Aprl Notes

G.R. No.
199669
SOUTHERN LUZON DRUG CORPORATION, Petitioner,

vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL COUNCIL
FOR THE WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF FINANCE, and THE
BUREAU OF INTERNAL REVENUE, Respondents
DECISION
REYES, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
1
the Decision dated June 17, 2011, and Resolution dated November 25, 2011 of the Court of
2 3
Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the petition for prohibition filed by
Southern Luzon Drug Corporation (petitioner) against the Department of1 Social Welfare and
Development (DSWD), the National Council for the Welfare of Disabled Persons (NCWDP) (now
National Council on Disability Affairs or NCDA), the Department of Finance (DOF) and the Bureau
of: Internal Revenue (collectively, the respondents), which sought to prohibit the implementation of
Section 4(a) of Republic Act (R.A.) No. 9257, otherwise known as the "Expanded Senior Citizens
Act of 2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta for Disabled
Persons," particularly the granting of 20% discount on the purchase of medicines by senior citizens
and persons with disability (PWD),: respectively, and treating them as tax deduction.
The petitioner is a domestic corporation engaged in the business of: drugstore operation in the
Philippines while the respondents are government' agencies, office and bureau tasked to monitor
compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules and regulations for their
effective implementation, as well as prosecute and revoke licenses of erring1 establishments.
Factual Antecedents
On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens to
Nation-Building, Grant Benefits and Special Privileges and For Other Purposes," was enacted.
Under the said law, a senior citizen, who must be at least 60 years old and has an annual income of
not more than P60,000.00, may avail of the privileges provided in Section 4 thereof, one of which is
4
20% discount on the purchase of medicines. The said provision states:
Sec. 4. Privileges for the Senior Citizen. - x x x:
a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment, restaurants and recreation centers
and purchase of medicine anywhere in the country: Provided, That private establishments may
claim the cost as tax credit[.]
x x x x (Emphasis ours)
To recoup the amount given as discount to qualified senior citizens, covered establishments can
claim an equal amount as tax credit which can be applied against the income tax due from them.
On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257, amending
some provisions of R.A. No. 7432. The new law retained the 20% discount on the purchase of
medicines but removed the annual income ceiling thereby qualifying all senior citizens to the
privileges under the law. Further, R.A. No. 9257 modified the tax treatment of the discount granted to
senior citizens, from tax credit to tax deduction from gross income, computed based on the net cost
of goods sold or services rendered. The pertinent provision, as amended by R.A. No. 9257, reads as
follows:
SEC. 4. Privileges for the Senior Citizens. - 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, restaurants and recreation centers, and
purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens,
including funeral and burial services for the death of senior citizens;
xxxx
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction
based on the net cost of the goods sold or services rendered: 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. Provided, further, That the total amount of the claimed tax deduction net of
value-added tax if applicable, 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, as amended. (Emphasis ours)
On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of R.A. No.
9257. Article 8 of Rule VI of the said IRR provides:
Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts granted
under Rule V, Section 4 - Discounts for Establishments; Section 9, Medical and Dental Services in
Private Facilities and Sections 10 and 11 -Air, Sea and Land Transportation as tax deduction based
on the net cost of the goods sold or services rendered. 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; Provided, further, That the total amount of the claimed tax deduction net of value-added
tax if applicable, 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, as amended;
Provided, finally, 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). (Emphasis ours)
The change in the tax treatment of the discount given to senior citizens did not sit well with some
drug store owners and corporations, claiming it affected the profitability of their business. Thus, on
January 13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug), together with other.
corporation and proprietors operating drugstores in the Philippines, filed a Petition for Prohibition
with Prayer for Temporary Restraining Order (TRO) I and/or Preliminary Injunction before this Court,
entitled Carlos Superdrug I Corporation v. DSWD, docketed as G.R. No. 166494, assailing the
5
constitutionality of Section 4(a) of R.A. No. 9257 primarily on the ground that it amounts to taking of
private property without payment of just compensation. In a Decision dated June 29, 2007, the Court
upheld the constitutionality of the assailed provision, holding that the same is a legitimate exercise of
police power. The relevant portions of the decision read, thus:
The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, 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, thus
assuring the greatest benefits. Accordingly, it has been described as "the most essential, insistent
and the least limitable of powers, extending as it does to all the great public needs." It is "[t]he power
vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and 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.
xxxx
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 a reminder that the
right to property can be relinquished upon the command of the State for the 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 being 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
RA. 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.
WHEREFORE, the petition is DISMISSED for lack of merit. (Citations omitted)

6
On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing decision.
Subsequently, the Court issued Resolution dated August 21, 2007, denying the said motion with
finality.
7
Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for Disabled
Persons" was enacted, codifying the rights and privileges of PWDs. Thereafter, on April 30, 2007,
R.A. No. 9442 was enacted, amending R.A. No. 7277. One of the salient amendments in the law is
the insertion of Chapter 8 in Title 2 thereof, which enumerates the other privileges and incentives of
PWDs, including the grant of 20% discount on the purchase of medicines. Similar to R.A. No. 9257,
covered establishments shall claim the discounts given to PWDs as tax deductions from the gross
income, based on the net cost of goods sold or services rendered. Section 32 ofR.A. No. 9442
reads:
CHAPTER 8. Other Privileges and Incentives
SEC. 32. Persons with disability shall be entitled to the following:
xxxx
(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for the
exclusive use or enjoyment of persons with disability;
xxxx
The establishments may claim the discounts granted in subsections (a), (b), (c), (e), (t) and (g)
as taxdeductions based on the net cost of the goods sold or services rendered: Provided,
however, That the cost of the discount shall be allowed as deduction from gross income for the
same taxable year that the discount is granted: Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, 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 (NIRC), as amended. (Emphasis ours)
Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD, Department of
Education, DOF, Department of Tourism and the Department of Transportation and
Communications. Sections 5 .1 and 6.1.d thereof provide:
8
Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are defined
as follows:
5.1. Persons with Disability are those individuals defined under Section 4 of RA

7277, "An Act Providing for the Rehabilitation, Self-Development and Self-Reliance
of Persons with Disability as amended and their integration into the Mainstream of
Society and for Other Purposes." This is defined as a person suffering from
restriction or different abilities, as a result of a mental, physical or sensory
impairment, to perform an activity in a manner or within the range considered normal
for human being. Disability shall mean: (1) a physical or mental impairment that
substantially limits one or more psychological, physiological or anatomical function of
an individual or activities of such individual; (2) a record of such an impairment; or (3)
being regarded as having such an impairment.
xxxx
6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the

purchase of medicine for the exclusive use and enjoyment of persons with disability.
All drug stores, hospital, pharmacies, clinics and other similar establishments selling
medicines are required to provide at least twenty percent (20%) discount subject to
the guidelines issued by DOH and PHILHEALTH.
On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for TRO and/or
Writ of Preliminary Injunction9 with the CA, seeking to declare as unconstitutional (a) Section 4(a) of
R.A. No. 9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR, insofar as these
provisions only allow tax deduction on the gross income based on the net cost of goods sold or
services rendered as compensation to private establishments for the 20% discount that they are
required to grant to senior citizens and PWDs. Further, the petitioner prayed that the respondents be
permanently enjoined from implementing the assailed provisions.
Ruling of the CA
On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
Superdrug particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police power.
10
Moreover, the CA held that considering that the same question had been raised by parties similarly
situated and was resolved in Carlos Superdrug, the rule of stare decisis stood as a hindrance to any
further attempt to relitigate the same issue. It further noted that jurisdictional considerations also
compel the dismissal of the action. It particularly emphasized that it has no original or appellate
jurisdiction to pass upon the constitutionality of the assailed laws, the same pertaining to the
11
Regional Trial Court (RTC). Even assuming that it had concurrent jurisdiction with the RTC, the
principle of hierarchy of courts mandates that the case be commenced and heard by the lower
court. The CA further ruled that the petitioner resorted to the wrong remedy as a petition for
12
prohibition will not lie to restrain the actions of the respondents for the simple reason that they do not
exercise judicial, quasi-judicial or ministerial duties relative to the issuance or implementation of the
questioned provisions. Also, the petition was wanting of the allegations of the specific acts
committed by the respondents that demonstrate the exercise of these powers which may be properly
challenged in a petition for prohibition.13
The petitioner filed its Motion for Reconsideration of the Decision dated June 17, 2011 of the CA,
14
but the same was denied in a Resolution dated November 25, 2011.
15
Unyielding, the petitioner filed the instant petition, raising the following assignment of errors, to wit:
THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR PROHIBITION FILED
WITH THE CA IS AN IMPROPER REMEDY TO ASSAIL THE CONSTITUTIONALITY OF THE
20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs;
II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME COURT'S RULING
IN CARLOS SUPERDRUG CONSTITUTES STARE DECISIS;
III
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs IS A VALID EXERCISE OF
POLICE POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF
EMINENT DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO THE
PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;
IV

20°/o SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs DOES NOT VIOLATE THE
PETITIONER'S RIGHT TO EQUAL PROTECTION OF THE LAW; and

DEFINITIONS OF DISABILITIES AND PWDs ARE NOT VAGUE AND DO NOT VIOLATE THE
PETITIONER'S RIGHT TO DUE PROCESS OF LAW. 16
Ruling of the Court
Prohibition may be filed to question

the constitutionality of a law
In the assailed decision, the CA noted that the action, although denominated as one for prohibition,
seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No. 9257 and Section 32 of
R.A. No.9442. It held that in such a case, the proper remedy is not a special civil 1 action but a
petition for declaratory relief, which falls under the exclusive original jurisdiction of the RTC, in the
first instance, and of the Supreme Court, on appeal. 17
The Court clarifies.
Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of authority and
is directed against proceedings that are done without or in excess of jurisdiction, or with grave abuse
of discretion, there being no appeal or other plain, speedy, and adequate remedy in the ordinary
course of law. It is the remedy to prevent inferior courts, corporations, boards, or persons from
usurping or exercising a jurisdiction or power with which they have not been vested by law. This is,
18
however, not the lone office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance, et
al., prohibition was also recognized as a proper remedy to prohibit or nullify acts of executive
19
officials that amount to usurpation of legislative authority. And, in a number of jurisprudence,

20
prohibition was allowed as a proper action to assail the constitutionality of a law or prohibit its
implementation.
In Social Weather Stations, Inc. v. Commission on Elections, therein petitioner filed a petition for
21
prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or the "Fair Elections
Act," which prohibited the publication of surveys within 15 days before an election for national
candidates, and seven days for local candidates. Included in the petition is a prayer to prohibit the
Commission on Elections from enforcing the said provision. The Court granted the Petition and
struck down the assailed provision for being unconstitutional. 22
In Social Justice Society (SJS) v. Dangerous Drugs Board, et al., therein petitioner assailed the
23
constitutionality of paragraphs (c ), (d), (f) and (g) of Section 36 of R.A. No. 9165, otherwise known
as the "Comprehensive Dangerous Drugs Act of 2002," on the ground that they constitute undue
delegation of legislative power for granting unbridled discretion to schools and private employers in
determining the manner of drug 'testing of their employees, and that the law constitutes a violation of
the right against unreasonable searches and seizures. It also sought to enjoin the Dangerous Drugs
Board and the Philippine Drug Enforcement Agency from enforcing the challenged provision. The 24
Court partially granted the petition by declaring Section 36(f) and (g) of R.A. No. 9165
unconstitutional, and permanently enjoined the concerned agencies from implementing them. 25
In another instance, consolidated petitions for prohibitions questioning the constitutionality of the
26
Priority Development Assistance Fund were deliberated upon by this Court which ultimately granted
the same.
Clearly, prohibition has been found an appropriate remedy to challenge the constitutionality of
various laws, rules, and regulations.
There is also no question regarding the jurisdiction of the CA to hear and decide a petition for
prohibition. By express provision of the law, particularly Section 9(1) of Batas Pambansa Bilang
129, the CA was granted "original jurisdiction to issue writs of mandamus, prohibition, certiorari,
27
habeas corpus, and quo warranto, and auxiliary writs or I processes, whether or not in aid of its
appellate jurisdiction." This authority· the CA enjoys concurrently with RTCs and this Court.
In the same manner, the supposed violation of the principle of the ·. hierarchy of courts does not
pose any hindrance to the full deliberation of the issues at hand. It is well to remember that "the
judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases involving warring
factual allegations. For this reason, litigants are required to [refer] to the trial courts at the first
instance to determine the truth or falsity of these contending allegations on the basis of the evidence
of the parties. Cases which depend on disputed facts for decision cannot be brought immediately
before appellate courts as they are not triers of facts. Therefore, a strict application of the rule of
hierarchy of courts is not necessary when the cases brought before the appellate courts do not
involve factual but legal questions." 28
Moreover, the principle of hierarchy of courts may be set aside for special and important reasons,
such as when dictated by public welfare and ' the advancement of public policy, or demanded by the
broader interest of justice. Thus, when based on the good judgment of the court, the urgency and
29
significance of the issues presented calls for its intervention, it should not hesitate to exercise its
duty to resolve.
The instant petition presents an exception to the principle as it basically raises a legal question on
the constitutionality of the mandatory discount and the breadth of its rightful beneficiaries. More
importantly, the resolution of the issues will redound to the benefit of the public as it will put to rest
the questions on the propriety of the granting of discounts to senior citizens and PWDs amid the
fervent insistence of affected establishments that the measure transgresses their property rights.
The Court, therefore, finds it to the best interest of justice that the instant petition be resolved.
The instant case is not barred by

stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos Superdrug constitutes
as stare decisis or law of the case which bars the relitigation of the issues that had been resolved
therein and had been raised anew in the instant petition. It argues that there are substantial
differences between Carlos Superdrug and the circumstances in the instant case which take it out
from the operation of the doctrine of stare decisis. It cites that in Carlos Superdrug, the Court denied
the petition because the petitioner therein failed to prove the confiscatory effect of the tax deduction
scheme as no proof of actual loss was submitted. It believes that its submission of financial
statements for the years 2006 and 2007 to prove the confiscatory effect of the law is a material fact
that distinguishes the instant case from that of Carlos Superdrug. 30
The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the instant
case, not because of the petitioner's submission of financial statements which were wanting in the
first case, but because it had the good sense of including questions that had not been raised or
deliberated in the former case of Carlos Superdrug, i.e., validity of the 20% discount granted to
PWDs, the supposed vagueness of the provisions of R.A. No. 9442 and violation of the equal
protection clause.
Nonetheless, the Court finds nothing in the instant case that merits a reversal of the earlier ruling of
the Court in Carlos Superdrug. Contrary to the petitioner's claim, there is a very slim difference
between the issues in Carlos Superdrug and the instant case with respect to the nature of the senior
citizen discount. A perfunctory reading of the circumstances of the two cases easily discloses
marked similarities in the issues and the arguments raised by the petitioners in both cases that
semantics nor careful play of words can hardly obscure.
In both cases, it is apparent that what the petitioners are ultimately questioning is not the grant of the
senior citizen discount per se, but the manner by which they were allowed to recoup the said
discount. In particular, they are protesting the change in the tax treatment of the senior citizen
discount from tax credit to being merely a deduction from gross income which they claimed to have
significantly reduced their profits.
This question had been settled in Carlos Superdrug, where the Court ruled that the change in the
tax treatment of the discount was a valid exercise of police power, thus:
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. No. 9257.
xxxx
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.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-being as
the State considers them an integral part of our society.
The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.
Thus, the Act provides:
SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
SEC. 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: "The State shall provide social justice in all phases of national
development." Further, Article XIII, Section 11, provides: "The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to make essential goods,
health and other social services available to all the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly, disabled, women and children." Consonant with
these constitutional principles the following are the declared policies of this Act:
xxxx
(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, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may claim the
discount as a tax deduction.
assuring the greatest benefits. Accordingly, it has been described as "the most essential, insistent
and the least limitable of powers, extending as it does to all the great public needs." It is "[t]he power
vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same."
must bow to the primacy of police power because proper rights, though sheltered by due process,
must yield to general welfare. (Citations omitted and emphasis in the original)
31
Verily, it is the bounden duty of the State to care for the elderly as they reach the point in their lives
when the vigor of their youth has diminished and resources have become scarce. Not much because
of choice, they become needing of support from the society for whom they presumably spent their
productive days and for whose betterment they' exhausted their energy, know-how and experience
to make our days better to live.
In the same way, providing aid for the disabled persons is an equally important State responsibility.
Thus, the State is obliged to give full support to the improvement of the total well-being of disabled
persons and their integration into the mainstream of society. This entails the creation of
32
opportunities for them and according them privileges if only to balance the playing field which had
been unduly tilted against them because of their limitations.
The duty to care for the elderly and the disabled lies not only upon the State, but also on the
community and even private entities. As to the State, the duty emanates from its role as parens
patriae which holds it under obligation to provide protection and look after the welfare of its people
especially those who cannot tend to themselves. Parens patriae means parent of his or her country,
and refers to the State in its role as "sovereign", or the State in its capacity as a provider of
protection to those unable to care for themselves. In fulfilling this duty, the State may resort to the
33
exercise of its inherent powers: police power, eminent domain and power of taxation.
In Gerochi v. Department of Energy, the Court passed upon one of the inherent powers of the state,
34
the police power, where it emphasized, thus:
[P]olice power is the power of the state to promote public welfare by restraining and regulating the
use of liberty and property. It is the most pervasive, the least limitable, and the most demanding of
the three fundamental powers of the State. The justification is found in the Latin maxim salus populi
est suprema lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non
laedas (so use your property as not to injure the property of others). As an inherent attribute of
sovereignty which virtually extends to all public needs, police power grants a wide panoply of
instruments through which the State, as parens patriae, gives effect to a host of its regulatory
powers. We have held that the power to "regulate" means the power to protect, foster, promote,
preserve, and control, with due regard for the interests, first and foremost, of the public, then of the
utility and of its patrons. (Citations omitted)
35
It is in the exercise of its police power that the Congress enacted R.A. Nos. 9257 and 9442, the laws
mandating a 20% discount on purchases of medicines made by senior citizens and PWDs. It is also
in further exercise of this power that the legislature opted that the said discount be claimed as tax
deduction, rather than tax credit, by covered establishments.
The petitioner, however, claims that the change in the tax treatment of the discount is illegal as it
constitutes taking without just compensation. It even submitted financial statements for the years
2006 and 2007 to support its claim of declining profits when the change in the policy was
implemented.
The Court is not swayed.
To begin with, the issue of just compensation finds no relevance in the instant case as it had already
been made clear in Carlos Superdrug that the power being exercised by the State in the imposition
of senior citizen discount was its police power. Unlike in the exercise of the power of eminent
domain, just compensation is not required in wielding police power. This is precisely because there
is no taking involved, but only an imposition of burden.
In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., the Court ruled that by
36
examining the nature and the effects of R.A. No. 9257, it becomes apparent that the challenged
governmental act was an exercise of police power. It was held, thus:
[W]e now look at the nature and effects of the 20% discount to determine if it constitutes an exercise
of police power or eminent domain.
The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less
likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need of
subsidy in purchasing basic commodities. 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. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law.
As to its nature and effects, 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, senior
citizens, for which the Constitution affords preferential concern. In turn, this affects the amount of
profits or income/gross sales that a private establishment can derive from senior citizens. In other
words, the subject regulation affects the pricing, and, hence, the profitability of a private
establishment. However, it does not purport to appropriate or burden specific properties, used in the
operation or conduct of the business of private establishments, for the use or benefit of the public, or
senior citizens for that matter, but merely regulates the pricing of goods and services relative to, and
the amount of profits or income/gross sales that such private establishments may derive from, senior
citizens.
The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of 'return on investment control laws which are traditionally regarded as police power
measures. x x x. (Citations omitted)
37
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." Even then, the
38
State's claim of police power cannot be arbitrary or unreasonable. After all, the overriding purpose of
the exercise of the power is to promote general welfare, public health and safety, among others. It is
a measure, which by sheer necessity, the State exercises, even to the point of interfering with
personal liberties or property rights in order to advance common good. To warrant such interference,
two requisites must concur: (a) the interests of the public generally, as distinguished from those of a
particular class, require the interference of the! State; and (b) the means employed are reasonably
necessary to the: attainment of the object sought to be accomplished and not unduly oppressive
upon individuals. In other words, the proper exercise of the police power requires the concurrence of
a lawful subject and a lawful method. 39
The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are individuals whose
well-being is a recognized public duty. As a public duty, the responsibility for their care devolves
upon the concerted efforts of the State, the family and the community. In Article XIII, Section 1 of the
Constitution, the State is mandated to give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power1 for the
common good. The more apparent manifestation of these social inequities is the unequal distribution
or access to healthcare services. To: abet in alleviating this concern, the State is committed to adopt
an integrated! and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost, with
priority for the needs of the underprivileged sick, elderly, disabled, women, and children. 40
In the same manner, the family and the community have equally significant duties to perform in
reducing social inequality. The family as the basic social institution has the foremost duty to care for
its elderly members. On the other hand, the community, which include the private sector, is
41
recognized as an active partner of the State in pursuing greater causes. The private sector, being
recipients of the privilege to engage business in our land, utilize our goods as well as the services of
our people for proprietary purposes, it is only fitting to expect their support in measures that
contribute to common good. Moreover, their right to own, establish and operate economic
enterprises is always subject to the duty of the State to promote distributive justice and to intervene
when the common good so demands. 42
The Court also entertains no doubt on the legality of the method taken by the legislature to
implement the declared policies of the subject laws, that is, to impose discounts on the medical
services and purchases of senior citizens and PWDs and to treat the said discounts as tax deduction
rather than tax credit. The measure is fair and reasonable and no credible proof was presented to
prove the claim that it was confiscatory. To be considered confiscatory, there must be taking of
property without just compensation.
Illuminating on this point is the discussion of the Court on the concept of taking in City of Manila v.
Hon. Laguio, Jr., viz.:
43
There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.
xxxx
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. x x x.
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use. A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use prohibitable.
When the owner of real property has been called upon to sacrifice all economically beneficial uses in
the name of the common good, that is, to leave his property economically idle, he has suffered a
taking.
xxxx
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner. (Citations omitted)
44
The petitioner herein attempts to prove its claim that the pertinent provisions of R.A. Nos. 9257 and
9442 amount to taking by presenting financial statements purportedly showing financial losses
incurred by them due to the adoption of the tax deduction scheme.
For the petitioner's clarification, the presentation of the financial statement is not of compelling
significance in justifying its claim for just compensation. What is imperative is for it to establish that
there was taking in the constitutional sense or that, in the imposition of the mandatory discount, the
power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi, five circumstances must be present in
45
order to qualify "taking" as an exercise of eminent domain. First, the expropriator must enter a

private property. Second, the entrance 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. Fifth, 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. 46
The first requirement speaks of entry into a private property which clearly does not obtain in this
case. There is no private property that is; invaded or appropriated by the State. As it is, the petitioner
precipitately deemed future profits as private property and then proceeded to argue that the State
took it away without full compensation. This seemed preposterous considering that the subject of
what the petitioner supposed as taking was not even earned profits but merely an expectation of
profits, which may not even occur. For obvious reasons, there cannot be taking of a contingency or
of a mere possibility because it lacks physical existence that is necessary before there could be any
taking. Further, it is impossible to quantify the compensation for the loss of supposed profits before it
is earned.
The supposed taking also lacked the characteristics of permanence and consistency. The
47
1âwphi1
presence of these characteristics is significant because they can establish that the effect of the
questioned provisions is the same on all establishments and those losses are indeed its unavoidable
consequence. But apparently these indications are wanting in this case. The reason is that the
impact on the establishments varies depending on their response to the changes brought about by
the subject provisions. To be clear, establishments, are not prevented from adjusting their prices to
accommodate the effects of the granting of the discount and retain their profitability while being fully
compliant to the laws. It follows that losses are not inevitable because establishments are free to
take business measures to accommodate the contingency. Lacking in permanence and consistency,
there can be no taking in the constitutional sense. There cannot be taking in one establishment and
none in another, such that the former can claim compensation but the other may not. Simply told,
there is no taking to justify compensation; there is only poor business decision to blame.
There is also no ousting of the owner or deprivation of ownership. Establishments are neither
divested of ownership of any of their properties nor is anything forcibly taken from them. They
remain the owner of their goods and their profit or loss still depends on the performance of their
sales.
Apart from the foregoing, covered establishments are also provided with a mechanism to recoup the
amount of discounts they grant the senior citizens and PWDs. It is provided in Section 4(a) of R.A.
No. 9257 and Section 32 of R.A. No. 9442 that establishments may claim the discounts as "tax
deduction based on the net cost of the goods sold or services rendered." Basically, whatever amount
was given as discount, covered establishments may claim an equal amount as an expense or tax
deduction. The trouble is that the petitioner, in protesting the change in the tax treatment of the
discounts, apparently seeks tax incentive and not merely a return of the amount given as discounts.
It premised its interpretation of financial losses in terms of the effect of the change in the tax
treatment of the discount on its tax liability; hence, the claim that the measure was confiscatory.
However, as mentioned earlier in the discussion, loss of profits is not the inevitable result of the
change in tax treatment of the discounts; it is more appropriately a consequence of poor business
decision.
It bears emphasizing that the law does not place a cap on the amount of mark up that covered
establishments may impose on their items. This rests on the discretion of the establishment which,
of course, is expected to put in the price of the overhead costs, expectation of profits and other
considerations into the selling price of an item. In a simple illustration, here is Drug A, with
acquisition cost of ₱8.00, and selling price of ₱10.00. Then comes a law that imposes 20% on senior
citizens and PWDs, which affected Establishments 1, 2 and 3. Let us suppose that the approximate
number of patrons who purchases Drug A is 100, half of which are senior citizens and PWDs. Before
the passage of the law, all of the establishments are earning the same amount from profit from the
sale of Drug A, viz.:
Before the passage of the law:
Drug A
Acquisition cost ₱8.00
Selling price ₱10.00
Number of patrons 100
Sales:
100 x ₱10.00 = ₱1,000.00
Profit: ₱200
After the passage of the law, the three establishments reacted differently. Establishment 1 was
passive and maintained the price of Drug A at ₱8.00 which understandably resulted in diminution of
profits.
Establishment 1
Drug A
Selling price ;₱10.00
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱100.00
Profit: ₱100.00
On the other hand, Establishment 2, mindful that the new law will affect the profitability of the
business, made a calculated decision by increasing the mark up of Drug A to ₱3.20, instead of only
₱2.00. This brought a positive result to the earnings of the company.
Establishment 2
Drug A
Acquisition cost ;₱8.00
Number of patron 100
Senior Citizens/PWDs 50
Sales
100 x ₱10.00 = ₱1,000.00
Profit: ₱208.00
For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just to even out the effect of
the law. This measure left a negligible effect on its profit, but Establishment 3 took it as a social duty:
to share in the cause being promoted by the government while still maintaining profitability.
Establishment 3
Drug A
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Profit: ₱190.00
The foregoing demonstrates that it is not the law per se which occasioned the losses in the covered
establishments but bad business I judgment. One of the main considerations in making business
decisions is the law because its effect is widespread and inevitable. Literally, anything can be a
subject of legislation. It is therefore incumbent upon business managers to cover this contingency
and consider it in making business strategies. As shown in the illustration, the better responses were
exemplified by Establishments 2 and 3 which promptly put in the additional costs brought about by
the law into the price of Drug A. In doing so, they were able to maintain the profitability of the
business, even earning some more, while at the same time being fully compliant with the law. This is
not to mention that the illustration is even too simplistic and not' the most ideal since it dealt only with
a single drug being purchased by both regular patrons and senior citizens and PWDs. It did not
consider the accumulated profits from the other medical and non-medical products being sold by the
establishments which are expected to further curb the effect of the granting of the discounts in the
business.
It is therefore unthinkable how the petitioner could have suffered losses due to the mandated
discounts in R.A. Nos. 9257 and 9442, when a fractional increase in the prices of items could bring
the business standing at a balance even with the introduction of the subject laws. A level adjustment
in the pricing of items is a reasonable business measure to take in order to adapt to the contingency.
This could even make establishments earn more, as shown in the illustration, since every fractional
increase in the price of covered items translates to a wider cushion to taper off the effect of the
granting of discounts and ultimately results to additional profits gained from the purchases of the
same items by regular patrons who are not entitled to the discount. Clearly, the effect of the subject
laws in the financial standing of covered companies depends largely on how they respond and forge
a balance between profitability and their sense of social responsibility. The adaptation is entirely up
to them and they are not powerless to make adjustments to accommodate the subject legislations.
Still, the petitioner argues that the law is confiscatory in the sense that the State takes away a
portion of its supposed profits which could have gone into its coffers and utilizes it for public purpose.
The petitioner claims that the action of the State amounts to taking for which it should be
compensated.
To reiterate, the subject provisions only affect the petitioner's right to profit, and not earned profits.
Unfortunately for the petitioner, the right to profit is not a vested right or an entitlement that has
accrued on the person or entity such that its invasion or deprivation warrants compensation. Vested
rights are "fixed, unalterable, or irrevocable."48 More extensively, they are depicted as follows:
Rights which have so completely and definitely accrued to or settled in a person that they are not
subject to be defeated or cancelled by the act of any other private person, and which it is right and
equitable that the government should recognize and protect, as being lawful in themselves, and
settled according to the then current rules of law, and of which the individual could not be deprived
arbitrarily without injustice, or of which he could not justly be deprived otherwise than by the
established methods of procedure and for the public welfare. x x x A right is not 'vested' unless it is
more than a mere expectation based on the anticipated continuance of present laws; it must be an
established interest in property, not open to doubt. x x x To be vested in its accurate legal sense,
a right must be complete and consummated, and one of which the person to whom it belongs
cannot be divested without his consent.x x x. (Emphasis ours)
49
Right to profits does not give the petitioner the cause of action to ask for just compensation, it being
only an inchoate right or one that has not fully developed and therefore cannot be claimed as one's
50
own. An inchoate right is a mere expectation, which may or may not come into existence. It is
contingent as it only comes "into existence on an event or condition which may not happen or be
performed until some other event may prevent their vesting." Certainly, the petitioner cannot claim
51
confiscation or taking of something that has yet to exist. It cannot claim deprivation of profit before
the consummation of a sale and the purchase by a senior citizen or PWD.
Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not come into
being until the occurrence or realization of a condition precedent. It is a mere "contingency that might
never eventuate into a right. It stands for a mere possibility of profit but nothing might ever be
payable under it."52
The inchoate nature of the right to profit precludes the possibility of compensation because it lacks
the quality or characteristic which is necessary before any act of taking or expropriation can be
effected. Moreover, there is no yardstick fitting to quantify a contingency or to determine
compensation for a mere possibility. Certainly, "taking" presupposes the existence of a subject that
has a quantifiable or determinable value, characteristics which a mere contingency does not
possess.
Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say that it is
within the province of Congress to do so in the exercise of its legislative power. It has the authority to
choose the subject of legislation, outline the effective measures to achieve its declared policies and
even impose penalties in case of non-compliance. It has the sole discretion to decide which policies
to pursue and devise means to achieve them, and courts often do not interfere in this exercise for as
long as it does not transcend constitutional limitations. "In performing this duty, the legislature has no
guide but its judgment and discretion and the wisdom of experience." In Carter v. Carter Coal
53
Co., legislative discretion has been described as follows:

