking could be inherited. Article III of the 1987 Constitution speaks of private property without any distinction. Without adequate proof. IV At this juncture. or golf clubs which are open to the public and not only for exclusive membership. the grim picture painted by petitioners on the unconscionable losses to be indiscriminately suffered _______________ [108] Parenthetical comment supplied.[110] Two things may be said of this argument. In fact. the 20% discount applies to non-profit establishments like country.

hence. 13. 393 [111] Id. the 20% discount is not private property actually owned and/or used by the business establishment. it contradicts itself because it later argues. http://central. the 20% discount is part of the gross sales and.com. It is an erroneous characterization of the 20% discount.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 10:23 AM Dissent. vs. 369 VOL.. if appropriated for public use.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 74 of 158 . 9. However. at p. Inc. when the Dissent now argues that the issue of profit or loss is immaterial. in order to justify that there is a „taking‰ under the power of eminent domain in this case. Thus. p. is premised on the permanent reduction of total revenues and the loss that business establishments will be forced to suffer in arguing that the 20% discount constitutes a „taking‰ under the power of eminent domain. It should be distinguished from properties like lands or buildings actually used in the operation of a business establishment which. 12. [112] Id. at p. After it states that the issue of profit or loss is immaterial. this argument suffers from the same flaw as the DissentÊs original arguments. 711 SCRA 302. DECEMBER 3. According to the Dissent. private property belonging to business establishments. would amount to a „taking‰ under the power of eminent domain. the Dissent proceeds to argue that the 20% discount is not a minimal loss[111] and that the 20% discount forces business establishments to operate at a loss.[113] which the Dissent essentially adopts and relies on. Second. that the 20% discount forces business establishments to suffer a significant loss or to operate at a loss. Secretary of the Department of Social Welfare and Development Central Luzon Drug Corporation..[112] Even the obiter in _______________ [110] Dissenting Opinion. 711. as previously discussed. 2013 369 Manila Memorial Park.

Secretary of the Department of Social Welfare and Development characterized by Justice Bersamin in his Concurring Opinion. the 20% discount does not mean that a 20% reduction in gross sales necessarily results. the profitability of business establishments.com. vs. At the time the discount is imposed. Prior to the sale of goods or services. For this reason.‰ That is. the 20% discount does not automatically result in a 20% reduction in profits. no particular property of the business establishment can be said to be „taken. 10:23 AM Instead. They are a mere expectancy because they are potential fruits of the successful conduct of the business. a business establishment may be subject to State regulations. as similarly _______________ [113] Supra note 5. Again. the validity of the discount is to be determined based on its overall effects on the operations of the business establishment. Because (1) the profit margin of a http://central. as previously discussed. the 20% discount is a regulatory measure which impacts the pricing and. hence. [114] The Dissent uses the term „gross sales‰ instead of „income‰ but „income‰ and „gross sales‰ are used in the same sense through370 370 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. the State does not acquire or take anything from the business establishment in the way that it takes a piece of private land to build a public road. potential profits or income/gross sales are not private property. specifically cash or money. While the 20% discount may form part of the potential profits or income/gross sales[114] of the business establishment. or.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 75 of 158 . Inc. such as the 20% senior citizen discount. already belonging to the business establishment. which may impact the level or amount of profits or income/gross sales that can be generated by such establishment.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. to align it with the term used by the Dissent.

apart from „profits. it does not follow that the regulation is unreasonable.e. If the subject regulation affects income/gross sales. such reduction in profits or income/gross sales may be prevented or. mitigated so that the business establishment continues to operate profitably. i. Income/gross sales is a broader concept vis-a-vis profits because income/gross sales less cost of the goods or services equals profits. vs. Another way to view it. in his Concurring and Dissenting Opinion. 371 VOL. they are money derived from the sale of goods or services. oppressive or confiscatory because the business establishment may make the necessary adjustments to continue to operate profitably. The reference to or mention of „income‰/„gross sales‰.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Inc. No evidence was presented by petitioners to show otherwise. 2013 371 Manila Memorial Park. is that the business establishment merely has a right to profits.com. Justice Leonen. (2) not all customers of a business establishment are senior citizens. Secretary of the Department of Social Welfare and Development some degree of reduction in profits or income/gross sales occurs because of the 20% discount.. 711.‰ is intentionally made because the 20% discount may cover more than the profits from the sale of goods or services in cases where the profit margin is less than 20% and the business establishment does not adjust its pricing strategy. 10:23 AM product is not necessarily less than 20%. characterizes „profits‰ (or income/gross sales) as an inchoate right. and (3) the establishment may revise its pricing strategy. Thus.‰ cannot erase or conceal the materiality of profits or losses in determining the validity of the subject regulation in this case. as stated by Justice Velasco in his Concurring Opinion. then it follows that it affects profits and vice versa. even if we gratuitously assume that _______________ out this ponencia. from „profits‰ to „gross sales. The Constitution adverts to it as the right of an enterprise to a http://central.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 76 of 158 . in the alternative. no evidence was presented by petitioners at all. The shift in the use of terms. That is. In fact. DECEMBER 3.

But. it is not profits or income/gross sales which are actually taken and appropriated for public use. this right. may be regulated under the police power of the State to achieve important governmental objectives like protecting the interests and improving the welfare of senior citizens.com. in appropriate cases. Inc. Secretary of the Department of Social Welfare and Development the business and the total loss of the capital invested therein. what is actually taken is capital and the right of the business establishment to a reasonable return on investment.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. like any other right. The Dissent further argues that we erroneously used price and rate of return on investment control laws to http://central. It should be noted though that potential profits or income/gross sales are relevant in police power and eminent domain analyses because they may. oppressive or confiscatory. vs. 10:23 AM reasonable return on investment. V. again. When the deprivation or reduction of profits or income/gross sales is shown to be unreasonable. serve as an indicia when a regulation has gone „too far‰ as to amount to a „taking‰ under the power of eminent domain. petitioners in this case failed to prove that the subject regulation is unreasonable. when the regulation causes an establishment to incur losses in an unreasonable. Rather. In such a case. Section 3. then the challenged governmental regulation may be nullified for being a „taking‰ under the power of eminent domain.[115] Undeniably. oppressive or confiscatory manner. 372 372 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. If the business losses are not halted because of the continued operation of the regulation. oppressive or confiscatory.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 77 of 158 . this eventually leads to the destruction of _______________ [115] Article XIII.

but with substantial distinctions from. The subject regulation differs therefrom in that (1) the discount does not prevent the establishments from adjusting the level of prices of their goods and services.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 78 of 158 . 711. According to the Dissent. price control or rate of return on investment control laws which are traditionally regarded as police http://central. and (2) the discount does not apply to all customers of a given establishment but only to the class of senior citizens. 398. p. vs. 2013 373 Manila Memorial Park. it is unfortunate that the Dissent quotes only a portion of the ponencia · The subject regulation may be said to be similar to. Inc.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. These laws generally regulate public utilities or industries/enter​prises imbued with public interest in order to protect consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of return on investment of these corporations considering that they have a monopoly over the goods or services that they provide to the general public. 12. Profits of establishments without franchises cannot be regulated permanently because there is no law regulating their profits. only profits from industries imbued with public interest may be regulated because this is a condition of their franchises. DECEMBER 3. price control or rate of return on investment control laws which are traditionally regarded as police power measures. 10:23 AM justify the senior citizen discount law. 373 VOL. states · The subject regulation may be said to be similar to. The Dissent concludes that the permanent reduction of total revenues or gross sales of business establishments without franchises is a taking of private property under the power of eminent domain. in full. but with substantial distinctions from. x x x[116] _______________ [116] Dissenting Opinion. In making this argument. Secretary of the Department of Social Welfare and Development The above paragraph.com. 711 SCRA 302.

(Emphasis supplied) The point of this paragraph is to simply show that the State has. regulated prices and profits of business establishments. 374 374 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. 10:23 AM power measures. there is no intention to say that price and rate of return on investment control laws are the justification for the senior citizen discount law. establishments subject to price and rate of return on investment control laws cannot adjust prices accordingly. in the past. the ability to adjust prices allows the establishment subject to the senior citizen discount to prevent or mitigate any reduction of profits or income/gross sales arising from the giving of the discount. These laws generally regulate public utilities or industries/enter​prises imbued with public interest in order to protect consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of return on investment of these corporations considering that they have a monopoly over the goods or services that they provide to the general public. The subject regulation differs therefrom in that (1) the discount does not prevent the establishments from adjusting the level of prices of their goods and services. Inc. Not at all. and (2) the discount does not apply to all customers of a given establishment but only to the class of senior citizens. As previously discussed. to the degree material to the resolution of this case. In other words. In contrast. the substantial distinctions between price and rate of return on investment control laws vis-à-vis the senior citizen discount law provide greater reason to uphold the validity of the senior citizen discount law. the 20% discount may be properly viewed as belonging to the category of price regulatory measures which affects the profitability of establishments subjected thereto. Nonetheless. vs. this type of regulatory measures is traditionally recognized as police power measures so that the senior citizen discount may be considered as a police power measure as well.com. Secretary of the Department of Social Welfare and Development Certainly.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 79 of 158 . The http://central. What is more.

even those without franchises. 2013 375 http://central. and disposition of property and its increments. the social justice provisions of the Constitution enjoin the State to regulate the „acquisition. ownership. and remove cultural inequities by equitably diffusing wealth and political power for the common good. For what are franchises but mere legislative enactments? There is nothing in the Constitution that prohibits Congress from regulating the profits or income/gross sales of industries and enterprises without franchises.com. DECEMBER 3. 711. To this end. [118] Id. to attain the objective of diffusing wealth in order to protect and enhance the right of all the people to human dignity. without qualification. On the contrary. or is not in breach of some specific constitutional limitation.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. reduce social. and political inequalities. ownership. 10:23 AM justification for the senior citizen discount law is the plenary powers of Congress. Section 1 of the Constitution states: The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity. and disposition‰ of property and its increments. the State shall regulate the acquisition. states that the „profits of private establishments which are non-franchisees cannot be _______________ [117] Article XIII. economic. therefore. It is well within CongressÊ legislative powers to regulate the profits or income/gross sales of industries and enterprises.[118] Thus. 375 VOL. use. The legislative power to regulate business establishments is broad and covers a wide array of areas and subjects. When the Dissent. use. under the social justice policy of the Constitution.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 80 of 158 .[117] This may cover the regulation of profits or income/gross sales of all businesses. oppressive or confiscatory. business establishments may be compelled to contribute to uplifting the plight of vulnerable or marginalized groups in our society provided that the regulation is not arbitrary.

likewise. the minimum wage law could. even those without franchises.00 to produce the same product. Congress can regulate such profits or income/gross sales because. Does this mean that the minimum wage law should. Here. second. suppose the company decides to increase the price of its product in order to offset the effects of _______________ http://central.‰[119] it is assuming what it ought to prove. As can be seen. likewise. For instance. permanently regulate profits or income/gross sales of establishments without franchises. suppose it costs a company P5. And.com.00 with a profit margin of 30%.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. it must be emphasized that petitioners failed to present any proof to show that the effects of the assailed law on their operations has been unreasonable.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 81 of 158 . is not as uncommon as the Dissent depicts it to be. lead to a permanent reduction of profits. there are laws which. and there is no such law regulating their profits permanently. the company incurs greater labor costs so that it now costs P7. Inc. Because of the added labor costs arising from the minimum wage. Secretary of the Department of Social Welfare and Development regulated permanently. 10:23 AM Manila Memorial Park. a permanent reduction of profits or income/gross sales would result. First. To illustrate. be declared unconstitutional on the mere plea that it results in a permanent reduction of profits? Taking it a step further. The permanent regulation of profits or income/gross sales of business establishments. As a result. as previously noted. The profit per product of the company would be reduced to P3. vs. in effect. assuming that the employer does not increase the prices of his goods or services. there is nothing in the Constitution to prevent it from doing so. oppressive or confiscatory. Later. The net effect would be the same as in the earlier example of granting a 20% senior citizen discount. the minimum wage law allows the State to set the minimum wage of employees in a given region or geographical area. and RA 9257 is one such law.00 to produce a product and it sells the same at P10. the State increases the minimum wage.00 with a 50% profit margin. again.

are valid police power regulations. 14. if the establishment does not increase its prices. Sections 19 and 18 of the Social Security Law. [122] According to the Dissent. p.‰[121] then these statutory provisions would. 711 SCRA 302. following the reasoning of the Dissent.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Again. [121] Dissenting Opinion.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 82 of 158 . the net effect would be a permanent reduction in its profits or income/gross sales. Inc. Article 157 of the Labor Code. Following the reasoning of the Dissent that „any form of permanent taking of private property (including profits or income/gross sales)[120] is an exercise of eminent domain that requires the State to pay just compensation. have to be declared unconstitutional. It does not matter that these benefits are deemed part of the employeesÊ legislated wages because the net effect is the same. it leads to higher labor costs and a permanent reduction in the profits or income/gross sales of the business establishments. 399. in turn. these statutorily mandated employee benefits are valid police power measures because the employer is deemed fully compensated therefor as they form part of the employeeÊs legislated wage. 376 376 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. i. Secretary of the Department of Social Welfare and Development the increase in labor cost.e. This would. vs. 13. that is. according to it.[122] _______________ [120] Parenthetical comment supplied. p. 711 SCRA 302. 10:23 AM [119] Dissenting Opinion. does this mean that the minimum wage law. likewise. be integrated as part of the cost of its goods or services.com. minimum wage earners? The same reasoning can be adopted relative to the examples cited by the Dissent which. http://central.. is unconstitutional because the consuming public is effectively made to subsidize the wage of a group of laborers. 400. and Section 7 of the Pag-IBIG Fund Law would effectively increase the labor cost of a business establishment.

regulatory measures imposed by the State on business establishments impact. 10:23 AM The Dissent confuses police power with eminent domain. DECEMBER 3.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 83 of 158 . precisely. or a business establishment for that matter. Secretary of the Department of Social Welfare and Development The point then is this · most. to the test of reasonableness as to the means adopted to achieve such legitimate ends. no compensation is required. if not all. 711. the latterÊs prices and/or profits or income/gross sales. it is the paramount State interest in protecting the welfare of employees which justifies these measures as valid exercises of police power subject. police power is employed to protect and uphold the welfare of marginalized and vulnerable groups in our society. 2013 377 Manila Memorial Park. then a wholesale nullification of such measures would inevitably result. vs. Police power would be a meaningless State attribute if an individual. Further. Again.. at some level. the direct or incidental benefit derived by the employer (i. That the assailed law benefits senior citizens and not employees of a business establishment makes no material difference because. healthier work environment which presumably translates to more productive employees) from these statutorily mandated benefits is not a requirement to make them valid police power measures. It is immaterial whether the employer is deemed fully compensated because the 377 VOL. as the Dissent mistakenly assumes. to show that the employer is deemed fully compensated in order for the statutorily mandated benefits to be a valid exercise of police power. This State interest is principally rooted in the historical abuses suffered by employees when employers solely determined the terms and conditions of employment.com. of course.e. and it is not necessary.[123] If the Court were to sustain the DissentÊs theory. can only be compelled to accede to State regulations provided he (or it) is directly or incidentally benefited http://central. Inc. The police power of the State and the social justice _______________ justification for these statutorily mandated benefits is the overriding State interest to protect and uphold the welfare of employees. In police power.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.

petitioners must accept the realities of business and the State. the right to property has a social dimension. be rendered nugatory. A good number of these measures impact. While the Constitution protects property rights. vs. 671-673 (2012). Many laudable existing police power measures would have to be invalidated if. Secretary of the Department of Social Welfare and Development provisions of the Constitution would. There is nothing sacrosanct about profits or income/gross sales. This. in the exercise of police power.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 10:23 AM thereby. for a list of police power measures upheld by this Court. the individual subjected thereto should be directly or incidentally benefited by such measures. the profitability of business establishments yet the same were upheld by the Court because they were not shown to be unreasonable.com. as a condition for their validity. can intervene in the operations of a business which may result in an impairment of property rights in the process. Precisely in instances when the individual resists or opposes a regulation because it burdens him or her that the State exercises its police power in order to uphold the common good. at pp. thus. there is no basis for its nullification in view of the presumption of validity which every law has in its favor. [123] See De Leon and De Leon. While Article XIII of the Constitution provides the precept for the protection of property.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 84 of 158 . Jr. Philippine Constitutional Law: Principles and Cases Vol. the questioned provision is invalidated. we made clear in Carlos Superdrug Corporation:[124] Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings and capital. Moreover. Moreover. 378 378 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Inc. oppressive or confiscatory. various laws and jurisprudence. 1. directly or indirectly. xxxx The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing component of the business. in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question.. particularly http://central.