54
Legislative congressional discretion begins with the choice of means, and ends with the adoption
of methods and details to carry the delegated powers into effect. x x x [W]hile the powers are rigidly
limited to the enumerations of the Constitution, the means which may be employed to carry the
powers into effect are not restricted, save that they must be appropriate, plainly adapted to the end,
and not prohibited by, but consistent with, the letter and spirit of the Constitution. x x x. (Emphasis
55
ours)
Corollary, whether to treat the discount as a tax deduction or tax credit is a matter addressed to the
wisdom of the legislature. After all, it is within its prerogative to enact laws which it deems sufficient
to address a specific public concern. And, in the process of legislation, a bill goes through rigorous
tests of validity, necessity and sufficiency in both houses of Congress before enrolment. It
undergoes close scrutiny of the members of Congress and necessarily had to surpass the
arguments hurled against its passage. Thus, the presumption of validity that goes with every law as
a form of deference to the process it had gone through and also to the legislature's exercise of
discretion. Thus, in lchong, etc., et al. v. Hernandez) etc., and Sarmiento, the Court emphasized,
56
thus:
It must not be overlooked, in the first place, that the legislature, which is the constitutional
repository of police power and exercises the prerogative of determining the policy of the State, is by
force of circumstances primarily the judge of necessity, adequacy or reasonableness and
wisdom, of any law promulgated in the exercise of the police power, or of the measures
adopted to implement the public policy or to achieve public interest.x x x. (Emphasis ours)
57
The legislature may also grant rights and impose additional burdens: It may also regulate industries,
in the exercise of police power, for the protection of the public. R.A. Nos. 9257 and 9442 are akin to
regulatory laws, the issuance of which is within the ambit of police power. The minimum wage law,
zoning ordinances, price control laws, laws regulating the operation of motels and hotels, laws
limiting the working hours to eight, and the like fall under this category. 58
Indeed, regulatory laws are within the category of police power measures from which affected
persons or entities cannot claim exclusion or compensation. For instance, private establishments
cannot protest that the imposition of the minimum wage is confiscatory since it eats up a
considerable chunk of its profits or that the mandated remuneration is not commensurate for the
work done. The compulsory nature of the provision for minimum wages underlies the effort of the
State; as R.A. No. 6727 expresses it, to promote productivity-improvement and gain-sharing
59
measures to ensure a decent standard of living for the workers and their families; to guarantee the
rights of labor to its just share in the fruits of production; to enhance employment generation in the
countryside through industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth, and as the Constitution expresses it, to affirm labor as a primary
social economic force. 60
Similarly, the imposition of price control on staple goods in R.A. No. 7581 is likewise a valid
61
exercise of police power and affected establishments cannot argue that the law was depriving them
of supposed gains. The law seeks to ensure the availability of basic necessities and prime
commodities at reasonable prices at all times without denying legitimate business a fair return on
investment. It likewise aims to provide effective and sufficient protection to consumers against
hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of
said goods, especially during periods of calamity, emergency, widespread illegal price manipulation
and other similar situations. 62
More relevantly, in Manila Memorial Park, Inc., it was ruled that it is within the bounds of the police
63
power of the state to impose burden on private entities, even if it may affect their profits, such as in
the imposition of price control measures. There is no compensable taking but only a recognition of
the fact that they are subject to the regulation of the State and that all personal or private interests
must bow down to the more paramount interest of the State.
This notwithstanding, the regulatory power of the State does not authorize the destruction of the
business. While a business may be regulated, such regulation must be within the bounds of
reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably interfered with even by
the exercise of police power. After all, regulation only signifies control or restraint, it does not mean
64
suppression or absolute prohibition. Thus, in Philippine Communications Satellite

Corporation v. Alcuaz, the Court emphasized:
65
The power to regulate is not the power to destroy useful and harmless enterprises, but is the power
to protect, foster, promote, preserve, and control with due regard for the interest, first and foremost,
of the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an
effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of
property rights is void, because it is repugnant to the constitutional guaranties of due process and
equal protection of the laws. (Citation omitted)
66
Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of regulation, allow
undue interference in an otherwise legitimate business. On the contrary, it was shown that the
1avvphi1
questioned laws do not meddle in the business or take anything from it but only regulate its
realization of profits.
The subject laws do not violate the

equal protection clause
The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause in
that it failed to distinguish between those who have the capacity to pay and those who do not, in
granting the 20% discount. R.A. No. 9257, in particular, removed the income qualification in R.A. No.
7432 of'₱60,000.00 per annum before a senior citizen may be entitled to the 20o/o discount.
The contention lacks merit.
The petitioner's argument is dismissive of the reasonable qualification on which the subject laws
were based. In City of Manila v. Hon. Laguio, Jr., the Court emphasized:
67
Equal protection requires that all persons or things similarly situated should be treated alike, both as
to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be
treated differently, so as to give undue favor to some and unjustly discriminate against others. The
guarantee means that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances. (Citations omitted)
68
"The equal protection clause is not infringed by legislation which applies only to those persons falling
within a specified class. If the groupings are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from another." For a classification to
69
be valid, (1) it must be based upon substantial distinctions, (2) it must be germane to the purposes of
the law, (3) it must not be limited to existing conditions only, and (4) it must apply equally to all
members of the same class. 70
To recognize all senior citizens as a group, without distinction as to income, is a valid classification.
The Constitution itself considered the elderly as a class of their own and deemed it a priority to
address their needs. When the Constitution declared its intention to prioritize the predicament of the
underprivileged sick, elderly, disabled, women, and children, it did not make any reservation as to
71
income, race, religion or any other personal circumstances. It was a blanket privilege afforded the
group of citizens in the enumeration in view of the vulnerability of their class.
R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures that
protect and enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities. 72 Specifically, it caters to the welfare of all senior citizens. The classification is
based on age and therefore qualifies all who have attained the age of 60. Senior citizens are a class
of their own, who are in need and should be entitled to government support, and the fact that they
may still be earning for their own sustenance should not disqualify them from the privilege.
It is well to consider that our senior citizens have already reached the age when work opportunities
have dwindled concurrently as their physical health. They are no longer expected to work, but there
1âwphi1
are still those who continue to work and contribute what they can to the country. Thus, to single them
out and take them out of the privileges of the law for continuing to strive and earn income to fend for
themselves is inimical to a welfare state that the Constitution envisions. It is tantamount to penalizing
them for their persistence. It is commending indolence rather than rewarding diligence. It
encourages them to become wards of the State rather than productive partners.
Our senior citizens were the laborers, professionals and overseas contract workers of the past.
While some may be well to do or may have the capacity to support their sustenance, the discretion
to avail of the privileges of the law is up to them. But to instantly tag them. as undeserving of the
privilege would be the height of ingratitude; it is an outright discrimination.
The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442 and in
granting them discounts. It needs no further explanation that PWDs have special needs which, for
1âwphi1
most,' last their entire lifetime. They constitute a class of their own, equally deserving of government
support as our elderlies. While some of them maybe willing to work and earn income for themselves,
their disability deters them from living their full potential. Thus, the need for assistance from the
government to augment the reduced income or productivity brought about by their physical or
intellectual limitations.
There is also no question that the grant of mandatory discount is germane to the purpose of R.A.
Nos. 9257 and 9442, that is, to adopt an integrated and comprehensive approach to health
development and make essential goods and other social services available to all the people at
affordable cost, with special priority given to the elderlies and the disabled, among others. The
privileges granted by the laws ease their concerns and allow them to live more comfortably.
The subject laws also address a continuing concern of the government for the welfare of the senior
citizens and PWDs. It is not some random predicament but an actual, continuing and pressing
concern that requires preferential attention. Also, the laws apply to all senior citizens and PWDs,
respectively, without further distinction or reservation. Without a doubt, all the elements for a valid
classification were met.
The definitions of "disabilities" and

"PWDs" are clear and unequivocal
Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in defining the terms
"disability" and "PWDs," such that it lack comprehensible standards that men of common intelligence
must guess at its meaning. It likewise bewails the futility of the given safeguards to prevent abuse
since government officials who are neither experts nor practitioners of medicine are given the
authority to issue identification cards that authorizes the granting of the privileges under the law.
The Court disagrees.
Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as
follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a

mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being[.]
On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as follows:
5.1. PersonswithDisability are those individuals defined under Section 4 of [R.A. No.] 7277 [or] An
Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability
as amended and their integration into the Mainstream of Society and for Other Purposes. This is
defined as a person suffering from restriction or different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in a manner or within the range considered normal for
human being. Disability shall mean (1) a physical 1or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an impairment.
The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of
the United Nations Convention on the Rights of Persons with Disabilities which reads:
Persons with disabilities include those who have long-term physical, mental, intellectual or
sensory impairments which in interaction with various barriers may hinder their full and effective
participation in society on an equal basis with others. (Emphasis and italics ours)
The seemingly broad definition of the terms was not without good reasons. It recognizes that
"disability is an evolving concept" and appreciates the "diversity of PWDs." The terms were given
73 74
comprehensive definitions so as to accommodate the various forms of disabilities, and not confine it
to a particular case as this would effectively exclude other forms of physical, intellectual or
psychological impairments.
Moreover, in Estrada v. Sandiganbayan, it was declared, thus:

75
A statute is not rendered uncertain and void merely because general terms are used therein, or
because of the employment of terms without defining them; much less do we have to define every
word we use. Besides, there is no positive constitutional or statutory command requiring the
legislature to define each and every word in an enactment. Congress is not restricted in the form of
expression of its will, and its inability to so define the words employed in a statute will not necessarily
result in the vagueness or ambiguity of the law so long as the legislative will is clear, or at least, can
be gathered from the whole act x x x. (Citation omitted)
76
At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As regards the
petitioner's claim that the law lacked reasonable standards in determining the persons entitled to the
discount, Section 32 thereof is on point as it identifies who may avail of the privilege and the manner
of its availment. It states:
Sec. 32. x x x
The abovementioned privileges are available only to persons with disability who are Filipino citizens
upon submission of any of the following as proof of his/her entitlement thereto:
(I) An identification card issued by the city or municipal mayor or the barangay
captain of the place where the persons with disability resides;
(II) The passport of the persons with disability concerned; or
(III) Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP).
It is, however, the petitioner's contention that the foregoing authorizes government officials who had
no medical background to exercise discretion in issuing identification cards to those claiming to be
PWDs. It argues that the provision lends to the indiscriminate availment of the privileges even by
those who are not qualified.
The petitioner's apprehension demonstrates a superficial understanding of the law and its
implementing rules. To be clear, the issuance of identification cards to PWDs does not depend on
the authority of the city or municipal mayor, the DSWD or officials of the NCDA (formerly NCWDP). It
is well to remember that what entitles a person to the privileges of the law is his disability, the fact of
which he must prove to qualify. Thus, in NCDA Administrative Order (A.O.) No. 001, series of
2008, it is required that the person claiming disability must submit the following requirements
77
before he shall be issued a PWD Identification Card:
1. Two "1 x l" recent ID pictures with the names, and signatures or thumb marks at the back of the
picture.
2. One (1) Valid ID

3. Document to confirm the medical or disability condition 78
To confirm his disability, the person must obtain a medical certificate or assessment, as the case
maybe, issued by a licensed private or government physician, licensed teacher or head of a
business establishment attesting to his impairment. The issuing entity depends on whether the
disability is apparent or non-apparent. NCDAA.O. No. 001 further provides: 79
DISABILITY DOCUMENT ISSUING ENTITY

Apparent Medical Licensed Private or
Disability Certificate Government Physician

School Licensed Teacher duly
Assessment signed by the School
Principal
Certificate of  Head of the
Disability Business
Establishment
 Head of Non-
Government
Organization
Non-Apparent Medical Licensed Private or

Disability Certificate Government Physician

To provide further safeguard, the Department of Health issued A.O. No. 2009-0011, providing
guidelines for the availment of the 20% discount on the purchase of medicines by PWDs. In making
a purchase, the individual must present the documents enumerated in Section VI(4)(b ), to wit:
i. PWD identification card x x x
ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic name
of the medicine, dosage form, dosage strength, quantity, signature over printed name of
physician, physician's address, contact number of physician or dentist, professional license
number, professional tax receipt number and narcotic license number, if applicable. To
safeguard the health of PWDs and to prevent abuse of [R.A. No.] 9257, a doctor's
prescription is required in the purchase of over-the-counter medicines. x x x.
iii. Purchase booklet issued by the local social/health office to PWDs for free containing the
following basic information:
a) PWD ID number
b) Booklet control number
c) Name of PWD
d) Sex
e) Address
f) Date of Birth
g) Picture
h) Signature of PWD
i) Information of medicine purchased:
i.1 Name of medicine
i.2 Quantity
i.3 Attending Physician
i.4 License Number
i.5 Servicing drug store name
i.6 Name of dispensing pharmacist
j) Authorization letter of the PWD x x x in case the medicine is bought by the

representative or caregiver of the PWD.
The PWD identification card also has a validity period of only three years which facilitate in the
monitoring of those who may need continued support and who have been relieved of their disability,
and therefore may be taken out of the coverage of the law.
At any rate, the law has penal provisions which give concerned establishments the option to file a
case against those abusing the privilege Section 46(b) of R.A. No. 9442 provides that "[a]ny person
who abuses the privileges granted herein shall be punished with imprisonment of not less than six
months or a fine of not less than Five Thousand pesos (₱5,000.00), but not more than Fifty
Thousand pesos (₱50,000.00), or both, at the discretion of the court." Thus, concerned
establishments, together with the proper government agencies, must actively participate in
monitoring compliance with the law so that only the intended beneficiaries of the law can avail of the
privileges.
Indubitably, the law is clear and unequivocal, and the petitioner claim of vagueness to cast
uncertainty in the validity of the law does not stand.
WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and
Section 32 of Republic Act No. 9442 are hereby declared CONSTITUTIONAL.
<<page>>
SO ORDERED.
BIENVENIDO L. REYES,
Associate Justice
WE CONCUR:
MARIA LOURDES P.A. SERENO

Chief Justice
(See Dissenting Opinion)

PRESBITERO J. VELASCO, JR.
ANTONIO T. CARPIO
Associate Justice
Associate Justice
TERESITA J. LEONARDO-DE CASTRO DIOSDADO M. PERALTA

Associate Justice Associate Justice
(No Part)
LUCAS P. BERSAMIN
MARIANO C. DEL CASTILLO
Associate Justice
Associate Justice
(No Part)
JOSE CATRAL MENDOZA
ESTELA M. PERLAS-BERNABE
Associate Justice
Associate Justice
(See Separate Opinion) (No Part)

MARVIC M.V.F. LEONEN FRANCIS H. JARDELEZA
ALFREDO BENJAMIN S. CAGUIOA SAMUEL R. MARTIREZ

NOEL G. TIJAM
Associate Justice
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation,
I certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.

Chief Justice
G.R. No. 156052 March 7, 2007
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S.

TUMBOKON, Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.
DECISION
CORONA, J.:
In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T.
Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of
the City of Manila, to enforce Ordinance No. 8027.
The antecedents are as follows.
On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.

8027.2 Respondent mayor approved the ordinance on November 28, 2001.3 It became effective on
December 28, 2001, after its publication.4
Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units,
a principle described as the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals and general welfare of the society.5 This is evident
from Sections 1 and 3 thereof which state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety,
and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the
land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in
the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan in the
west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in
the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the
Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from
Industrial II to Commercial I.
xxx xxx xxx
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of
effectivity of this Ordinance within which to cease and desist from the operation of businesses which
are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and
directed the owners and operators of businesses disallowed under Section 1 to cease and desist
from operating their businesses within six months from the date of effectivity of the ordinance.
Among the businesses situated in the area are the so-called "Pandacan Terminals" of the oil
companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the
oil companies agreed to perform the following:
Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing
of this MOU, undertake a program to scale down the Pandacan Terminals which shall include,
among others, the immediate removal/decommissioning process of TWENTY EIGHT (28) tanks
starting with the LPG spheres and the commencing of works for the creation of safety buffer and
green zones surrounding the Pandacan Terminals. xxx
Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES shall
establish joint operations and management, including the operation of common, integrated and/or
shared facilities, consistent with international and domestic technical, safety, environmental and
economic considerations and standards. Consequently, the joint operations of the OIL COMPANIES
in the Pandacan Terminals shall be limited to the common and integrated areas/facilities. A separate
agreement covering the commercial and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.
Section 3. - The development and maintenance of the safety and green buffer zones mentioned
therein, which shall be taken from the properties of the OIL COMPANIES and not from the
surrounding communities, shall be the sole responsibility of the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed to do the following:
Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with
the view of implementing the spirit and intent thereof.
Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU,
enable the OIL COMPANIES to continuously operate in compliance with legal requirements, within
the limited area resulting from the joint operations and the scale down program.
Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with the
provisions of this MOU.
Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and
green zones and shall exert all efforts at preventing future occupation or encroachment into these
areas by illegal settlers and other unauthorized parties.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution,
the Sanggunian declared that the MOU was effective only for a period of six months starting July 25,
2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special
business permits to the oil companies. Resolution No. 13, s. 2003 also called for a reassessment of
the ordinance.10
Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that
Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the
terminals of the oil companies.11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and
order the removal of the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.12
Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the
Local Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals of the oil companies. Instead, he has allowed them to stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the
resolutions.14 However, he also confusingly argues that the ordinance and MOU are not inconsistent
with each other and that the latter has not amended the former. He insists that the ordinance
remains valid and in full force and effect and that the MOU did not in any way prevent him from
enforcing and implementing it. He maintains that the MOU should be considered as a mere guideline
for its full implementation.15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any
tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which
the law specifically enjoins as a duty resulting from an office, trust or station. Mandamus is an
extraordinary writ that is employed to compel the performance, when refused, of a ministerial duty
that is already imposed on the respondent and there is no other plain, speedy and adequate remedy
in the ordinary course of law. The petitioner should have a well-defined, clear and certain legal right
to the performance of the act and it must be the clear and imperative duty of respondent to do the
act required to be done.17
Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal function of the writ
of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is neither the
office nor the aim of the writ to secure a legal right but to implement that which is already
established. Unless the right to the relief sought is unclouded, mandamus will not issue.18
To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has
its offices in Manila. It claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any
specific interest.19 Besides, as residents of Manila, petitioners have a direct interest in the
enforcement of the city’s ordinances. Respondent never questioned the right of petitioners to
institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor,
to "enforce all laws and ordinances relative to the governance of the city.">20 One of these is
Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce Ordinance No.
8027 as long as it has not been repealed by the Sanggunian or annulled by the courts.21 He has no other
choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing the duty. The reason for this is obvious. It might seriously
hinder the transaction of public business if these officers were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing duties upon
them and which have not judicially been declared unconstitutional. Officers of the government from the highest to the lowest are creatures of the law and are bound to obey
it.23
The question now is whether the MOU entered into by respondent with the oil companies and the subsequent resolutions passed by the Sanggunian have made the
respondent’s duty to enforce Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised by petitioners, that is, whether the MOU and
Resolution Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend or repeal Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the resolutions which ratified it and made it binding on the
City of Manila expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing Ordinance No.
8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of the
World Trade Center in New York City. The objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely occur in case of a
terrorist attack25 on the Pandacan Terminals. No reason exists why such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance No.
8027.
SO ORDERED.
RENATO C. CORONA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
(On official leave)

ANGELINA SANDOVAL-GUTIERREZ
ADOLFO S. AZCUNA
Associate Justice
Asscociate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
G.R. No. 166494 June 29, 2007
CARLOS SUPERDRUG CORP., doing business under the name and style "Carlos Superdrug,"
ELSIE M. CANO, doing business under the name and style "Advance Drug," Dr. SIMPLICIO L.
YAP, JR., doing business under the name and style "City Pharmacy," MELVIN S. DELA
SERNA, doing business under the name and style "Botica dela Serna," and LEYTE SERV-
WELL CORP., doing business under the name and style "Leyte Serv-Well
Drugstore," petitioners,
vs.
DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD), DEPARTMENT OF
HEALTH (DOH), DEPARTMENT OF FINANCE (DOF), DEPARTMENT OF JUSTICE (DOJ), and
DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT (DILG), respondents.
DECISION
AZCUNA, J.:
This is a petition1 for Prohibition with Prayer for Preliminary Injunction assailing the constitutionality
of Section 4(a) of Republic Act (R.A.) No. 9257,2 otherwise known as the "Expanded Senior Citizens
Act of 2003."
Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.
Public respondents, on the other hand, include the Department of Social Welfare and Development
(DSWD), the Department of Health (DOH), the Department of Finance (DOF), the Department of
Justice (DOJ), and the Department of Interior and Local Government (DILG) which have been
specifically tasked to monitor the drugstores’ compliance with the law; promulgate the implementing
rules and regulations for the effective implementation of the law; and prosecute and revoke the
licenses of erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432,3 was signed into law by President
Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a) of the Act states:
SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:
...
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: 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. Provided, further, That the total amount of the claimed tax deduction net of
value added tax if applicable, 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, as amended.4
On May 28, 2004, the DSWD approved and adopted the Implementing Rules and Regulations of
R.A. No. 9257, Rule VI, Article 8 of which states:
Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts granted
under Rule V, Section 4 – Discounts for Establishments;5 Section 9, Medical and Dental Services in
Private Facilities[,]6 and Sections 107 and 118 – Air, Sea and Land Transportation as tax deduction
based on the net cost of the goods sold or services rendered. 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; Provided, further, That the total amount of the claimed tax deduction net of value added tax
if applicable, 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, as amended;
Provided, finally, 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).9
On July 10, 2004, in reference to the query of the Drug Stores Association of the Philippines (DSAP)
concerning the meaning of a tax deduction under the Expanded Senior Citizens Act, the DOF,
through Director IV Ma. Lourdes B. Recente, clarified as follows:
1) The difference between the Tax Credit (under the Old Senior Citizens Act) and Tax Deduction
(under the Expanded Senior Citizens Act).
1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act) grants twenty percent
(20%) discount from all establishments relative to the utilization of transportation services, hotels and
similar lodging establishment, restaurants and recreation centers and purchase of medicines
anywhere in the country, the costs of which may be claimed by the private establishments
concerned as tax credit.
Effectively, a tax credit is a peso-for-peso deduction from a taxpayer’s tax liability due to the
government of the amount of discounts such establishment has granted to a senior citizen. The
establishment recovers the full amount of discount given to a senior citizen and hence, the
government shoulders 100% of the discounts granted.
It must be noted, however, that conceptually, a tax credit scheme under the Philippine tax system,
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. The tax credit scheme under R.A. No. 7432 is,
therefore, inapplicable since no tax payments have previously occurred.
1.2. The provision under R.A. No. 9257, on the other hand, provides that the establishment
concerned may claim the discounts under Section 4(a), (f), (g) and (h) as tax deduction from gross
income, based on the net cost of goods sold or services rendered.
Under this scheme, the establishment concerned is allowed to deduct from gross income, in
computing for its tax liability, the amount of discounts granted to senior citizens. Effectively, 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. This will be an amount equivalent to 32% of the
twenty percent (20%) discounts so granted. The establishment shoulders the remaining portion of
the granted discounts.
It may be necessary to note that while the burden on [the] government is slightly diminished in terms
of its percentage share on the discounts granted to senior citizens, the number of potential
establishments that may claim tax deductions, have however, been broadened. Aside from the
establishments that may claim tax credits under the old law, more establishments were added under
the new law such as: establishments providing medical and dental services, diagnostic and
laboratory services, including professional fees of attending doctors in all private hospitals and
medical facilities, operators of domestic air and sea transport services, public railways and skyways
and bus transport services.
A simple illustration might help amplify the points discussed above, as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme, the tax deduction on discounts was subtracted

from Net Sales together with other deductions which are considered as operating expenses before
the Tax Due was computed based on the Net Taxable Income. On the other hand, under a tax
credit scheme, the amount of discounts which is the tax credit item, was deducted directly from the
tax due amount.10
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or the Policies and Guidelines
to Implement the Relevant Provisions of Republic Act 9257, otherwise known as the "Expanded
Senior Citizens Act of 2003"11 was issued by the DOH, providing the grant of twenty percent (20%)
discount in the purchase of unbranded generic medicines from all establishments dispensing
medicines for the exclusive use of the senior citizens.
On November 12, 2004, the DOH issued Administrative Order No 17712 amending A.O. No. 171.
Under A.O. No. 177, the twenty percent discount shall not be limited to the purchase of unbranded
generic medicines only, but shall extend to both prescription and non-prescription medicines whether
branded or generic. Thus, it stated that "[t]he grant of twenty percent (20%) discount shall be
provided in the purchase of medicines from all establishments dispensing medicines for the
exclusive use of the senior citizens."
Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior Citizens Act based on
the following grounds:13
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution which provides that
private property shall not be taken for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our Constitution which states
that "no person shall be deprived of life, liberty or property without due process of law, nor shall any
person be denied of the equal protection of the laws;" and
3) The 20% discount on medicines violates the constitutional guarantee in Article XIII, Section 11
that makes "essential goods, health and other social services available to all people at affordable
cost."14
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of
private property. 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; and
2) the law failed to provide a scheme whereby drugstores will be justly compensated for the
discount.
Examining petitioners’ arguments, 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.
Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse
petitioners for the discount privilege accorded to senior citizens. This is because the discount is
treated as a deduction, a tax-deductible expense that is subtracted from the gross income and
results in a lower taxable income. Stated otherwise, it is an amount that is allowed by law15 to reduce
the income prior to the application of the tax rate to compute the amount of tax which is due.16 Being
a tax deduction, the discount does not reduce taxes owed on a peso for peso basis but merely offers
a fractional reduction in taxes owed.
the gross sales of the private establishments, were it not for R.A. No. 9257.
The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit.17 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 taker’s gain but the owner’s 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.18
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
meet the definition of just compensation.19
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.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-being as
the State considers them an integral part of our society.20
The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.
Thus, the Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. – Pursuant to Article XV, Section 4 of the
...
(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.21
discount as a tax deduction.
assuring the greatest benefits. 22 Accordingly, it has been described as "the most essential, insistent
and the least limitable of powers, extending as it does to all the great public needs."23 It is "[t]he
power vested in the legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same."24
must bow to the primacy of police power because property rights, though sheltered by due process,
must yield to general welfare.25
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.26
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.27
In treating the discount as a tax deduction, petitioners insist that they will incur losses because,
referring to the DOF Opinion, for every ₱1.00 senior citizen discount that petitioners would give,
₱0.68 will be shouldered by them as only ₱0.32 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
₱37.57 per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount to senior
citizens or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which
translates to a loss from capital of ₱5.89 per tablet. Even if the government will allow a tax
deduction, only ₱2.53 per tablet will be refunded and not the full amount of the discount which is
₱7.92. In short, only 32% of the 20% discount will be reimbursed to the drugstores.28
Petitioners’ computation is flawed. For purposes of reimbursement, the law states that the cost of the
discount shall be deducted from gross income,29 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, showing an
accounting of petitioners’ 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.
reform and the regulation of contracts and public utilities, 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.30
Undeniably, the success of the senior citizens program rests largely on the support imparted by
petitioners and the other private establishments concerned. This being the case, the means
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.31
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
(On Official Leave) (On Leave)