711. Thus.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 85 of 158 . 10:23 AM on agrarian reform and the regulation of contracts and public utilities. No. Inc.com. 2013 379 Manila Memorial Park. A law. we maintain that the correct rule in determining whether the subject regulatory measure has amounted to a „taking‰ under the power of eminent domain is the one laid down in Alalayan v. is reasonably and directly _______________ [124] Supra note 14. Without sufficient proof that Section 4(a) of R. 379 VOL. the deprivation or reduction of profits or income/gross sales must be clearly shown to be unreasonable. Under the specific circumstances of this case. oppressive or confiscatory. Undeniably.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. http://central. 9257 is arbitrary. the Court will refrain from quashing a legislative act. Secretary of the Department of Social Welfare and Development related. the success of the senior citizens program rests largely on the support imparted by petitioners and the other private establishments concerned. National Power Corporation[126] and followed in Carlos Superdrug Corporation[127] consistent with long standing principles in police power and eminent domain analysis.[125] In conclusion. such determination can only be made upon the presentation of competent proof which petitioners failed to do.A. vs. the means employed in invoking the active participation of the private sector. and that the continued implementation of the same would be unconscionably detrimental to petitioners. in order to achieve the purpose or objective of the law. This being the case. continuously serve as a reminder that the right to property can be relinquished upon the command of the State for the promotion of public good. which has been in operation for many years and promotes the welfare of a group accorded special concern by the Constitution. DECEMBER 3. cannot and should not be summarily invalidated on a mere allegation that it reduces the profits or income/gross sales of business establishments.

. J. Jr. _______________ [125] Id. 380 380 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. at pp.. and La Funeraria Paz-Sucat. 7432). Abad. Perez. Mendoza. Manila Memorial Park. No part.. which states that establishments may claim the 20% mandatory discount to senior citizens as tax deduction..A. Del Castillo. Leonen. SO ORDERED. Velasco.. 7432[1] (R. the Petition is hereby DISMISSED for lack of merit. [126] Supra note 83. Peralta left his vote concurring with ponencia of J. Leonardo-De Castro.: The main issue in this case is the constitutionality of Section 4 of Republic Act No. Carpio.). See Dissenting Opinion. vs. Inc.. Secretary of the Department of Social Welfare and Development Brion.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. concur. J. Del Castillo. Reyes and Perlas-Bernabe. Villarama.com. Bersamin. Jr. With Concurring Opinion.A. J. Inc..A. Inc. see Concurring Opinion. J. 9257[2] (R. I certify that J. as amended by Republic Act No. JJ. J. I certify that J.. J. 10:23 AM WHEREFORE. Pls. J. Peralta. De Castro left her vote concurring with ponencia of J. Article III of the Constitution which provides that „[p]rivate property shall not be taken for public use without http://central.. See Separate Concurring Opinion. DISSENTING OPINION CARPIO... 132-135. [127] Supra note 14. 9257). (petitioners) allege that the tax deduction scheme under R. 9257 violates Section 9. J.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 86 of 158 . Sereno (CJ. and thus no longer as tax credit.

9994.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 87 of 158 . No. That the total amount of the claimed tax deduction net of value added tax if applicable. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. (Emphasis supplied) The constitutionality of Section 4(a) of R. 7432. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. provides: SEC. further. including funeral and burial services for the death of senior citizens. 711. Secretary of the Department of Social Welfare and Development vices in hotels and similar lodging establishment. Inc. (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. 9257.‰ It was further amended by R.A.A. had been passed upon by the Court in Carlos Superdrug Corporation v.com. (f). or the „EXPANDED SENIOR CITIZENS ACT OF 2010. 2013 381 Manila Memorial Park. GRANT OTHER PURPOSES. as amended by R. Department of Social http://central.A. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. OTHERWISE KNOWN CONTRIBUTION OF SPECIAL PRIVILEGES SENIOR CITIZENS AND FOR TO AS „AN ACT NATION BUILDING. 7432. 10:23 AM just compensation.·The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of ser_______________ [1] AN ACT TO MAXIMIZE THE CONTRIBUTION OF SENIOR CITIZENS NATION TO BUILDING. xxxx The establishment may claim the discounts granted under (a). 4. 7432.‰ Section 4 of R. Privileges for the Senior Citizens. DECEMBER 3. restaurants and recreation centers. as amended.A. as amended by R. Provided.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. [2] AN ACT GRANTING ADDITIONAL BENEFITS AMENDING FOR TO MAXIMIZE BENEFITS THE THE AND AND PRIVILEGES TO SENIOR CITIZENS PURPOSE REPUBLIC ACT NO. vs. 381 VOL. 9257.A. GRANT BENEFITS AND SPECIAL PRIVILEGES AND FOR OTHER PURPOSES.

Under the tax deduction scheme. The Court cited in Carlos Superdrug Corporation the clarification by the Department of Finance.A. Secretary of the Department of Social Welfare and Development 1) The difference between the Tax Credit (under the Old Senior Citizens Act) and Tax Deduction (under the Expanded Senior Citizens Act). 7432 (the old Senior Citizens Act) and the tax deduction scheme under R.1. a tax credit is a peso-for-peso deduction from a taxpayerÊs tax liability due to the government of the amount of discounts such establishment has granted to a senior citizen. restaurants and recreation centers and purchase of medicines anywhere in the country. the government shoulders 100% of the discounts granted. which explained the difference between tax credit and tax deduction. The provision of Section 4 of R. 10:23 AM Welfare and Development.[3] In Carlos Superdrug Corporation. Effectively.A. vs.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 7432 (the old Senior Citizens Act) grants twenty percent (20%) discount from all establishments relative to the utilization of transportation services. The establishment recovers the full amount of discount given to a senior citizen and hence. a tax credit http://central. It must be noted. 526 SCRA 130 (2007). 382 382 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. 120. the costs of which may be claimed by the private establishments concerned as tax credit.com. however. No. as follows: _______________ [3] 553 Phil. 1. the establishments are paid back 100% of the discount they give to senior citizens. Lourdes B. hotels and similar lodging establishment. Recente. through Director IV Ma. they are only paid back about 32% of the 20% discount granted to senior citizens. that conceptually.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 88 of 158 . the Court made a distinction between the tax credit scheme under Section 4 of R. Inc. 9257 (the Expanded Senior Citizens Act). Under the tax credit scheme.A.

provides that the establishment concerned may claim the discounts under Section 4(a). The justification for the validity of the tax deduction. the establishment concerned is allowed to deduct from gross income. 2013 383 Manila Memorial Park.A. but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances. 7432 is. therefore. 10:23 AM scheme under the Philippine tax system. 9257. the amount of discounts granted to senior citizens. in computing for its tax liability. The estab383 VOL.2. there is no full compensation for the 20% discount that private establishments are forced to give to senior citizens. The provision under R. based on the net cost of goods sold or services rendered. 711. was explained by the Court in Carlos Superdrug Corporation as a lawful exercise of police power. The tax credit scheme under R.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 89 of 158 . necessitates that prior payments of taxes have been made and the taxpayer is attempting to recover this tax payment from his/her income tax due. it has been described as „the most essential. inapplicable since no tax payments have previously occurred. Accordingly. Police power is not capable of an exact definition.A. This will be an amount equivalent to 32% of the twenty percent (20%) discounts so granted. thus assuring the greatest benefits. No. (f).SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. on the other hand. Inc. The Court ruled: The law is a legitimate exercise of police power which. insistent and the least limitable of powers. (g) and (h) as tax deduction from gross income. Secretary of the Department of Social Welfare and Development lishment shoulders the remaining portion of the granted discounts. the government loses in terms of foregone revenues an amount equivalent to the marginal tax rate the said establishment is liable to pay the government. DECEMBER 3. Effectively. No. which the majority opinion adopts. extending as it does to all the great public http://central. [4] (Emphasis in the original) Thus. under the tax deduction scheme. Under this scheme. has general welfare for its object. 1.com. similar to the power of eminent domain. vs.

Inc. 125-126. Moreover.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 90 of 158 . Central Luzon Drug Corporation[6] (Central Luzon Drug Corporation) holding that „the tax credit benefit granted to these establishments can be http://central.[5] In the case before us. not repugnant to the constitution. 136-137.. because petitioners have not taken time to calculate correctly and come up with a financial report. at pp. The majority opinion also declares that the CourtÊs earlier decision in Commissioner of Internal Revenue v. and ordinances. in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question. it is incorrect for petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their business. and of the subjects of the same. though sheltered by due process. must yield to general welfare.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 10:23 AM needs. either with penalties or without. there is no basis for its nullification in view of the presumption of validity which every law has in its favor. Given these. property rights must bow to the primacy of police power because property rights. and establish all manner of wholesome and reasonable laws. Secretary of the Department of Social Welfare and Development and capital. when the conditions so demand as determined by the legislature. statutes. the majority opinion declares that it finds no reason to overturn or modify the ruling in Carlos Superdrug Corporation. as they shall judge to be for the good and welfare of the commonwealth.‰ It is „[t]he power vested in the legislature by the constitution to make. 384 384 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. pp.com. Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings _______________ [4] Id. so that they have not been able to show properly whether or not the tax deduction scheme really works greatly to their disadvantage. ordain.‰ For this reason. vs. the questioned provision is invalidated.

was whether a private establishment may claim the cost of the 20% discount granted to senior citizens as a tax credit even though an establishment operates _______________ [5] Id.. [7] Id.com. The sole issue. despite the provision of the law mandating that it should be treated as a tax credit. at pp. 143-145. 2-94 (RR 2-94). a reading of the decision shows that petitioner raised the issue of „[w]hether the Court of Appeals erred in holding that respondent may claim the 20% sales discount as a tax credit instead of as a tax deduction from gross income or gross sales. 711. 10:23 AM deemed as their just compensation for private property taken by the State for public use‰[7] and that the permanent reduction in the total revenues of private establishments is „a forced subsidy corresponding to the taking of private property for public use or benefit‰[8] is an obiter dictum and is not a binding precedent. The erroneous treatment by the BIR under RR 2-94 necessitated the discussion explaining why the tax credit benefit given to private establishments should be deemed just compensation.. [8] Id.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 91 of 158 . the BIR erroneously treated the 20% discount as a tax deduction under Sections 2. 444. at p. The Court explained in Central Luzon http://central. Inc. according to the CourtÊs decision in Central Luzon Drug Corporation. 307. 385 VOL. However. pp. [6] 496 Phil. Secretary of the Department of Social Welfare and Development at a loss. 132-133. 456 SCRA 414 (2005).‰[9] In that case. The majority opinion reasons that the Court in Central Luzon Drug Corporation was not confronted with the issue of whether the 20% discount was an exercise of police power or eminent domain. p. vs. Citations omitted. 2013 385 Manila Memorial Park.i and 4 of Revenue Regulations No. DECEMBER 3. 335.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.

the tax credit benefit granted to these establishments can be deemed as their just compensation for private property taken by the State for public use. 426. 10:23 AM Drug Corporation: Fourth. public welfare.i and 4 of RR 2-94 deny the exercise by the State of its power of eminent domain.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 92 of 158 . of the equivalent amount it needs to cope with the reduction in its revenues. Accordingly.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. The concept of public use is no longer confined to the traditional notion of use by the public. through the certificate. at p. Secretary of the Department of Social Welfare and Development compensation. respondent becomes entitled to a just _______________ [9] Id. public benefit.com. In effect. Be it stressed that the privilege enjoyed by senior citizens does not come directly from the State. and public convenience. 318. respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt. were it not for RA 7432. This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the discounts given. 386 386 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.. As a result of the 20 percent discount imposed by RA 7432. http://central. such issuance · when not done within a reasonable time from the grant of the discounts · cannot be considered as just compensation. Sections 2. but held synonymous with public interest. Inc. vs. but rather from the private establishments concerned. Equivalent to the payment of property taken by the State. The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. p. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned. but also to the promptness in its release. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit.

Inc. because no taxes are due from the latter. it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales.‰ In recent years. The foregoing discussion was certainly not unnecessary or immaterial in the resolution of the case. 387 VOL. a private establishment that merely breaks even · without the discounts yet · will surely start to incur losses because of such discounts. vs. The same effect is expected if its markup is less than 20 percent. and if all its sales come from retail purchases by senior citizens. Secretary of the Department of Social Welfare and Development Operating at a loss through no fault of its own. the power to tax has indeed become a most effective tool to realize social justice.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.[11] hence. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto. public welfare. it will realize that the tax credit limitation under RR 2-94 is inutile.com. Tax measures are but „enforced contributions exacted on pain of penal sanctions‰ and „clearly imposed for a public purpose. 2013 387 Manila Memorial Park. While it is a declared commitment under Section 1 of RA 7432. and no administrative body can alter that fact.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 93 of 158 . It is in the tax credit that our legislators find support to realize social justice. To put it differently. and the equitable distribution of wealth. profit-generating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing. DECEMBER 3.i and 4 of RR 2-94 were erroneously issued.[10] (Emphasis supplied) The foregoing discussion formed part of the explanation of this Court in Central Luzon Drug Corporation why Sections 2. 10:23 AM Besides. Worse. the http://central. Aside from the observation we have already raised earlier. if not improper. a just compensation for income that is taken away from respondent becomes necessary. social justice „cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. 711.‰ For this reason. the taxation power can also be used as an implement for the exercise of the power of eminent domain.

Olds.[12] the Court acknowledged that „[b]y reason of the constant growth of public opinion in a developing civilization. When police power is exercised. 335-337.‰ p. Cabrigas.S.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 94 of 158 . Thus. vs. clearly and definitely defined and circumscribed.. 1222. at pp. the Court defined obiter dictum as „words of a prior opinion entirely unnecessary for the decision of the case‰ („BlackÊs Law Dictionary‰. there must be just compensation. there is no just compensation to the citizen who loses his private property. Government officials cannot just invoke police power when the act constitutes eminent domain.‰[13] The Court stated that the „definition of the police power of the state must depend upon the particular law and the particular facts to which it is to be applied. Pomar. it was http://central. v. Lucia Realty and Development. _______________ [10] Id. While it is true that police power is similar to the power of eminent domain because both have the general welfare of the people for their object. Inc.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 725 (2001). 358 SCRA 715. the Court must clarify taking in police power and taking in eminent domain.‰[14] However. [11] In Sta. Secretary of the Department of Social Welfare and Development In the early case of People v. 411 Phil. 388 388 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. a second look at the case shows that it barely distinguished between police power and eminent domain. Citations omitted. 443-446.‰ 78 U. App. 1555). Inc. p.C. 382-383. citing the case of „Noel v. D. 369. the term Âpolice powerÊ has never been. 155) or an incidental and collateral opinion uttered by a judge and therefore not material to his decision or judgment and not binding („WebsterÊs Third New International Dictionary. pp.com. we need to clarify the concept of taking in eminent domain as against taking in police power to prevent any claim of police power when the power actually exercised is eminent domain. When eminent domain is exercised. As regards Carlos Superdrug Corporation. and we do not believe can be. 10:23 AM discussion is definitely not obiter dictum.

the destruction of the property is permitted in the exercise of the police power of the state. Kansan.. 711.‰ 28. where individuals have been deprived of their property. without compensation.com. refers to property that are destroyed or placed outside the commerce of man. In all of such cases. except in cases where the property in question was used for the purpose of violating some law legally adopted. Co. in civilized society and well-organized governments. ButchersÊ Union. [14] Id. vs. The Court declared in Pomar: It is believed and confidently asserted that no case can be found. Among such cases may be mentioned: Apparatus used in counterfeiting the money of the state. morals and general welfare of the state. 111 U. when applied to taking of property without compensation. Crescent City. John Stuart Mill – „On Liberty. 389 VOL. But it must first be established that such property was used as the instrument for the violation of a valid existing law.] 36. 2013 389 Manila Memorial Park. and in many more which might be cited.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. opium possessed in violation of law. Co. at p.S. [13] Id. 623. 445.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 95 of 158 . vs. (Mugler vs. etc. DECEMBER 3. Slaughter_______________ [12] 46 Phil.. 746. Secretary of the Department of Social Welfare and Development House Cases. 10:23 AM considered even then that police power. 440 (1924)..S. and all cases in which the property itself has become a nuisance and dangerous and detrimental to the public health. Inc. apparatus used for gambling in violation of law. 29) Without further attempting to define what are the peculiar subjects or limits of the police power.S. 123 U. etc.. 16 Wall. buildings and property used for the purpose of violating laws prohibiting the manufacture and sale of intoxicating liquors. or constitutes a nuisance. [U. under the police power of the state. firearms illegally possessed. it may safely be affirmed. that http://central.