*LEONARDO A. QUISUMBING **CONSUELO YNARES-SANTIAGO
ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO
MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
CONCHITA CARPIO MORALES DANTE O. TINGA
MINITA V. CHICO-NAZARIO CANCIO C. GARCIA
PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Court.
REYNATO S. PUNO
Chief Justice
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.
DECISION
DEL CASTILLO, J.:
When a party challeges the constitutionality of a law, the burden of proof rests upon him.
Before us is a Petition for Prohibition under Rule 65 of the Rules of Court filed by petitioners Manila
2
Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged in the
business of providing funeral and burial services, against public respondents Secretaries of the
Department of Social Welfare and Development (DSWD) and the Department of Finance (DOF).
Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432, as amended by
3
RA 9257, and the implementing rules and regulations issued by the DSWD and DOF insofar as
4
these allow business establishments to claim the 20% discount given to senior citizens as a tax
deduction.
Factual Antecedents
On April 23, 1992, RA 7432 was passed into law, granting senior citizens the following privileges:
SECTION 4. Privileges for the Senior Citizens. – 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, hotels and similar lodging establishment[s], restaurants and
recreation centers and purchase of medicine anywhere in the country: Provided, That private
establishments may claim the cost as tax credit;
b) a minimum of twenty percent (20%) discount on admission fees charged by theaters,

cinema houses and concert halls, circuses, carnivals and other similar places of culture,
leisure, and amusement;
c) exemption from the payment of individual income taxes: Provided, That their annual
taxable income does not exceed the property level as determined by the National Economic
and Development Authority (NEDA) for that year;
d) exemption from training fees for socioeconomic programs undertaken by the OSCA as
part of its work;
e) free medical and dental services in government establishment[s] anywhere in the country,
subject to guidelines to be issued by the Department of Health, the Government Service
Insurance System and the Social Security System;
f) to the extent practicable and feasible, the continuance of the same benefits and privileges
given by the Government Service Insurance System (GSIS), Social Security System (SSS)
and PAG-IBIG, as the case may be, as are enjoyed by those in actual service.
On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432.
Sections 2(i) and 4 of RR No. 02-94 provide:
Sec. 2. DEFINITIONS. – For purposes of these regulations: i. Tax Credit – refers to the amount
representing the 20% discount granted to a qualified senior citizen by all establishments relative to
their utilization of transportation services, hotels and similar lodging establishments, restaurants,
drugstores, recreation centers, theaters, cinema houses, concert halls, circuses, carnivals and other
similar places of culture, leisure and amusement, 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. x x x x Sec. 4. RECORDING/BOOKKEEPING
REQUIREMENTS FOR PRIVATE ESTABLISHMENTS. – Private establishments, i.e., transport
services, hotels and similar lodging establishments, restaurants, recreation centers, drugstores,
theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture[,]
leisure and amusement, giving 20% discounts to qualified senior citizens are required to keep
separate and accurate record[s] of sales made to senior citizens, which shall include the name,
identification number, gross sales/receipts, discounts, dates of transactions and invoice number for
every transaction. 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.
In Commissioner of Internal Revenue v. Central Luzon Drug Corporation, the Court declared
5
Sections 2(i) and 4 of RR No. 02-94 as erroneous because these contravene RA 7432, thus: 6
RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts
they grant. In turn, the Implementing Rules and Regulations, issued pursuant thereto, provide the
procedures for its availment. To deny such credit, despite the plain mandate of the law and the
regulations carrying out that mandate, is indefensible. First, the definition given by petitioner is
erroneous. 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 value-added tax or other percentage tax purposes." In ordinary business language,
the tax credit represents the amount of such discount. However, the manner by which the discount
shall be credited against taxes has not been clarified by the revenue regulations. By ordinary
acceptation, a discount is an "abatement or reduction made from the gross amount or value of
anything." To be more precise, it is in business parlance "a deduction or lowering of an amount of
money;" or "a reduction from the full amount or value of something, especially a price." In business
there are many kinds of discount, the most common of which is that affecting the income statement
or financial report upon which the income tax is based.
xxxx
Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent
discount deductible from gross income for income tax purposes, or from gross sales for VAT or other
percentage tax purposes. In effect, the tax credit benefit under RA 7432 is related to a sales
discount. This contrived definition is improper, 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, even for purposes of computing the income tax. When the law says that the cost of the
discount may be claimed as a tax credit, it means that the amount — when claimed — shall be
treated as a reduction from any tax liability, plain and simple. The option to avail of the tax credit
benefit depends upon the existence of a tax liability, but to limit the benefit to a sales discount —
which is not even identical to the 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.
Laws Not Amended by Regulations
Second, the law cannot be amended by a mere regulation. In fact, a regulation that "operates to
create a rule out of harmony with the statute is a mere nullity;" it cannot prevail. 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." In the scheme of judicial tax administration, the
need for certainty and predictability in the implementation of tax laws is crucial. Our tax authorities fill
in the details that "Congress may not have the opportunity or competence to provide." The
regulations these authorities issue are relied upon by taxpayers, who are certain that these will be
followed by the courts. Courts, however, will not uphold these authorities’ interpretations when
clearly absurd, erroneous or improper. In the present case, the tax authorities have given the term
tax credit in Sections 2.i and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides.
Their interpretation has muddled x x x the intent of Congress in granting a mere discount privilege,
not a sales discount. The administrative agency issuing these regulations may not enlarge, alter or
restrict the provisions of the law it administers; it cannot engraft additional requirements not
contemplated by the legislature.
In case of conflict, the law must prevail. A "regulation adopted pursuant to law is law." Conversely, a
regulation or any portion thereof not adopted pursuant to law is no law and has neither the force nor
the effect of law.
7
On February 26, 2004, RA 9257 amended certain provisions of RA 7432, to wit:

8
xxxx
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based
on the net cost of the goods sold or services rendered: 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.
Provided, further, That the total amount of the claimed tax deduction net of value added tax if
applicable, 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, as amended.
To implement the tax provisions of RA 9257, the Secretary of Finance issued RR No. 4-2006, the
pertinent provision of which provides:
SEC. 8. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM

GROSS INCOME. – 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 discount from gross income subject to the following conditions:
(1) Only that portion of the gross sales EXCLUSIVELY USED, CONSUMED OR ENJOYED
BY THE SENIOR CITIZEN shall be eligible for the deductible sales discount.
(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.
(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, net of value added tax, if
applicable, for income tax purposes, and from gross sales or gross receipts of the business
enterprise concerned, for VAT or other percentage tax purposes.
(4) The discount can only be allowed as deduction from gross income for the same taxable
year that the discount is granted.
(5) The business establishment giving sales discounts to qualified senior citizens is required
to keep separate and accurate record[s] of sales, which shall include the name of the senior
citizen, TIN, OSCA ID, gross sales/receipts, sales discount granted, [date] of [transaction]
and invoice number for every sale transaction to senior citizen.
(6) Only the following business establishments which granted sales discount to senior
citizens on their sale of goods and/or services may claim the said discount granted as
deduction from gross income, namely:
xxxx
(i) Funeral parlors and similar establishments – The beneficiary or any person who shall shoulder the
funeral and burial expenses of the deceased senior citizen shall claim the discount, such as casket,
embalmment, cremation cost and other related services for the senior citizen upon payment and
presentation of [his] death certificate.
The DSWD likewise issued its own Rules and Regulations Implementing RA 9257, to wit:
RULE VI DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS
Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts granted
under Rule V, Section 4 – Discounts for Establishments, Section 9, Medical and Dental Services in
Private Facilities and Sections 10 and 11 – Air, Sea and Land Transportation as tax deduction based
on the net cost of the goods sold or services rendered.
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; Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable, 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, as amended; Provided, finally, 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).
Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying that
Section 4 of RA 7432, as amended by RA 9257, and the implementing rules and regulations issued
by the DSWD and the DOF be declared unconstitutional insofar as these allow business
establishments to claim the 20% discount given to senior citizens as a tax deduction; that the DSWD
and the DOF be prohibited from enforcing the same; and that the tax credit treatment of the 20%
discount under the former Section 4 (a) of RA 7432 be reinstated.
Issues
Petitioners raise the following issues:
A.
WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY.

B.
WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES
AND REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%)
DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE
ESTABLISHMENTS, ARE INVALID AND UNCONSTITUTIONAL. 9
Petitioners’ 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. 10
Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution,
which provides that: "[p]rivate property shall not be taken for public use without just compensation." 11
In support of their position, petitioners cite Central Luzon Drug Corporation, where it was ruled that
12
the 20% discount privilege constitutes taking of private property for public use which requires the
payment of just compensation, and Carlos Superdrug Corporation v. Department of Social Welfare
13
and Development, where it was acknowledged that the tax deduction scheme does not meet the
14
definition of just compensation.15
Petitioners likewise seek a reversal of the ruling in Carlos Superdrug Corporation that the tax
16
deduction scheme adopted by the government is justified by police power. 17
They assert that "[a]lthough both police power and the power of eminent domain have the general
welfare for their object, there are still traditional distinctions between the two" and that "eminent
18
domain cannot be made less supreme than police power." 19
Petitioners further claim that the legislature, in amending RA 7432, relied on an erroneous
contemporaneous construction that prior payment of taxes is required for tax credit. 20
Petitioners also contend that the tax deduction scheme violates Article XV, Section 4 and Article 21
XIII, Section 11 of the Constitution because it shifts the State’s constitutional mandate or duty of
22
improving the welfare of the elderly to the private sector.23
Under the tax deduction scheme, the private sector shoulders 65% of the discount because only
35% of it is actually returned by the government.
24 25
Consequently, the implementation of the tax deduction scheme prescribed under Section 4 of RA
9257 affects the businesses of petitioners. 26
Thus, there exists an actual case or controversy of transcendental importance which deserves
judicious disposition on the merits by the highest court of the land. 27
Respondents’ Arguments
Respondents, on the other hand, question the filing of the instant Petition directly with the Supreme
Court as this disregards the hierarchy of courts.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. 29
As to the constitutionality of RA 9257 and its implementing rules and regulations, respondents
contend that petitioners failed to overturn its presumption of constitutionality.30
More important, respondents maintain that the tax deduction scheme is a legitimate exercise of the
State’s police power. 31
Our Ruling
The Petition lacks merit.
There exists an actual case or controversy.
We shall first resolve the procedural issue. 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."32
In this case, 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.
Respondents, however, oppose the Petition on the ground that there is no actual case or
controversy. We do not agree with respondents. 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."
33
The Petition must therefore show that "the governmental act being challenged has a direct adverse
effect on the individual challenging it."
34
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.
The validity of the 20% senior citizen discount and tax deduction scheme under RA 9257, as
an exercise of police power of the State, has already been settled in Carlos Superdrug
Corporation.
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. If it is
police power, no just compensation is warranted. But if it is eminent domain, the tax deduction
scheme is unconstitutional because it is not a peso for peso reimbursement of the 20% discount
given to senior citizens. Thus, it constitutes taking of private property without payment of just
compensation. At the outset, we note that this question has been settled in Carlos Superdrug
Corporation. 35
In that case, we ruled:
a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded
medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly compensated
for the discount. Examining petitioners’ arguments, 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. Based on the afore-stated DOF
Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated
otherwise, 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. Being a tax deduction, the discount does not
reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
the gross sales of the private establishments, were it not for R.A. No. 9257. 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 taker’s gain but the
owner’s 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. The Senior Citizens Act was enacted primarily to maximize the contribution of
senior citizens to nation-building, and to grant benefits and privileges to them for their improvement
and well-being as the State considers them an integral part of our society. The priority given to
senior citizens finds its basis in the Constitution as set forth in the law itself. Thus, the Act provides:
1âwphi1
SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:
SECTION 1. Declaration of Policies and Objectives. — Pursuant to Article XV, Section 4 of the
x x x x x x x x x
(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.
discount as a tax deduction. The law is a legitimate exercise of police power which, similar to the
power of eminent domain, has general welfare for its object. Police power is not capable of an exact
definition, 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, thus assuring the greatest benefits. Accordingly, it has been described as "the most
essential, insistent and the least limitable of powers, extending as it does to all the great public
needs." It is "[t]he power vested in the legislature by the constitution to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and 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. 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 ₱1.00 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 ₱37.57
per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount to senior citizens
or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which translates to a
loss from capital of ₱5.89 per tablet. Even if the government will allow a tax deduction, only ₱2.53
per tablet will be refunded and not the full amount of the discount which is ₱7.92. In short, only 32%
of the 20% discount will be reimbursed to the drugstores. Petitioners’ computation is flawed. For
purposes of 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, showing an accounting of petitioners' 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.
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 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 being the case, the means
objective of the law, is reasonably and directly related. Without sufficient proof that Section 4 (a) of
unconscionably detrimental to petitioners, the Court will refrain from quashing a legislative
act. (Bold in the original; underline supplied)
36
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, modify or abandon the ruling in Carlos
Superdrug Corporation.
Petitioners argue that we have previously ruled in Central Luzon Drug Corporation that the 20%
37
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 which38
allegedly reversed the ruling in Central Luzon Drug Corporation. 39
They also point out that Carlos Superdrug Corporation recognized that the tax deduction scheme
40
under the assailed law does not provide for sufficient just compensation. We agree with petitioners’
observation that there are statements in Central Luzon Drug Corporation describing the 20%
41
discount as an exercise of the power of eminent domain, viz.:
[T]he privilege enjoyed by senior citizens does not come directly from the State, but rather from the
private establishments concerned. Accordingly, 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. The concept of public use is no longer confined to the traditional notion of use by the
public, but held synonymous with public interest, public benefit, public welfare, and public
convenience. The discount privilege to which our senior citizens are entitled is actually a benefit
enjoyed by the general public to which these citizens belong. The discounts given would have
entered the coffers and formed part of the gross sales of the private establishments concerned, were
it not for RA 7432. The permanent reduction in their total revenues is a forced subsidy corresponding
to the taking of private property for public use or benefit. As a result of the 20 percent discount
imposed by RA 7432, respondent becomes entitled to a just compensation. This term refers not only
to the issuance of a tax credit certificate indicating the correct amount of the discounts given, but
also to the promptness in its release. Equivalent to the payment of property taken by the State, such
issuance — when not done within a reasonable time from the grant of the discounts — cannot be
considered as just compensation. In effect, respondent is made to suffer the consequences of being
immediately deprived of its revenues while awaiting actual receipt, through the certificate, of the
equivalent amount it needs to cope with the reduction in its revenues. Besides, the taxation power
can also be used as an implement for the exercise of the power of eminent domain. Tax measures
are but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for a public
purpose." In recent years, the power to tax has indeed become a most effective tool to realize social
justice, public welfare, and the equitable distribution of wealth. While it is a declared commitment
under Section 1 of RA 7432, social justice "cannot be invoked to trample on the rights of property
owners who under our Constitution and laws are also entitled to protection. 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." For this reason, a just compensation for income that is taken
away from respondent becomes necessary. It is in the tax credit that our legislators find support to
realize social justice, and no administrative body can alter that fact. To put it differently, a private
establishment that merely breaks even — without the discounts yet — will surely start to incur losses
because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if
all its sales come from retail purchases by senior citizens. Aside from the observation we have
already raised earlier, 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. Operating at a loss through no
1âwphi1
fault of its own, it will realize that the tax credit limitation under RR 2-94 is inutile, if not improper.
Worse, profit-generating businesses will be put in a better position if they avail themselves of tax
credits denied those that are losing, because no taxes are due from the latter. (Italics in the original;
42
emphasis supplied)
The above was partly incorporated in our ruling in Carlos Superdrug Corporation when we stated
43
preliminarily that—
a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded
medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly compensated
for the discount. Examining petitioners’ arguments, 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. Based on the afore-stated DOF
Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated
otherwise, 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. Being a tax deduction, the discount does not
reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
the gross sales of the private establishments, were it not for R.A. No. 9257. 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 taker’s gain but the
owner’s 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
This, notwithstanding, we went on to rule in Carlos Superdrug Corporation that the 20% discount
45
and tax deduction scheme is a valid exercise of the police power of the State. The present case,
thus, affords an opportunity for us to clarify the above-quoted statements in Central Luzon Drug
Corporation and Carlos Superdrug Corporation.
46 47
First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug
Corporation is obiter dicta and, thus, not binding precedent. As stated earlier, in Central Luzon Drug
48
Corporation, we ruled that the BIR acted ultra vires when it effectively treated the 20% discount as a
49
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
50
Corporation, this referred only to preliminary matters. A fair reading of Carlos Superdrug
51
Corporation would show that we categorically ruled therein that the 20% discount is a valid exercise
52
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
53
reason to overturn, modify or abandon it. We also note that petitioners’ arguments are a mere
reiteration of those raised and resolved in Carlos Superdrug Corporation. Thus, we sustain Carlos
54
Superdrug Corporation. 55
Nonetheless, we deem it proper, in what follows, to amplify our explanation in Carlos Superdrug
Corporation as to why the 20% discount is a valid exercise of police power and why it may not,
56
under the specific circumstances of this case, be considered as an exercise of the power of eminent
domain contrary to the obiter in Central Luzon Drug Corporation. 57
Police power versus eminent domain.
Police power is the inherent power of the State to regulate or to restrain the use of liberty and
property for public welfare. 58
The only limitation is that the restriction imposed should be reasonable, not oppressive. 59
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. 60
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."61
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." 62
Eminent domain, on the other hand, is the inherent power of the State to take or appropriate private
property for public use. 63
The Constitution, however, requires that private property shall not be taken without due process of
law and the payment of just compensation. 64
Traditional distinctions exist between police power and eminent domain. In the exercise of police
power, a property right is impaired by regulation, or the use of property is merely prohibited,
65
regulated or restricted to promote public welfare. In such cases, there is no compensable taking,
66
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
67
the health, morals or safety of the community (e.g., dividing a city’s territory into residential and
industrial areas). 68
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. 69
On the other hand, in the exercise of the power of eminent domain, property interests are
appropriated and applied to some public purpose which necessitates the payment of just
compensation therefor. Normally, the title to and possession of the property are transferred to the
expropriating authority. 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. However, 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. 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 or the compelled interconnection of the telephone system between
71
the government and a private company. 72
In these cases, although the private property owner is not divested of ownership or possession,
payment of just compensation is warranted because of the burden placed on the property for the use
or benefit of the public.
The 20% senior citizen discount is an exercise of police power.
It may not always be easy to determine whether a challenged governmental act is an exercise of
police power or eminent domain. 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
73 74
compensation in eminent domain evinces that these are not static concepts. Because of the
75
exigencies of rapidly changing times, 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. The judicious approach, therefore, is to
look at the nature and effects of the challenged governmental act and decide, on the basis thereof,
whether the act is the exercise of police power or eminent domain. Thus, 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. The 20% discount is intended to improve the welfare of senior citizens who, at their age, are
less likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need
of subsidy in purchasing basic commodities. 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. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law. As to its nature and effects, 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, senior citizens, for which the Constitution affords preferential
concern. 76
In turn, this affects the amount of profits or income/gross sales that a private establishment can
derive from senior citizens. In other words, the subject regulation affects the pricing, and, hence, the
profitability of a private establishment. However, it does not purport to appropriate or burden specific
properties, used in the operation or conduct of the business of private establishments, for the use or
benefit of the public, or senior citizens for that matter, but merely regulates the pricing of goods and
services relative to, and the amount of profits or income/gross sales that such private establishments
may derive from, senior citizens. The subject regulation may be said to be similar to, but with
substantial distinctions from, price control or rate of return on investment control laws which are
traditionally regarded as police power measures. 77
These laws generally 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 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, and (2) the discount does not apply to all customers of a given
establishment but only to the class of senior citizens. Nonetheless, to the degree material to the
resolution of this case, the 20% discount may be properly viewed as belonging to the category of
price regulatory measures which affect the profitability of establishments subjected thereto. On its
face, therefore, the subject regulation is a police power measure. The obiter in Central Luzon Drug
Corporation, however, describes the 20% discount as an exercise of the power of eminent domain
78
and the tax credit, under the previous law, equivalent to the amount of discount given as the just
compensation therefor. 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, and (2) the permanent
reduction in total revenues is a forced subsidy corresponding to the taking of private property for
public use or benefit. The flaw in this reasoning is in its premise. It presupposes that the subject
regulation, which impacts the pricing and, hence, the profitability of a private establishment,
automatically amounts to a deprivation of property without due process of law. If this were so, then
all price and rate of return on investment control laws would have to be invalidated because they
impact, at some level, the regulated establishment’s profits or income/gross sales, yet there is no
provision for payment of just compensation. It would also mean that overnment cannot set price or
rate of return on investment limits, which reduce the profits or income/gross sales of private
establishments, if no just compensation is paid even if the measure is not confiscatory. The obiter is,
thus, at odds with the settled octrine that the State can employ police power measures to regulate
the pricing of goods and services, and, hence, the profitability of business establishments in order to
pursue legitimate State objectives for the common good, provided that the regulation does not go too
far as to amount to "taking."
79
In City of Manila v. Laguio, Jr., we recognized that— x x x a taking also could be found if
80
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and
compensation to support the act. While property may be regulated to a certain extent, if regulation
goes too far it will be recognized as a taking. 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 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. 81
The impact or effect of a regulation, such as the one under consideration, must, thus, be determined
on a case-to-case basis. Whether that line between permissible regulation under police power and
"taking" under eminent domain has been crossed must, under the specific circumstances of this
case, be subject to proof and the one assailing the constitutionality of the regulation carries the
heavy burden of proving that the measure is unreasonable, oppressive or confiscatory. 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." 82
The 20% senior citizen discount has not been shown to be unreasonable, oppressive or
confiscatory.
In Alalayan v. National Power Corporation, petitioners, who were franchise holders of electric
83
plants, 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. In rejecting their plea, we ruled that,
in an earlier case, 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 when we ruled that
85
petitioners therein failed to prove that the 20% discount is arbitrary, oppressive or confiscatory. We
noted that no evidence, 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. In the case at bar, petitioners
proceeded with a hypothetical computation of the alleged loss that they will suffer similar to what the
petitioners in Carlos Superdrug Corporation did. Petitioners went directly to this Court without first
86
establishing the factual bases of their claims. Hence, the present recourse must, likewise, fail.
Because all laws enjoy the presumption of constitutionality, courts will uphold a law’s validity if any
set of facts may be conceived to sustain it.
87
On its face, we find that there are at least two conceivable bases to sustain the subject regulation’s
validity absent clear and convincing proof that it is unreasonable, oppressive or confiscatory.
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. Concurrently, Congress may have, likewise, legitimately
concluded that the establishments, which will be required to extend the 20% discount, 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, can be recouped through higher mark-ups
or from other products not subject of discounts. As a result, the discounts resulting from sales to
senior citizens will not be confiscatory or unduly oppressive. In sum, we sustain our ruling in Carlos
Superdrug Corporation that the 20% senior citizen discount and tax deduction scheme are valid
88
exercises of police power of the State absent a clear showing that it is arbitrary, oppressive or
confiscatory.
Conclusion
In closing, we note that petitioners hypothesize, consistent with our previous ratiocinations, that the
discount will force establishments to raise their prices in order to compensate for its impact on
overall profits or income/gross sales. The general public, or those not belonging to the senior citizen
class, are, thus, made to effectively shoulder the subsidy for senior citizens. This, in petitioners’
view, is unfair.
As already mentioned, Congress may be reasonably assumed to have foreseen this eventuality. But,
more importantly, this goes into the wisdom, efficacy and expediency of the subject law which is not
proper for judicial review. In a way, this law pursues its social equity 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. Verily, Congress must be given sufficient leeway in formulating
welfare legislations given the enormous challenges that the government faces relative to, among
others, 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. In the process,
the individual, who enjoys the rights, benefits and privileges of living in a democratic polity, must
bear his share in supporting measures intended for the common good. This is only fair. In fine,
without the requisite showing of a clear and unequivocal breach of the Constitution, the validity of the
assailed law must be sustained.
Refutation of the Dissent
The main points of Justice Carpio’s Dissent may be summarized as follows: (1) the discussion on
eminent domain in Central Luzon Drug Corporation is not obiter dicta ; (2) allowable taking, in police
89
power, is limited to property that is destroyed or placed outside the commerce of man for public
welfare; (3) the amount of mandatory discount is private property within the ambit of Article III,
Section 9 of the Constitution; and (4) the permanent reduction in a private establishment’s total
90
revenue, arising from the mandatory discount, is a taking of private property for public use or benefit,
hence, an exercise of the power of eminent domain requiring the payment of just compensation. I
We maintain that the discussion on eminent domain in Central Luzon Drug Corporation is obiter
91
dicta. As previously discussed, in Central Luzon Drug Corporation, the BIR, pursuant to Sections 2.i
92
and 4 of RR No. 2-94, treated the senior citizen discount in the previous law, RA 7432, as a tax
deduction instead of a tax credit despite the clear provision in that law which stated –
a) The grant of twenty percent (20%) discount from all establishments relative to
utilization of transportation services, hotels and similar lodging establishment,
restaurants and recreation centers and purchase of medicines anywhere in the
country: Provided, That private establishments may claim the cost as tax credit;
(Emphasis supplied)
Thus, the Court ruled that the subject revenue regulation violated the law, viz:
The 20 percent discount required by the law to be given to senior citizens is a tax credit, not merely
a tax deduction from the gross income or gross sale of the establishment concerned. A tax credit is
used by a private establishment only after the tax has been computed; a tax deduction, before the
tax is computed. RA 7432 unconditionally grants a tax credit to all covered entities. Thus, the
provisions of the revenue regulation that withdraw or modify such grant are void. Basic is the rule
that administrative regulations cannot amend or revoke the law. 93
As can be readily seen, the discussion on eminent domain was not necessary in order to arrive at
this conclusion. All that was needed was to point out that the revenue regulation contravened the law
which it sought to implement. And, precisely, this was done in Central Luzon Drug Corporation by94
comparing the wording of the previous law vis-à-vis the revenue regulation; employing the rules of
statutory construction; and applying the settled principle that a regulation cannot amend the law it
seeks to implement. A close reading of Central Luzon Drug Corporation would show that the Court
95
went on to state that the tax credit "can be deemed" as just compensation only to explain why the
previous law provides for a tax credit instead of a tax deduction. The Court surmised that the tax
credit was a form of just compensation given to the establishments covered by the 20% discount.
However, 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. Hence, the
discussion on eminent domain is obiter dicta.
A court, in resolving cases before it, may look into the possible purposes or reasons that impelled
the enactment of a particular statute or legal provision. However, statements made relative thereto
are not always necessary in resolving the actual controversies presented before it. This was the
case in Central Luzon Drug Corporation resulting in that unfortunate statement that the tax credit
96
"can be deemed" as just compensation. This, in turn, led to the erroneous conclusion, by deductive
reasoning, that the 20% discount is an exercise of the power of eminent domain. The Dissent
essentially adopts this theory and reasoning which, as will be shown below, is contrary to settled
principles in police power and eminent domain analysis. 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. Indeed, there is a whole class of police power measures which justify
the destruction of private property in order to preserve public health, morals, safety or welfare. As
earlier mentioned, 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. In such cases, no compensation is required.
However, 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. The minimum wage law, zoning
ordinances, price control laws, laws regulating the operation of motels and hotels, laws limiting the
working hours to eight, and the like would fall under this category. The examples cited by the
Dissent, likewise, fall under this category: Article 157 of the Labor Code, Sections 19 and 18 of the
Social Security Law, and Section 7 of the Pag-IBIG Fund Law. These laws merely regulate or, to use
the term of the Dissent, burden the conduct of the affairs of business establishments. In such cases,
payment of just compensation is not required because they fall within the sphere of permissible
police power measures. The senior citizen discount law falls under this latter category. III The
Dissent proceeds from the theory that the permanent reduction of profits or income/gross sales, due
to the 20% discount, is a "taking" of private property for public purpose without payment of just
compensation. At the outset, 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. 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. The central premise of the
Dissent’s argument that the 20% discount results in a permanent reduction in profits or income/gross
sales, or forces a business establishment to operate at a loss is, thus, wholly unsupported by
competent evidence. To be sure, the Court can invalidate a law which, on its face, is arbitrary,
oppressive or confiscatory. 97
But this is not the case here.
In the case at bar, evidence is indispensable before a determination of a constitutional violation can
be made because of the following reasons. First, the assailed law, by imposing the senior citizen
discount, does not take any of the properties used by a business establishment like, say, the land on
which a manufacturing plant is constructed or the equipment being used to produce goods or
services. Second, rather than taking specific properties of a business establishment, the senior
citizen discount law merely regulates the prices of the goods or services being sold to senior citizens
by mandating a 20% discount. Thus, if a product is sold at ₱10.00 to the general public, then it shall
be sold at ₱8.00 ( i.e., ₱10.00 less 20%) to senior citizens. Note that the law does not impose at
what specific price the product shall be sold, only that a 20% discount shall be given to senior
citizens based on the price set by the business establishment. A business establishment is, thus,
free to adjust the prices of the goods or services it provides to the general public. Accordingly, it can
increase the price of the above product to ₱20.00 but is required to sell it at ₱16.00 (i.e. , ₱20.00
less 20%) to senior citizens. Third, because the law impacts the prices of the goods or services of a
particular establishment relative to its sales to senior citizens, its profits or income/gross sales are
affected. The extent of the impact would, however, depend on the profit margin of the business
establishment on a particular good or service. If a product costs ₱5.00 to produce and is sold at
₱10.00, then the profit is ₱5.00 or a profit margin of 50%.
98 99 100 101
Under the assailed law, the aforesaid product would have to be sold at ₱8.00 to senior citizens yet
the business would still earn ₱3.00 or a 30% profit margin. On the other hand, if the product costs
102 103
₱9.00 to produce and is required to be sold at ₱8.00 to senior citizens, then the business would
experience a loss of ₱1.00. 104
But note that since not all customers of a business establishment are senior citizens, the business
establishment may continue to earn ₱1.00 from non-senior citizens which, in turn, can offset any
loss arising from sales to senior citizens.
Fourth, when the law imposes the 20% discount in favor of senior citizens, it does not prevent the
business establishment from revising its pricing strategy.
By revising its pricing strategy, a business establishment can recoup any reduction of profits or
income/gross sales which would otherwise arise from the giving of the 20% discount. To illustrate,
suppose A has two customers: X, a senior citizen, and Y, a non-senior citizen. Prior to the law, A
sells his products at ₱10.00 a piece to X and Y resulting in income/gross sales of ₱20.00 (₱10.00 +
₱10.00). With the passage of the law, A must now sell his product to X at ₱8.00 (i.e., ₱10.00 less
20%) so that his income/gross sales would be ₱18.00 (₱8.00 + ₱10.00) or lower by ₱2.00. To
prevent this from happening, A decides to increase the price of his products to ₱11.11 per piece.
Thus, he sells his product to X at ₱8.89 (i.e. , ₱11.11 less 20%) and to Y at ₱11.11. As a result, his
income/gross sales would still be ₱20.00 (₱8.89 + ₱11.11). The capacity, then, of business
105
establishments to revise their pricing strategy makes it possible for them not to suffer any reduction
in profits or income/gross sales, or, in the alternative, mitigate the reduction of their profits or
income/gross sales even after the passage of the law. In other words, business establishments have
the capacity to adjust their prices so that they may remain profitable even under the operation of the
assailed law.
The Dissent, however, 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. It was likewise suggested that if a company increases its prices, despite the
application of the 20% discount, the establishment becomes more profitable than it was before the
implementation of R.A. 7432. Such an economic justification is self-defeating, for more consumers
will suffer from the price increase than will benefit from the 20% discount. Even then, such ability to
increase prices cannot legally validate a violation of the eminent domain clause. 106
But, if it is possible that the business establishment, by adjusting its prices, will suffer no reduction in
its profits or income/gross sales (or suffer some reduction but continue to operate profitably) despite
giving the discount, what would be the basis to strike down the law? If it is possible that the business
establishment, by adjusting its prices, will not be unduly burdened, 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, by itself, a ground to declare it unconstitutional for this goes into the
wisdom and expediency of the law.
The cost of most, if not all, regulatory measures of the government on business establishments is
ultimately passed on to the consumers but that, by itself, does not justify the wholesale nullification
of these measures. 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. 107
All persons may be burdened by regulatory measures intended for the common good or to serve
some important governmental interest, such as protecting or improving the welfare of a special class
of people for which the Constitution affords preferential concern. Indubitably, the one assailing the
law has the heavy burden of proving that the regulation is unreasonable, oppressive or confiscatory,
or has gone "too far" as to amount to a "taking." Yet, here, the Dissent would have this Court nullify
the law without any proof of such nature.
Further, 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 not within our power or
competence to judge which scheme is more or less burdensome to business establishments or the
consuming public and, thereafter, to choose which scheme the State should use or pursue. 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 showing, as here, that the subject regulation has transgressed
constitutional limitations. Unavoidably, 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), and not all private establishments make a 20% profit margin (which conversely implies that
108
there are those who make more and, thus, would not be greatly affected by this regulation). 109
In fine, because of the possible scenarios discussed above, we cannot assume that the 20%
discount results in a permanent reduction in profits or income/gross sales, much less that business
establishments are forced to operate at a loss under the assailed law. And, even if we gratuitously
assume that the 20% discount results in some degree of reduction in profits or income/gross sales,
we cannot assume that such reduction is arbitrary, oppressive or confiscatory. To repeat, there is no
actual proof to back up this claim, 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
law uniformly applies to all business establishments covered thereunder. There is, therefore, no
unjust discrimination as the aforesaid business establishments are faced with the same constraints.
The necessity of proof is all the more pertinent in this case because, as similarly observed by Justice
Velasco in his Concurring Opinion, the law has been in operation for over nine years now. However,
the grim picture painted by petitioners on the unconscionable losses to be indiscriminately suffered
by business establishments, which should have led to the closure of numerous business
establishments, has not come to pass. Verily, we cannot invalidate the assailed law based on
assumptions and conjectures. Without adequate proof, the presumption of constitutionality must
prevail. IV At this juncture, we note that the Dissent modified its original arguments by including a
new paragraph, to wit:
Section 9, Article III of the 1987 Constitution speaks of private property without any distinction. 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, donated,
purchased, mortgaged, or as in this case, part of the gross sales of private establishments. They are
all private property and any taking should be attended by corresponding payment of just
compensation. The 20% discount granted to senior citizens belong to private establishments,
whether these establishments make a profit or suffer a loss. In fact, the 20% discount applies to non-
profit establishments like country, social, or golf clubs which are open to the public and not only for
exclusive membership. The issue of profit or loss to the establishments is immaterial. 110
Two things may be said of this argument. First, it contradicts the rest of the arguments of the
Dissent. After it states that the issue of profit or loss is immaterial, the Dissent proceeds to argue that
the 20% discount is not a minimal loss and that the 20% discount forces business establishments
111
to operate at a loss.112
Even the obiter in Central Luzon Drug Corporation, which the Dissent essentially adopts and relies
113
on, 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. Thus, when the Dissent now argues that the issue of profit or loss is
immaterial, it contradicts itself because it later argues, in order to justify that there is a "taking" under
the power of eminent domain in this case, that the 20% discount forces business establishments to
suffer a significant loss or to operate at a loss. Second, this argument suffers from the same flaw as
the Dissent's original arguments. It is an erroneous characterization of the 20% discount. According
to the Dissent, the 20% discount is part of the gross sales and, hence, private property belonging to
business establishments. However, as previously discussed, the 20% discount is not private
property actually owned and/or used by the business establishment. It should be distinguished from
properties like lands or buildings actually used in the operation of a business establishment which, if
appropriated for public use, would amount to a "taking" under the power of eminent domain. Instead,
the 20% discount is a regulatory measure which impacts the pricing and, hence, the profitability of
business establishments. At the time the discount is imposed, no particular property of the business
establishment can be said to be "taken." That is, 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.
While the 20% discount may form part of the potential profits or income/gross sales of the business
114
establishment, as similarly characterized by Justice Bersamin in his Concurring Opinion, potential