[and] (3) taxation. Hon. But the state. must come within this category. 10:23 AM every law for the restraint and punishment of crimes. V-11. Judge Ericta. there are three inherent powers of government by which the state interferes with the property rights. It is usually exerted in order to merely regulate the use and enjoyment of property of the owner.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 96 of 158 . liberty or property without due process of law. for the preservation of the public peace. 390 390 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 122 SCRA 759 (1983). vs. 623)[15] (Emphasis supplied) In City Government of Quezon City v. at pp. is subject to and is controlled by the paramount authority of the constitution of the state. when providing by legislation for the protection of the public health. III. 123 U. S-64. 50). Section 1 subparagraph 1. [16] the Court quoted with approval the trial courtÊs decision declaring null and void Section 9 of Ordinance No. of the Quezon City Council. and morals. Inc. (2) eminent domain. Occupying the forefront in the bill of rights is the provision which states that Âno person shall be deprived of life. 648. (Mugler vs. the public morals. If he is deprived of his property outright. health.S. p. namely · (1) police power. Constitution) On the other hand. Secretary of the Department of Social Welfare and Development Police power is defined by Freund as Âthe power of promoting the public welfare by restraining and regulating the use of liberty and propertyÊ (Quoted in Political Law by Tañada and Carreon. (Art.. and will not be permitted to violate rights secured or guaranteed by that instrument or interfere with the execution of the powers and rights guaranteed to the people under their law · the constitution. [16] 207 Phil. it is http://central. Kansan. 454-455. 6118. thus: We start the discussion with a restatement of certain basic principles. These are said to exist independently of the Constitution as necessary attributes of sovereignty. or the public safety.com. _______________ [15] Id.

It does not involve the http://central. The field and scope of police power have become almost boundless. 39 Phil.S. 711. L-​7995. 10:23 AM not taken for public use but rather to destroy in order to promote the general welfare. vs. The police power being the most active power of the government and the due process clause being the broadest limitation on governmental power. L-7995. In police power. it does not need to be expressed or defined in its scope.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Being coextensive with self-preservation and survival itself. 660. they cannot delimit beforehand the extent or scope of the police power by which and through which the state seeks to attain or achieve public interest and welfare. Inc. Secretary of the Department of Social Welfare and Development tween this power of government and the due process clause of the Constitution is oftentimes inevitable. (Ichong vs. 10 Phil. The Supreme Court has said that police power is so far-reaching in scope that it has almost become impossible to limit its sweep. As it derives its existence from the very existence of the state itself. 104). the owner does not recover from the government for injury sustained in consequence thereof (12 C. Hernandez. at times the most insistent. DECEMBER 3. the most essential insistent and illimitable. 2013 391 Manila Memorial Park. Provincial Board. It has been said that police power is the most essential of government powers.J. Especially it is so under the modern democratic framework where the demands of society and nations have multiplied to almost unimaginable proportions. May 31. it is the most positive and active of all governmental processes. May 31.com. Linsuya Fan. the conflict be391 VOL. just as the fields of public interest and public welfare have become almost all embracing and have transcended human foresight. Hernandez. and always one of the least limitable of the powers of government (Ruby vs.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 97 of 158 . Ichong vs. 1957). 623). vs. 1957). It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare. Since the Court cannot foresee the needs and demands of public interest and welfare. This power embraces the whole system of public regulation (U.

‰ This proscription is intended to provide a safeguard against possible abuse and so to protect as well the individual against whose property the power is sought to be enforced. It is a right to take or reassert dominion over property within the state for public use or to meet public exigency. 442. [18] Manosca v.[18] _______________ [17] Id. Inc.[17] (Boldfacing and italicization supplied) Clearly. Court of Appeals. the taking of private property by the government under eminent domain has to be for public use and there must be just compensation. 448.[19] http://central. 10:23 AM taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace and order and of promoting the general welfare as for instance. 763-764. 654-655. On the other hand. 322 Phil. 392 392 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.com. Secretary of the Department of Social Welfare and Development In order to be valid.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. vs.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 98 of 158 . It is said to be an essential part of governance even in its most primitive form and thus inseparable from sovereignty. the confiscation of an illegally possessed article. 418 (1996). at pp.. taking under the exercise of police power does not require any compensation because the property taken is either destroyed or placed outside the commerce of man. the power of eminent domain has been described as · x x x Âthe highest and most exact idea of property remaining in the governmentÊ that may be acquired for some public purpose through a method in the nature of a forced purchase by the State. 252 SCRA 412. pp. such as opium and firearms. The only direct constitutional qualification is that „private property should not be taken for public use without just compensation.

compensation is not required. 2013 393 Manila Memorial Park. vs. The former achieves its object by regulation while the latter by „taking‰. there is no compensable taking. DECEMBER 3. S. it is undeniable that there is taking of property for public use.J. 711. Secretary of the Department of Social Welfare and Development that is subject to private ownership. expounded: Both police power and the power of eminent domain have the general welfare for their object. 1057.. S. An analysis of existing jurisprudence yields the rule that when a property interest is appropriated and applied to some public purpose. 10:23 AM Fr. When title to property is transferred to the expropriating authority. the Constitution prescribes just compensation. whereas. The property taken for http://central.J. there is a clear case of compensable taking. Inc. It is in cases where title remains with the private owner that inquiry must be made whether the impairment of property right is merely regulation or already amounts to compensable taking.A. Bernas. Private property is anything _______________ [19] Moday v. However. a sharp distinction must be made between regulation and taking. THE 1987 CONSTITUTION OF THE PHILIPPINES.com. a property interest is merely restricted because continued unrestricted use would be injurious to public welfare or where property is destroyed because continued existence of the property would be injurious to public interest. Court of Appeals.. when property is taken. [20] J.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 99 of 158 . Joaquin G. A COMMENTARY 379 (1996 ed. it is a settled rule that neither acquisition of title nor total destruction of value is essential to taking. When property right is impaired by regulation. 268 SCRA 586 (1997). however. Bernas.[20] (Emphasis supplied) In Section 4 of R. there is compensable taking.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 335 Phil. as will be seen.) 393 VOL. Where. Hence. 7432.

Implementing Rules and Regulations of R. including the mandatory discounts given to senior citizens which form part of the gross sales of the private establishments that are forced to give them.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. _______________ [21] See Section 4. For sure. Rule IV. The taking of property under Section 4 of R. In fact. 10:23 AM public use applies not only to land but also to other proprietary property. Inc. purchased. money or cash is private property because it is something of value that is subject to private ownership. Section 9.A.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 100 of 158 . The private property referred to for purposes of taking could be inherited. It does not state that there should be profit before the taking of property is subject to just compensation. Secretary of the Department of Social Welfare and Development http://central. part of the gross sales of private establishments. donated. 9994. 394 394 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.A. 7432 is an exercise of the power of eminent domain and not an exercise of the police power of the State. vs.com. mortgaged. The 20% discount granted to senior citizens belongs to private establishments. or golf clubs which are open to the public and not only for exclusive membership. or as in this case.[21] The issue of profit or loss to the establishments is immaterial. social. They are all private property and any taking should be attended by a corresponding payment of just compensation. the 20% discount applies to non-profit establishments like country. No. whether these establishments make a profit or suffer a loss. The amount of mandatory discount is money that belongs to the private establishment. Article III of the 1987 Constitution speaks of private property without any distinction. A clear and sharp distinction should be made because private property owners will be left at the mercy of government officials if these officials are allowed to invoke police power when what is actually exercised is the power of eminent domain.

at p.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 101 of 158 . 130. but the ownerÊs loss. in promoting the health and welfare of a special group of citizens. 689 SCRA 554. 30 January 2013. No. [25] Id.‰ There may be valid instances when the State can impose burdens on private establishments that effectively subsidize a government program.. at pp. 395 http://central. the moment a constitutional threshold is crossed · when the burden constitutes a taking of private property for public use · then the burden becomes _______________ [22] National Power Corporation v. 10:23 AM Just compensation is „the full and fair equivalent of the property taken from its owner by the expropriator.‰[25] Despite these pronouncements admitting there was compensable taking. can impose upon private establishments the burden of partly subsidizing a government program. full and ample. at p. [23] Id.‰[24] The Court ruled that „[t]his constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.com. [24] Supra note 3. However.. In Carlos Superdrug Corporation. the Court still proceeded to rule that „the State. 562. substantial. The word ÂjustÊ is used to qualify the meaning of the word ÂcompensationÊ and to convey thereby the idea that the amount to be tendered for the property to be taken shall be real. x x x. The measure is not the takerÊs gain.[23] (Emphasis supplied) The 32% of the discount that the private establishments could recover under the tax deduction scheme cannot be considered real. 173520. 129-130.‰[22] The Court explained: x x x.R. substantial. G. full and ample compensation. the Court conceded that „[t]he permanent reduction in [private establishmentsÊ] total revenue is a forced subsidy corresponding to the taking of private property for public use or benefit. Spouses Zabala.

SUPREME COURT REPORTS ANNOTATED VOLUME 711 VOL. b. Emergency medical and dental services. when the number of employees exceeds two hundred (200) but not more than three hundred (300). a part-time physician and dentist. The services of a full-time registered nurse. dentist and a full-time registered nurse as well as a dental clinic and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300). The Secretary of Labor and Employment shall provide by appropriate regulations. xxxx 396 396 SUPREME COURT REPORTS ANNOTATED http://central. 10:23 AM 395 Manila Memorial Park. 157. DECEMBER 3. and c. the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order. 2013 9/2/15. depending on the number of employees. and a dentist. the services of a graduate first-aider shall be provided for the protection of workers. 711. An example of a burden that can be validly imposed on private establishments is the requirement under Article 157 of the Labor Code that employers with a certain number of employees should maintain a clinic and employ a registered nurse. The services of a full-time physician. where no registered nurse is available. a physician. Article 157 of the Labor Code provides: Art. vs. The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces. Inc. in which case. Secretary of the Department of Social Welfare and Development an exercise of eminent domain for which just compensation is required.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 102 of 158 . ·It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of: a. and an emergency clinic. hazardous workplaces for purposes of this Article.com.

SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. [27] Republic Act No. or any other form of payment. otherwise known as the Social Security Act of 1997.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 103 of 158 . the private establishments cannot recover the full amount of the discount they give and thus there is taking to the extent of the amount that cannot be recovered. benefits fully from this burden because the health of its workers while in the workplace is a legitimate concern of the private employer. In the present case. The employer itself. 10:23 AM Manila Memorial Park. The Court should correct this situation as it clearly violates Section 9. 1161. the private establishment is compensated only in the equivalent amount of 32% of the mandatory discount. Secretary of the Department of Social Welfare and Development Article 157 is a burden imposed by the State on private employers to complement a government program of promoting a healthy workplace. 8282. Another example of a burden that can be validly imposed on a private establishment is the requirement under Section 19 in relation to Section 18 of the Social Security Law[26] and Section 7 of the Pag-IBIG Fund[27] for the employer to contribute a certain amount to fund the benefits of its employees. otherwise known as the Home http://central. Moreover. They shoulder 68% of the discount they are forced to give to senior citizens. however.com. that could make up for the 68% balance of the mandatory discount. which amended Republic Act No. There are no services rendered by the senior citizens. In the case of the senior citizenÊs discount. Clearly. The amounts contributed by private employers form part of the legislated wages of employees. the private establishments are only compensated about 32% of the 20% discount granted to senior citizens. The private employers are deemed fully compensated for these amounts by the services rendered by the employees. vs. the cost of maintaining the clinic and staff is part of the legislated wages for which the private employer is fully compensated by the services of the employees. Article III of the Constitution which provides that „[p]rivate property shall not be taken for _______________ [26] Republic Act No. 9679. Inc.

ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 104 of 158 .‰[29] „admission fees charged by theaters. and other similar places of culture. Inc. carnivals. Carlos Superdrug Corporation considered that there was sufficient basis for taking without compensation by invoking the exercise of police power of the State. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. leisure and amusement for the exclusive use or enjoyment of senior citizens.‰[28] However. restaurants and recreation centers. Under R. in accordance with http://central. It is incorrect to say that private establishments only suffer a minimal loss when they give a 20% discount to senior citizens.‰ Carlos Superdrug Corporation should be abandoned by this Court and Central Luzon Drug Corporation re​affirmed. 10:23 AM Development Mutual Fund Law of 2009. 397 VOL. the taking of property for public use and payment of just compensation. the Court failed to consider that a permanent taking of property for public use is an exercise of eminent domain for which the government must pay compensation. 711. the 20% discount applies to „all establishments relative to the utilization of services in hotels and similar lodging establishment. vs. that is. DECEMBER 3. 2013 397 Manila Memorial Park. circuses. cinema houses and concert halls. 9257.‰[30] „medical and dental services.com. Secretary of the Department of Social Welfare and Development public use without just compensation.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Eminent domain is a sub-class of police power and its exercise is subject to certain conditions. Carlos Superdrug Corporation admitted that the permanent reduction in the total revenues of private establishments is a „compensable taking for which petitioners would ordinarily become entitled to a just compensation.A. In doing so. and diagnostic and laboratory fees provided under Section 4(e) including professional fees of attending doctors in all private hospitals and medical facilities. including funeral and burial services for the death of senior citizens.

a 20% mandatory discount based on the gross selling price is huge. Secretary of the Department of Social Welfare and Development coordination with the Philippine Health Insurance Corporation.‰[32] and „public railways.com. [30] Section 4(b). vs. 10:23 AM the rules and regulations to be issued by the Department of Health. itself not an insignificant amount. 398 398 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Inc.‰[33] The 20% discount cannot be considered minimal because not all private establishments make a 20% margin of profit. in _______________ [28] Supra note 3. The subject regulation differs therefrom in that (1) the discount does not prevent the establishments from adjusting the http://central. 130. The 20% mandatory discount is more than the 12% Value Added Tax. skyways and bus fare for the exclusive use and enjoyment of senior citizens. Besides. on its face alone. These laws generally regulate public utilities or industries/enter​prises imbued with public interest in order to protect consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate or return on investment of these corporations considering that they have a monopoly over the goods or services that they provide to the general public. price control or rate of return on investment control laws which are traditionally regarded as police power measures.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. but with substantial distinctions from. The majority opinion states: The subject regulation may be said to be similar to.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 105 of 158 . The majority opinion states that the grant of 20% discount to senior citizens is a regulation of businesses similar to the regulation of public utilities and businesses imbued with public interest.‰[31] „fare for domestic air and sea travel for the exclusive use or enjoyment of senior citizens. [29] Section 4(a). at p.

and these franchisees have agreed to limit their profits as condition for the grant of the franchises. DECEMBER 3. can only be regulated temporarily during emergencies like calamities.[34] _______________ [31] Section 4(f). However. There has to be an emergency to trigger price control on businesses and only for the duration of the emergency.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. [33] Section 4(h). but which do not enjoy franchises from the State. the majority opinion admits that the 20% mandatory discount is only „similar to. The profits of private establishments which are non-franchisees cannot be regulated permanently. Only those who are granted franchises by the State can operate public utilities. 353-354.com. 20. [34] Decision. and (2) the discount does not apply to all customers of a given establishment but only to a class of senior citizens. and there is no such law regulating their profits permanently. 711 SCRA 302. but with substantial distinctions from price control or rate of return on investment control laws‰ which „regulate public utilities or industries/enterprises imbued with public interest.‰ regulatory laws on public utilities and industries imbued with public interest cannot be used as justification for the 20% mandatory discount without payment of just compensation.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 106 of 158 . 10:23 AM level of prices of their goods and services. 2013 399 Manila Memorial Park. The profits of public utilities are regulated because they operate under franchises granted by the State. [32] Section 4(g). Secretary of the Department of Social Welfare and Development However. http://central. The majority opinion cites a case[35] that allegedly allows the State to limit the net profits of private establishments. 399 VOL. x x x. vs. p. 711.‰ Since there are admittedly „substantial distinctions. Inc. The profits of industries imbued with public interest.