profits or income/gross sales are not private property, specifically cash or money, already belonging
to the business establishment. They are a mere expectancy because they are potential fruits of the
successful conduct of the business. Prior to the sale of goods or services, a business establishment
may be subject to State regulations, such as the 20% senior citizen discount, which may impact the
level or amount of profits or income/gross sales that can be generated by such establishment. For
this reason, the validity of the discount is to be determined based on its overall effects on the
operations of the business establishment.
Again, as previously discussed, the 20% discount does not automatically result in a 20% reduction in
profits, or, to align it with the term used by the Dissent, the 20% discount does not mean that a 20%
reduction in gross sales necessarily results. Because (1) the profit margin of a product is not
necessarily less than 20%, (2) not all customers of a business establishment are senior citizens, and
(3) the establishment may revise its pricing strategy, such reduction in profits or income/gross sales
may be prevented or, in the alternative, mitigated so that the business establishment continues to
operate profitably. Thus, even if we gratuitously assume that some degree of reduction in profits or
income/gross sales occurs because of the 20% discount, it does not follow that the regulation is
unreasonable, oppressive or confiscatory because the business establishment may make the
necessary adjustments to continue to operate profitably. No evidence was presented by petitioners
to show otherwise. In fact, no evidence was presented by petitioners at all. Justice Leonen, in his
Concurring and Dissenting Opinion, characterizes "profits" (or income/gross sales) as an inchoate
right. Another way to view it, as stated by Justice Velasco in his Concurring Opinion, is that the
business establishment merely has a right to profits. The Constitution adverts to it as the right of an
enterprise to a reasonable return on investment. 115
Undeniably, this right, like any other 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. It should be noted though that potential profits or income/gross sales are relevant in
police power and eminent domain analyses because they may, in appropriate cases, serve as an
indicia when a regulation has gone "too far" as to amount to a "taking" under the power of eminent
domain. When the deprivation or reduction of profits or income/gross sales is shown to be
unreasonable, oppressive or confiscatory, then the challenged governmental regulation may be
nullified for being a "taking" under the power of eminent domain. In such a case, it is not profits or
income/gross sales which are actually taken and appropriated for public use. Rather, when the
regulation causes an establishment to incur losses in an unreasonable, oppressive or confiscatory
manner, what is actually taken is capital and the right of the business establishment to a reasonable
return on investment. If the business losses are not halted because of the continued operation of the
regulation, this eventually leads to the destruction of the business and the total loss of the capital
invested therein. But, again, petitioners in this case failed to prove that the subject regulation is
unreasonable, oppressive or confiscatory.
V.
The Dissent further argues that we erroneously used price and rate of return on investment control
laws to justify the senior citizen discount law. According to the Dissent, only profits from industries
imbued with public interest may be regulated because this is a condition of their franchises. Profits of
establishments without franchises cannot be regulated permanently because there is no law
regulating their profits. 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 making this argument, it is unfortunate that the Dissent quotes only a
portion of the ponencia – The subject regulation may be said to be similar to, but with substantial
distinctions from, price control or rate of return on investment control laws which are traditionally
regarded as police power measures. These laws generally 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 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, and (2) the discount does not apply to all customers of a given establishment but only to
the class of senior citizens. x x x116
The above paragraph, in full, states –
The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of return on investment control laws which are traditionally regarded as police power
measures. These laws generally 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 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, and (2) the discount does not apply to all
customers of a given establishment but only to the class of senior citizens.
Nonetheless, to the degree material to the resolution of this case, the 20% discount may be properly
viewed as belonging to the category of price regulatory measures which affects the profitability of
establishments subjected thereto. (Emphasis supplied)
The point of this paragraph is to simply show that the State has, in the past, regulated prices and
profits of business establishments. In other words, 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. What is more, 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. As previously discussed, 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. In contrast,
establishments subject to price and rate of return on investment control laws cannot adjust prices
accordingly. Certainly, 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. Not at all. The justification for the senior
citizen discount law is the plenary powers of Congress. The legislative power to regulate business
establishments is broad and covers a wide array of areas and subjects. It is well within Congress’
legislative powers to regulate the profits or income/gross sales of industries and enterprises, even
those without franchises. 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. On the contrary, the social justice provisions of the
Constitution enjoin the State to regulate the "acquisition, ownership, use, and disposition" of property
and its increments. 117
This may cover the regulation of profits or income/gross sales of all businesses, without qualification,
to attain the objective of diffusing wealth in order to protect and enhance the right of all the people to
human dignity. 118
Thus, under the social justice policy of the Constitution, 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, oppressive or confiscatory, or is not in breach of some specific
constitutional limitation. When the Dissent, therefore, states that the "profits of private
establishments which are non-franchisees cannot be regulated permanently, and there is no such
law regulating their profits permanently," it is assuming what it ought to prove. First, there are laws
119
which, in effect, permanently regulate profits or income/gross sales of establishments without

franchises, and RA 9257 is one such law. And, second, Congress can regulate such profits or
income/gross sales because, as previously noted, there is nothing in the Constitution to prevent it
from doing so. Here, again, 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, oppressive or
confiscatory. The permanent regulation of profits or income/gross sales of business establishments,
even those without franchises, is not as uncommon as the Dissent depicts it to be. For instance, the
minimum wage law allows the State to set the minimum wage of employees in a given region or
geographical area. Because of the added labor costs arising from the minimum wage, a permanent
reduction of profits or income/gross sales would result, assuming that the employer does not
increase the prices of his goods or services. To illustrate, suppose it costs a company ₱5.00 to
produce a product and it sells the same at ₱10.00 with a 50% profit margin. Later, the State
increases the minimum wage. As a result, the company incurs greater labor costs so that it now
costs ₱7.00 to produce the same product. The profit per product of the company would be reduced
to ₱3.00 with a profit margin of 30%. The net effect would be the same as in the earlier example of
granting a 20% senior citizen discount. As can be seen, the minimum wage law could, likewise, lead
to a permanent reduction of profits. Does this mean that the minimum wage law should, likewise, be
declared unconstitutional on the mere plea that it results in a permanent reduction of profits? Taking
it a step further, suppose the company decides to increase the price of its product in order to offset
the effects of the increase in labor cost; does this mean that the minimum wage law, following the
reasoning of the Dissent, is unconstitutional because the consuming public is effectively made to
subsidize the wage of a group of laborers, i.e., minimum wage earners? The same reasoning can be
adopted relative to the examples cited by the Dissent which, according to it, are valid police power
regulations. Article 157 of the Labor Code, Sections 19 and 18 of the Social Security Law, and
Section 7 of the Pag-IBIG Fund Law would effectively increase the labor cost of a business
establishment. This would, in turn, be integrated as part of the cost of its goods or services. Again, if
1âwphi1
the establishment does not increase its prices, the net effect would be a permanent reduction in its
profits or income/gross sales. Following the reasoning of the Dissent that "any form of permanent
taking of private property (including profits or income/gross sales) is an exercise of eminent domain
120
that requires the State to pay just compensation," then these statutory provisions would, likewise,
121
have to be declared unconstitutional. It does not matter that these benefits are deemed part of the
employees’ legislated wages because the net effect is the same, that is, it leads to higher labor costs
and a permanent reduction in the profits or income/gross sales of the business establishments. 122
The point then is this – most, if not all, regulatory measures imposed by the State on business
establishments impact, at some level, the latter’s prices and/or profits or income/gross sales. 123
If the Court were to sustain the Dissent’s theory, then a wholesale nullification of such measures
would inevitably result. The police power of the State and the social justice provisions of the
Constitution would, thus, be rendered nugatory. There is nothing sacrosanct about profits or
income/gross sales. This, 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, 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.
xxxx
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 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.
the percept for the protection of property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities, continously serve as a reminder for the
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 being the case, the means
unconscionably detrimental to petitioners, the Court will refrain form quashing a legislative act. 125
In conclusion, 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. National Power Corporation and followed in Carlos Superdurg
126
Corporation consistent with long standing principles in police power and eminent domain analysis.
127
Thus, the deprivation or reduction of profits or income. Gross sales must be clearly shown to be
unreasonable, oppressive or confiscatory. Under the specific circumstances of this case, such
determination can only be made upon the presentation of competent proof which petitioners failed to
do. A law, which has been in operation for many years and promotes the welfare of a group
accorded special concern by the Constitution, cannot and should not be summarily invalidated on a
mere allegation that it reduces the profits or income/gross sales of business establishments.
WHEREFORE, the Petition is hereby DISMISSED for lack of merit.
SO ORDERED.
MARIANO C. DEL CASTILLO

Associate Justice
WE CONCUR:
Chief Justice
See Dissenting Opinion Please See Concurring Opinion

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.
I certify that J. De Castro Left her vote

No Part
concurring my ponencia of J. Del Castillo
ARTURO D. BRION
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Associate Justice
I certify that J. Peralta left his vote

With Concurring Opinion
concurring my ponencia of J. Del Castillo
LUCAS P. BERSAMIN
DIOSDADO M. PERALTA
Associate Justice
Associate Justice
ROBERTO A. ABAD MARTIN S. VILLARAMA

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

BIENVENIDO L. REYES ESTELA M. PERLAS-BERNABE

See separate concurring opinion

MARVIC MARIO VICTOR F. LEONEN
Associate Justice
CERTIFICATION
I certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court.

Chief Justice
G.R. No. 194561, September 14, 2016 - DRUGSTORES ASSOCIATION OF THE

PHILIPPINES, INC. AND NORTHERN LUZON DRUG CORPORATION, Petitioners, v.
NATIONAL COUNCIL ON DISABILITY AFFAIRS; DEPARTMENT OF HEALTH; DEPARTMENT
OF FINANCE; BUREAU OF INTERNAL REVENUE; DEPARTMENT OF THE INTERIOR AND
LOCAL GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT,
Respondent.:
G.R. No. 194561, September 14, 2016 - DRUGSTORES ASSOCIATION OF THE
PHILIPPINES, INC. AND NORTHERN LUZON DRUG CORPORATION, Petitioners, v.
NATIONAL COUNCIL ON DISABILITY AFFAIRS; DEPARTMENT OF HEALTH; DEPARTMENT
OF FINANCE; BUREAU OF INTERNAL REVENUE; DEPARTMENT OF THE INTERIOR AND
LOCAL GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT,
Respondent.
THIRD DIVISION
G.R. No. 194561, September 14, 2016
DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND NORTHERN

LUZON DRUG CORPORATION, Petitioners, v. NATIONAL COUNCIL ON
DISABILITY AFFAIRS; DEPARTMENT OF HEALTH; DEPARTMENT OF FINANCE;
BUREAU OF INTERNAL REVENUE; DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT, Respondent.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari1 with a Prayer for a Temporary

Restraining Order and/or Writ of Preliminary Injunction which seeks to annul and set
aside the Decision2 dated July 26, 2010, and the Resolution3 dated November 19, 2010
of the Court of Appeals (CA) in CA-G.R. SP No. 109903. The CA dismissed petitioners'
Petition for Prohibition4 and upheld the constitutionality of the mandatory twenty
percent (20%) discount on the purchase of medicine by persons with disability (PWD).
The antecedents are as follows:
On March 24, 1992, Republic Act (R.A.) No. 7277, entitled "An Act Providing for the
chanRoblesvirtualLawlibrary
Rehabilitation, Self-Development and Self-Reliance of Disabled Persons and their

Integration into the Mainstream of Society and for Other Purposes," otherwise known as
the "Magna Carta for Disabled Persons," was passed into law. 5 The law defines
"disabled persons", "impairment" and "disability" as follows:
ChanRoblesVirtualawlibrary
SECTION 4. Definition of Terms. - For purposes of this Act, these terms are defined as
follows:
(a) Disabled Persons are those suffering from restriction of different abilities, as a

result of a mental, physical or sensory impairment, to perform an activity in the manner

or within the range considered normal for a human being;
(b) Impairment is any loss, diminution or aberration of psychological, physiological, or

anatomical structure of function;
(c) Disability shall mean (1) a physical or mental impairment that substantially limits

one or more psychological, physiological or anatomical function of an individual or
activities of such individual; (2) a record of such an impairment; or (3) being regarded
as having such an impairment.6 chanroblesvirtuallawlibrary
On April 30, 2007, Republic Act No. 9442 7 was enacted amending R.A. No. 7277. The
Title of R.A. No. 7277 was amended to read as "Magna Carta for Persons with
Disability" and all references on the law to "disabled persons" were amended to read as
"persons with disability" (PWD).8 Specifically, R.A. No. 9442 granted the PWDs a twenty
(20) percent discount on the purchase of medicine, and a tax deduction scheme was
adopted wherein covered establishments may deduct the discount granted from gross
income based on the net cost of goods sold or services rendered: ChanRoblesVirtualawlibrary
CHAPTER 8. Other Privileges and Incentives. SEC. 32. Persons with disability shall be
entitled to the following:
chanRoblesvirtualLawlibrary xxxx

(d) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for
the exclusive use or enjoyment of persons with disability;
xxxx
The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto:
(i) An identification card issued by the city or municipal mayor or the barangay captain of the
place where the person with disability resides;
(ii) The passport of the person with disability concerned; or
(ii) Transportation discount fare Identification Card (ID) issued by the National Council for
the Welfare of Disabled Persons (NCWDP).
xxxx
The establishments may claim the discounts granted in subsections (a), (b), (c), (f) and
(g) as tax deductions based on the net cost of the goods sold or services
rendered: Provided, however, That the cost of the discount shall be allowed as
deduction from gross income for the same taxable year that the discount is
granted: Provided, further, That the total amount of the claimed tax deduction net of
value-added tax if applicable, 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 (NIRC), as amended.9 chanroblesvirtuallawlibrary
The Implementing Rules and Regulations (IRR) of R.A. No. 944210 was jointly
promulgated by the Department of Social Welfare and Development (DSWD),
Department of Education, Department of Finance (DOF), Department of Tourism,
Department of Transportation and Communication, Department of the Interior and
Local Government (DILG) and Department of Agriculture. Insofar as pertinent to this
petition, the salient portions of the IRR are hereunder quoted: 11
RULE III. DEFINITION OF TERMS
Section 5. Definition of Terms. For purposes of these Rules and Regulations, these
terms are defined as follows:
5.1. Persons with Disability - are those individuals defined under Section 4 of RA

7277 "An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of
Persons with Disability as amended and their integration into the Mainstream of Society
and for Other Purposes". This is defined as a person suffering from restriction or
different abilities, as a result of a mental, physical or sensory impairment, to perform
an activity in a manner or within the range considered normal for human being.
Disability shall mean (1) a physical or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities
of such individual; (2) a record of such an impairment; or (3) being regarded as having
such an impairment.
xxxx
RULE IV. PRIVILEGES AND INCENTIVES FOR THE PERSONS WITH DISABILITY
Section 6. Other Privileges and Incentives. Persons with disability shall be entitled to
the following:
chanRoblesvirtualLawlibrary xxxx
6.1.d. Purchase of Medicine - at least twenty percent (20%) discount on the purchase

of medicine for the exclusive use and enjoyment of persons with disability. All
drugstores, hospital, pharmacies, clinics and other similar establishments selling
medicines are required to provide at least twenty percent (20%) discount subject to the
guidelines issued by DOH and PHILHEALTH.12 chanrobleslaw
xxxx
6.11 The abovementioned privileges are available only to persons with disability who
are Filipino citizens upon submission of any of the following as proof of his/her
entitlement thereto subject to the guidelines issued by the NCWDP in coordination with
DSWD, DOH and DILG.
6.11.1 An identification card issued by the city or municipal mayor or the barangay
captain of the place where the person with disability resides;
6.11.2 The passport of the persons with disability concerned; or
6.11.3 Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP). However, upon effectivity of this
Implementing Rules and Regulations, NCWDP will already adopt the Identification Card
issued by the Local Government Unit for purposes of uniformity in the implementation.
NCWDP will provide the design and specification of the identification card that will be
issued by the Local Government Units.13 chanroblesvirtuallawlibrary
6.14. Availmenl of Tax Deductions by Establishment Granting Twenty Percent. 20%

Discount - The establishments may claim the discounts granted in sub-sections (6.1),
(6.2), (6.4), (6.5) and (6.6) as tax deductions based on the net cost of the goods sold
or services rendered: Provided, however, that the cost of the discount shall be allowed
as deduction from gross income for the same taxable year that the discount is granted:
Provided, further, That the total amount of the claimed tax deduction net of value-
added tax if applicable, 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, as amended.
On April 23, 2008, the National Council on Disability Affairs (NCDA)14 issued
Administrative Order (A.O.) No. 1, Series of 2008, 15 prescribing guidelines which should
serve as a mechanism for the issuance of a PWD Identification Card (IDC) which shall
be the basis for providing privileges and discounts to bona fide PWDs in accordance
with R.A. 9442: ChanRoblesVirtualawlibrary
IV. INSTITUTIONAL ARRANGEMENTS
A. The Local Government Unit of the City or Municipal Office shall implement
these guidelines in the issuance of the PWD-IDC
xxxx
D. Issuance of the appropriate document to confirm the medical condition of the

applicant is as follows: ChanRoblesVirtualawlibrary
Disability Document Issuing Entity

Apparent Disability Medical Certificate Licensed Private or Government Physician
School Assessment Licensed Teacher duly signed by the School Principal
Certificate of Head of the Business Establishment or Head of Non-

Disability Government Organization
Non-Apparent
Medical Certificate Licensed Private or Government Physician
Disability
E. PWD Registration Forms and ID Cards shall be issued and signed by the City or
Municipal Mayor, or Barangay Captain.
xxxx
V. IMPLEMENTING GUIDELINES AND PROCEDURES
Any bonafide person with permanent disability can apply for the issuance of the PWD-
IDC. His/her caregiver can assist in the application process. Procedures for the issuance
of the ID Cards are as follows:
A. Completion of the Requirements. Complete and/or make available the following

requirements: ChanRoblesVirtualawlibrary
1. Two "1x1" recent ID pictures with the names, and signatures or
thumbmarks at the back of the picture
2. One (1) Valid ID
3. Document to confirm the medical or disability condition (See

Section IV, D for the required document).
On December 9, 2008, the DOF issued Revenue Regulations No. 1-2009 16 prescribing
rules and regulations to implement R.A. 9442 relative to the tax privileges of PWDs and
tax incentives for establishments granting the discount. Section 4 of Revenue
Regulations No. 001-09 states that drugstores can only deduct the 20% discount from
their gross income subject to some conditions.17 chanrobleslaw
On May 20, 2009, the DOH issued A.O. No. 2009-0011 18 specifically stating that the
grant of 20% discount shall be provided in the purchase of branded medicines and
unbranded generic medicines from all establishments dispensing medicines for the
exclusive use of the PWDs.19 It also detailed the guidelines for the provision of medical
and related discounts and special privileges to PWDs pursuant to R.A. 9442. 20 chanrobleslaw
On July 28, 2009, petitioners filed a Petition for Prohibition with application for a
Temporary Restraining Order and/or a Writ of Preliminary Injunction 21 before the Court
of Appeals to annul and enjoin the implementation of the following laws: ChanRoblesVirtualawlibrary
1) Section 32 of R.A. No. 7277 as amended by R.A. No. 9442;
2) Section 6, Rule IV of the Implementing Rules and Regulations of R.A. No. 9442;
3) NCDA A.O. No. 1;
4) DOF Revenue Regulation No. 1-2009;
5) DOH A.O. No. 2009-0011.