Inc. because that constitutes taking of private property for public use without just compensation.com. However. 24 SCRA 172 (1968). One example is the two-day liquor ban during elections under Article 261 of the Omnibus Election Code but this. 400 400 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. again. or to operate at a loss. The State has the power to regulate the conduct of the business of private establishments as long as the regulation is reasonable. This is a valid exercise of police power of the State. 279.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 107 of 158 . Under its police _______________ [35] Alalayan v. 10:23 AM the case cited by the majority opinion refers to franchise holders of electric plants. the State may also temporarily limit or suspend business activities. The police power to regulate business cannot negate another provision of the Constitution like the eminent domain clause. National Power Corporation. is only for a limited period. The State can take over private property without compensation in times of war or other national emergency under Section 23(2). Article VI of the 1987 Constitution but only for a limited period and subject to such restrictions as Congress may provide. The State cannot compel private establishments without franchises to grant discounts. 133 Phil. http://central. but when the regulation amounts to permanent taking of private property for public use. Secretary of the Department of Social Welfare and Development power. there must be just compensation because the regulation now reaches the level of eminent domain. which requires just compensation to be paid for the taking of private property for public use. any form of permanent taking of private property is an exercise of eminent domain that requires the State to pay just compensation. vs.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.

Prior to its amendment. Section 4 of R. x x x x (Emphasis supplied) Under R. 7432. despite the application of the 20% discount. for more consumers will suffer from the price increase than will benefit from the 20% discount. such ability to increase prices cannot legally validate a violation of the eminent domain clause. 7432 reads: 401 VOL. vs. the amendment reads: SEC.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 108 of 158 . 10:23 AM The explanation by the majority that private establishments can always increase their prices to recover the mandatory discount will only encourage private establishments to adjust their prices upwards to the prejudice of customers who do not enjoy the 20% discount. hotels and similar lodging establishment. That private establishments may claim the cost as tax credit. DECEMBER 3. 9257. the 20% discount granted to senior citizens is not per se unreasonable. 4.·The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all http://central.·The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all establishments. the establishment becomes more profitable than it was before the implementation of R.A. Privileges for the Senior Citizens. Such an economic justification is self-defeating.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Secretary of the Department of Social Welfare and Development SEC. It is the provision that the 20% discount may be claimed by private establishments as tax deduction. that is oppressive and confiscatory.A. 4.A. and no longer as tax credit. relative to utilization of transportation services. 2013 401 Manila Memorial Park. Privileges for the Senior Citizens. It was likewise suggested that if a company increases its prices. restaurants and recreation centers and purchase of medicine anywhere in the country: Provided.com. Finally. Inc. 711. Even then.

(g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided.A. CONCURRING OPINION VELASCO. as amended by R. providing that private establishments may claim the 20% discount to senior citizens as tax deduction. 7432. Where amendments to a statute are declared unconstitutional.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. the original statute as it existed before the amendment remains in force. 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 109 of 158 .. further. in legal contemplation does not exist. or Section 4 of R.[36] An amendatory law.: The issue in the present case hinges upon the http://central. if declared null and void.com. Provided. as amended. Inc. the old law. J. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. ACCORDINGLY. I vote to GRANT the petition. xxxx The establishment may claim the discounts granted under (a). 10:23 AM establishments relative to the utilization of services in hotels and similar lodging establishment. Secretary of the Department of Social Welfare and Development allows the 20% discount as tax credit. vs. [37] The private establishments should therefore be allowed to claim the 20% discount granted to senior citizens as tax credit. JR. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens.A. That the total amount of the claimed tax deduction net of value added tax if applicable. which 402 402 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. (f).A. (Emphasis supplied) Due to the patent unconstitutionality of Section 4 of R. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. 7432. including funeral and burial services for the death of senior citizens. is automatically reinstated. restaurants and recreation centers.

however. 4 of RA 9257. 10 L. 249. vs. Secretary of the Department of Social Welfare and Development Indeed. 4 of RA 9257 as an improper exercise of the power of eminent domain by the State as it permits the deprivation of private property without just compensation. DECEMBER 3. citing Eberle v. 493 SCRA 279 (2006). Rather. 10:23 AM consequence of a reclassification of a mandated discount as a deduction from the gross income instead of a tax credit deductible from the tax liability of affected taxpayers. Michigan.com. is not subject to expropriation as it is of a mercurial character http://central. Mensching. the petition questions the constitutionality of Section 4 of Republic Act No. 2013 403 Manila Memorial Park. A view. 526 Phil. 4 of RA 9257 is no more than a regulation of the right to profits of certain taxpayers in order to benefit a significant sector of society. 8. v. As cited by the ponencia. Agoncillo..S.R. as distinguished from profit itself.. The right to profit. Inc. 50 Phil. a valid exercise of the police power of the State. However. It is. the practice of allowing taking of private property without just compensation is an abhorrent policy. it is my humble opinion that Sec. Inc. 348 (1927). 711. _______________ [36] See Government of the Philippine Islands v. thus.A. 232 U. DSWD (Carlos Superdrug) by sustaining the reclassification as a proper implement of the police power of the State. In particular. City of Manila.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 403 VOL. which has allowed the amount representing the 20% forcible discount to senior citizens as a deduction from gross income rather than a tax credit. this Court had previously resolved the issue in Carlos Superdrug v. 625 [1907]. [37] See Coca-Cola Bottlers Phils. has been advanced that We should take a second look at the doctrine laid down in Carlos Superdrug and declare Sec. People v. I do not agree that such policy underpins Sec.. (RA) 9257. 700 [1914].S. and its implementing rules.Y.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 110 of 158 . 187 N.

New York. 1968.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.S. 948-949. The mandated 20% discount for the benefit of senior citizens is not a property already vested with the taxpayer before the sale of the product or service. This nebulous nature of the financial gain of the seller deters the acquisition by the state of the „domain‰ or ownership of the right to such financial gain through expropriation. 404 404 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. We have sustained the StateÊs power to regulate the right to acquire and possess arms. 291 U.[4] The right to profit is not immune from this regulatory power of the State intended to http://central. the State is empowered to regulate this right to the acquisition of this financial gain to benefit senior citizens by ensuring that the good or service be sold to them at a price 20% less than the regular selling price. No. 10:23 AM that denies the possibility of taking for a public purpose. for instance. Secretary of the Department of Social Welfare and Development their employees. recognized the power of the State to regulate and temper the right of employers to dismiss _______________ [1] Philippine American Life Insurance Company v.com. 502. Auditor General. there is no gain derived by the taxpayer. citing Nebbia v.[2] Similarly. this Court has recognized the fundamental police power of the State to regulate the exercise of various rights holding that „equally fundamental with the private right is that of the public to regulate it in the common interest. January 18. 78 L. At best. vs. 523.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 111 of 158 . 940. Inc. Time and again.[3] Contractual rights are also subject to the regulatory police power of the State. It is a right solely within the discretion of the taxpayers that cannot be appropriated by the government. Such percentage of the sale price may include both the markup on the cost of the good or service and the income to be gained from the sale. Without the sale and corresponding purchase by senior citizens. ed.‰[1] This Court has. L-19255.

PambuscoÊs EmployeesÊ Union. Ichong v. October 24. 848 (1948).ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 112 of 158 . Antamok Goldfields Mining Company v. No. No. June 9. 485 (1940). 1961. Air Lines EmployeesÊ Asso. Court of Industrial Relations. August 10. citing Pampanga Bus Co. 1964. 70 Phil. No. Court of Agrarian Relations. this Court has rejected the doctrine of laissez faire as an axiom of economic theory and has upheld the power of the State to regulate businesses even to the extent of limiting their profit. June 30. Hernandez. 69 Phil. 80 Phil. 79 (1941). See also Edu v. March 21. Court of Industrial Relations. No. Public Service Com. 50 (1950). 85668. cf. The Pangil Federation of Labor. Air Lines. Del Rosario v. Roman Catholic Archbishop of Manila v. 20 SCRA 849. 23 SCRA 1183. v.. Ongsiaco v. 176 SCRA 295. 1 SCRA 10. 221 (1940).. 602 (1940). 157036. L-15045. No.R. July 31. Social Security Com. No. v. 1967. Co. L-19555. Director of Forestry v..com. Inc. 1968. Inc. 1989. G. [4] Philippine American Life Insurance Company. As early as the first half of the past century. Chu Chi. 2013 405 Manila Memorial Park. 10:23 AM promote the common good and the attainment of social justice. 22 SCRA 1196. 68 Phil. 405 VOL. et al. 92 Phil. 977 (1953). 541 (1939). No. 70 Phil.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. No. Rosenthal. 11 SCRA 387. Gamboa. City Mayor of Manila. Tapang v. 711. 1970. 101 Phil. L-24746. Secretary of the Department of Social Welfare and Development http://central. v. L-18559. Manila Trading and Supply Co. June 28. v. De Ramas v.. De los Santos. 1155 (1957). Pangasinan Trans. v. No. the imposition of price control is recognized as a valid exercise of police power that does not give businessmen the right to be compensated for the amount of what they could have earned considering _______________ [2] Gelmart Industries. 70 Phil. vs. 35 SCRA 481. [5] Ermita-Malate Hotel and Hotel Operators Association. Court of Industrial Relations. 1968. Inc.. supra note 1. L-32096. 340 (1940). L​-20589. People v. 1964. 68 Phil. May 29. Ericta. G. Zulueta. DECEMBER 3. Inc. International Hardwood and Veneer Company v. Phil. 72 Phil. Muñoz. 11 SCRA 171. 328 (1939). L-24693.R. Phil. [3] Chavez v. National Labor Relations Commission. People v. Camacho v. 86 Phil. Inc. 431 SCRA 534. Romulo. 2004. January 20.[5] Thus. v.

it is simply a recognition of the fact that no income was realized by the taxpayer to the extent of the 20% of the selling price by virtue of the discount given to senior citizens. As such. As it is a regulatory law. Rather. This is the real import of Sec. it simply regulated the right to the attainment of these profits. The enforcement of the 20% discount in favor of senior citizens does not. the logical result is that no tax on income can be imposed by the State. the allowance to use the 20% discount. In the first place. is not intended as compensation. proprietors like petitioners cannot insist that they are entitled to a pesofor-peso compensation for complying with the valid regulation embodied in RA 9257 that restricts their right to profit.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. partake the nature of „taking‰ in the context of eminent domain.e. as RA 9257 is a regulatory law. the regulatory law does not require the payment of compensation. the senior citizens. 406 http://central. the assertion that the use of the 20% discount as a deduction negates its role as a „just compensation‰ is mislaid and irrelevant.. The effect of RA 9257 is not dissimilar to a price control law. in the overall pricing strategy of their products and services. therefore. In other words.com. As RA 9257 does not sanction any taking of private property. not a law implementing the power of eminent domain. by forcing some businesses to give a 20% discount to senior citizens. i. It is an acknowledgment that proprietors can and will factor in the potential deduction of 20% of the price given to some of their customers. 10:23 AM the demand of the market. Be that as it may. 4 of RA 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 113 of 158 . RA 9257 has to be sure not obliterated the right of taxpayers to profit nor divested them of profits already earned. the government is likewise foregoing the taxes it could have otherwise earned from the earnings pertinent to the 20% discount. The fact that the State has not fixed an amount to be deducted from the selling price of certain goods and services to senior citizens indicates that RA 9257 is a regulatory law under the police power of the State. as a deduction from the gross income for purposes of computing the income tax payable to the government.

2010. J. Republic Act No. it has not been alleged that a business establishment commonly patronized by senior citizens and covered by RA 9257 had shut down because of the mandate to give the 20% discount and the supposed deficient „compensation‰ under Sec.·The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and similar lodging establishment. 4 of RA 9257 has already been settled. logical. economic progress has not been put to a halt. and just instrument of the social justice policy of our Constitution. 4. res_______________ [1] Amended by RA No. which provides · SECTION 2. 9257 (Expanded Senior Citizens Act of 2003)[1] and the implementing rules and regulations issued by the Department of Social Welfare and Development (DSWD) and Department of Finance (DOF).com. Inc.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 114 of 158 .SUPREME COURT REPORTS ANNOTATED VOLUME 711 406 9/2/15. 9994. 407 http://central. 4 of RA 9257. Privileges for the Senior Citizens. it must be noted that the issue of validity of Sec. In fact. 10:23 AM SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.: At issue is the constitutionality of the treatment as a tax deduction by covered establishments of the 20% discount granted to senior citizens under Republic Act (RA) No. After years of implementation of the law. The assailed provision is Section 4 of the Expanded Senior Citizens Act of 2003. 7432 is hereby amended to read as follows: xxxx SEC. February 15. vs. CONCURRING OPINION BERSAMIN. Secretary of the Department of Social Welfare and Development Finally. This clearly shows that the regulation made in the subject law is a minimal encumbrance to businesses that must not be employed to overthrow an otherwise reasonable.

‰ On the other hand. which mandates that „[p]rivate property shall not be taken for public use without just compensation.A. No. Secretary of the Department of Social Welfare and Development taurants and recreation centers. the treatment of the discount as a deduction reduces the net income of the private establishments concerned. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. were it not for R. 9257. as amended. The petitioners contend that Section 4. xxxx The establishment may claim the discounts granted under (a).R. 2007. 526 SCRA 130. Department of Social Welfare and Development. further. Justice del Castillo observes in his opinion ably written for the Majority that the validity of the 20% senior citizen discount must be upheld as an exercise by the State of its police power. 166494. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments. DECEMBER 3. (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. and reminds that the issue has already been settled in Carlos Superdrug Corporation v. No. 10:23 AM 407 Manila Memorial Park. violates Section 9. Article III of the Constitution. 408 408 SUPREME COURT REPORTS ANNOTATED http://central. supra. (f).ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 115 of 158 . June 29.SUPREME COURT REPORTS ANNOTATED VOLUME 711 VOL. vs. Inc. 711. 2013 9/2/15. _______________ [2] G.[2] with the Court pronouncing therein that: Theoretically. Provided. including funeral and burial services for the death of senior citizens.com. That the total amount of the claimed tax deduction net of value added tax if applicable.