On July 26, 2010, the CA rendered a Decision upholding the constitutionality of R.A.
7277 as amended, as well as the assailed administrative issuances. However, the CA
suspended the effectivity of NCDA A.O. No. 1 pending proof of respondent NCDA's
compliance with filing of said administrative order with the Office of the National
Administrative Register (ONAR) and its publication in a newspaper of general
circulation. The dispositive portion of the Decision states: ChanRoblesVirtualawlibrary
WHEREFORE, the petition is PARTLY GRANTED. The effectivity of NCDA Administrative

Order No. 1 is hereby SUSPENDED pending Respondent's compliance with the proof of
filing of NCDA Administrative Order No. 1 with the Office of the National Administrative
Register and its publication in a newspaper of general circulation.
Respondent NCDA filed a motion for reconsideration before the CA to lift the suspension
of the implementation of NCDA A.O. No. 1 attaching thereto proof of its publication in
the Philippine Star and Daily Tribune on August 12, 2010, as well as a certification from
the ONAR showing that the same was filed with the said office on October 22,
2009.22 Likewise, petitioners filed a motion for reconsideration of the CA Decision.
In a Resolution dated November 19, 2010, the CA dismissed petitioners' motion for
reconsideration and lifted the suspension of the effectivity of NCDA A.O. No. 1
considering the filing of the same with ONAR and its publication in a newspaper of
general circulation.
Hence, the instant petition raising the following issues: ChanRoblesVirtualawlibrary
I. THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT

THE MANDATED PWD DISCOUNT IS A VALID EXERCISE OF POLICE POWER. ON THE
CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT DOMAIN
BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO PETITIONERS AND OTHER
SIMILARLY SITUATED DRUGSTORES;
II. THE CA SERIOUSLY ERRED WHEN IT RULED THAT SECTION 32 OF RA 7277 AS

AMENDED BY RA 9442, NCDA AO 1 AND THE OTHER IMPLEMENTING REGULATIONS
DID NOT VIOLATE THE DUE PROCESS CLAUSE;
III. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE DEFINITIONS OF

DISABILITIES UNDER SECTION 4(A), SECTION 4(B) AND SECTION 4(C) OF RA 7277 AS
AMENDED BY RA 9442, RULE 1 OF THE IMPLEMENTING RULES AND REGULATIONS 23 OF
RA 7277, SECTION 5.1 OF THE IMPLEMENTING RULES AND REGULATIONS OF RA 9442,
NCDA AO 1 AND DOH AO 2009-11 ARE NOT VAGUE, AMBIGUOUS AND
UNCONSTITUTIONAL;
IV. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE MANDATED PWD DISCOUNT
DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE.
We deny the petition.
The CA is correct when it applied by analogy the case of Carlos Superdrug Corporation
et al. v. DSWD, et al.24 wherein We pronouced that Section 4 of R.A. No. 9257 which
grants 20% discount on the purchase of medicine of senior citizens is a legitimate
exercise of police power: ChanRoblesVirtualawlibrary
The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact
definition, 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, thus assuring the greatest
benefits.25 Accordingly, it has been described as the most essential, insistent and the
cralawred
least limitable of powers, extending as it does to all the great public needs. 26 It is [t]he
power vested in the legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of the same. 27 chanrobleslaw
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. 28 chanrobleslaw
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.29 chanroblesvirtuallawlibrary
Police power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. On the other hand, the power of eminent
domain is the inherent right of the state (and of those entities to which the power has
been lawfully delegated) to condemn private property to public use upon payment of
just compensation. 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.30 A legislative act based on the police power requires the
concurrence of a lawful subject and a lawful method. In more familiar words, (a) the
interests of the public generally, as distinguished from those of a particular class,
should justify the interference of the state; and (b) the means employed are reasonably
necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.31 chanrobleslaw
R.A. No. 7277 was enacted primarily to provide full support to the improvement of the
total well-being of PWDs and their integration into the mainstream of society. The
priority given to PWDs finds its basis in the Constitution: ChanRoblesVirtualawlibrary
ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY
xxxx
Section 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own, establish,
and operate economic enterprises, subject to the duty of the State to promote
distributive justice and to intervene when the common good so demands.32 chanrobleslaw
ARTICLE XIII
SOCIAL JUSTICE AND HUMAN RIGHTS
xxxx
Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social
services available to all the people at affordable cost. There shall be priority for the
needs of the underprivileged, sick, elderly, disabled, women, and children. The State
shall endeavor to provide free medical care to paupers. 33 chanroblesvirtuallawlibrary
Thus, R.A. No. 7277 provides: ChanRoblesVirtualawlibrary
SECTION 2. Declaration of Policy. The grant of the rights and privileges for disabled
persons shall be guided by the following principles:
(a). Disabled persons are part of the Philippine society, thus the Senate shall give full
support to the improvement of the total well-being of disabled persons and their
integration into the mainstream of society.
Toward this end, the State shall adopt policies ensuring the rehabilitation, self-
development and self-reliance of disabled persons.
It shall develop their skills and potentials to enable them to compete favorably for
available opportunities.
(b). Disabled persons have the same rights as other people to take their proper place in
society. They should be able to live freely and as independently as possible. This must
be the concern of everyone - the family, community and all government and non-
government organizations.
Disabled person's rights must never be perceived as welfare services by the

Government.
xxxx
(d). The State also recognizes the role of the private sector in promoting the welfare of
disabled persons and shall encourage partnership in programs that address their needs
and concerns.34 chanroblesvirtuallawlibrary
To implement the above policies, R.A. No. 9442 which amended R.A. No. 7277 grants
incentives and benefits including a twenty percent (20%) discount to PWDs in the
purchase of medicines; fares for domestic air, sea and land travels including public
railways and skyways; recreation and amusement centers including theaters, food
chains and restaurants.35 This is specifically stated in Section 4 of the IRR of R.A. No.
9442: ChanRoblesVirtualawlibrary
Section 4. Policies and Objectives - It is the objective of Republic Act No. 9442 to
provide persons with disability, the opportunity to participate fully into the
mainstream of society by granting them at least twenty percent (20%)
discount in all basic services. It is a declared policy of RA 7277 that persons with
disability are part of Philippine society, and thus the State shall give full support to
the improvement of their total wellbeing and their integration into the
mainstream of society. They have the same rights as other people to take their
proper place in society. They should be able to live freely and as independently as
possible. This must be the concern of everyone the family, community and all
government and non-government organizations. Rights of persons with disability must
never be perceived as welfare services. Prohibitions on verbal, non-verbal ridicule and
vilification against persons with disability shall always be observed at all times. 36
chanroblesvirtuallawlibrary
Hence, the PWD mandatory discount on the purchase of medicine is supported by a

valid objective or purpose as aforementioned. It has a valid subject considering that the
concept of public use is no longer confined to the traditional notion of use by the public,
but held synonymous with public interest, public benefit, public welfare, and public
convenience. As in the case of senior citizens,37 the discount privilege to which the
PWDs are entitled is actually a benefit enjoyed by the general public to which these
citizens belong. 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.38 Also, the means employed to provide a fair, just and quality health
care to PWDs are reasonably related to its accomplishment, and are not oppressive,
considering that as a form of reimbursement, the discount extended to PWDs in the
purchase of medicine can be claimed by the establishments as allowable tax deductions
pursuant to Section 32 of R.A. No. 9442 as implemented in Section 4 of DOF Revenue
Regulations No. 1-2009. Otherwise stated, the discount reduces taxable income upon
which the tax liability of the establishments is computed.
Further, petitioners aver that Section 32 of R.A. No. 7277 as amended by R.A. No. 9442
is unconstitutional and void for violating the due process clause of the Constitution
since entitlement to the 20% discount is allegedly merely based on any of the three
documents mentioned in the provision, namely: (i) an identification card issued by the
city or municipal mayor or the barangay captain of the place where the PWD resides;
(ii) the passport of the PWD; or (iii) transportation discount fare identification card
issued by NCDA. Petitioners, thus, maintain that none of the said documents has any
relation to a medical finding of disability, and the grant of the discount is allegedly
without any process for the determination of a PWD in accordance with law.
Section 32 of R.A. No. 7277, as amended by R.A. No. 9442, must be read with its IRR
which stated that upon its effectivity, NCWDP (which is the government agency tasked
to ensure the implementation of RA 7277), would adopt the IDC issued by the local
government units for purposes of uniformity in the implementation. 39 Thus, NCDA A.O.
No. 1 provides the reasonable guidelines in the issuance of IDCs to PWDs as proof of
their entitlement to the privileges and incentives under the law 40 and fills the details in
the implementation of the law.
As stated in NCDA A.O. No. 1, before an IDC is issued by the city or municipal mayor or
the barangay captain,41 or the Chairman of the NCDA,42 the applicant must first secure
a medical certificate issued by a licensed private or government physician that will
confirm his medical or disability condition. If an applicant is an employee with apparent
disability, a "certificate of disability" issued by the head of the business establishment
or the head of the non-governmental organization is needed for him to be issued a
PWD-IDC. For a student with apparent disability, the "school assessment" issued by the
teacher and signed by the school principal should be presented to avail of a PWD-ID.
Petitioners' insistence that Part IV (D) of NCDA Administrative Order No. 1 is void
because it allows allegedly non-competent persons like teachers, head of
establishments and heads of Non-Governmental Organizations (NGOs) to confirm the
medical condition of the applicant is misplaced. It must be stressed that only for
apparent disabilities can the teacher or head of a business establishment validly issue
the mentioned required document because, obviously, the disability is easily seen or
clearly visible. It is, therefore, not an unqualified grant of authority for the said non-
medical persons as it is simply limited to apparent disabilities. For a non-apparent
disability or a disability condition that is not easily seen or clearly visible, the disability
can only be validated by a licensed private or government physician, and a medical
certificate has to be presented in the procurement of an IDC. Relative to this issue, the
CA validly ruled, thus: ChanRoblesVirtualawlibrary
We agree with the Office of the Solicitor General's (OSG) ratiocination that teachers,
heads of business establishments and heads of NGOs can validly confirm the medical
condition of their students/employees with apparent disability for obvious reasons as
compared to non-apparent disability which can only be determined by licensed
physicians. Under the Labor Code, disabled persons are eligible as apprentices or
learners provided that their handicap are not as much as to effectively impede the
performance of their job. We find that heads of business establishments can validly
issue certificates of disability of their employees because aside from the fact that they
can obviously validate the disability, they also have medical records of the employees
as a pre-requisite in the hiring of employees. Hence, Part IV (D) of NCDA AO No. 1
is logical and valid.43 chanroblesvirtuallawlibrary
Furthermore, DOH A.O. No. 2009-11 prescribes additional guidelines for the 20%
discount in the purchase of all medicines for the exclusive use of PWD. 44 To avail of the
discount, the PWD must not only present his I.D. but also the doctor's prescription
stating, among others, the generic name of the medicine, the physician's address,
contact number and professional license number, professional tax receipt number and
narcotic license number, if applicable. A purchase booklet issued by the local
social/health office is also required in the purchase of over-the-counter medicines.
Likewise, any single dispensing of medicine must be in accordance with the prescription
issued by the physician and should not exceed a one (1) month supply. Therefore, as
correctly argued by the respondents, Section 32 of R.A. No. 7277 as amended by R.A.
No. 9442 complies with the standards of substantive due process.
We are likewise not persuaded by the argument of petitioners that the definition of
"disabilities" under the subject laws is vague and ambiguous because it is allegedly so
general and broad that the person tasked with implementing the law will undoubtedly
arrive at different interpretations and applications of the law. Aside from the definitions
of a "person with disability" or "disabled persons" under Section 4 of R.A. No. 7277 as
amended by R.A. No. 9442 and in the IRR of RA 9442, NCDA A.O. No. 1 also
provides: ChanRoblesVirtualawlibrary
4. Identification Cards shall be issued to any bonafide PWD with permanent

disabilities due to any one or more of the following conditions:
psychosocial, chronic illness, learning, mental, visual, orthopedic, speech
and hearing conditions. This includes persons suffering from disabling
diseases resulting to the person's limitations to do day to day activities as
normally as possible such as but not limited to those undergoing dialysis,
heart disorders, severe cancer cases and such other similar cases
resulting to temporary or permanent disability.45
Similarly, DOH A.O. No. 2009-0011 defines the different categories of disability as
follows:ChanRoblesVirtualawlibrary
Rule IV, Section 4, Paragraph B of the Implementing Rules and Regulations (IRR) of
this Act required the Department of Health to address the health concerns of seven (7)
different categories of disability, which include the following: (1) Psychological and
behavioral disabilities (2) Chronic illness with disabilities (3)Learning(cognitive or
intellectual) disabilities (4) Mental disabilities (5) Visual/seeing disabilities (6)
Orthopedic/moving, and (7) communication deficits.46 chanroblesvirtuallawlibrary
Elementary is the rule that when laws or rules are clear, when the law is unambiguous
and unequivocal, application not interpretation thereof is imperative. However, where
the language of a statute is vague and ambiguous, an interpretation thereof is resorted
to. A law is deemed ambiguous when it is capable of being understood by reasonably
well-informed persons in either of two or more senses. The fact that a law admits of
different interpretations is the best evidence that it is vague and ambiguous. 47 chanrobleslaw
In the instant case, We do not find the aforestated definition of terms as vague and
ambiguous. Settled is the rule that courts will not interfere in matters which are
addressed to the sound discretion of the government agency entrusted with the
regulation of activities coming under the special and technical training and knowledge
of such agency.48 As a matter of policy, We accord great respect to the decisions and/or
actions of administrative authorities not only because of the doctrine of separation of
powers but also for their presumed knowledge, ability, and expertise in the
enforcement of laws and regulations entrusted to their jurisdiction. The rationale for
this rule relates not only to the emergence of the multifarious needs of a modern or
modernizing society and the establishment of diverse administrative agencies for
addressing and satisfying those needs; it also relates to the accumulation of experience
and growth of specialized capabilities by the administrative agency charged with
implementing a particular statute.49 chanrobleslaw
Lastly, petitioners contend that R.A. No. 7227, as amended by R.A. No. 9442, violates
the equal protection clause of the Constitution because it fairly singles out drugstores to
bear the burden of the discount, and that it can hardly be said to "rationally" meet a
legitimate government objective which is the purpose of the law. The law allegedly
targets only retailers such as petitioners, and that the other enterprises in the drug
industry are not imposed with similar burden. This same argument had been raised in
the case of Carlos Superdrug Corp., et al. v. DSWD, et al.,50 and We reaffirm and apply
the ruling therein in the case at bar: ChanRoblesVirtualawlibrary
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 a reminder that the right to property can be relinquished
upon the command of the State for the promotion of public good. 51 chanroblesvirtuallawlibrary
Under the equal protection clause, all persons or things similarly situated must be
treated alike, both in the privileges conferred and the obligations imposed. Conversely,
all persons or things differently situated should be treated differently. 52 In the case
of ABAKADA Guro Party List, et al. v. Hon. Purisima, et al.,53 We held: ChanRoblesVirtualawlibrary
Equality guaranteed under the equal protection clause is equality under the same
conditions and among persons similarly situated; it is equality among equals, not
similarity of treatment of persons who are classified based on substantial differences in
relation to the object to be accomplished. When things or persons are different in fact
or circumstance, they may be treated in law differently. In Victoriano v. Elizalde Rope
Workers' Union, this Court declared: ChanRoblesVirtualawlibrary
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the State. It is not, therefore, a requirement,
in order to avoid the constitutional prohibition against inequality, that every man,
woman and child should be affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely as such, but on persons
according to the circumstances surrounding them. It guarantees equality, not identity
of rights. The Constitution does not require that things which are different in
fact be treated in law as though they were the same. The equal protection
clause does not forbid discrimination as to things that are different. It does
not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is required
of a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for real
differences, that it must be germane to the purpose of the law; that it must
not be limited to existing conditions only; and that it must apply equally to
each member of the class. This Court has held that the standard is satisfied if
the classification or distinction is based on a reasonable foundation or rational
basis and is not palpably arbitrary.
In the exercise of its power to make classifications for the purpose of enacting laws
over matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion. It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the classification be
made with mathematical nicety. Hence, legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
The equal protection clause recognizes a valid classification, that is, a classification that
has a reasonable foundation or rational basis and not arbitrary. 54 With respect to R.A.
No. 9442, its expressed public policy is the rehabilitation, self-development and self-
reliance of PWDs. Persons with disability form a class separate and distinct from the
other citizens of the country. Indubitably, such substantial distinction is germane and
intimately related to the purpose of the law. Hence, the classification and treatment
accorded to the PWDs fully satisfy the demands of equal protection. Thus, Congress
may pass a law providing for a different treatment to persons with disability apart from
the other citizens of the country.
Subject to the determination of the courts as to what is a proper exercise of police

power using the due process clause and the equal protection clause as yardsticks, the
State may interfere wherever the public interests demand it, and in this particular, a
large discretion is necessarily vested in the legislature to determine, not only what
interests of the public require, but what measures are necessary for the protection of
such interests.55 Thus, We are mindful of the fundamental criteria in cases of this nature
that all reasonable doubts should be resolved in favor of the constitutionality of a
statute.56 The burden of proof is on him who claims that a statute is unconstitutional.
Petitioners failed to discharge such burden of proof.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated July
26, 2010, and the Resolution dated November 19, 2010, in CA-G.R. SP No. 109903
are AFFIRMED.
SO ORDERED. chanRoblesvirtualLawlibrary
Velasco, Jr., (Chairperson), Perez, Reyes, and Jardeleza, JJ., concur.
Endnotes:
1
Rollo, pp. 11-86.
2
Penned by Associate Justice Noel G. Tijam, with Associate Justices Marlene Gonzales-
Sison and Danton Q. Bueser, concurring; id. at 88-107.
3
Rollo, pp. 109-112.
4
Id. at 144-204.
5
Id. at 90.
6
Id. at 17 and 979.
7
An Act Amending Republic Act No. 7277, Otherwise known as the Magna Carta for
Persons with Disability as Amended, and For Other Purposes; rollo, p. 90.
8
Section 4 of R.A. No. 9442.
9
Rollo, pp. 20 and 980.
10
Published on January 21, 2009 in the Manila Standard Today, and filed with the Office
of the National Administration Register, U.P. Law Center on January 31, 2008; id. at 90
and 982.
11
Rollo, p. 981.
12
Underscoring supplied.
13
14
Formerly National Councilfor the Welfare of Disabled Persons (NCWDP).
15
Guidelines on the Issuance of Identification Card Relative to Republic Act 9442; rollo,
pp. 117-119.
16
Rules and Regulations Implementing Republic Act No. 9442, entitled "An Act
Amending Republic Acl 7227, Otherwise Known as the Magna Cart a for Persons with
Disability" Relative to the Tax Privileges of Persons with Disability and Tax Incentives
for Establishments Granting Sales Discounts; Rollo, pp. 120-126.
17
Section 4. Availment by Establishments of Sales Discounts as Deduction from Gross
Income - Establishments granting sales discounts to persons with disability on their sale
of goods and/or services specified under Section 3 above shall be entitled to deduct the
said sales discount from their gross income subject to the following conditions:ChanRoblesVirtualawlibrary
1. The sales discounts shall be deducted from gross income after

deducting the cost of goods sold or the cost of service;
2. The cost of the sales discount shall be allowed as deduction from

gross income for the same taxable year that the discount is
granted;
3. Only that portion of the gross sales exclusively used, consumed or

enjoyed by the person with disability shall be eligible for the
deductible sales discount;
4. The gross selling price and the sales discount must be separately
indicated in the sales invoice or official receipt issued by the
establishment for the sale of goods or services to the person with
disability;
5. Only the actual amount of the sales discount granted or a sales

discount not exceeding 20% of the gross selling price or gross
receipt can be deducted from the gross income, net of value added
tax, if applicable, for income tax purposes, and from gross sales or
gross receipts of the business enterprise concerned, for VAT or
other percentage tax purposes; and shall be subject to proper
documentation under pertinent provisions of the Tax Code of 1997,
as amended;
6. The business establishment giving sales discount to qualified

person with disability is required to keep separate and accurate
record of sales, which shall include the name of the person with
disability, ID Number, gross sales/receipts, sales discount granted,
date of transactions and invoice number for every sale transaction
to person with disability; and
cralawlawlibrary
7. All establishments mentioned in Section 3 above which granted

sales discount to persons with disability on their sale of goods
and/or services may claim the said discount as deduction from
gross income.
18
Guidelines to Implement the Provisions of Republic Act 9442, Otherwise known as
"An Act Amending Republic Act No. 7227, otherwise known as the "Magna Carta for
Disabled Persons, and for Other Purposes" for the provision of medical and related
discounts and special privileges; Published in the Philippine Daily Inquirer on May 13,
2009, and filed in the Office of the National Administrative Register, U.P. Law Center on
July 9, 2009; rollo, pp. 127-142.
19
Title V, No. 3, DOH A.O. No. 2009-0011.
20
Number 4 of DOH issued Administrative Order No. 2009-0011.
21
Rollo, pp. 144-204.
22
Id. at 110-111 and 988.
23
Rule I. Title, Purpose, and Construction
24
553 Phil. 120, 132-133 (2007).
25
cralawred Sangalang v. Intermediate Appellate Court, 257 Phil. 930 (1989).
26
Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, L-
24693, July 31, 1967, 20 SCRA 849, citing Noble State Bank v. Haskell, 219 U.S. 412
(1911).
27
U.S. v. Toribio, 15 Phil. 85 (1910), citing Commonwealth v. Alger, 7 Cush., 53 (Mass.
1851); U.S. v. Pompeya, 31 Phil. 245, 253-254 (1915).
28
Alalayan v. National Power Corporation, 24 Phil. 172 (1968).
29
Id.
30
Didipio Earth-Savers' Multi-Purpose Association, Inc., et al. v. Sec. Gozun, et al., 520
Phil. 457, 476 (2006).
31
National Development Company v. Philippine Veterans Bank, et al., 270 Phil. 349, 356
(1990); Association of Small Landowners in the Philippines, Inc., et al. v. Honorable
Secretary of Agrarian Reform, 256 Phil. 777, 810 (1989).
32
33
34
Underscoring supplied
35
SEC. 32. Persons with disability shall be entitled to the following:
(a) At least twenty percent (20%) discount from all establishments relative to the
utilization of all services in hotels and similar lodging establishments; restaurants and
recreation centers for the exclusive use or enjoyment of persons with disability;
(b) A minimum of twenty percent (20%) discount on admission fees charged by

theaters, cinema houses, concert halls, circuses, carnivals and other similar places of
culture, leisure and amusement for the exclusive use of enjoyment of persons with
disability;
(c) At least twenty percent (20%) discount for the purchase of medicines in all
drugstores for the exclusive use or enjoyment of persons with disability;
(d) At least twenty percent (20%) discount on medical and dental services including
diagnostic and laboratory fees such as, but not limited to, x-rays, computerized
tomography scans and blood tests, in all government facilities, subject to guidelines to
be issued by the Department of Health (DOH), in coordination with the Philippine Health
Insurance Corporation (PHILHEALTH);
(e) At least twenty percent (20%) discount on medical and dental services including
diagnostic and laboratory fees, and professional fees of attending doctors in all private
hospitals and medical facilities, in accordance with the rules and regulations to be
issued by the DOH, in coordination with the PHILHEALTH;
(f) At least twenty percent (20%) discount on fare for domestic air and sea travel for
the exclusive use or enjoyment of persons with disability;
(g) At least twenty percent (20%) discount in public railways, skyways and bus fare for
the exclusive use and enjoyment of person with disability;
(h) Educational assistance to persons with disability, for them to pursue primary,
secondary, tertiary, post tertiary, as well as vocational or technical education, in both
public and private schools, through the provision of scholarships, grants, financial aids,
subsidies and other incentives to qualified persons with disability, including support for
books, learning material, and uniform allowance to the extent feasible: Provided, That
persons with disability shall meet minimum admission requirements;
(i) To the extent practicable and feasible, the continuance of the same benefits and
privileges given by the Government Service Insurance System (GSIS), Social Security
System (SSS), and PAG-IBIG, as the case may be, as are enjoyed by those in actual
service;
(j) To the extent possible, the government may grant special discounts in special
programs for persons with disability on purchase of basic commodities, subject to
guidelines to be issued for the purpose by the Department of Trade and Industry (DTI)
and the Department of Agricultural (DA); and cralawlawlibrary
(k) Provision of express lanes for persons with disability in all commercial and
government establishments; in the absence thereof, priority shall be given to them.
36
Emphasis supplied.
37
Commissioner of Internal Revenue v. Central Luzon Drug Corporation, 496 Phil. 307,
335 (2005).
38
Carlos Superdrug Corporation, et al. v. DSWD, et al., supra note 24, at 135.
39
Section 6.11.3 of IRR of R.A. No. 9442.
40
Part I, Nos. 4 and 5, NCDA Administrative Order No. 1; rollo, p. 111.
41
Only for the first three (3) years as provided in DOH Administrative Order No. 2009-
001; id. at 131.
42
After three (3) years, the signatory to the IDC shall be the Chairperson of the NCDA
as provided in DOH Administrative Order No. 2009-001; id.
43
Emphasis supplied.
44
Guidelines for the twenty percent (20%) discount in the purchase of all medicines for
the exclusive use of PWD:
a) All establishments through their registered pharmacist must have full disclosure
and responsibility in dispensing all medicines for exclusive use of PWD.
b) Discounts shall be granted to PWDs on all the purchase of all medicines provided

that it is supported by the following:
chanRoblesvirtualLawlibrary i. PWD Identification Card as stated in the Definition of Terms;
ii. Doctor's prescription stating the name of the PWD, age, sex, address, date,
generic name of the medicine, dosage form, dosage strength, quantity, signature over
printed name of physician, physician's address, contact number of physician or dentist,
professional license number, professional tax receipt number and narcotic license
number, if applicable. To safeguard the health of PWDs and to prevent abuse of RA
9257, a doctor's prescription is required in the purchase of over-the counter medicines.
Only prescriptions that contain the above information shall be honored.
iii. Purchase booklet issued by the local social/health office to PWDs for free

containing the following basic information:
chanRoblesvirtualLawlibrary a) PWD ID Number
b) Booklet control number
c) Name of PWD
d) Sex
e) Address
f) Date of Birth
g) Picture
h) Signature of PWD
i) Information of medicine purchased: ChanRoblesVirtualawlibrary
i.1 Name of medicine
i.2 Quantity
i.3 Attending Physician