 Republic Act No. Declaration of Policies and Objectives. A tax deduction does not offer full reimbursement of the senior citizen discount. As such. can impose upon private establishments the burden of partly subsidizing a government program. Section 4 of the Constitution. and to grant benefits and privileges to them for their improvement and wellbeing as the State considers them an integral part of our society. 2. DECEMBER 3. The Court believes so. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. 2013 http://central. Secretary of the Department of Social Welfare and Development The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. in promoting the health and welfare of a special group of citizens.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest 409 Page 116 of 158 .com. 7432 is hereby amended to read as follows: SECTION 1. The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-building. Having said that. and to convey the idea that the equivalent to be rendered for the property to be taken shall be real. Section 10 in the Declaration of Principles and State Policies provides: „The State shall provide social justice in all phases of national de409 VOL. vs. it would not meet the definition of just compensation. In addition to this. it is the duty of the family to take care of its elderly members while the State may design programs of social security for them.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. this raises the question of whether the State. Inc. This constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation. full and ample. 711. The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself. The measure is not the takerÊs gain but the ownerÊs loss.·Pursuant to Article XV. Thus. The word just is used to intensify the meaning of the word compensation. the Act provides: SEC. 10:23 AM Manila Memorial Park. substantial.

concert halls. and diagnostic and laboratory fees. Accordingly.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.com. restaurants and recreation centers.. has general welfare for its object.‰ Further. and purchases of medicines for the exclusive use or enjoyment of senior citizens. it has been described as „the most essential. extending as it does to all the great public needs. vs. ordain. Police power is not capable of an exact definition. Secretary of the Department of Social Welfare and Development velopment. admission fees charged by theaters. the law grants a twenty percent discount to senior citizens for medical and dental services. As a form of reimbursement.. but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances. circuses. (f) To recognize the important role of the private sector in the improvement of the welfare of senior citizens and to actively seek their partnership. health and other social services available to all the people at affordable cost. carnivals. insistent and the least limitable of powers. The law is a legitimate exercise of police power which. elderly.‰ It is „[t]he power vested in the legislature by the constitution to make. and establish 410 http://central. 10:23 AM Manila Memorial Park. fares for domestic land. There shall be priority for the needs of the underprivileged sick. utilization of services in hotels and similar lodging establishments. provides: „The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods. To implement the above policy. similar to the power of eminent domain. and other similar places of culture. disabled.‰ Consonant with these constitutional principles the following are the declared policies of this Act: . women and children. Article XIII. air and sea travel.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 117 of 158 . Section 11. Inc. leisure and amusement. thus assuring the greatest benefits. the law provides that business establishments extending the twenty percent discount to senior citizens may claim the discount as a tax deduction.

141-144. not repugnant to the constitution. „a regulation affecting the ability of private establishments to price their products and services relative to a special class of individuals. at pp. and of the subjects of the same. 20. at p. the Majority posits that the discount has not been proved to be unreasonable. [4] Decision. and ordinances. for which the Constitution affords preferential concern. 711 SCRA 302. vs.SUPREME COURT REPORTS ANNOTATED VOLUME 711 410 9/2/15. the discount may be properly viewed as a price regulatory measure that affects the profitability of establishments subjected thereto. Moreover.[5] Nonetheless.. when the conditions so demand as determined by the legislature. property rights must bow to the primacy of police power because property rights. Secretary of the Department of Social Welfare and Development all manner of wholesome and reasonable laws.com. by its nature and effects.. 19. only that: (1) the discount does not prevent the establishments from adjusting the level of prices of their goods and services. p. Inc. 10:23 AM SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question. [5] Id. as they shall judge to be for the good and welfare of the commonwealth.‰ For this reason.‰[4] As such. there is no basis for its nullification in view of the presumption of validity which every law has in its favor. either with penalties or without. and (2) the discount does not apply to all customers of a given establishment but only to the class of senior citizens. http://central.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 118 of 158 .[3] The Majority hold that the 20% senior citizen discount is. must yield to general welfare. oppressive or confiscatory in the absence of evidence showing that its continued implementation causes an establishment to operate _______________ [3] Id. Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings and capital. 366. senior citizens. the questioned provision is invalidated. though sheltered by due process. statutes.

Let me explain. The 20% senior citizen discount under the Expanded Senior Citizens Act does not amount to compensable taking The petitionersÊ claim of unconstitutionality of the tax deduction scheme under the Expanded Senior Citizens Act rests on the premise that the 20% senior citizen discount was enacted by Congress in the exercise of its power of eminent domain. but from the exercise of police power. because I find that the imposition of the discount does not emanate from the exercise of the power of eminent domain. http://central.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.[6] Submissions I JOIN the Majority.. founded on a common necessity and interest of appropriating the property of individual _______________ [6] Id. 10:23 AM 411 VOL. Inc.com. 2013 411 Manila Memorial Park. Like the Majority. DECEMBER 3. or will be unconscionably detrimental to the business operations of covered establishments such as that of the petitioners.‰ It is acknowledged as „an inherent political right. or to authorize the taking of. conditioned upon payment of just compensation. I. 711. I cannot sustain the claim of the petitioners. at pp. vs. Secretary of the Department of Social Welfare and Development at a loss. 21-22.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 119 of 158 . private property for a public use without the ownerÊs consent. Eminent domain is defined as · [T]he power of the nation or a sovereign state to take. I VOTE for the dismissal of the petition in order to uphold the constitutionality of the tax deduction scheme as a valid exercise of the StateÊs police power.

the expropriator must enter a private property. Inc. for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment _______________ [7] Barangay Sindalan. fourth. According to Republic v.R. vs. Article III of the Constitution. the entry into private property must be for more than a momentary period. and. de Castellvi. third. Secretary of the Department of Social Welfare and Development members of the community to the great necessities of the whole community.[9] the requisites of taking in eminent domain are as follows: first. Vda. 150640. the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. Pampanga v.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 120 of 158 . 657-658. 518 SCRA 649. therefore.[7] The StateÊs exercise of the power of eminent domain is not without limitations. http://central. There is taking when · [T]he owner is actually deprived or dispossessed of his property. the entry into the property should be under warrant or color of legal authority. which requires that private property shall not be taken for public use without just compensation. G. March 22. 10:23 AM 412 412 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. Court of Appeals. but is constrained by Section 9. second. fifth. No.com. 2007. when there is a practical destruction or a material impairment of the value of his property or when he is deprived of the ordinary use thereof.[8] Article III of the Constitution. the existence of compensable taking.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. San Fernando. as well as by the Due Process Clause found in Section 1. The essential component of the proper exercise of the power of eminent domain is. There is a „taking‰ in this sense when the expropriator enters private property not only for a momentary period but for a more permanent duration.

liberty. is not met. page 596). Volume VI. No person shall be deprived of his/her life. transitory. or property without due process of law. Vda.‰ Where the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use. there is taking within the Constitutional sense.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 121 of 158 . „is nothing without the inherent rights of possession. the nature and effects of the 20% senior citizen discount do not meet all the requisites of taking for purposes of exercising the power of eminent domain as delineated in Republic v. rendered in Republic v. L-20620. Inc. discount is an abatement or reduction made from the gross amount or value of anything. that the taking must be for more than a momentary period.[13] when a sale is made or http://central.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.[12] Under the Expanded Senior Citizens Act. 1974. 413 VOL. 10:23 AM [8] Section 1. control and enjoyment. [11] In concept. For ownership.) The word „momentary‰ when applied to possession or occupancy of (real) property should be construed to mean „a limited period‰ · not indefinite or permanent. 1963 edition. as defined by law. I base this conclusion on the universal understanding of the term momentary. considering that the second of the requisites. having a very brief life. DECEMBER 3. Secretary of the Department of Social Welfare and Development thereof. a reduction from a price made to a specific customer or class of customers. [9] No. de Castellvi thusly: „Momentary‰ means. de Castellvi. 350-352. the 20% senior citizen discount is a special privilege granted only to senior citizens or the elderly. vs. 2013 413 Manila Memorial Park. of but a momentÊs duration‰ (The Oxford English Dictionary. 711. Vda. after all. August 15. operative or recurring at every moment‰ (WebsterÊs Third International Dictionary.[10] As I see it.com. „lasting but a moment. „lasting a very short time. 58 SCRA 336.

just compensation is defined as · [T]he full and fair equivalent of the property taken from its owner by the expropriator. The amount of unrealized revenue or lost potential profits on the part of the covered establishment · should it be subsequently shown that the 20% senior citizen discount granted could have covered operating expenses · lacks the character of indefiniteness and permanence considering that the taking was conditioned upon the occurrence of a sale or service to a senior citizen. The measure is not the takerÊs gain. 1990. (Section 2[a]. 304. [12] WebsterÊs Third New International Dictionary. The tax deduction scheme is. [11] Supra note 9. The income or revenue corresponding to the amount of the discount granted to a senior citizen is thus unrealized only in the event that a sale is made or a service is rendered to a senior citizen. 50147. Secretary of the Department of Social Welfare and Development a service is rendered by a covered establishment to a senior citizen or an elderly. 10:23 AM _______________ [10] Ansaldo v.R. For that purpose. http://central. Article III of the Constitution. No. 646. Tantuico. [13] „Senior citizen‰ or „elderly‰ shall mean any resident citizen of the Philippines at least sixty (60) years old.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.com.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 122 of 158 . therefore. Even assuming that the unrealized revenue or lost potential profits resulting from the grant of the 20% senior citizen discount qualifies as taking within the contemplation of the power of eminent domain. 350. the discount is not availed of when there is no sale or service rendered to a senior citizen. Verily. The word „just‰ is used to intensify the meaning of the word „compensation‰ and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real. 188 SCRA 300. Inc. G. 9257). at p. August 3. 414 414 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. not the compensation contemplated under Section 9.. but the ownerÊs loss. RA No. the tax deduction scheme suffices as a form of just compensation. p. Jr. vs.

R. the loss incurred by the covered establishment represents only the gross amount of discount granted to the senior citizen.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. rather than the tax deduction scheme. full. G. just compensation is not required In Didipio Earth SaversÊ Multi-Purpose Association. 638 SCRA 660.[15] appear to espouse the view that the tax credit method. because the loss corresponds to the real and actual value of the property at the time of taking. Secretary of the Department of Social Welfare and Development The petitioners. thus. II. relying on the ruling in Commissioner of Internal Revenue v. without the benefit of operating expenses and exemptions. and ample. on the other. 415 VOL. 669 (bold emphasis is supplied). because „a tax credit reduces the tax due. upon the sale of the goods or the rendition of a service to a senior citizen. 10:23 AM substantial. The tax deduction scheme substantially compensates such loss.[14] _______________ [14] National Power Corporation v.‰[16] At the time when the supposed taking happens. Central Luzon Drug Corporation. the „just‰-ness of the compensation can only be attained by using reliable and actual data as bases in fixing the value of the condemned property. 180979.e. the real equivalent of the property taken is the amount of unrealized income or revenue of the covered establishment. i.. therefore. http://central. Diato-Bernal. December 15. reduces the income that is subject to tax in order to arrive at taxable income. Indeed. The 20% senior citizen discount is a taking in the form of regulation. Inc. 711. No. DECEMBER 3. Inc.com.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 123 of 158 . At that point. including · whenever applicable · the income tax that is determined after applying the corresponding tax rates to taxable income‰ while a „tax deduction. 2010. This. if any. meets the definition of just compensation. 2013 415 Manila Memorial Park. vs.

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v. Gozun,[17] the Court has distinguished the element of
taking in eminent domain from the concept of taking in the
exercise of police power, viz.:
_______________
[15] G.R. No. 159647, April 15, 2005, 456 SCRA 414.
[16] Id., at pp. 428-429.
[17] G.R. No. 157882, March 30, 2006, 485 SCRA 586, 604-607.

416

416

SUPREME COURT REPORTS ANNOTATED
Manila Memorial Park, Inc. vs. Secretary of the
Department of Social Welfare and Development

Property condemned under police power is usually noxious or
intended for a noxious purpose; hence, no compensation shall be
paid. Likewise, in the exercise of police power, property rights of
private individuals are subjected to restraints and burdens in order
to secure the general comfort, health, and prosperity of the state.
Thus, an ordinance prohibiting theaters from selling tickets in
excess of their seating capacity (which would result in the
diminution of profits of the theater-owners) was upheld valid as this
would promote the comfort, convenience and safety of the
customers. In U.S. v. Toribio, the court upheld the provisions of Act
No. 1147, a statute regulating the slaughter of carabao for the
purpose of conserving an adequate supply of draft animals, as a
valid exercise of police power, notwithstanding the property rights
impairment that the ordinance imposed on cattle owners. A zoning
ordinance prohibiting the operation of a lumber yard within certain
areas was assailed as unconstitutional in that it was an invasion of
the property rights of the lumber yard owners in People v. De
Guzman. The Court nonetheless ruled that the regulation was a
valid exercise of police power. A similar ruling was arrived at in
Seng Kee S Co. v. Earnshaw and Piatt where an ordinance divided
the City of Manila into industrial and residential areas.
A thorough scrutiny of the extant jurisprudence leads to a cogent
deduction that where a property interest is merely restricted
because the continued use thereof would be injurious to public
welfare, or where property is destroyed because its continued
existence would be injurious to public interest, there is no

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compensable taking. However, when a property interest is
appropriated and applied to some public purpose, there is
compensable taking.
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in
the exercise of its police power regulation, the state restricts the use
of private property, but none of the property interests in the bundle
of rights which constitute ownership is appropriated for use by or
for the benefit of the public. Use of the property by the owner
417

VOL. 711, DECEMBER 3, 2013

417

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
was limited, but no aspect of the property is used by or for the
public. The deprivation of use can in fact be total and it will not
constitute compensable taking if nobody else acquires use of the
property or any interest therein.
If, however, in the regulation of the use of the property,
somebody else acquires the use or interest thereof, such restriction
constitutes compensable taking.
xxxx
While the power of eminent domain often results in the
appropriation of title to or possession of property, it need not always
be the case. Taking may include trespass without actual eviction of
the owner, material impairment of the value of the property or
prevention of the ordinary uses for which the property was intended
such as the establishment of an easement.