i.4 License Number
i.5 Servicing drug store name
i.6 Name of dispensing pharmacist

j) Authorization letter of the PWD who is residing in the Philippines at the time of
purchase, currently dated and the identification card of the authorized person or
representative, in case the medicine is bought by the representative or care giver of the
PWD. (Emphasis supplied)
c) As a general rule, any single dispensing of medicine must be in accordance with the
prescription issued by a physician and should not exceed a one (1) month supply.
Drug stores are required to maintain a special record book for PWD subject to
inspection by the BFAD and BIR.
d) For partial filling, the establishment's pharmacists will indicate the quantity partially
filled in the special record book and the unfilled balance on the prescription. The PWD
shall retain the partially tilled prescription and present the same later to complete the
prescribed quantity.
e) Drugstores offering special discounted prices less than 20% of the regular retail price
can deduct the percentage discount on their promotional campaign from the total of
20% discount as required by RA 9442. Thus, a total discount of 20% for PWD will still
be observed.
These discount privileges shall be non-transferable and exclusive for the benefits of the
PWD.
All establishments as defined above are enjoined to comply with above-cited guidelines.
xxxx
45
No. 3, Part I of NCDA AO 1.
46
Rollo, pp. 102-103.
Disability Types - the 7 types of disabilities mentioned in RA No. 7277 are

psychosocial disability, disability due to chronic illness, learning disability, mental
disability, visual disability, orthopaedic disability, and communication disability.
Communication Disability - an impairment in the process of speech, language or

hearing: a) hearing impairment is a total or partial loss of hearing function which
impede the communication process essential to language, educational, social and/or
cultural interaction; Speech and Language Impairment means one or more
speech/language disorders of voice, articulation, rhythm and/or the receptive or and
expressive processes of language.
Learning Disability - any disorder in one or more of the basic psychological processes
(perception, comprehension, thinking, etc.) involved in understanding or in using
spoken or written language.
Mental Disability - disability resulting from organic brain syndrome (i.e. Mental
retardation, acquired lesions of the central nervous system, or dementia) and/or mental
illness (psychotic or non-psychotic disorder)
Orthopedic Disability - disability in the normal functioning of the joints, muscles or

limbs.
Psychosocial Disability - any acquired behavioural, cognitive, emotional, social

impairment that limits one or more activities necessary for effective interpersonal
transactions and other civilizing process or activities for daily living such as but not
limited to deviancy or anti-social behaviour.
Visual Disability - a person with visual disability (impairment) is one who has
impairment of visual functioning even after treatment and/or standard refractive
correction, and has visual acuity in the better eye of less than (6/18 for low vision and
3/60 for blind, or a visual field of less than 10 degrees from the point of fixation. A
certain level of visual impairment is defined as legal blindness. One is legally blind when
your best corrected central visual acuity in your better eye is 6/60 or worse or your side
vision is 20 degrees or less in the better eye.
Chronic Illness — words to describe a group of health conditions that last a long time.
It may get slowly worse over time or may become permanent or it may lead to death.
It may cause permanent change to the body and it will certainly affect the person's
quality of life.
47
Garcia v. Social Security Commission Legal and Collection, SSS, 565 Phil. 193, 208
(2007).
48
PEZA v. Pearl City Manufacturing Corporation, 623 Phil. 191, 207 (2009); Department
of Agrarian Reform vs. Samson, et al., 577 Phil. 370, 381 (2008).
49
The Public Schools District Supervisors Association, et al. v. Hon. De Jesus, 524 Phil.
366, 386-387 (2006).
50
Supra note 24, at 146-147.
51
By the general police power of the State, persons and property are subjected to all
kinds of restraints and burdens, in order to secure the general comfort, health, and
prosperity of the State; of the perfect right in the legislature to do which, no question
ever was, or, upon acknowledged and general principles, ever can be made, so far as
natural persons are concerned. (U.S. v. Toribio, supra note 27, at 98-99, citing Thorpe
v. Rutland & Burlington R.R. Co. [27 Vt., 140, 149]).
52
National Development Company v. Philippine Veterans Bank, et al., supra note 31, at
357.
53
584 Phil. 246, 269-270 (2008). (Emphasis in the original)
54
ABAKADA Guro Parly List v. Hon. Purisima, et al., supra, at 270.
55
U.S. v. Toribio, supra note 27, at 98, citing Lawton v. Steele, 152 U.S. 133,
136; Barbier v. Connoly, 113 U.S. 27; Kidd v. Pearson, 128 U.S. 1.
56
People v. Vera, 65 Phil. 199 (1937).
G.R. No. 195145, February 10, 2016 - MANILA ELECTRIC COMPANY, Petitioner, v.
SPOUSES SULPICIO AND PATRICIA RAMOS, Respondents.:
G.R. No. 195145, February 10, 2016 - MANILA ELECTRIC COMPANY, Petitioner, v.
SPOUSES SULPICIO AND PATRICIA RAMOS, Respondents.
SECOND DIVISION
G.R. No. 195145, February 10, 2016

MANILA ELECTRIC COMPANY, Petitioner, v. SPOUSES SULPICIO AND PATRICIA
RAMOS, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 assailing the July 30, 2010 decision2 of
the Court of Appeals (CA) in CA-G.R. CV No. 87843 entitled "Spouses Sulpicio and
Patricia Ramos v. Manila Electric Company" that affirmed the Regional Trial Court's
(RTC) August 22, 2006 decision3 in Civil Case No. 99-95975.
The August 22, 2006 RTC decision ordered the Manila Electric Company (MERALCO) to
restore the electric power connection of Spouses Sulpicio and Patricia Ramos
(respondents) and awarded them P2,000,000.00, with legal interest, in total
damages. chanRoblesvirtualLawlibrary
The Factual Antecedents
MERALCO is a private corporation engaged in the business of selling and distributing

electricity to its customers in Metro Manila and other franchise areas. The respondents
are registered customers of MERALCO under Service Identification Number (SIN)
409076401.
MERALCO entered into a contract of service with the respondents agreeing to supply
the latter with electric power in their residence at 2760-B Molave St., Manuguit, Tondo,
Manila. To measure the respondents' electric consumption, it installed the electric meter
with serial number 330ZN43953 outside the front wall of the property occupied by
Patricia's brother, Isidoro Sales, and his wife, Nieves Sales (Nieves), located beside the
respondents' house.
On November 5, 1999, MERALCO's service inspector inspected the respondents'

electrical facilities and found an outside connection attached to their electric meter. The
service inspector traced the connection, an illegal one, to the residence and appliances
of Nieves. Nieves was the only one present during the inspection and she was the one
who signed the Metering Facilities Inspection Report.
Due to the discovery of the illegal connection, the service inspector disconnected the
respondents' electric services on the same day. The inspection and disconnection were
done without the knowledge of the respondents as they were not at home and their
house was closed at the time.
The respondents denied that they had been, using an illegal electrical connection and
they requested MERALCO to immediately reconnect their electric services. Despite the
respondents' request, MERALCO instead demanded from them the payment of
P179,231.70 as differential billing.
On December 20, 1999, the respondents filed a complaint for breach of contract
with preliminary mandatory injunction and damages against MERALCO before the
RTC, Branch 40, City of Manila. They prayed for the immediate reconnection of their
electric service and the award of actual, moral, and exemplary damages, attorney's
fees, and litigation expenses.
In a decision dated August 22, 2006, the RTC ordered MERALCO to reconnect the
respondents' electric service and awarded damages as follows: ChanRoblesVirtualawlibrary
WHEREFORE, Judgment is rendered directing defendant MERALCO to permanently

reconnect immediately the plaintiffs electric services, and for said defendant to pay the
following:ChanRoblesVirtualawlibrary
1. P100,000.00 as actual or compensatory damages;
2. P1,500,000.00 as moral damages;
3. P300,000.00 as exemplary damages;
4. P100,000.00 as attorney's fees; and,
5. Costs of suit;
with legal interest on the total damages of P2,000,000.00 from the date of this
Judgment until fully paid.
SO ORDERED.4 chanroblesvirtuallawlibrary
MERALCO appealed the RTC's decision to the CA.
In its assailed July 30, 2010 decision, 5 the CA denied the appeal for lack of merit and
affirmed the RTC's order of reconnection and award for payment of damages. The
appellate court held that MERALCO failed to comply not only with its own contract of
service, but also with the requirements under Sections 4 and 6 of Republic Act No.
7832, or the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of
1994 (R.A. 7832), when it resorted to the immediate disconnection of the respondents'
electric service without due notice. It also ruled that the respondents were not liable for
the differential billing as it had not been established that they knew or consented to the
illegal connection or even benefited from it.
MERALCO moved for the reconsideration of the decision, but the CA denied its motion in
a resolution6 dated January 3, 2011. The present petition for review on certiorari7 was
filed with this Court on March 4, 2011, as a consequence. chanRoblesvirtualLawlibrary
The Petition
MERALCO argues that under R.A. 7832, it had the right and authority to immediately
disconnect the electric service of the respondents after they were caught in flagrante
delicto using a tampered electrical installation.
MERALCO also claims that by virtue of their contract of service, the respondents are
liable to pay the differential billing regardless of whether the latter benefited from the
illegal electric service or not. It adds that this is true even if the respondents did not
personally tamper with the electrical facilities.
Finally, MERALCO contends that there is no basis for the award of damages as the
disconnection of the respondents' electric service was done in good faith and in the
lawful exercise of its rights as a public utility company. chanRoblesvirtualLawlibrary
The Respondents' Comment
In their comment8 of June 29, 2011, the respondents pray for the denial of the present
petition for lack of merit. They argue that the discovery of an outside connection
attached to their electric meter does not give MERALCO the right to automatically
disconnect their electric service as the law provides certain mandatory requirements
that should be observed before a disconnection could be effected. They claim that
MERALCO failed to comply with these statutory requirements.
Also, the respondents contend that MERALCO breached its contractual obligations when
its service inspector immediately disconnected their electric service without notice. They
claim that this breach of contract, coupled with MERALCO's failure to observe the
requirements under R.A. 7832, entitled them to damages which were sufficiently
established with evidence and were rightfully awarded by the RTC and affirmed by the
CA.
Lastly, the respondents argue that they are not liable to MERALCO for the differential
billing as they were not the ones who illegally consumed the unbilled electricity through
the illegal connection.chanRoblesvirtualLawlibrary
The Court's Ruling
We DENY the petition for review on certiorari as we find no reversible error

committed by the CA in issuing its assailed decision.
The core issue in this case is whether MERALCO had the right to immediately disconnect
the electric service of the respondents upon discovery of an outside connection
attached to their electric meter.
The distribution of electricity is a basic necessity that is imbued with public interest. Its
provider is considered as a public utility subject to the strict regulation by the State in
the exercise of its police power. Failure to comply with these regulations gives
rise to the presumption of bad faith or abuse of right. 9 chanroblesvirtuallawlibrary
Nevertheless, the State also recognizes that electricity is the property of the service
provider. R.A. 7832 was enacted by Congress to afford electric service providers
multiple remedies to. protect themselves from electricity pilferage. These remedies
include the immediate disconnection of the electric service of an erring customer,
criminal prosecution, and the imposition of surcharges.10 However, the service provider
must avail of any or all of these remedies within legal bounds, in strict compliance with
the requirements and/or conditions set forth by law.
Section 4(a) of R.A. 7832 provides that the discovery of an outside connection
attached on the electric meter shall constitute as prima facie evidence of illegal use of
electricity by the person who benefits from the illegal use if the discovery is personally
witnessed and attested to by an officer of the law or a duly authorized
representative of the Energy Regulatory Board (ERB). With the presence of
such prima facie evidence, the electric service provider is within its rights to
immediately disconnect the electric service of the consumer after due notice.
This Court has repeatedly stressed the significance of the presence of an authorized
government representative during an inspection of electric facilities, viz.: ChanRoblesVirtualawlibrary
The presence of government agents who may authorize immediate

disconnections go into the essence of due process. Indeed, we cannot allow
respondent to act virtually as prosecutor and judge in imposing the penalty of
disconnection due to alleged meter tampering. That would not sit well in a
democratic country. After all, Meralco is a monopoly that derives its power from the
government. Clothing it with unilateral authority to disconnect would be equivalent to
giving it a license to tyrannize its hapless customers. 11 (Emphasis supplied)
Additionally, Section 6 of R.A. 7832 affords a private electric utility the right and
authority to immediately disconnect the electric service of a consumer who has been
caught in flagrante delicto doing any of the acts covered by Section 4(a). However, the
law clearly states that the disconnection may only be done after serving a written notice
or warning to the consumer.
To reiterate, R.A. 7832 has two requisites for an electric service provider to be
authorized to disconnect its customer's electric service on the basis of alleged electricity
pilferage: first, an officer of the law or an authorized ERB representative must be
present during the inspection of the electric facilities; and second, even if there is prima
facie evidence of illegal use of electricity and the customer is caught in flagrante
delicto committing the acts under Section 4(a), the customer must still be given due
notice prior to the disconnection.12
In its defense, MERALCO insists that it observed due process when its service inspector
disconnected the respondents' electric service, viz.: ChanRoblesVirtualawlibrary
Under the present situation, there is no doubt that due process, as required by R.A.
7832, was observed [when] the petitioner discontinued the electric supply of
respondent: there was an inspection conducted in the premises of respondent with the
consent of their authorized representative; it was discovered during the said inspection
that private respondents were using outside connection; the nature of the violation was
explained to private respondents' representative; the inspection and discovery was
personally witnessed and attested to by private respondents' representative; private
respondents failed and refused to pay the differential billing amounting to
P179,231.70 before their electric service was disconnected.13 (Emphasis
supplied)
After a thorough examination of the records of the case, we find no proof that
MERALCO complied with these two requirements under R.A. 7832. MERALCO never
even alleged in its submissions that an ERB representative or an officer of the law was
present during the inspection of the respondents' electric meter. Also, it did not claim
that the respondents were ever notified beforehand of the impending disconnection of
their electric service.
In view of MERALCO's failure to comply with the strict requirements under Sections 4
and 6 of R. A. No. 7832, we hold that MERALCO had no authority to immediately
disconnect the respondents' electric service. As a result, the immediate
disconnection of the respondents' electric service is presumed to be in bad faith.
We point out, too, that MERALCO's allegation that the respondents refused to pay the
differential billing before the disconnection of their electric service is an obvious falsity.
MERALCO never disputed the fact that the respondents' electric service was
disconnected on November 5, 1999 -the same day as when the electric meter was
inspected. Also, MERALCO's demand letter for payment of the differential billing is
dated December 4, 1999. Thus, there is no truth to the statement that the respondents
first failed to pay the differential billing and only then was their electric service
disconnected.
The disconnection of respondents' electric service is not supported by

MERALCO's own Terms and Conditions of Service.
In addition, we observe that MERALCO also failed to follow its own procedure for the
discontinuance of service under its contract of service with the respondents. We quote
in this regard the relevant terms of service: ChanRoblesVirtualawlibrary
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is in
arrears in the payment of bills in those cases where the meter stopped or failed to
register the correct amount of energy consumed, or failure to comply with any of these
terms and conditions or in case of or to prevent fraud upon the Company. Before
disconnection is made in case of or to prevent fraud, the Company may adjust
the bill of said customer accordingly and if the adjusted bill is not paid, the
Company may disconnect the same. In case of disconnection, the provisions of
Revised Order No. 1 of the former Public Service Commission (now ERC) shall be
observed. Any such suspension of service shall not terminate the contract between the
Company and the customer.14 (Emphasis supplied)
There is nothing in its contract of service that gives MERALCO the authority to
immediately disconnect a customer's electric connection. MERALCO's contractual right
to disconnect electric service arises only after the customer has been notified of his
adjusted bill and has been afforded the opportunity to pay the differential billing.
In this case, the disconnection of the respondents' electric service happened on

November 5, 1999, while the demand for the payment of differential billing was made
through a letter dated December 4, 1999. Thus, we hold that MERALCO breached
its contract of service with the respondents as it disconnected the latter's
electric service before they were ever notified of the differential billing.
Differential billing
Section 6 of R.A. 7832 defines differential billing as "the amount to be charged to the
person concerned for the unbilled electricity illegally consumed by him." Clearly, the law
provides that the person who actually consumed the electricity illegally shall be liable
for the differential billing. It does not ipso facto make liable for payment of the
differential billing the registered customer whose electrical facilities had been tampered
with and utilized for the illegal use of electricity.
In this case, as the prima facie presumption afforded by Section 4 of R.A. 7832 does

not apply, it falls upon MERALCO to first prove that the respondents had actually
installed the outside connection attached on their electric meter and that they had
benefited from the electricity consumed through the outside connection before it could
hold them liable for the differential billing.
The records show that MERALCO presented no proof that it ever caught the
respondents, or anyone acting in the respondents' behalf, in the act of tampering with
their electric meter. As the CA correctly held, the respondents could not have been
caught in flagrante delicto committing the tampering since they were not present
during the inspection of the electric meter, nor were any of their representatives at
hand.15 Moreover, the presence of an outside connection attached to the electric meter
operates only as a prima facie evidence of electricity pilferage under R.A. 7832; it is not
enough to declare the respondents in flagrante delicto tampering with the electric
meter.16 In fact, MERALCO itself admitted in its submissions that Nieves was the illegal
user of the outside connection attached to the respondents' electric meter. 17 chanroblesvirtuallawlibrary
On this point, MERALCO argues that Nieves was an authorized representative of the
respondents. However, the records are bereft of any sufficient proof to support this
claim. The fact that she is an occupant of the premises where the electric meter was
installed does not make her the respondents' representative considering that the unit
occupied by the respondents is separate and distinct from the one occupied by Nieves
and her family. Similarly, the fact that Nieves was able to show the respondents' latest
electric bill does not make her the latter's authorized representative.
While this Court recognizes the right of MERALCO as a public utility to collect system
losses, the courts cannot and will not blindly grant a public utility's claim for differential
billing if there is no sufficient evidence to prove entitlement. 18As MERALCO failed to
sufficiently prove its claim for payment of the differential billing, we rule that
the respondents cannot be held liable for the billed amount.
On the issue of damages
With MERALCO in bad faith for its failure to follow the strict requirements under R.A.
7832 in the disconnection of the respondents' electric service, we agree with the CA
that the award of damages is in order. However, we deem it proper to modify the
award in accordance with prevailing jurisprudence.
First, actual damages pertain to such injuries or losses that are actually sustained and
are susceptible of measurement. They are intended not to enrich the injured party but
to put him in the position in which he was in before he was injured. 19 chanroblesvirtuallawlibrary
In Viron Transportation Co., Inc. v. Delos Santos,20 we explained that in order to

recover actual damages, there must be pleading and proof of the damages
suffered, viz.:
ChanRoblesVirtualawlibrary
Actual damages, to be recoverable, must not only be capable of proof, but must
actually be proved with a reasonable degree of certainty. Courts cannot simply rely on
speculation, conjecture or guesswork in determining the fact and amount of
damages. To justify an award of actual damages, there must be competent
proof of the actual amount of loss, credence can be given only to claims which
are duly supported by receipts. (Emphasis supplied)
In this case, Patricia stated that her family's food expenses doubled after MERALCO
disconnected their electric services as they could no longer cook at home. We note,
however, that there is no- sufficient proof presented to show the actual food expenses
that the respondents incurred. Nevertheless, Patricia also testified that they were forced
to move to a new residence after living without electricity for eight (8) months at their
home in Tondo, Manila. They proved this allegation through the presentation of a
contract of lease and receipts for payment of monthly rentals for 42 months amounting
to P210,000.00. Thus, we find it proper to increase the award of actual damages
from P100,000.00 to P210,000.00.
Second, moral damages are designed to compensate and alleviate the physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar harm unjustly caused to a
person.21 They may be properly awarded to persons who have been unjustly deprived of
property without due process of law.22 chanroblesvirtuallawlibrary
In Regala v. Carin,23 we discussed the requisites for the award of moral

damages, viz: ChanRoblesVirtualawlibrary
In fine, an award of moral damages calls for the presentation of 1) evidence of

besmirched reputation or physical, mental or psychological suffering sustained by the
claimant; 2) a culpable act or omission factually established; 3) proof that the wrongful
act or omission of the defendant is the proximate cause of the damages sustained by
the claimant; and 4) the proof that the act is predicated on any of the instances
expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.
Applied to this case, after due consideration of the manner of disconnection of the
respondents' electric service and the length of time that the respondents had to endure
without electricity, we find the award of moral damages proper. Aside from having to
spend eight (8) months in the dark at their own residence, Patricia testified that they
suffered extreme social humiliation, embarrassment, and serious anxiety as they were
subjected to gossip in their neighborhood of stealing electricity through the use of an
illegal connection. The damage to the respondents' reputation and social standing was
aggravated by their decision to move to a new residence following the absolute refusal
of MERALCO to restore their electric services.
However, we find the award of P1,500,000.00 in moral damages to be excessive. Moral

damages are not intended to enrich the complainant as a penalty for the defendant. It
is awarded as a means to ease the moral suffering the complainant suffered due to the
defendant's culpable action.24 While prevailing jurisprudence deems it appropriate to
award 100,000.00 in moral damages in cases where MERALCO wrongfully disconnected
electric service,25 we hold that such amount is not commensurate with the injury
suffered by the respondents. Thus, in view of the specific circumstances present in this
case, we reduce the award of moral damages from P1,500,000.00 to
P300,000.00.
Third, exemplary or corrective damages are imposed by way of example or correction

for the public good, in addition to moral, temperate, liquidated, or compensatory
damages. The award of exemplary damages is allowed by law as a warning to the
public and as a deterrent against the repetition of socially deleterious actions. 26
In numerous cases,27 this Court found that MERALCO failed to comply with the
requirements under R.A. 7832 before a disconnection of a customer's electric service
could be effected. In these cases, we aptly awarded exemplary damages against
MERALCO to serve as a warning against repeating the same actions.
In this case, MERALCO totally failed to comply with the two requirements under R.A.
7832 before disconnecting the respondents' electric service. While MERALCO insists that
R.A. 7832 gives it the right to disconnect the respondents' electric service, nothing in
the records indicates that it attempted to comply with the statutory requirements
before effecting the disconnection.
Under these circumstances, we find that the previous awards against MERALCO have
not served their purpose as a means to prevent the repetition of the same damaging
actions that it has committed in the past. Therefore, we increase the award of
exemplary damages from P300,000.00 to P500,000.00 in the hope that this will
persuade MERALCO to be more prudent and responsible in its observance of the
requirements under the law in disconnecting a customer's electrical supply.
Lastly, in view of the award of exemplary damages, we find the award of attorney's
fees proper, in accordance with Article 2208(1) of the Civil Code. We find the CA's
award of attorney's fees in the amount of P100,000.00 just and reasonable
under the circumstances.
WHEREFORE, the petition is DENIED. The decision dated July 30,2010 and resolution
dated January 3,2011 of the Court of Appeals in CA-G.R. CV No. 87843
are AFFIRMED with the following modifications: MERALCO is ordered to pay
respondents Spouses Sulpicio and Patricia Ramos P210,000.00 as actual damages,
P300,000.00 as moral damages, P500,000.00 as exemplary damages, and P100,000.00
as attorneys fees. Costs against Manila Electric Company.
SO ORDERED. cralawlawlibrary
Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.
Endnotes:
1
Petition for Review on Certiorari, rollo, pp. 8-29.
2
Penned by Associate Justice Mario V. Lopez and concurred in by Associate Justices
Magdangal M. De Leon and Manuel M. Barrios, id. at 36-50.
3
Penned by Presiding Judge Placido C. Marquez, id. at 123-144.
4
Id. at 144.
5
Supra note 2.
6
Rollo, pp. 63-66.
7
Supra note 1.
8
Rollo, pp. 223-240.
9
Samar II Electric Cooperative, Inc. v. Quijano, G.R. No. 144474, April 27, 2007, 522
SCRA 364, 375, 376.
10
Id. at 376-377.
11
Quisumbing v. Manila Electric Company, G.R. No. 142943, April 3, 2002, 380 SCRA
195, 208.
12
Manila Electric Company v. Navarro-Domingo, G.R. No. 161893, June 27, 2006, 493
SCRA 363, 371.
13
See Petition for Review on Certiorari, rollo, p. 22.
14
See Petition for Review on Certiorari, rollo, p. 16.
15
Go v. Leyte II Electric Cooperative, Inc., G.R. No. 176909, February 18, 2008, 546
SCRA 187, 195.
16
Manila Electric Company v. Chua, G.R. No. 160422, July 5, 2010, 623 SCRA 81, 98.
17
See MERALCO'S Answer with Compulsory Counterclaim, rollo, p. 92.
18
Manila Electric Company v. Wilcon Builders Supply, Inc., G.R. No. 171534, June 30,
2008, 556 SCRA 742, 756, 757.
19
Oceaneering Contractors (PHILS), Inc. v. Barretto, G.R. No. 184215, February 9,
2011, 642 SCRA 596, 605, 606.
20
G.R. No. 138296, November 22, 2000, 345 SCRA 509, 519.
21
Regala v. Carin, G.R. No. 188715, April 6, 2011, 647 SCRA 419, 426.
22
CIVIL CODE, Article 32.
23
Supra note 21, at 427-428.
24
Manila Electric Company v. Jose, G.R. No. 152769, February 14, 2007, 515 SCRA 669,
680.
25
Supra note 17.
26
Tan v. OMC Carriers, Inc., G.R. No. 190521, January 12, 2011, 639 SCRA 471, 485.
27
Quisumbing v. Manila Electric Company, supra note 11; Manila Electric Company v.
Santiago, G.R. No. 170482, September 4, 2009, 598 SCRA 315; Manila Electric
Company v. Castillo, G.R. No. 182976, January 14, 2013, 688 SCRA 455; Manila
Electric Company v. Chua, supra note 16; Manila Electric Company v. Using Nan
Tannery, G.R. No. 178913, February 12, 2009, 578 SCRA 640; Manila Electric Company
v. Navarro-Domingo, supra note 12.
G.R. No. 170656 August 15, 2007
THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY and BAYANI FERNANDO as

Chairman of the Metropolitan Manila Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC., respondent.
x --------------------------------------------- x
G.R. No. 170657 August 15, 2007
HON. ALBERTO G. ROMULO, Executive Secretary, the METROPOLITAN MANILA

DEVELOPMENT AUTHORITY and BAYANI FERNANDO as Chairman of the Metropolitan
Manila Development Authority, petitioners,
vs.
MENCORP TRANSPORTATION SYSTEM, INC., respondent.
DECISION
CARPIO MORALES, J.:
The following conditions in 1969, as observed by this Court:
Vehicles have increased in number. Traffic congestion has moved from bad to worse, from
tolerable to critical. The number of people who use the thoroughfares has multiplied x x x,1
have remained unchecked and have reverberated to this day. Traffic jams continue to clog the
streets of Metro Manila, bringing vehicles to a standstill at main road arteries during rush hour traffic
and sapping people’s energies and patience in the process.
The present petition for review on certiorari, rooted in the traffic congestion problem, questions the
authority of the Metropolitan Manila Development Authority (MMDA) to order the closure of provincial
bus terminals along Epifanio de los Santos Avenue (EDSA) and major thoroughfares of Metro
Manila.
Specifically challenged are two Orders issued by Judge Silvino T. Pampilo, Jr. of the Regional Trial
Court (RTC) of Manila, Branch 26 in Civil Case Nos. 03-105850 and 03-106224.
The first assailed Order of September 8, 2005,2 which resolved a motion for reconsideration filed by
herein respondents, declared Executive Order (E.O.) No. 179, hereafter referred to as the E.O.,
"unconstitutional as it constitutes an unreasonable exercise of police power." The second assailed
Order of November 23, 20053 denied petitioners’ motion for reconsideration.
The following facts are not disputed:
President Gloria Macapagal Arroyo issued the E.O. on February 10, 2003, "Providing for the
Establishment of Greater Manila Mass Transport System," the pertinent portions of which read:
WHEREAS, Metro Manila continues to be the center of employment opportunities,

trade and commerce of the Greater Metro Manila area;
WHEREAS, the traffic situation in Metro Manila has affected the adjacent provinces
of Bulacan, Cavite, Laguna, and Rizal, owing to the continued movement of residents
and industries to more affordable and economically viable locations in these
provinces;
WHEREAS, the Metropolitan Manila Development Authority (MMDA) is tasked to

undertake measures to ease traffic congestion in Metro Manila and ensure the
convenient and efficient travel of commuters within its jurisdiction;
WHEREAS, a primary cause of traffic congestion in Metro Manila has been the
numerous buses plying the streets that impedes [sic] the flow of vehicles and
commuters due to the inefficient connectivity of the different transport modes;
WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating

the bus terminals now located along major Metro Manila thoroughfares and providing
more convenient access to the mass transport system to the commuting
public through the provision of mass transport terminal facilities that would integrate
the existing transport modes, namely the buses, the rail-based systems of the LRT,
MRT and PNR and to facilitate and ensure efficient travel through the improved
connectivity of the different transport modes;
WHEREAS, the national government must provide the necessary funding
requirements to immediately implement and render operational these projects; and
extent to MMDA such other assistance as may be warranted to ensure their
expeditious prosecution.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the