In order to determine whether a challenged legislation
involves regulation or taking, the purpose of the law should
be revisited, analyzed, and scrutinized.[18] There is no more
direct and better way to do so now than to look at the
declared policies and objectives of the Expanded Senior
Citizens Act, to wit:
SECTION 1. Declaration of Policies and Objectives.·Pursuant to
Article XV, Section 4 of the Constitution, it is the duty of the family
to take care of its elderly members while the State may design
programs of social security for them. In addition to this, Section 10
in the Declaration of Principles and State Policies provides: ÂThe
State shall provide social justice in all phases of national
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development.Ê Further, Article XIII, Section 11 provides: ÂThe State
shall adopt an integrated and comprehensive approach to health
and other social services available to all the people at affordable
cost. There shall be priority for the needs of the underpriviledged,
sick, elderly, disabled, women and children.Ê Consonant with
_______________
[18] Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary, 2009 ed., p. 435.
418

418

SUPREME COURT REPORTS ANNOTATED

Manila Memorial Park, Inc. vs. Secretary of the Department of
Social Welfare and Development
these constitution principles the following are the declared policies
of this Act:
(a) To motivate and encourage the senior citizens to contribute to
nation building;
(b) To encourage their families and the communities they live
with to reaffirm the valued Filipino tradition of caring for the senior
citizens;
(c) To give full support to the improvement of the total
well-being of the elderly and their full participation in
society considering that senior citizens are integral part of
Philippine society;
(d) To recognize the rights of senior citizens to take their
proper place in society. This must be the concern of the
family, community, and government;
(e) To provide a comprehensive health care and
rehabilitation system for disabled senior citizens to foster
their capacity to attain a more meaningful and productive
ageing; and
(f) To recognize the important role of the private sector in
the improvement of the welfare of senior citizens and to
actively seek their partnership.
In accordance with these policies, this Act aims to:
(1) establish mechanism whereby the contribution of the senior
citizens are maximized;
(2) adopt measures whereby our senior citizens are
assisted and appreciated by the community as a whole;

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instead of being converted to income of the covered establishments.com. DECEMBER 3.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. and (4) establish community-based health and rehabilitation programs in every political unit of society. A new question necessarily arises. Secretary of the Department of Social Welfare and Development As the foregoing shows. Even so. however. the 20% senior citizen discount forbids a covered establishment from selling certain goods or rendering services to senior citizens in excess of 80% of the offered price. thereby causing a diminution in the revenue or profits of the covered establishment. the erstwhile Municipality of Makati had passed a resolution granting burial assistance http://central. is depicted as a regulating. (Bold emphasis supplied) 419 VOL. Unlike traditional regulatory legislations. insofar as it is being exercised by the State. The amount corresponding to the discount. proves instructive. and to maximize his contribution to nationbuilding. their families and the rest of the community that they serve. is retained by the senior citizen to be used by him in order to promote his well-being. It is neither benevolent nor generous. Can a law. The ruling in Binay v. what the law clearly and primarily intends is to grant benefits and special privileges to senior citizens. Therein. [19] which involves police power as exercised by a local government unit pursuant to the general welfare clause. and punishing power. Inc. 711. 10:23 AM (3) establish a program beneficial to the senior citizens. the Expanded Senior Citizens Act remains a valid exercise of the StateÊs police power. to recognize his important role in society. be justified as a valid exercise of the StateÊs police power? Police power.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 127 of 158 . prohibiting. Although a form of regulation of or limitation on property right is thereby manifest. the Expanded Senior Citizens Act does not intend to prevent any evil or destroy anything obnoxious. vs. whose chief purpose is to give benefits to a special class of citizens. Domingo. 2013 419 Manila Memorial Park.

peace. 10:23 AM of P500.com.00 to qualified beneficiaries. at p. In a sense it is the greatest and most powerful attribute of the government. insistent.‰[21] In upholding the validity of the resolution. education. Inc. and the alleged public safety.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.Ê (Sections 91..ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 128 of 158 . And under Section 7 of BP 337. Secretary of the Department of Social Welfare and Development welfare. s. 420 420 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. good order or safety and general welfare of the people. No. etc. 1988. 201 SCRA 508.R. enhance prosperity. 177 and 208. supra. maintain peace and order. BP 337). and illimitable of powers. 511. comfort and convenience. [20] Id. and preserve the comfort and convenience of the inhabitants therein. promote the prosperity and general welfare of the municipality and the inhabitants thereof. vs.[20] The Commission on Audit disallowed on the ground that there was „no perceptible connection or relation between the objective sought to be attained under Resolution No. and such as shall be necessary and proper to provide for the health. http://central. the Court ruled: Municipal governments exercise this power under the general welfare clause: pursuant thereto they are clothed with authority to Âenact such ordinances and issue such regulations as may be necessary to carry out and discharge the responsibilities conferred upon it by law.Ê Police power is the power to prescribe regulations to promote the health. 1991. and insure the protection of property therein. It is the most essential. improve morals. of the inhabitants of Makati. those necessarily implied therefrom. Âevery local government unit shall exercise the powers expressly granted. safety. to be taken out of the unappropriated available existing funds from the Municipal Treasury. 60. 149. September 11. morals. and maintain peace and order in the local government unit. as well as powers necessary and proper for governance such as to promote health and safety. general _______________ [19] G. improve public morals. 92389.

provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits. vs. and. Its scope.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 129 of 158 . and has been said to be commensurate with. vs. 421 VOL. The police power of a municipal corporation is broad. DECEMBER 3. IAC.Ê In the case of Sangalang vs.com. over-expanding to meet the exigencies of the times. We ruled that police power is not capable of an exact definition but has been. supra). Annex „G‰. 896) However. general welfare etc. and it has been said to be the very foundation on which our social system rests. (Sangalang. purposely. 2013 421 Manila Memorial Park. comfort. it is not confined within narrow circumstances of precedents resting on past conditions. 10:23 AM It is elastic and must be responsive to various social conditions. Inc. the comfort of an existence in a thickly populated community. On it depends the security of social order. in a broad sense http://central. even to anticipate the future where it could be done. 1988. but not to exceed. s. and the beneficial use of property. IAC. the life and health of the citizen. general welfare. p. In the case at bar. Secretary of the Department of Social Welfare and Development legal progress of a democratic way of life. of the inhabitants of Makati. et al. et al. IAC. etc. supra. it must follow the _______________ [21] Id.J. (Sangalang. supra.. (16 C.Ê (Rollo.. the duty to provide for the real needs of the people in their health.S. 512. 711. and the alleged public safety. vs. COA tries to redefine the scope of police power by circumscribing its exercise to Âpublic safety. Apparently. safety.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. COA is of the position that there is Âno perceptible connection or relation between the objective sought to be attained under Resolution No. p. and convenience as consistently as may be with private rights. at p. the enjoyment of private and social life. veiled in general terms to underscore its allcomprehensiveness. It extends to all the great public needs. 176 SCRA 719). of the inhabitants of Makati. 51). 60.

S. The support for the poor has long been an accepted exercise of police power in the promotion of the common good. As correctly pointed out by the Office of the Solicitor General. 10:23 AM includes all legislation and almost every function of the municipal government. while it is especially occupied with whatever affects the peace. Public purpose is not unconstitutional merely because it incidentally benefits a limited number of persons. Secretary of the Department of Social Welfare and Development COAÊs additional objection is based on its contention that ÂResolution No.) social justice (Section 10. ibid.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.J. the promotion of the general welfare (Section 5. It covers a wide scope of subjects. health. Art. and to everything worthwhile for the preservation of comfort of the inhabitants of the corporation (62 C. the Expanded Senior http://central. 422 422 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. 128). Thus. Constitution). and.) The Expanded Senior Citizens Act is similar to the municipal resolution in Binay because both accord benefits to a specific class of citizens. but is broadened to deal with conditions which exist so as to bring out of them the greatest welfare of the people by promoting public convenience or general prosperity. Inc.Ê (Comment. ibid. 51). On the one hand. ibid). p. and general welfare of the community. and both on their faces do not primarily intend to burden or regulate any person in giving such benefit. it is not limited thereto. Sec.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 130 of 158 . 12) The care for the poor is generally recognized as a public duty.com. if not the majority. security. it is deemed inadvisable to attempt to frame any definition which shall absolutely indicate the limits of police power. COA is not attuned to the changing of the times.[22] (Bold emphasis supplied. vs.) as well as human dignity and respect for human rights (Section 11. 60 is still subject to the limitation that the expenditure covered thereby should be for a public purpose. Annex ÂGÊ.Ê (Rollo. II. of the inhabitants of the Municipality and not for the benefit of only a few individuals as in the present case. Âthe drift is towards social welfare legislation geared towards state policies to provide adequate social services (Section 9. x x x should be for the benefit of the whole. morals. p.

If the Court sustained in Binay a municipalityÊs exercise of police power to enact benevolent and beneficial resolutions. it is but opportune for the Court to now make an unequivocal and definitive pronouncement on this new dimension of the StateÊs police power. 711.. 9257[1] as well as the implementing rules and regulations issued by respondents Department of Social Welfare and Development and Department of Finance. while. ACCORDINGLY.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 131 of 158 . 423 VOL. Indeed.: This case involves the constitutionality of Section 4 of Republic Act No. on the other. 7432 as amended by Republic Act No. The provisions amend an earlier law that allows the senior citizen discount as a tax credit from their total tax liability. Secretary of the Department of Social Welfare and Development same power through the enactment of a law of a similar nature. at pp. J. 514-516. 10:23 AM Citizens Act aims to achieve this by. vs. the municipal resolution in Binay appropriated money from the Municipal Treasury to achieve its goal of giving support to the poor. CONCURRING AND DISSENTING OPINION LEONEN. DECEMBER 3.com. I vote to DISMISS the petition. Inc. requiring select establishments to grant senior citizens the 20% discount for their goods or services. http://central. we have a greater reason to uphold the StateÊs exercise of the _______________ [22] Id. The provisions allow the 20% discount given by business establishments to senior citizens only as a tax deduction from their gross income. 2013 423 Manila Memorial Park. I concur with the ponencia in denying the constitutional challenge.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. among others.

_______________ [1] Republic Act No. 9257 is otherwise known as the Expanded Seniors Citizens Act of 2003.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 132 of 158 .SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. and La Funeraria Paz-Sucat. Inc. Republic Act No.‰ On August 23. Section 2(i) on the definition of „tax credit‰ provides that the discount „shall be deducted by the said establishments from their gross income x x x. Inc. Secretary of the Department of Social Welfare and Development The Petition Before us is a Petition for Prohibition[2] filed by Manila Memorial Park. 10:23 AM The enactment of the provision as well as its implementing rules is a proper exercise of the inherent power to tax and police power. Section 4(a) grants them a 20% discount from certain establishments provided „[t]hat private establishments may claim the cost as tax credit. On April 23. 9994. Petitioners are domestic corporations engaged in the business of providing funeral and burial services. February 15. 02-94 was issued to implement Republic Act No. against the Secretaries of the Department of Social Welfare and Development and the Department of Finance. 7432 was passed granting senior citizens privileges. Revenue Regulation No. vs. 1993. 1992.‰ http://central. 2010.com.‰ Section 4 on bookkeeping requirements for private establishments similarly states that „[t]he amount of 20% discount shall be deducted from the gross income for income tax purposes and from gross sales of the business enterprise concerned for purposes of VAT and other percentage taxes. Inc. It was amended by Republic Act No. 7432. 424 424 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. However. It is for these reasons that I offer this separate opinion. I regret I cannot join my esteemed colleagues Justice Mariano del Castillo as the ponencia and Justice Antonio Carpio in his thoughtful dissent that the power of eminent domain is also involved.

7432. 02-94 as erroneous for contravening Republic Act No. 307. That the total amount of the claimed tax deduction net of value added tax if applicable. which specifically allows establishments to claim a tax credit. 2013 425 Manila Memorial Park. further. (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. (f). 2004.·The senior citizens shall be entitled to the following: _______________ [2] Petition is filed pursuant to Rule 65 of the Rules of Court. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. Republic Act No. 9257. 7432.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 133 of 158 . Specifically. restaurants and recreation centers. The Department of Social Welfare and Development also issued its own Rules and Regulations Implementing Republic Act http://central. Inc.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. including funeral and burial services for the death of senior citizens. Privileges for the Senior Citizens. On February 26. [3] 496 Phil. as amended. Central Luzon Drug Corporation[3] later declared these sections of Revenue Regulation No. xxxx The establishment may claim the discounts granted under (a). shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens.com. 9257 was passed amending certain provisions of Republic Act No. Section 4 now provides as follows: SECTION 4. DECEMBER 3. Provided. 456 SCRA 414 (2005). The Secretary of Finance issued Revenue Regulation No. 711. vs. 425 VOL. 4-2006 to implement Republic Act No. 10:23 AM Commissioner of Internal Revenue v. Secretary of the Department of Social Welfare and Development (a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and similar lodging establishments.

_______________ [4] Rollo. Petitioners. 9257. insofar as they provide that the 20% discount to senior citizens may be claimed as a tax deduction by private establishments. The arguments of the parties as summarized in the ponencia are as follows: Petitioners contend that the tax deduction scheme contravenes Article III. Section 9 of the Constitution.[9] Petitioners also seek a reversal of the ruling in Carlos http://central. 7432 be reinstated. thus. that respondents be prohibited from enforcing them. 9257. 9257. 31. 426 426 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Secretary of the Department of Social Welfare and Development as well as its implementing rules and regulations.[4] The most salient issue is as follows: whether Section 4 of Republic Act No. p.‰[5] Moreover. as well as the implementing rules and regulations issued by respondents.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 134 of 158 . Department of Social Welfare and Development[8] acknowledging that the tax deduction scheme does not meet the definition of just compensation.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 7432 as amended by Republic Act No. Inc.[7] and Carlos Superdrug Corporation v. petitioners cite Commissioner of Internal Revenue v. filed this Petition urging that Section 4 of Republic Act No. which states that: „[p]rivate property shall not be taken for public use without just compensation. be declared unconstitutional insofar as these allow business establishments to claim the 20% discount given as a tax deduction. 7432 as amended by Republic Act No. and that the tax credit treatment of the 20% discount under the former Section 4(a) of Republic Act No. 10:23 AM No.com. vs. is invalid and unconstitutional. Central Luzon Drug Corporation[6] ruling that the 20% discount privilege constitutes taking of private property for public use which requires the payment of just compensation.

there are still traditional distinctions between the two‰[11] and that „eminent domain cannot be made less supreme than police power. Secretary of the Department of Social Welfare and Development Petitioners likewise argue that the tax deduction scheme violates Article XV.[13] _______________ [5] Id. question the filing of the instant Petition directly with this Court in disregard of http://central.[15] Consequently. pp.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 401-402. and Article XIII. at pp. 413. Section 4. [11] Id.. 10:23 AM Superdrug that the tax deduction scheme is justified by police power.. DECEMBER 3. [7] Rollo. 2013 427 Manila Memorial Park. its implementation affects petitionersÊ businesses. 427-436. vs. [8] 553 Phil.. on the other hand. 307.‰[12] They claim that in amending Republic Act No. 456 SCRA 414 (2005). 410-420.[14] Under the tax deduction scheme. 427 VOL. [12] Id.[10] They assert that „[a]lthough both police power and the power of eminent domain have the general welfare for their object. 7432. 120. pp. at pp.[16] and there exists an actual case or controversy of transcendental importance. 411-412. at pp. 526 SCRA 130 (2007). 711.com.[17] Respondents. [6] 496 Phil. [9] Rollo.. at pp. [10] Id. [13] Id. 405-409. Inc. the legislature relied on an erroneous contemporaneous construction that prior payment of taxes is required for tax credit. Section 11 of the Constitution because it shifts the StateÊs constitutional mandate or duty of improving the welfare of the elderly to the private sector. 402-403. at p.. the private sector shoulders 65% of the discount because only 35% (now 30%) of it is actually returned by the government.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 135 of 158 .

The determination that it will be a tax deduction. The imposition of _______________ [14] Id. [16] Id. [15] Id.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 136 of 158 . not a tax credit. rather. 10:23 AM the hierarchy of courts.. Inc. [17] Id. [18] Id. at pp.... The imposition of a discount for senior citizens affects the price. it is now only a tax deduction. 364-368. at pp. 428 428 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.[20] They maintain that the tax deduction scheme is a legitimate exercise of the StateÊs police power.[21] I Uncertain Burdens and Inchoate Losses What is in question here is not the actual imposition of a senior citizen discount. 394-401.. nothing in the law controls the prices of the goods subject to such discount. at p. [20] Id. vs. it is the treatment of that senior citizen discount for taxation purposes. respondents argue that petitioners failed to overturn its presumption of constitutionality..com. at pp. Secretary of the Department of Social Welfare and Development the senior citizen discount is an exercise of police power. at pp.[18] They assert that there is no justiciable controversy as petitioners failed to prove that the tax deduction treatment is not a „fair and full equivalent of the loss sustained‰ by them. However. [21] Id. at p. at pp. 368-370. From being a tax credit. 424. [19] Id.. Legislation interferes with the autonomy of contractual arrangements in that it imposes a http://central.[19] On the constitutionality of Republic Act No. It is thus an inherently regulatory function. 421-427. 359-363. 9257 and its implementing rules and regulations. 425.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.. at pp. 363-364. is an exercise of the power to tax.

There will always be a static demand for memorial lots because it is strictly based on a nonnegotiable preference of the purchaser. 10:23 AM two-tiered pricing system. SAMUELSON AND W. vs. BusinessesÊ discretion to fix the regular price or improve the costs of the goods or the service that they offer to the public · and therefore determine their profit · is not affected by the law. There will be two prices for every good or service: one is the regular price for everyone except for senior citizens who get a twenty percent (20%) discount. This http://central.com. No price restriction. The demand for memorial lots is not usually influenced by price _______________ [22] „[Price elasticity] measures how much the quantity demanded of a good changes when its price changes. the kind of competition businesses face. A. To put this idea in perspective. 429 VOL.‰ P. the barriers to entry that will make possible the expansion of suppliers should there be a change in the prices and the profits that can be made in that industry. will be part of the cost of doing business for all such businesses. Of course. DECEMBER 3. Inc.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 137 of 158 . 2005). which include qualifications such as exemptions. let us assume that Company A is in the business of the sale of memorial lots. rational businesses will take into consideration economic factors such as price elasticity. Taxes. for purposes of argument. 2013 429 Manila Memorial Park. no certain losses There is no restriction in the law for businesses to attempt to recover the same amount of profits for the businesses affected by the law. Secretary of the Department of Social Welfare and Development fluctuations. ECONOMICS 66 (Eighteenth Edition. NORDHAUS.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 711. exclusions and deductions. that Company A acquired the plots of land at zero cost. D. [22] the market structure. Let us also assume.

There will be a price discrimination scheme wherein senior citizens can avail a square meter of a http://central. the total profit of Company A will be: R0 = P x Q R0 = P100. and 1.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. NORDHAUS.[23] To simplify. refer to P. Secretary of the Department of Social Welfare and Development When Congress enacted Republic Act No. In economics.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 138 of 158 . R0 = P160. m.600 square meters sold. Inc.com. Considering the formula. 2005). vs. D. _______________ [23] Revenue in the economic sense is not usually subject to such simplistic treatment.00 per square meter. Costs must be taken into consideration. consider this formula: R = PxQ Where R = Revenue P = Price per unit Q = Quantity sold Given these assumptions. SAMUELSON AND W. Company A sells 1. let us presume that in any given year before the promulgation of any law for senior citizen discounting.280 square meters are bought by ordinary citizens. to evaluate the combination of factors to be used by a profitmaximizing firm. Economists usually compare if an additional unit of labor will contribute to additional productivity. Company A was forced to give a 20% discount to senior citizens.00 x 1. 430 430 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.000. 7432.600 square meters of memorial plots at the price of P100. For a more comprehensive explanation. an analysis of the marginal product of inputs is compared to the marginal revenue.600 sq.00 Let us assume further that out of the 1. 10:23 AM means that the price of the plot multiplied by the number of plots sold will always be considered revenue. ECONOMICS 225-239 (Eighteenth Edition. only 320 square meters are bought by senior citizens. A.

SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.00 431 VOL.00 x 1. The total revenue received by Company A will now constitute revenue derived from plots sold to senior citizens added to the revenue derived from plots sold to ordinary citizens. in order to maintain its profitability.00 + P128.00 RT1 = P153. is to increase the price per square meter of a memorial lot.) RT1 = P25.00. m.600. The natural consequence of Company A.00 Obviously.) + (P100.600. This makes the price for ordinary citizens go up to P110. the formula becomes: RT= RS+ RC RS = PS x QS RC = PC x QC RT = (PS x QS ) + (PC x QC ) Where RT = Total Revenue RS = Revenue from Senior Citizens RC = Revenue from Ordinary Citizens PS = Price for Senior Citizens per Unit QS = Quantity Sold to Senior Citizens PC = Price for Ordinary Citizens per Unit QC = Quantity Sold to Ordinary Citizens In our example. Hence. Inc. 2013 431 Manila Memorial Park.00 x 320 sq. Secretary of the Department of Social Welfare and Development http://central.280 sq. 10:23 AM memorial plot for only P80. this means that the total revenue of Company A becomes: RT1 = (PS x QS )+ (PC x QC ) RT1 = (P80. m. 711. vs.00 per square meter.com.000.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 139 of 158 . the Total Revenue after the discount was applied is lower than the Revenue derived by Company A before the discount was imposed. DECEMBER 3. Assume that the price increase was P10.

m.160. 7432 and after treating the discount given to senior citizens becomes tax credit for Company A.) + (P110.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.800. the formula for the price for ordinary customers is PC = R0 / (0.00 per square meter.00 RT2 = P168. we will get: Gross Income (RT1) Less: Deductions Taxable Income Income Tax Rate Income Tax Liability P 153. 7432.080 Less: Senior Citizen _______________ [24] To determine the price for both ordinary customers and senior citizens that will retain the same level of profitability. 7432 vis-à-vis the tax implications of the amendment introduced in Republic Act No.com.) RT2 = P28.00 + P140.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 140 of 158 . m. 9257 are also augmented by controlling the price. If we compute for the tax liability and the net income of Company A after the implementation of Republic Act No. the discounted price for senior citizens becomes P88.600 30% P 28.00 x 320 sq.00 x 1.[24] The tax implications of Republic Act No. Again.960.600 (P 60.280 sq. 432 432 SUPREME COURT REPORTS ANNOTATED http://central. Meanwhile. 10:23 AM per square meter. Company A becomes more profitable than it was before the implementation of Republic Act No.00 After Company A increases its prices. despite the application of the mandated discount rates.000) P 93. The effects of that with respect to total revenue of Company A become: RT2= (PS x QS )+ (PC x QC ) RT2 = (P88. nothing in the law prohibits Company A from increasing its prices for regular customers.8QS + QC ) where RO is the total revenue before the senior citizen discount was given.

if Company A uses pricing to respond to Republic Act No. vs.600 (P 60.400) Final Income Tax Liability P 21.200 30% P 26. However.960 (P 60. senior citizen discount is considered a deduction.440 Keeping the number of units sold to senior citizens and ordinary citizens constant. Republic Act No.920 30% P 30.00 to P110.000) Less: Senior Citizen Discount Taxable Income Income Tax Rate Income Tax Liability (P 7. Inc.040) P 101.160 P 127. the net income becomes: Gross Income (RT2 ) Less: Deductions P 168.920 Given the changes made in Republic Act No.00.000) Less: Senior Citizen Discount Taxable Income Income Tax Rate Income Tax Liability Less: Tax Credit Final Income Tax Liability Net Income (P 6. 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 141 of 158 .400) P 87. Hence: Gross Income (RT1) Less: Deductions P 153. 9257. Secretary of the Department of Social Welfare and Development Discount Tax Credit (P 6.com.680 Net Income P 131.576 http://central.160 P0 P 26.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 9257 will mean a smaller net income for Company A. as discussed in the earlier example where Company A increased its prices from P100. 10:23 AM Manila Memorial Park.

vs. income and profits are not vested rights. Company A could improve its net income than in the situation where the senior citizen discount was treated as a tax credit if it imposes a price increase. There is no factual basis for that kind of certainty. They are the results of good or bad business judgments occasioned by the proper response to their economic environment. We do not decide constitutional issues on the basis of inchoate losses and uncertain burdens. Secretary of the Department of Social Welfare and Development Less: Tax Credit Final Income Tax Liability Net Income P0 P 30. Inc. Businesses. therefore. losses are not inevitable. are not guaranteed by the change in legislation challenged in this Petition. for instance. 711. On this basis alone. 2013 433 Manila Memorial Park. 10:23 AM 433 VOL.384 It becomes apparent that despite converting the discount from tax credit to an income deduction.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 142 of 158 . Losses.576 P 138.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. They will want to know whether the change in their prices would encourage customers to shift their preferences to cremating their loved ones instead of burying them. DECEMBER 3. Put simply. The case is premised on the inevitable loss to be suffered by the petitioners. the constitutional challenge should fail. http://central.[25] They might also want to determine if the subsequent increase in relative profits will encourage the setting up of more competition into their market. Note that the price increase we provided in this example was even less than the discount given to senior citizens. Furthermore. The decision to increase price as well as its magnitude depends upon a number of non-legal factors. will consider whether they are in a situation of near monopoly or a competitive market.com.

including the businesses of petitioners. 2005). compensating for the alleged losses of the petitioners assumes that we accept their current pricing as correct. D. Secretary of the Department of Social Welfare and Development Profits and the maintenance of a steady stream of income should be the reward of business acumen of entrepreneurship. SAMUELSON AND W. are at their optimum level of efficiency. A.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. „The precise definition of price elasticity is the percentage change in quantity demanded divided by the percentage change in price. efficiency in the business can also maintain or even increase profits. 10:23 AM _______________ [25] This sensitivity is referred to as price elasticity.‰ P. We should not allow ourselves to become the tools for good business results for some businesses. Courts read law and in doing so provide the givens in a business environment. Profits can improve with efficiency Apart from increasing the price of goods and services. it is the price that covers their costs and provides them with profits that a competitive market can bear. 434 434 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 143 of 158 . _______________ [26] Another algebraic formula will show us how costs should be http://central.[26] We cannot simply assume that businesses. can be better for the economy although it may.com. in some cases. NORDHAUS. A more restrictive business environment should occasion a review of the cost structure of the economic agent. therefore. without any certainty. The change in the tax treatment of senior citizenÊs discount. Inc. That is. occasion some pain on some businesses. We cannot have the situation where establishments can just set any price and come to court to recover whatever profit they were enjoying prior to a regulatory measure. ECONOMICS 66 (Eighteenth Edition. Our view should be more all-encompassing. vs. Besides.

v. 10:23 AM minimized to retain the same level of profitability. 327 (1991). The formula is C1 = C0 -[(20% x PC ) x QS ] where: C1 = Cost of producing all quantities after the discount policy C0 = Cost of producing all quantities before the discount policy PC = Price per unit for Ordinary Citizens QS = Quantity sold to Senior Citizens 435 VOL. 449 Phil. Posadas. the rates to be levied.‰[28] The scope of the legislative power to tax necessarily includes not only the power to determine the rate of tax but the method of its collection as well. 711. 558. supra at p. the State has the power „to make reasonable and natural classifications for the purposes of taxation x x x [w]hether it relates to the subject of taxation. Wee Poco & Co. 2013 435 Manila Memorial Park. v. the _______________ [27] National Power Corporation v. 247. http://central. City of Cabanatuan. the methods of assessment. 196 SCRA 322.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. [28] National Power Corporation v.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 144 of 158 .com. City of Cabanatuan. Inc. 640 (1937).‰[27] Such inherent power of the State anchors on its „social contract with its citizens [which] obliges it to promote public interest and common good. Rafferty. 39 Phil. 233. Reyes v.‰[30] In fact.[29] We have held that Congress has the power to „define what tax shall be imposed. vs. valuation and collection. 401 SCRA 259. Almanzor. or the amounts to be raised. 248. Secretary of the Department of Social Welfare and Development II Power to Tax The power to tax is „a principal attribute of sovereignty. 145 (1918). the kind of property. how much tax shall be imposed. DECEMBER 3. against whom (or what) it shall be imposed and where it shall be imposed. 273 Phil. why it should be imposed. 564. 64 Phil. 269-270 (2003) citing Hong Kong & Shanghai Banking Corp.

[33] we have referred to our discussion in the 1988 case of Commissioner of Internal Revenue v. 626. 9337 introducing further reforms to the Value Added Tax (VAT) system was upheld as constitutional. Without taxes. vs. Inc. March 9. such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. 160756. Sections 106. 10:23 AM [29] For instance.‰[31] This means that the power to tax also allows Congress to determine matters as whether tax rates will be applied to gross income or net income and whether costs such as discounts may be allowed as a deduction from gross income or a tax credit from net income after tax. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation. the government would be paralyzed for lack of the motive power to activate and operate it.‰ this power has its limits. Executive Secretary Romulo. [30] Chamber of Real Estate and BuildersÊ Associations. Hence. providing for limitations on a taxpayerÊs claim for input tax.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. despite the natural http://central.[34] as follows: Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.R. No. Relevant portions of Sections 110 and 114 of the Tax Code were also amended. may be achieved.com. On the other hand. Inc. Republic Act No.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 145 of 158 . (Emphasis supplied) 436 436 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. v. Secretary of the Department of Social Welfare and Development StateÊs power is entitled to presumption of validity x x x. 107. Executive Secretary. 506 Phil. xxxx It is said that taxes are what we pay for civilized society. 614 SCRA 605. which is the promotion of the common good. In a number of cases. 2010. Algue. While the power to tax has been considered the strongest of all of governmentÊs powers[32] with taxes as the „lifeblood of the government. 469 SCRA 14 (2005). 1. and 108 of the Tax Code were amended to impose a Value Added Tax rate of 10% to be increased to 12% upon satisfaction of enumerated conditions. See Abakada Guro Party List v. G.

Commissioner of Internal Revenue v.R. [34] 241 Phil. Secretary of the Department of Social Welfare and Development part. If it is not. Commissioner of Internal Revenue. 711. 829. 564.R. No. 667 SCRA 455. 273 Phil. every person who is able to must contribute his share in the running of the government. G. 637 SCRA 633. he may still be stopped in his tracks if the taxpayer can demonstrate. that the law has not been observed. „[t]he rule of taxation shall be uniform and equitable. Executive Secretary Ermita. March 5. supra at p. The government.com. 2013 437 Manila Memorial Park. it complies with http://central. December 8. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. (Emphasis supplied) [32] Reyes v. For all the awesome power of the tax collector.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 139. vs. v.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 146 of 158 . DECEMBER 3. No.. Inc.‰[37] The tax deduction scheme for the 20% discount applies equally and uniformly to all the private establishments covered by the law. [33] See for instance Lascona Land Co. is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. 2010.[35] (Emphasis supplied) The Constitution provides for limitations on the power of taxation. p. 10:23 AM reluctance to surrender part of oneÊs hard-earned income to the taxing authorities. 171251. 327 (1991). 158 SCRA 9 (1988). 185371. Metro Star Superama. 2012. G. First.‰[36] This requirement for uniformity and equality means that „all taxable articles or kinds of property of the same class [shall] be taxed at the same rate. 647-648. Inc. But even as we concede the inevitability and indispensability of taxation. then the taxpayer has a right to complain and the courts will then come to his succor. for its _______________ [31] Abakada Guro Party List v. 437 VOL. Thus. it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. 129. 196 SCRA 322. 558. as it has here. Almanzor.

Secretary of Finance. taxes must neither be confiscatory nor arbitrary as to amount to a „[deprivation] of property without due process of law. liberty. [36] CONSTITUTION.. Art. No person shall be deprived of life. pp. [37] Tolentino v. v. 830-836. Sec.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. or property without due process of law. Sec.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 147 of 158 . The Congress shall evolve a progressive system of taxation. Sec. 11-17. VI. this Court discussed the due process limitation on the power to tax: As a general rule. Inc. 319 Phil. acknowledging in its very nature no limits. Sec. liberty or property without due http://central. Executive Secretary Romulo.com. so that the principal check against its abuse is to be found only in the responsibility of the legislature (which imposes the tax) to its constituency who are to pay it. nor shall any person be denied the equal protection of the laws. it is circumscribed by constitutional limitations.  1.Ê ‰[40] In dismissing the Petition. III. 10:23 AM this limitation. like any other statute. Second. Secretary of the Department of Social Welfare and Development tions. vs. is not Ârealized gain. Nevertheless. 755. 28 (1). The constitutional safeguard of due process is embodied in the fiat „[no] person shall be deprived of life. tax legislation carries a presumption of constitutionality. At the same time. Art. 795. 438 438 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. the power to tax is plenary and unlimited in its range. 658 (1995). 28 (1) The rule of taxation shall be uniform and equitable. 249 SCRA 629.[39] petitioners questioned the constitutionality of the Minimum Corporate Income Tax (MCIT) alleging among others that „pegging the tax base of the MCIT to a corporationÊs gross income is tantamount to a confiscation of capital because gross income.‰[38] In Chamber of Real Estate and BuildersÊ Associa_______________ [35] Id. 1. at pp. unlike net income. Inc. [38] CONSTITUTION.

DECEMBER 3.. 711. No. 439 VOL. But in the same case. this Court has consistently upheld the doctrine that „taxing power may be used as an implement of police power‰[42] in order to promote the general welfare of the people. Secretary of the Department of Social Welfare and Development In the present case. 160756. March 9.R. III http://central. at p. As illustrated earlier. in appropriate cases.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 148 of 158 . 2013 439 Manila Memorial Park. This merely adheres to the authoritative doctrine that. [40] Id. 625. The portion of the 20% discount petitioners are made to bear under the tax deduction scheme will not result in a complete loss of business for private establishments.‰ In Sison. there is no showing that the tax deduction scheme is confiscatory. (Citations omitted)[41] _______________ [39] G.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Ancheta. 626-627. vs. In fact.. 614 SCRA 605. where the due process clause is invoked. There must be a factual foundation to such an unconstitutional taint. a revenue measure when it amounts to a confiscation of property. Inc.. considering that it is not a fixed rule but rather a broad standard.com. 10:23 AM process of law. et al. we also explained that we will not strike down a revenue measure as unconstitutional (for being violative of the due process clause) on the mere allegation of arbitrariness by the taxpayer. Rules and Regulations have been issued by agencies as respondent Department of Finance to serve as guidelines for the implementation of the 20% discount and its tax deduction scheme. v. these establishments are free to adjust factors as prices and costs to recoup the 20% discount given to senior citizens. [41] Id. 2010. at pp. Jr. there is a need for proof of such persuasive character. Neither is the scheme arbitrary. we held that the due process clause may properly be invoked to invalidate.

these are not enough to show that eminent domain is involved. 7432 as amended by Republic Act No. vs.[43] cited in the ponencia. Araneta. G. hinted: http://central. Section 9 of the Constitution. 554 Phil. 99886. 151 SCRA 208 (1987). 9257. Inc.‰ Petitioners claim that there is taking by the government of that portion of the 20% discount they are required to give senior citizens under Republic Act No. 98 Phil. as well as the implementing rules and regulations issued by respondents Department of Social Welfare and Development and Department of Finance. In their view.com.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Videogram Regulatory Board. Republic Planters Bank. It is not enough to conclude that there is a violation of Article III. _______________ [42] Gerochi v. Petitioners cannot be faulted for this view. 717 (2007) citing Osmeña v. 563. 710-711. Orbos. They argue that they are inevitably made to bear a portion of the loss from the 20% discount required by law. No. Thus. Tio v. 10:23 AM Eminent Domain Even assuming that the losses and the burdens can be determined and are specific. and not as a tax credit from total tax liability. 158 SCRA 626 (1988). and Lutz v. 440 440 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park. Gaston v. 582. Secretary of the Department of Social Welfare and Development these speculative losses are to be provided with just compensation.R. Carlos Superdrug Corporation v. 148 (1955). 527 SCRA 696. March 31. 9257 but are not allowed to deduct from their tax liability in full as a tax credit. 220 SCRA 703. 235 Phil. they seek to declare as unconstitutional Section 4 of Republic Act No. 1993. 198. Department of Social Welfare and Development. Department of Energy.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 149 of 158 . This provision mandates that „[p]rivate property shall not be taken for public use without just compensation. 242 Phil. for only allowing the 20% discount as a tax deduction from gross income. 377.

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The permanent reduction in their total revenues is a forced
subsidy corresponding to the taking of private property for public
use or benefit. This constitutes compensable taking for which
petitioners would ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of
the property taken from its owner by the expropriator. The measure
is not the takerÊs gain but the ownerÊs loss. The word just is used to
intensify the meaning of the word compensation, and to convey the
idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full and ample.
A tax deduction does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just
compensation.
Having said that, this raises the question of whether the State,
in promoting the health and welfare of a special group of citizens,
can impose upon private establishments the burden of partly
subsidizing a government program.
The Court believes so.[44]
_______________

[43] Supra note 8.
[44] Id., at pp. 129-130. (Citations omitted)

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441

Manila Memorial Park, Inc. vs. Secretary of the
Department of Social Welfare and Development
The ponencia is, however, open to the possibility that
eminent domain will apply. While the main opinion held
that the 20% senior citizen discount is a valid exercise of
police power, it explained that this is due to the absence of
any clear showing that the discount is unreasonable,
oppressive or confiscatory as to amount to a taking under
eminent domain requiring the payment of just
compensation.[45]
Alalayan
v.
National
Power
Corporation[46] and Carlos Superdrug Corp. v. Department
of Social Welfare and Development[47] were cited as
examples when there was failure to prove that the limited
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rate of return for franchise holders, or the required 20%
senior citizens discount, „were arbitrary, oppressive or
confiscatory.‰[48] It found that petitioners similarly did not
establish the factual bases of their claims and relied on
hypothetical computations.[49]
The ponencia refers to City of Manila v. Hon. Laguio, Jr.
[50] citing the U.S. case of Pennsylvania Coal v. Mahon in
that we must determine on a case to case basis as to when
the regulation of property becomes a taking under eminent
domain.[51] It
_______________
[45] Ponencia, p. 21.
[46] 133 Phil. 279; 24 SCRA 172 (1968).
[47] Supra note 8.
[48] Ponencia, p. 22.
[49] Id., at p. 22.
[50] 495 Phil. 289; 455 SCRA 308 (2005).
[51] Id., at pp. 320-321; pp. 340-341 citing Pennsylvania Coal v.

Mahon, 260 U.S. 393, 415 (1922) and Penn Central Transportation Co. v.
New York City, 438 U.S. 104 (1978).
No formula or rule can be devised to answer the questions of what is
too far and when regulation becomes a taking. In Mahon, Justice Holmes
recognized that it was „a question of degree and therefore cannot be
disposed of by general propositions.‰ On many other occasions as well,
the U.S. Supreme Court has said that the issue of when regulation
constitutes a taking is a matter of considering the facts in each case. The
Court asks whether justice and fairness require that the economic loss
caused by public action must be compensated by the
442

442

SUPREME COURT REPORTS ANNOTATED
Manila Memorial Park, Inc. vs. Secretary of the
Department of Social Welfare and Development

cites the U.S. case of Munn v. Illinois[52] in that the State
can employ police power measures to regulate pricing
pursuant to the common good „provided that the regulation
does not go too far as to amount to Âtaking.Ê ‰[53] This
concept of regulatory taking, as opposed to ordinary taking,
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is amorphous and has not been applied in our jurisdiction.
What we have is indirect expropriation amounting to
compensable taking.
In National Power Corporation v. Sps. Gutierrez,[54] for
example, we held that „the easement of right-of-way [due to
electric transmission lines constructed over the property] is
definitely a taking under the power of eminent domain. x x
x the limitation imposed by NPC against the use of the
land for an indefinite period deprives private respondents
of its ordinary use.‰[55]
The ponencia also compares the tax deduction scheme
for the 20% discount with price controls or rate of return on
investment control laws which are valid exercises of police
power. While it acknowledges that there are differences
between these laws and the subject tax deduction scheme,
[56] it held that „the 20% discount may be properly viewed
as belonging to the category of price regulatory measures
which affects the profitability of establishments subjected
thereto.‰[57]
I disagree.
The eminent domain clause will still not apply even if
we assume, without conceding, that the 20% discount or a
portion
_______________
government and thus borne by the public as a whole, or whether the loss
should remain concentrated on those few persons subject to the public
action.
[52] 94 U.S. 113 (1877).
[53] Ponencia, p. 20.
[54] 271 Phil. 1; 193 SCRA 1 (1991).
[55] Id., at p. 7; p. 7. See also Republic of the Phil. v. PLDT, 136 Phil.

20; 26 SCRA 620 (1969).
[56] Ponencia, p. 20.
[57] Id., at p. 20.

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the forced nature of a sale under eminent domain is more justified for real property such as land. 193023. Profits are intangible personal property[58] for which petitioners merely have an inchoate right. June 29. 2011. Sec. 95 where this Court held that „[t]he determination of just compensation in expropriation cases is a function addressed to the discretion of the courts x x x. _______________ [58] See CIVIL CODE.‰[59] Most if not all jurisprudence on eminent domain involves real property. 10:23 AM of it is lost profits for petitioners. 256 Phil. for the construction of a public highway for example. These are types of property which cannot be „taken. v.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 376 (1989). Inc.‰ 444 444 SUPREME COURT REPORTS ANNOTATED http://central. Article 416. G. On the other hand. specifically that of land. 809. 653 SCRA 84. Hon. most tangible personal or movable property need not be subject of a forced sale when the government can procure these items in a public bidding with several able and willing private sellers. The common situation is that the government needs a specific plot. No. [59] Association of Small Land Owners in the Phil. Rule 67.com. Although Rule 67 of the Rules of Court. 1.[61] In a sense.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 153 of 158 . This provides for the definition of personal property.‰ Nature of Profits: Inchoate and Intangible Property Eminent domain has been defined as „an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Tuazon. [60] RULES OF COURT. requires the complaint to „describe the real or personal property sought to be expropriated. and the private owner cannot move his land to avoid being part of the project. Secretary of Agrarian Reform.. 175 SCRA 343. [61] See National Power Corporation v. the rules governing expropriation proceedings.R.‰[60] this refers to tangible personal property for which the court will deliberate as to its value for purposes of just compensation. 777.

p. vs. Second. 350-352. They are also inchoate rights.com. pp. 10:23 AM Manila Memorial Park. the expropriator must enter a private property. 350. the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. 143.[64] The requirement for „entry‰ or the element of „oust[ing] the owner‰ is not possible for intangible personal property such as profits. at p.‰[65] It may or may not ripen. 345-346. Fifth.[66] _______________ [62] 157 Phil. the entrance into private property must be for more than a momentary period. Business decisions are made every day dealing with factors such as price. No. 2004).[62] this Court also laid down five (5) „circumstances [that] must be present in the ÂtakingÊ of property for purposes of eminent domain‰[63] as follows: First. The existence of profits. An inchoate right means that the right „has not fully developed. 651 SCRA 128. matured. Profits are not only intangible personal property. at pp. more so its specific amount. 345. G. x x x. and cost in order to manage potential outcomes of profit or loss at any given point. June 7. Profits are thus considered as „future economic benefits‰ which. entitles petitioners only to an inchoate right. x x x.. the entry into the property should be under warrant or color of legal authority. x x x. x x x. Inc.. de Castellvi.. at best. 177130. Aldecoa-Delorino. or vested. [66] See Ermita v. [64] Id. [63] Id.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 154 of 158 . 445 http://central. 58 SCRA 336 (1974). Fourth. 2011. is uncertain.R. Third.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. 329. [65] BLACKÊS LAW DICTIONARY 777 (Eighth Ed. the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. Secretary of the Department of Social Welfare and Development In Republic of the Philippines v. Vda. x x x. quantity.

Inc. 271 Phil. III. Juico. At most. 1.[69] When the 20% discount is given to customers who are senior citizens. http://central. 711. 2013 9/2/15.[67] Just compensation has been defined „to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation. DECEMBER 3. This is not always the case. Gutierrez. there is a perceived loss for the establishment for that same amount at that precise moment. 66 Phil. Secretary of Agrarian Reform. Inc. 7. of Small Land Owners of the Phils. Pabrico v. Sec. Juico. We cannot compensate cash for cash. profits can materialize in the form of cash. Assoc. Arroyo. 467 (1938). Justice Carpio submits in his dissent that the Constitution speaks of private property without distinction. the issue of profit or loss to private establishments like petitioners is immaterial. Perez. Hon. 256 Phil.com. Manaay v. this moment is fleeting and the perceived loss can easily be recouped by sales to ordinary citizens at higher prices. v. this is not the private property contemplated by the Constitution and whose value will be deliberated by courts for purposes of just compensation. There may be taxable periods when they will be reporting a loss in their ending balance as a result of other factors such as high costs of goods sold. Secretary of the Department of Social Welfare and Development This is not the private property referred in the Constitution that can be taken and would require the payment of just compensation. [68] National Power Corporation v. Art. 9. not all their sales are made to senior citizens. The 20% discount belongs to them whether they make a profit or suffer a loss. Moreover.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 155 of 158 . but even then. thus. However.SUPREME COURT REPORTS ANNOTATED VOLUME 711 VOL. The concern that more consumers will suffer as a result of a price _______________ [67] CONSTITUTION. 193 SCRA 1 (1991) citing Province of Tayabas v. 10:23 AM 445 Manila Memorial Park.‰[68] PetitionersÊ position in seeking just compensation for the 20% discount assumes that the discount always translates to lost profits. vs. Acuna v..

there is nothing to compensate. 393. and will continue to be made to adapt to the ever changing market. Final Note Article XIII was introduced in the 1987 Constitution to specifically address Social Justice and Human Rights. viz. As it stands. This certainly is not the intent of the eminent domain provisions in our bill of rights. 175 SCRA 343 (1989). Republic Act No. Loss of profits will be difficult to prove and will tax the imagination and speculative abilities of judges and justices. Every piece of legislation in the future would cause the filing of cases that will ask us to determine the loss or damage caused to an ongoing business. They may or may not exist depending on many factors. ownership. Inc. This is not the sort of protection to property imagined by our constitutional order. earmarked. Our determination of profits as a form of personal property that can be taken in a constitutional sense as a result of valid regulation would invite untold consequences on our legal system. and disposition of property and its increments.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15.: http://central. We cannot consider this fluid concept of possible loss and potential profit as private property belonging to private establishments. [69] Dissenting Opinion of Justice Carpio. actual or specific for taking in this scenario. There is nothing concrete. the state may regulate the acquisition. 711 SCRA 302. Business decisions like these have been made even before the 20% discount became law. vs. Secretary of the Department of Social Welfare and Development increase[70] is a matter better addressed to the wisdom of the Congress. 446 446 SUPREME COURT REPORTS ANNOTATED Manila Memorial Park.com. 10:23 AM 777. They are inchoate.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 156 of 158 . they may cut down on costs and make other business decisions to optimize performance. Necessarily. For this purpose. For non-profit establishments. some of which are within the control of the private establishments. p. 9. use. 9257 does not establish a price control.

·The 20% sales discount granted by establishments to qualified senior citizens is now treated as tax deduction and not as tax credit. 9257.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 157 of 158 . the State shall regulate the acquisition. The Congress shall give highest priority to the enactment of measures that protect and enhance the _______________ [70] Id. 130. Note. 142.. and remove cultural inequities by equitably diffusing wealth and political power for the common good. Department of Social Welfare and Development. 7432 as amended by Republic Act No. Art. Inc.com. reduce social. ownership. 447 VOL. I vote to DENY the Petition and hold that the challenge to the constitutionality of Section 4 of Republic Act No. XIII. supra note 8. at p. Petition dismissed.‰[72] Accordingly. 14. [72] Carlos Superdrug Corp. 711. 1. Sec.SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. and political inequalities. v. DECEMBER 3. http://central. p. economic. To this end. Commissioner of Internal Revenue. 654 SCRA 124 [2011]) ··o0o·· _______________ [71] CONSTITUTION. (Mercury Drug Corporation vs. and disposition of property and its increments. Secretary of the Department of Social Welfare and Development right of all the people to human dignity. use.[71] Thus. should fail. the government „can impose upon private establishments [like petitioners] the burden of partly subsidizing a government program. 10:23 AM Section 1. 2013 447 Manila Memorial Park. vs. at p. as well as the implementing rules and regulations issued by respondents Department of Social Welfare and Development and Department of Finance. in the exercise of its police power and in promoting senior citizensÊ welfare.

All rights reserved. 10:23 AM © Copyright 2015 Central Book Supply.ph/sfsreader/session/0000014f8bdce4859c1d49df000a0094004f00ee/p/ANP689/?username=Guest Page 158 of 158 .SUPREME COURT REPORTS ANNOTATED VOLUME 711 9/2/15. Inc. http://central.com.