Philippines, by virtue of the powers vested in me by law, do hereby order:
Section 1. THE PROJECT. – The project shall be identified as GREATER MANILA

TRANSPORT SYSTEM Project.
Section 2. PROJECT OBJECTIVES. – In accordance with the plan proposed by

MMDA, the project aims to develop four (4) interim intermodal mass transport
terminals to integrate the different transport modes, as well as those that shall
hereafter be developed, to serve the commuting public in the northwest, north, east,
south, and southwest of Metro Manila. Initially, the project shall concentrate on
immediately establishing the mass transport terminals for the north and south Metro
Manila commuters as hereinafter described.
Section 3. PROJECT IMPLEMENTING AGENCY. – The Metropolitan Manila

Development Authority (MMDA), is hereby designated as the implementing Agency
for the project. For this purpose, MMDA is directed to undertake such infrastructure
development work as may be necessary and, thereafter, manage the project until it
may be turned-over to more appropriate agencies, if found suitable and convenient.
Specifically, MMDA shall have the following functions and responsibilities:
a) Cause the preparation of the Master Plan for the projects,

including the designs and costing;
b) Coordinate the use of the land and/or properties needed for the
project with the respective agencies and/or entities owning them;
c) Supervise and manage the construction of the necessary

structures and facilities;
d) Execute such contracts or agreements as may be necessary, with

the appropriate government agencies, entities, and/or private
persons, in accordance with existing laws and pertinent regulations,
to facilitate the implementation of the project;
e) Accept, manage and disburse such funds as may be necessary for

the construction and/or implementation of the projects, in accordance
with prevailing accounting and audit polices and practice in
government.
f) Enlist the assistance of any national government agency, office or

department, including local government units, government-owned or
controlled corporations, as may be necessary;
g) Assign or hire the necessary personnel for the above purposes;

and
h) Perform such other related functions as may be necessary to
enable it to accomplish the objectives and purposes of this Executive
Order.4 (Emphasis in the original; underscoring supplied)
As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in Metro
Manila has been the numerous buses plying the streets and the inefficient connectivity of the
different transport modes;5 and the MMDA had "recommended a plan to decongest traffic by
eliminating the bus terminals now located along major Metro Manila thoroughfares and providing
more and convenient access to the mass transport system to the commuting public through the
provision of mass transport terminal facilities"6 which plan is referred to under the E.O. as
the Greater Manila Mass Transport System Project (the Project).
The E.O. thus designated the MMDA as the implementing agency for the Project.
Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking body
of the MMDA, issued Resolution No. 03-07 series of 20037 expressing full support of the Project.
Recognizing the imperative to integrate the different transport modes via the establishment of
common bus parking terminal areas, the MMC cited the need to remove the bus terminals located
along major thoroughfares of Metro Manila.8
On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in the
business of public transportation with a provincial bus operation,9 filed a petition for declaratory
relief10 before the RTC11 of Manila.
In its petition which was docketed as Civil Case No. 03-105850, Viron alleged that the MMDA,
through Chairman Fernando, was "poised to issue a Circular, Memorandum or Order closing, or
tantamount to closing, all provincial bus terminals along EDSA and in the whole of the Metropolis
under the pretext of traffic regulation."12 This impending move, it stressed, would mean the closure of
its bus terminal in Sampaloc, Manila and two others in Quezon City.
Alleging that the MMDA’s authority does not include the power to direct provincial bus operators to
abandon their existing bus terminals to thus deprive them of the use of their property, Viron asked
the court to construe the scope, extent and limitation of the power of the MMDA to regulate traffic
under R.A. No. 7924, "An Act Creating the Metropolitan Manila Development Authority, Defining its
Powers and Functions, Providing Funds Therefor and For Other Purposes."
Viron also asked for a ruling on whether the planned closure of provincial bus terminals would
contravene the Public Service Act and related laws which mandate public utilities to provide and
maintain their own terminals as a requisite for the privilege of operating as common carriers.13
Mencorp Transportation System, Inc. (Mencorp), another provincial bus operator, later filed a similar
petition for declaratory relief14 against Executive Secretary Alberto G. Romulo and MMDA Chairman
Fernando.
Mencorp asked the court to declare the E.O. unconstitutional and illegal for transgressing the
possessory rights of owners and operators of public land transportation units over their respective
terminals.
Averring that MMDA Chairman Fernando had begun to implement a plan to close and eliminate all
provincial bus terminals along EDSA and in the whole of the metropolis and to transfer their
operations to common bus terminals,15 Mencorp prayed for the issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction to restrain the impending closure of its bus terminals
which it was leasing at the corner of EDSA and New York Street in Cubao and at the intersection of
Blumentritt, Laon Laan and Halcon Streets in Quezon City. The petition was docketed as Civil Case
No. 03-106224 and was raffled to Branch 47 of the RTC of Manila.
Mencorp’s petition was consolidated on June 19, 2003 with Viron’s petition which was raffled to
Branch 26 of the RTC, Manila.
Mencorp’s prayer for a TRO and/or writ of injunction was denied as was its application for the
issuance of a preliminary injunction.16
In the Pre-Trial Order17 issued by the trial court, the issues were narrowed down to whether 1) the
MMDA’s power to regulate traffic in Metro Manila included the power to direct provincial bus
operators to abandon and close their duly established and existing bus terminals in order to conduct
business in a common terminal; (2) the E.O. is consistent with the Public Service Act and the
Constitution; and (3) provincial bus operators would be deprived of their real properties without due
process of law should they be required to use the common bus terminals.
Upon the agreement of the parties, they filed their respective position papers in lieu of hearings.
By Decision18 of January 24, 2005, the trial court sustained the constitutionality and legality of the
E.O. pursuant to R.A. No. 7924, which empowered the MMDA to administer Metro Manila’s basic
services including those of transport and traffic management.
The trial court held that the E.O. was a valid exercise of the police power of the State as it satisfied
the two tests of lawful subject matter and lawful means, hence, Viron’s and Mencorp’s property
rights must yield to police power.
On the separate motions for reconsideration of Viron and Mencorp, the trial court, by Order of
September 8, 2005, reversed its Decision, this time holding that the E.O. was "an unreasonable
exercise of police power"; that the authority of the MMDA under Section (5)(e) of R.A. No. 7924 does
not include the power to order the closure of Viron’s and Mencorp’s existing bus terminals; and that
the E.O. is inconsistent with the provisions of the Public Service Act.
Petitioners’ motion for reconsideration was denied by Resolution of November 23, 2005.
Hence, this petition, which faults the trial court for failing to rule that: (1) the requisites of declaratory
relief are not present, there being no justiciable controversy in Civil Case Nos. 03-105850 and 03-
106224; and (2) the President has the authority to undertake or cause the implementation of the
Project.19
Petitioners contend that there is no justiciable controversy in the cases for declaratory relief as
nothing in the body of the E.O. mentions or orders the closure and elimination of bus terminals along
the major thoroughfares of Metro Manila. Viron and Mencorp, they argue, failed to produce any letter
or communication from the Executive Department apprising them of an immediate plan to close
down their bus terminals.
And petitioners maintain that the E.O. is only an administrative directive to government agencies to
coordinate with the MMDA and to make available for use government property along EDSA and
South Expressway corridors. They add that the only relation created by the E.O. is that between the
Chief Executive and the implementing officials, but not between third persons.
The petition fails.
It is true, as respondents have pointed out, that the alleged deficiency of the consolidated petitions to
meet the requirement of justiciability was not among the issues defined for resolution in the Pre-Trial
Order of January 12, 2004. It is equally true, however, that the question was repeatedly raised by
petitioners in their Answer to Viron’s petition,20 their Comment of April 29, 2003 opposing Mencorp’s
prayer for the issuance of a TRO,21 and their Position Paper of August 23, 2004.22
In bringing their petitions before the trial court, both respondents pleaded the existence of the
essential requisites for their respective petitions for declaratory relief,23 and refuted petitioners’
contention that a justiciable controversy was lacking.24 There can be no denying, therefore, that the
issue was raised and discussed by the parties before the trial court.
The following are the essential requisites for a declaratory relief petition: (a) there must be a
justiciable controversy; (b) the controversy must be between persons whose interests are adverse;
(c) the party seeking declaratory relief must have a legal interest in the controversy; and (d) the
issue invoked must be ripe for judicial determination.25
The requirement of the presence of a justiciable controversy is satisfied when an actual controversy
or the ripening seeds thereof exist between the parties, all of whom are sui juris and before the
court, and the declaration sought will help in ending the controversy.26 A question becomes
justiciable when it is translated into a claim of right which is actually contested.27
In the present cases, respondents’ resort to court was prompted by the issuance of the E.O. The 4th
Whereas clause of the E.O. sets out in clear strokes the MMDA’s plan to "decongest traffic
by eliminating the bus terminals now located along major Metro Manila thoroughfares and providing
more convenient access to the mass transport system to the commuting public through the provision
of mass transport terminal facilities x x x." (Emphasis supplied)
Section 2 of the E.O. thereafter lays down the immediate establishment of common bus terminals for
north- and south-bound commuters. For this purpose, Section 8 directs the Department of Budget
and Management to allocate funds of not more than one hundred million pesos (P100,000,000) to
cover the cost of the construction of the north and south terminals. And the E.O. was made effective
immediately.
The MMDA’s resolve to immediately implement the Project, its denials to the contrary
notwithstanding, is also evident from telltale circumstances, foremost of which was the passage by
the MMC of Resolution No. 03-07, Series of 2003 expressing its full support of the immediate
implementation of the Project.
Notable from the 5th Whereas clause of the MMC Resolution is the plan to "remove the bus
terminals located along major thoroughfares of Metro Manila and an urgent need to integrate the
different transport modes." The 7th Whereas clause proceeds to mention the establishment of the
North and South terminals.
As alleged in Viron’s petition, a diagram of the GMA-MTS North Bus/Rail Terminal had been drawn
up, and construction of the terminal is already in progress. The MMDA, in its Answer28 and Position
Paper,29 in fact affirmed that the government had begun to implement the Project.
It thus appears that the issue has already transcended the boundaries of what is merely conjectural
or anticipatory.lawphil
Under the circumstances, for respondents to wait for the actual issuance by the MMDA of an order
for the closure of respondents’ bus terminals would be foolhardy for, by then, the proper action to
bring would no longer be for declaratory relief which, under Section 1, Rule 6330 of the Rules of
Court, must be brought before there is a breach or violation of rights.
As for petitioners’ contention that the E.O. is a mere administrative issuance which creates no
relation with third persons, it does not persuade. Suffice it to stress that to ensure the success of the
Project for which the concerned government agencies are directed to coordinate their activities and
resources, the existing bus terminals owned, operated or leased by third persons like respondents
would have to be eliminated; and respondents would be forced to operate from the common bus
terminals.
It cannot be gainsaid that the E.O. would have an adverse effect on respondents. The closure of
their bus terminals would mean, among other things, the loss of income from the operation and/or
rentals of stalls thereat. Precisely, respondents claim a deprivation of their constitutional right to
property without due process of law.
Respondents have thus amply demonstrated a "personal and substantial interest in the case such
that [they have] sustained, or will sustain, direct injury as a result of [the E.O.’s]
enforcement."31 Consequently, the established rule that the constitutionality of a law or administrative
issuance can be challenged by one who will sustain a direct injury as a result of its enforcement has
been satisfied by respondents.
On to the merits of the case.
Respondents posit that the MMDA is devoid of authority to order the elimination of their bus
terminals under the E.O. which, they argue, is unconstitutional because it violates both the
Constitution and the Public Service Act; and that neither is the MMDA clothed with such authority
under R.A. No. 7924.
Petitioners submit, however, that the real issue concerns the President’s authority to undertake or to
cause the implementation of the Project. They assert that the authority of the President is derived
from E.O. No. 125, "Reorganizing the Ministry of Transportation and Communications Defining its
Powers and Functions and for Other Purposes," her residual power and/or E.O. No. 292, otherwise
known as the Administrative Code of 1987. They add that the E.O. is also a valid exercise of the
police power.
E.O. No. 125,32 which former President Corazon Aquino issued in the exercise of legislative powers,
reorganized the then Ministry (now Department) of Transportation and Communications. Sections 4,
5, 6 and 22 of E.O. 125, as amended by E.O. 125-A,33 read:
SECTION 4. Mandate. — The Ministry shall be the primary policy, planning,

programming, coordinating, implementing, regulating and administrative entity of the
Executive Branch of the government in the promotion, development and regulation of
dependable and coordinated networks of transportation and communication systems as
well as in the fast, safe, efficient and reliable postal, transportation and communications
services.
To accomplish such mandate, the Ministry shall have the following objectives:
(a) Promote the development of dependable and coordinated networks of
transportation and communications systems;
(b) Guide government and private investment in the development of the

country’s intermodal transportation and communications systems in a
most practical, expeditious, and orderly fashion for maximum safety, service,
and cost effectiveness; (Emphasis and underscoring supplied)
xxxx
SECTION 5. Powers and Functions. — To accomplish its mandate, the Ministry shall have
the following powers and functions:
(a) Formulate and recommend national policies and guidelines for the
preparation and implementation of integrated and comprehensive
transportation and communications systems at the national, regional and
local levels;
(b) Establish and administer comprehensive and integrated programs

for transportation and communications, and for this purpose, may call on
any agency, corporation, or organization, whether public or private, whose
development programs include transportation and communications as an
integral part thereof, to participate and assist in the preparation and
implementation of such program;
(c) Assess, review and provide direction to transportation and

communications research and development programs of the government in
coordination with other institutions concerned;
(d) Administer all laws, rules and regulations in the field of

transportation and communications; (Emphasis and underscoring
supplied)
xxxx
SECTION 6. Authority and Responsibility. — The authority and responsibility for the
exercise of the mandate of the Ministry and for the discharge of its powers and
functions shall be vested in the Minister of Transportation and Communications,
hereinafter referred to as the Minister, who shall have supervision and control over the
Ministry and shall be appointed by the President. (Emphasis and underscoring supplied)
SECTION 22. Implementing Authority of Minister. — The Minister shall issue such orders,
rules, regulations and other issuances as may be necessary to ensure the effective
implementation of the provisions of this Executive Order. (Emphasis and underscoring
supplied)
It is readily apparent from the abovequoted provisions of E.O. No. 125, as amended, that the
President, then possessed of and exercising legislative powers, mandated the DOTC to be the
primary policy, planning, programming, coordinating, implementing, regulating and administrative
entity to promote, develop and regulate networks of transportation and communications. The grant of
authority to the DOTC includes the power to establish and administer comprehensive and
integrated programs for transportation and communications.
As may be seen further, the Minister (now Secretary) of the DOTC is vested with the authority and
responsibility to exercise the mandate given to the department. Accordingly, the DOTC Secretary is
authorized to issue such orders, rules, regulations and other issuances as may be necessary to
ensure the effective implementation of the law.
Since, under the law, the DOTC is authorized to establish and administer programs and projects for
transportation, it follows that the President may exercise the same power and authority to order the
implementation of the Project, which admittedly is one for transportation.
Such authority springs from the President’s power of control over all executive departments as well
as the obligation for the faithful execution of the laws under Article VII, Section 17 of the Constitution
which provides:
SECTION 17. The President shall have control of all the executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed.
This constitutional provision is echoed in Section 1, Book III of the Administrative Code of 1987.
Notably, Section 38, Chapter 37, Book IV of the same Code defines the President’s power of
supervision and control over the executive departments, viz:
SECTION 38. Definition of Administrative Relationships. — Unless otherwise expressly

stated in the Code or in other laws defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as follows:
(1) Supervision and Control. — Supervision and control shall include authority to

act directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts; review,
approve, reverse or modify acts and decisions of subordinate officials or units; determine
priorities in the execution of plans and programs. Unless a different meaning is explicitly
provided in the specific law governing the relationship of particular agencies the word
"control" shall encompass supervision and control as defined in this paragraph. x x x
(Emphasis and underscoring supplied)
Thus, whenever a specific function is entrusted by law or regulation to a subordinate, the President
may act directly or merely direct the performance of a duty.34
Respecting the President’s authority to order the implementation of the Project in the exercise of the
police power of the State, suffice it to stress that the powers vested in the DOTC Secretary to
establish and administer comprehensive and integrated programs for transportation and
communications and to issue orders, rules and regulations to implement such mandate (which, as
previously discussed, may also be exercised by the President) have been so delegated for the good
and welfare of the people. Hence, these powers partake of the nature of police power.
Police power is the plenary power vested in the legislature to make, ordain, and establish
wholesome and reasonable laws, statutes and ordinances, not repugnant to the Constitution, for the
good and welfare of the people.35 This power to prescribe regulations to promote the health, morals,
education, good order or safety, and general welfare of the people flows from the recognition
that salus populi est suprema lex ─ the welfare of the people is the supreme law.
While police power rests primarily with the legislature, such power may be delegated, as it is in fact
increasingly being delegated.36 By virtue of a valid delegation, the power may be exercised by the
President and administrative boards37 as well as by the lawmaking bodies of municipal corporations
or local governments under an express delegation by the Local Government Code of 1991.38
The authority of the President to order the implementation of the Project notwithstanding, the
designation of the MMDA as the implementing agency for the Project may not be sustained. It
is ultra vires, there being no legal basis therefor.
It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and not the
MMDA, which is authorized to establish and implement a project such as the one subject of the
cases at bar. Thus, the President, although authorized to establish or cause the implementation of
the Project, must exercise the authority through the instrumentality of the DOTC which, by law, is the
primary implementing and administrative entity in the promotion, development and regulation of
networks of transportation, and the one so authorized to establish and implement a project such as
the Project in question.
By designating the MMDA as the implementing agency of the Project, the President clearly
overstepped the limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of MMDA flies in the absence of a specific grant of
authority to it under R.A. No. 7924.
To recall, R.A. No. 7924 declared the Metropolitan Manila area39 as a "special development and
administrative region" and placed the administration of "metro-wide" basic services affecting the
region under the MMDA.
Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform "planning, monitoring and
coordinative functions, and in the process exercise regulatory and supervisory authority over the
delivery of metro-wide services," including transport and traffic management.40 Section 5 of the same
law enumerates the powers and functions of the MMDA as follows:
(a) Formulate, coordinate and regulate the implementation of medium and long-term
plans and programs for the delivery of metro-wide services, land use and physical
development within Metropolitan Manila, consistent with national development
objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term investment

programs for metro-wide services which shall indicate sources and uses of funds for
priority programs and projects, and which shall include the packaging of projects and
presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and projects for the
delivery of specific services under its jurisdiction, subject to the approval of the
Council. For this purpose, MMDA can create appropriate project management
offices;
(d) Coordinate and monitor the implementation of such plans, programs and projects
in Metro Manila; identify bottlenecks and adopt solutions to problems of
implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and
shall coordinate and regulate the implementation of all programs and projects
concerning traffic management, specifically pertaining to enforcement,
engineering and education. Upon request, it shall be extended assistance and
cooperation, including but not limited to, assignment of personnel, by all other
government agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and collect fines
and penalties for all kinds of violations of traffic rules and regulations , whether
moving or non-moving in nature, and confiscate and suspend or revoke drivers’
licenses in the enforcement of such traffic laws and regulations, the provisions of RA
4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority
shall impose all traffic laws and regulations in Metro Manila, through its traffic
operation center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of non-governmental
organizations to whom may be delegated certain authority, subject to such conditions
and requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the objectives of the MMDA,
including the undertaking of delivery of basic services to the local government units,
when deemed necessary subject to prior coordination with and consent of the local
government unit concerned." (Emphasis and underscoring supplied)
The scope of the function of MMDA as an administrative, coordinating and policy-setting body has
been settled in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village Association,
Inc.41 In that case, the Court stressed:
Clearly, the scope of the MMDA’s function is limited to the delivery of the seven (7) basic
services. One of these is transport and traffic management which includes the formulation
and monitoring of policies, standards and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares and promotion of the safe
movement of persons and goods. It also covers the mass transport system and the
institution of a system of road regulation, the administration of all traffic enforcement
operations, traffic engineering services and traffic education programs, including the
institution of a single ticketing system in Metro Manila for traffic violations. Under this service,
the MMDA is expressly authorized to "to set the policies concerning traffic" and "coordinate
and regulate the implementation of all traffic management programs." In addition, the MMDA
may install and administer a single ticketing system," fix, impose and collect fines and
penalties for all traffic violations.
It will be noted that the powers of the MMDA are limited to the following acts: formulation,
coordination, regulation, implementation, preparation, management, monitoring, setting of
policies, installation of a system and administration. There is no syllable in R.A. No. 7924
that grants the MMDA police power, let alone legislative power. Even the Metro Manila
Council has not been delegated any legislative power. Unlike the legislative bodies of the
local government units, there is no provision in R.A. No. 7924 that empowers the
MMDA or its Council to ‘enact ordinances, approve resolutions and appropriate
funds for the general welfare’ of the inhabitants of Metro Manila. The MMDA is, as
termed in the charter itself, a ‘development authority.’ It is an agency created for the
purpose of laying down policies and coordinating with the various national
government agencies, people’s organizations, non-governmental organizations and
the private sector for the efficient and expeditious delivery of basic services in the
vast metropolitan area. All its functions are administrative in nature and these are
actually summed up in the charter itself, viz:
‘SECTION 2. Creation of the Metropolitan Manila Development Authority. — . . .
The MMDA shall perform planning, monitoring and coordinative functions, and

in the process exercise regulatory and supervisory authority over the delivery
of metro-wide services within Metro Manila, without diminution of the autonomy of
the local government units concerning purely local matters.’42 (Emphasis and
underscoring supplied)
In light of the administrative nature of its powers and functions, the MMDA is devoid of authority to
implement the Project as envisioned by the E.O; hence, it could not have been validly designated by
the President to undertake the Project. It follows that the MMDA cannot validly order the elimination
of respondents’ terminals.
Even the MMDA’s claimed authority under the police power must necessarily fail in consonance with
the above-quoted ruling in MMDA v. Bel-Air Village Association, Inc. and this Court’s subsequent
ruling in Metropolitan Manila Development Authority v. Garin43 that the MMDA is not vested with
police power.
Even assuming arguendo that police power was delegated to the MMDA, its exercise of such power
does not satisfy the two tests of a valid police power measure, viz: (1) the interest of the public
generally, as distinguished from that of a particular class, requires its exercise; and (2) the means
employed are reasonably necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.44 Stated differently, the police power legislation must be firmly grounded
on public interest and welfare and a reasonable relation must exist between the purposes and the
means.
As early as Calalang v. Williams,45 this Court recognized that traffic congestion is a public, not merely
a private, concern. The Court therein held that public welfare underlies the contested statute
authorizing the Director of Public Works to promulgate rules and regulations to regulate and control
traffic on national roads.
Likewise, in Luque v. Villegas,46 this Court emphasized that public welfare lies at the bottom of any
regulatory measure designed "to relieve congestion of traffic, which is, to say the least, a menace to
public safety."47 As such, measures calculated to promote the safety and convenience of the people
using the thoroughfares by the regulation of vehicular traffic present a proper subject for the exercise
of police power.
Notably, the parties herein concede that traffic congestion is a public concern that needs to be
addressed immediately. Indeed, the E.O. was issued due to the felt need to address the worsening
traffic congestion in Metro Manila which, the MMDA so determined, is caused by the increasing
volume of buses plying the major thoroughfares and the inefficient connectivity of existing transport
systems. It is thus beyond cavil that the motivating force behind the issuance of the E.O. is the
interest of the public in general.
Are the means employed appropriate and reasonably necessary for the accomplishment of the
purpose. Are they not duly oppressive?
With the avowed objective of decongesting traffic in Metro Manila, the E.O. seeks to "eliminate[e] the
bus terminals now located along major Metro Manila thoroughfares and provid[e] more convenient
access to the mass transport system to the commuting public through the provision of mass
transport terminal facilities x x x."48 Common carriers with terminals along the major thoroughfares of
Metro Manila would thus be compelled to close down their existing bus terminals and use the
MMDA-designated common parking areas.
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,49 two city ordinances were passed by
the Sangguniang Panlungsod of Lucena, directing public utility vehicles to unload and load
passengers at the Lucena Grand Central Terminal, which was given the exclusive franchise to
operate a single common terminal. Declaring that no other terminals shall be situated, constructed,
maintained or established inside or within the city of Lucena, the sanggunian declared as inoperable
all temporary terminals therein.
The ordinances were challenged before this Court for being unconstitutional on the ground that, inter
alia, the measures constituted an invalid exercise of police power, an undue taking of private
property, and a violation of the constitutional prohibition against monopolies.
Citing De la Cruz v. Paras50 and Lupangco v. Court of Appeals,51 this Court held that the assailed
ordinances were characterized by overbreadth, as they went beyond what was reasonably
necessary to solve the traffic problem in the city. And it found that the compulsory use of the Lucena
Grand Terminal was unduly oppressive because it would subject its users to fees, rentals and
charges.
The true role of Constitutional Law is to effect an equilibrium between authority and liberty so
that rights are exercised within the framework of the law and the laws are enacted with due
deference to rights.
A due deference to the rights of the individual thus requires a more careful formulation of
solutions to societal problems.
From the memorandum filed before this Court by petitioner, it is gathered that the
Sangguniang Panlungsod had identified the cause of traffic congestion to be the
indiscriminate loading and unloading of passengers by buses on the streets of the city
proper, hence, the conclusion that the terminals contributed to the proliferation of buses
obstructing traffic on the city streets.
Bus terminals per se do not, however, impede or help impede the flow of
traffic. How the outright proscription against the existence of all terminals, apart from
that franchised to petitioner, can be considered as reasonably necessary to solve the
traffic problem, this Court has not been enlightened. If terminals lack adequate space
such that bus drivers are compelled to load and unload passengers on the streets instead of
inside the terminals, then reasonable specifications for the size of terminals could be
instituted, with permits to operate the same denied those which are unable to meet the
specifications.
In the subject ordinances, however, the scope of the proscription against the

maintenance of terminals is so broad that even entities which might be able to provide
facilities better than the franchised terminal are barred from operating at all. (Emphasis
and underscoring supplied)
As in Lucena, this Court fails to see how the prohibition against the existence of respondents’
terminals can be considered a reasonable necessity to ease traffic congestion in the metropolis. On
the contrary, the elimination of respondents’ bus terminals brings forth the distinct possibility and the
equally harrowing reality of traffic congestion in the common parking areas, a case of transference
from one site to another.
Less intrusive measures such as curbing the proliferation of "colorum" buses, vans and taxis
entering Metro Manila and using the streets for parking and passenger pick-up points, as
respondents suggest, might even be more effective in easing the traffic situation. So would the strict
enforcement of traffic rules and the removal of obstructions from major thoroughfares.
As to the alleged confiscatory character of the E.O., it need only to be stated that respondents’
certificates of public convenience confer no property right, and are mere licenses or privileges.52 As
such, these must yield to legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the MMDA cannot order the closure of respondents’
terminals not only because no authority to implement the Project has been granted nor legislative or
police power been delegated to it, but also because the elimination of the terminals does not satisfy
the standards of a valid police power measure.
Finally, an order for the closure of respondents’ terminals is not in line with the provisions of the
Public Service Act.
Paragraph (a), Section 13 of Chapter II of the Public Service Act (now Section 5 of Executive Order
No. 202, creating the Land Transportation Franchising and Regulatory Board or LFTRB) vested the
Public Service Commission (PSC, now the LTFRB) with "x x x jurisdiction, supervision and control
over all public services and their franchises, equipment and other properties x x x."
Consonant with such grant of authority, the PSC was empowered to "impose such conditions as
to construction, equipment, maintenance, service, or operation as the public interests and
convenience may reasonably require"53 in approving any franchise or privilege.
Further, Section 16 (g) and (h) of the Public Service Act54 provided that the Commission shall have
the power, upon proper notice and hearing in accordance with the rules and provisions of this Act,
subject to the limitations and exceptions mentioned and saving provisions to the contrary:
(g) To compel any public service to furnish safe, adequate, and proper service as regards
the manner of furnishing the same as well as the maintenance of the necessary material and
equipment.
(h) To require any public service to establish, construct, maintain, and operate any
reasonable extension of its existing facilities, where in the judgment of said Commission,
such extension is reasonable and practicable and will furnish sufficient business to justify the
construction and maintenance of the same and when the financial condition of the said
public service reasonably warrants the original expenditure required in making and operating
such extension.(Emphasis and underscoring supplied)
The establishment, as well as the maintenance of vehicle parking areas or passenger terminals, is
generally considered a necessary service to be provided by provincial bus operators like
respondents, hence, the investments they have poured into the acquisition or lease of suitable
terminal sites. Eliminating the terminals would thus run counter to the provisions of the Public
Service Act.
This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at solving
the pestering problem of traffic congestion in Metro Manila. These efforts are commendable, to say
the least, in the face of the abominable traffic situation of our roads day in and day out. This Court
can only interpret, not change, the law, however. It needs only to be reiterated that it is the DOTC ─
as the primary policy, planning, programming, coordinating, implementing, regulating and
administrative entity to promote, develop and regulate networks of transportation and
communications ─ which has the power to establish and administer a transportation project
like the Project subject of the case at bar.
No matter how noble the intentions of the MMDA may be then, any plan, strategy or project which it
is not authorized to implement cannot pass muster.
WHEREFORE, the Petition is, in light of the foregoing disquisition, DENIED. E.O. No. 179 is
declared NULL and VOID for being ultra vires.
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,

Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr., Nachura, Reyes, JJ., concur.
G.R. No. 207132, December 06, 2016 - ASSOCIATION OF MEDICAL CLINICS FOR
OVERSEAS WORKERS, INC., (AMCOW), REPRESENTED HEREIN BY ITS PRESIDENT, DR.
ROLANDO VILLOTE, Petitioner, v. GCC APPROVED MEDICAL CENTERS ASSOCIATION,
INC. AND CHRISTIAN CANGCO, Respondents.; G.R. No. 207205 - HON. ENRIQUE T.
ONA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF HEALTH, Petitioner, v.
GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC. AND CHRISTIAN E. CANGCO,
Respondents.:
G.R. No. 207132, December 06, 2016 - ASSOCIATION OF MEDICAL CLINICS FOR
OVERSEAS WORKERS, INC., (AMCOW), REPRESENTED HEREIN BY ITS PRESIDENT, DR.
ROLANDO VILLOTE, Petitioner, v. GCC APPROVED MEDICAL CENTERS ASSOCIATION,
INC. AND CHRISTIAN CANGCO, Respondents.; G.R. No. 207205 - HON. ENRIQUE T.
ONA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF HEALTH, Petitioner, v.
GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC. AND CHRISTIAN E. CANGCO,
Respondents.
EN BANC
G.R. No. 207132, December 06, 2016
ASSOCIATION OF MEDICAL CLINICS FOR OVERSEAS WORKERS, INC.,

(AMCOW), REPRESENTED HEREIN BY ITS PRESIDENT, DR. ROLANDO
VILLOTE, Petitioner, v. GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC.
AND CHRISTIAN CANGCO, Respondents.
G.R. No. 207205
HON. ENRIQUE T. ONA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT

OF HEALTH, Petitioner, v. GCC APPROVED MEDICAL CENTERS ASSOCIATION,
INC. AND CHRISTIAN E. CANGCO, Respondents.
DECISION
BRION, J.:
In these consolidated petitions for review on certiorari1 filed under Rule 45 of the

Rules of Court, by the Association of Medical Clinics for Overseas Workers, Inc.
(AMCOW) in GR No. 207132, and by Secretary Enrique T. Ona (Secretary Ona) of the
Department of Health (DOH) in GR No. 207205, we resolve the challenge to
the August 10, 2012 decision2 and the April 12, 2013 order3 of the Regional Trial
Court (RTC) of Pasay City, Branch 108, in Sp. Civil Action No. R-PSY-10-04391-CV. 4
The August 10, 2012 decision and April 12, 2013 order declared null and void ab
initio the August 23, 2010 and November 2, 2010 orders issued by the DOH
directing respondent GCC Approved Medical Centers Association, Inc. (GAMCA) to cease
and desist from implementing the referral decking system (these orders shall be
alternately referred to as DOH CDO letters).
I. The Antecedents
On March 8, 2001, the DOH issued Administrative Order No. 5, Series of

20015(AO 5-01) which directed the decking or equal distribution of migrant
workers among the several clinics who are members of GAMCA.
AO 5-01 was issued to comply with the Gulf Cooperative Countries (GCC) States'
requirement that only GCC-accredited medical clinics/hospitals' examination results will
be honored by the GCC States' respective embassies. It required an OFW applicant to
first go to a GAMCA Center which, in turn, will refer the applicant to a GAMCA clinic or
hospital.
Subsequently, the DOH issued AO No. 106, Series of 20026holding in abeyance

the implementation of the referral decking system. The DOH reiterated its
directive suspending the referral decking system in AO No. 159, Series of
2004.7
In 2004, the DOH issued AO No. 167, Series of 20048repealing AO 5-01, reasoning
that the referral decking system did not guarantee the migrant workers' right to safe
and quality health service. AO 167-04 pertinently reads:
WHEREAS, after a meticulous and deliberate study, examination, and consultation
about the GAMCA referral decking system, the DOH believes that its mandate is to
protect and promote the health of the Filipino people by ensuring the rights to safe and
quality health service and reliable medical examination results through the stricter
regulation of medical clinics and other health facilities, which the referral decking
system neither assures nor guarantees.
NOW, THEREFORE, for and in consideration of the foregoing, the DOH hereby
withdraws, repeals and/or revokes Administrative Order No. 5, series of 2001,
concerning the referral decking system. Hence, all other administrative issuances,
bureau circulars and memoranda related to A.O. No. 5, series of 2001, are hereby
withdrawn, repealed and/revoked accordingly.
In Department Memorandum No. 2008-0210,9 dated September 26, 2008, then
DOH Secretary Francisco T. Duque III expressed his concern about the continued
implementation of the referral decking system despite the DOH's prior suspension
directives. The DOH directed the "OFW clinics, duly accredited/licensed by the DOH
and/or by the Philippine Health Insurance Corporation (PHILHEALTH) belonging to and
identified with GAMCA x x x to forthwith stop, terminate, withdraw or otherwise
end the x x x 'referral decking system.'"10
GAMCA questioned the DOH's Memorandum No. 2008-0210 before the Office of the
President (OP). In a decision11 dated January 14, 2010, the OP nullified
Memorandum No. 2008-0210.
On March 8, 2010, Republic Act (RA) No. 1002212lapsed into law without the

President's signature. Section 16 of RA No. 10022 amended Section 23 of RA No. 8042,
adding two new paragraphs - paragraphs (c) and (d). The pertinent portions of the
amendatory provisions read:
Section 16. Under Section 23 of Republic Act No. 8042, as amended, add new
paragraphs (c) and (d) with their corresponding subparagraphs to read as follows:
(c) Department of Health. - The Department of Health (DOH) shall regulate the
activities and operations of all clinics which conduct medical, physical, optical,
dental, psychological and other similar examinations, hereinafter referred to
as health examinations, on Filipino migrant workers as requirement for their
overseas employment. Pursuant to this, the DOH shall ensure that:
(c.1) The fees for the health examinations are regulated, regularly monitored and duly
published to ensure that the said fees are reasonable and not exorbitant;
(c.2) The Filipino migrant worker shall only be required to undergo health examinations
when there is reasonable certainty that he or she will be hired and deployed to the
jobsite and only those health examinations which are absolutely necessary for the type
of job applied for or those specifically required by the foreign employer shall be
conducted;
(c.3) No group or groups of medical clinics shall have a monopoly of

exclusively conducting health examinations on migrant workers for certain
receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the
DOH-accredited or DOH-operated clinics that will conduct his/her health
examinations and that his or her rights as a patient are respected. The decking
practice, which requires an overseas Filipino worker to go first to an office for
registration and then farmed out to a medical clinic located elsewhere, shall
not be allowed;
(c.5) Within a period of three (3) years from the effectivity of this Act, all DOH regional
and/or provincial hospitals shall establish and operate clinics that can serve the health
examination requirements of Filipino migrant workers to provide them easy access to
such clinics all over the country and lessen their transportation and lodging expenses;
and
(c.6) All DOH-accredited medical clinics, including the DOH operated clinics, conducting
health examinations for Filipino migrant workers shall observe the same standard
operating procedures and shall comply with internationally accepted standards in their
operations to conform with the requirements of receiving countries or of foreign
employers/principals.
Any Foreign employer who does not honor the results of valid health examinations
conducted by a DOH-accredited or DOH-operated clinic shall be temporarily disqualified
from participating in the overseas employment program, pursuant to POEA rules and
regulations.
In case an overseas Filipino worker is found to be not medically fit upon his/her
immediate arrival in the country of destination, the medical clinic that conducted the
health examinations of such overseas Filipino worker shall pay for his or her
repatriation back to the Philippines and the cost of deployment of such worker.
Any government official or employee who violates any provision of this subsection shall
be removed or dismissed from service with disqualification to hold any appointive public
office for five (5) years. Such penalty is without prejudice to any other liability which he
or she may have incurred under existing laws, rules or regulations. [emphases and
underscoring supplied]
On August 13, 2010, the Implementing Rules and Regulations 13 (IRR) of RA No. 8042,
as amended by RA No. 10022, took effect.
Pursuant to Section 16 of RA No. 10022, the DOH, through its August 23, 2010

letter-order,14 directed GAMCA to cease and desist from implementing the
referral decking system and to wrap up their operations within three (3) days from
receipt thereof. GAMCA received its copy of the August 23, 2010 letter-order on August
25, 2010.
On August 26, 2010, GAMCA filed with the RTC of Pasig City a petition for certiorari and
prohibition with prayer for a writ of preliminary injunction and/or temporary restraining
order (GAMCA's petition).15 It assailed: (1) the DOH's August 23, 2010 letter-order on
the ground of grave abuse of discretion; and (2) paragraphs c.3 and c.4, Section 16
of RA No. 10022, as well as Section 1 (c) and (d), Rule XI of the IRR,
as unconstitutional.
Meanwhile, the DOH reiterated - through its November 2, 2010 order - its directive
that GAMCA cease and desist from implementing the referral decking system. 16
On November 23, 2010, AMCOW filed an urgent motion for leave to intervene and to
file an opposition-in-intervention, attaching its opposition-in-intervention to its
motion.17 In the hearing conducted the following day, November 24, 2010, the RTC
granted AMCOW's intervention; DOH and GAMCA did not oppose AMCOW's
motion.18 AMCOW subsequently paid the docket fees and submitted its memorandum. 19
In an order20 dated August 1, 2011, the RTC issued a writ of preliminary

injunction21 directing the DOH to cease and desist from implementing its August 23,
2010 and November 2, 2010 orders. The RTC likewise issued an order denying the
motion for inhibition/disqualification filed by AMCOW.
On August 18, 2011, the DOH sought reconsideration of the RTC's August 1, 2011
order.
The assailed RTC rulings
In its August 10, 2012 decision,22 the RTC granted GAMCA's certiorari petition and

declared null and void ab initio the DOH CDO letters. It also issued a writ of prohibition
directing "the DOH Secretary and all persons acting on his behalf to cease and desist
from implementing the assailed Orders against the [GAMCA]."
The RTC upheld the constitutionality of Section 16 of RA No. 10022, amending

Section 23 of RA No. 8042, but ruled that Section 16 of RA No. 10022 does not
apply to GAMCA.
The RTC reasoned out that the prohibition against the referral decking system under
Section 16 of RA No. 10022 must be interpreted as applying only to clinics that conduct
health examination on migrant workers bound for countries that do not require the
referral decking system for the issuance of visas to job applicants.
It noted that the referral decking system is part of the application procedure in
obtaining visas to enter the GCC States, a procedure made in the exercise of the
sovereign power of the GCC States to protect their nationals from health hazards, and
of their diplomatic power to regulate and screen entrants to their territories. Under the
principle of sovereign equality and independence of States, the Philippines cannot
interfere with this system and, in fact, must respect the visa-granting procedures of
foreign states in the same way that they respect our immigration procedures.
Moreover, to restrain GAMCA which is a mere adjunct of HMC, the agent of GCC States,
is to restrain the GCC States themselves. To the RTC, the Congress was aware of this
limitation, pursuant to the generally accepted principles of international law under
Article II, Section 2 of the 1987 Constitution, when it enacted Section 16 of RA No.
10022.
The DOH and AMCOW separately sought reconsideration of the RTC's August 10, 2012
decision, which motions the RTC denied.23 The DOH and AMCOW separately filed the
present Rule 45 petitions.
On August 24, 2013, AMCOW filed a motion for consolidation 24 of the two petitions; the
Court granted this motion and ordered the consolidation of the two petitions in a
resolution dated September 17, 2013.25 cralawred
In the resolution26 of April 14, 2015, the Court denied: (1) GAMCA's most urgent motion
for issuance of temporary restraining order/writ of preliminary injunction/status quo
ante order (with request for immediate inclusion in the Honorable Court's agenda of
March 3, 2015, its motion dated March 2, 2015); 27 and (2) the most urgent reiterating
motion for issuance of temporary restraining order/writ of preliminary injunction/status
quo ante order dated March 11, 2015.28
The Court also suspended the implementation of the permanent injunction issued by
the RTC of Pasay City, Branch 108 in its August 10, 2012 decision.
II. The Issues
The consolidated cases before us present the following issues:
First, whether the Regional Trial Court legally erred in giving due course to the petition
for certiorari and prohibition against the DOH CDO letters;
Second, whether the DOH CDO letters prohibiting GAMCA from implementing the
referral decking system embodied under Section 16 of Republic Act No. 10022 violates
Section 3, Article II of the 1987 Constitution for being an undue taking of property;
Third, whether the application of Section 16 of Republic Act No.10022 to the GAMCA
violates the international customary principles of sovereign independence and equality.
III. Our Ruling

A. The RTC legally erred when it gave due course to GAMCA's petition
for certiorari and prohibition.
The present case reached us through an appeal by certiorari (pursuant to Rule 45) of

an RTC ruling, assailing the decision based solely on questions of law. The RTC decision,
on the other hand, involves the grant of the petitions for certiorari and prohibition
(pursuant to Rule 65) assailing the DOH CDO letters for grave abuse of discretion.
The question before us asks whether the RTC made a reversible error of law
when it issued writs of certiorari and prohibition against the DOH CDO letters.
AMCOW questions the means by which GAMCA raised the issue of the legality of RA No.
10022 before the RTC. AMCOW posits that GAMCA availed of an improper remedy,
as certiorari and prohibition lie only against quasi-judicial acts, and quasi-judicial and
ministerial acts, respectively. Since the disputed cease and desist order is neither, the
RTC should have dismissed the petition outright for being an improper remedy.
We agree with the petitioners' assertion that the RTC erred when it gave due course
to GAMCA's petition for certiorari and prohibition, but we do so for different reasons.
1. Certiorari under Rules of Court and under the courts' expanded jurisdiction
under Art VIII, Section 1 of the Constitution, as recognized by jurisprudence.
A.1.a. The Current Certiorari Situation
The use of petitions for certiorari and prohibition under Rule 65 is a remedy that

judiciaries have used long before our Rules of Court existed. 29 As footnoted below,
these writs - now recognized and regulated as remedies under Rule 65 of our Rules of
Court - have been characterized a "supervisory writs" used by superior courts to keep
lower courts within the confines of their granted jurisdictions, thereby ensuring
orderliness in lower courts' rulings.
We confirmed this characterization in Madrigal Transport v. Lapanday Holdings

Corporation,30 when we held that a writ is founded on the supervisory jurisdiction of
appellate courts over inferior courts, and is issued to keep the latter within the bounds
of their jurisdiction. Thus, the writ corrects only errors of jurisdiction of judicial and
quasi-judicial bodies, and cannot be used to correct errors of law or fact. For these
mistakes of judgment, the appropriate remedy is an appeal. 31
This situation changed after 1987 when the new Constitution "expanded" the scope of
judicial power by providing that -
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (italics supplied)32
In Francisco v. The House of Representatives,33 we recognized that this expanded
jurisdiction was meant "to ensure the potency of the power of judicial review to curb
grave abuse of discretion by 'any branch or instrumentalities of government.'" Thus, the
second paragraph of Article VIII, Section 1 engraves, for the first time in its history,
into black letter law the "expanded certiorari jurisdiction" of this Court, whose nature
and purpose had been provided in the sponsorship speech of its proponent, former
Chief Justice Constitutional Commissioner Roberto Concepcion:
xxxx
The first section starts with a sentence copied from former
Constitutions. It says:
The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.
I suppose nobody can question it.
The next provision is new in our constitutional law. I will read it first and explain.
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the government.
Fellow Members of this Commission, this is actually a product of our experience during
martial law. As a matter of fact, it has some antecedents in the past, but the role of the
judiciary during the deposed regime was marred considerably by the circumstance that
in a number of cases against the government, which then had no legal defense at all,
the solicitor general set up the defense of political question and got away with it. As a
consequence, certain principles concerning particularly the writ of habeas corpus, that
is, the authority of courts to order the release of political detainees, and other matters
related to the operation and effect of martial law failed because the government set up
the defense of political question. And the Supreme Court said: "Well, since it is political,
we have no authority to pass upon it." The Committee on the Judiciary feels that this
was not a proper solution of the questions involved. It did not merely request an
encroachment upon the rights of the people, but it, in effect, encouraged further
violations thereof during the martial law regime. x x x
xxxx
Briefly stated, courts of justice determine the limits of power of the agencies and offices
of the government as well as those of its officers. In other words, the judiciary is the
final arbiter on the question whether or not a branch of government or any of its
officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as
to constitute an abuse of discretion amounting to excess of jurisdiction or lack of
jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of
this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters
constitute a political question.34 (italics in the original; emphasis and underscoring
supplied)
Meanwhile that no specific procedural rule has been promulgated to enforce this
"expanded" constitutional definition of judicial power and because of the commonality
of "grave abuse of discretion" as a ground for review under Rule 65 and the courts
expanded jurisdiction, the Supreme Court based on its power to relax its rules35 allowed
Rule 65 to be used as the medium for petitions invoking the courts' expanded
jurisdiction based on its power to relax its Rules. 36 This is however an ad hoc approach
that does not fully consider the accompanying implications, among them, that Rule 65
is an essentially distinct remedy that cannot simply be bodily lifted for application under
the judicial power's expanded mode. The terms of Rule 65, too, are not fully aligned
with what the Court's expanded jurisdiction signifies and requires. 37
On the basis of almost thirty years' experience with the courts' expanded jurisdiction,
the Court should now fully recognize the attendant distinctions and should be aware
that the continued use of Rule 65 on an ad hoc basis as the operational remedy in
implementing its expanded jurisdiction may, in the longer term, result in problems of
uneven, misguided, or even incorrect application of the courts' expanded mandate.
The present case is a prime example of the misguided reading that may take place in
constitutional litigation: the procedural issues raised apparently spring from the lack of
proper understanding of what a petition for certiorari assails under the traditional and
expanded modes, and the impact of these distinctions in complying with the procedural
requirements for a valid petition.
2. The Basic Distinctions
A.2.a. Actual Case or Controversy
Basic in the exercise of judicial power whether under the traditional or in the expanded
setting - is the presence of an actual case or controversy. For a dispute to be
justiciable, a legally demandable and enforceable right must exist as basis, and must be
shown to have been violated.38
Whether a case actually exists depends on the pleaded allegations, as affected by the
elements of standing (translated in civil actions as the status of being a "real-
party-in-interest," in criminal actions as "offended party" and in special
proceedings as "interested party"),39ripeness,40prematurity, and the moot and
academic principle that likewise interact with one another. These elements and their
interactions are discussed m greater detail below.
The Court's expanded jurisdiction - itself an exercise of judicial power - does not do
away with the actual case or controversy requirement in presenting a constitutional
issue, but effectively simplifies this requirement by merely requiring a prima
facie showing of grave abuse of discretion in the assailed governmental act.
A.2.b. Actions Correctable by Certiorari
A basic feature of the expanded jurisdiction under the constitutional definition of judicial
power, is the authority and command for the courts to act on petitions involving the
commission by any branch or instrumentality of government of grave abuse of
discretion amounting to lack or excess of jurisdiction.
This command distinctly contrasts with the terms of Rule 65 which confines
court certiorari action solely to the review of judicial and quasi-judicial acts.41 These
differing features create very basic distinctions that must necessarily result in
differences in the application of remedies.
While actions by lower courts do not pose a significant problem because they are
necessarily acting judicially when they adjudicate, a critical question comes up for the
court acting on certiorari petitions when governmental agencies are involved - under
what capacity does the agency act?
This is a critical question as the circumstances of the present case show. When the
government entity acts quasi-judicially, the petition for certiorari challenging the action
falls under Rule 65; in other instances, the petition must be filed based on the courts'
expanded jurisdiction.
A.2.c. Grave Abuse of Discretion
Another distinction, a seeming one as explained below, relates to the cited ground of
a certiorari petition under Rule 65 which speaks of lack or excess of jurisdiction or
grave abuse of discretion amounting to lack or excess of jurisdiction, as against the
remedy under the courts' expanded jurisdiction which expressly only mentions grave
abuse of discretion amounting to lack or excess of jurisdiction.
This distinction is apparently not legally significant when it is considered that action
outside of or in excess of the granted authority necessarily involves action with grave
abuse of discretion: no discretion is allowed in areas outside of an agency's granted
authority so that any such action would be a gravely abusive exercise of power. The
constitutional grant of power, too, pointedly addresses grave abuse of discretion when
it amounts to lack or excess of jurisdiction,42 thus establishing that the presence of
jurisdiction is the critical element; failure to comply with this requirement necessarily
leads to the certiorari petition's immediate dismissal.43
As an added observation on a point that our jurisprudence has not fully explored, the
result of the action by a governmental entity (e.g., a law or an executive order) can be
distinguished from the perspective of its legality as tested against the terms of the
Constitution or of another law (where subordinate action like an executive order is
involved), vis-a-vis the legality of the resulting action where grave abuse of discretion
attended the governmental action or the exercise of the governmental function.
In the former, the conclusion may be plain illegality or legal error that characterized the
law or exec order (as tested, for example, under the established rules of
interpretation); no consideration is made of how the governmental entity exercised its
function. In the latter case, on the other hand, it is the governmental entity's exercise
of its function that is examined and adjudged independently of the result, with impact
on the legality of the result of the gravely abusive action.
Where the dispute in a case relates to plain legal error, ordinary court action and
traditional mode are called for and this must be filed in the lower courts based on rules
of jurisdiction while observing the hierarchy of courts.
Where grave abuse of discretion is alleged to be involved, the expanded jurisdiction is
brought into play based on the express wording of the Constitution and constitutional
implications may be involved (such as grave abuse of discretion because of plain
oppression or discrimination), but this must likewise be filed with the lowest court of
concurrent jurisdiction, unless the court highest in the hierarchy grants exemption.
Note that in the absence of express rules, it is only the highest court, the Supreme
Court, that can only grant exemptions.
From these perspectives, the use of grave abuse of discretion can spell the difference in
deciding whether a case filed directly with the Supreme Court has been properly filed.
A.2.d. Exhaustion of Available Remedies
A basic requirement under Rule 65 is that there be "no other plain, speedy and
adequate remedy found in law,"44 which requirement the expanded jurisdiction
provision does not expressly carry. Nevertheless, this requirement is not a significant
distinction in using the remedy of certiorari under the traditional and the expanded
modes. The doctrine of exhaustion of administrative remedies applies to a petition
for certiorari, regardless of the act of the administrative agency concerned, i.e.,
whether the act concerns a quasi-judicial, or quasi-legislative function, or is purely
regulatory.45
Consider in this regard that once an administrative agency has been empowered by
Congress to undertake a sovereign function, the agency should be allowed to perform
its function to the full extent that the law grants. This full extent covers the authority of
superior officers in the administrative agencies to correct the actions of subordinates, or
for collegial bodies to reconsider their own decisions on a motion for reconsideration.
Premature judicial intervention would interfere with this administrative mandate,
leaving administrative action incomplete; if allowed, such premature judicial action
through a writ of certiorari, would be a usurpation that violates the separation of
powers principle that underlies our Constitution. 46
In every case, remedies within the agency's administrative process must be exhausted
before external remedies can be applied. Thus, even if a governmental entity may have
committed a grave abuse of discretion, litigants should, as a rule, first ask
reconsideration from the body itself, or a review thereof before the agency concerned.
This step ensures that by the time the grave abuse of discretion issue reaches the
court, the administrative agency concerned would have fully exercised its jurisdiction
and the court can focus its attention on the questions of law presented before it.
Additionally, the failure to exhaust administrative remedies affects the ripeness

to adjudicate the constitutionality of a governmental act, which in turn affects
the existence of the need for an actual case or controversy for the courts to
exercise their power of judicial review.47 The need for ripeness - an aspect of the
timing of a case or controversy does not change regardless of whether the issue of
constitutionality reaches the Court through the traditional means, or through the
Court's expanded jurisdiction. In fact, separately from ripeness, one other concept
pertaining to judicial review is intrinsically connected to it; the concept of a case being
moot and academic.48
Both these concepts relate to the timing of the presentation of a controversy before the
Court ripeness relates to its prematurity, while mootness relates to a belated or
unnecessary judgment on the issues. The Court cannot preempt the actions of the
parties, and neither should it (as a rule) render judgment after the issue has already
been resolved by or through external developments.
The importance of timing in the exercise of judicial review highlights and reinforces the
need for an actual case or controversy an act that may violate a party's right. Without
any completed action or a concrete threat of injury to the petitioning party, the act is
not yet ripe for adjudication. It is merely a hypothetical problem. The challenged act
must have been accomplished or performed by either branch or instrumentality of
government before a court may come into the picture, and the petitioner must allege
the existence of an immediate or threatened injury to itself as a result of the challenged
action.
In these lights, a constitutional challenge, whether presented through the traditional

route or through the Court's expanded jurisdiction, requires compliance with the
ripeness requirement. In the case of administrative acts, ripeness manifests itself
through compliance with the doctrine of exhaustion of administrative remedies.
In like manner, an issue that was once ripe for resolution but whose resolution, since
then, has been rendered unnecessary, needs no resolution from the Court, as it
presents no actual case or controversy and likewise merely presents a hypothetical
problem. In simpler terms, a case is moot and academic when an event supervenes to
render a judgment over the issues unnecessary and superfluous.
Without the element of ripeness or a showing that the presented issue is moot and
academic, petitions challenging the constitutionality of a law or governmental act are
vulnerable to dismissal.
Not to be forgotten is that jurisprudence also prohibits litigants from immediately

seeking judicial relief without first exhausting the available administrative remedies for
practical reasons.49
From the perspective of practicality, immediate resort to the courts on issues that are
within the competence of administrative agencies to resolve, would unnecessarily clog
the courts' dockets. These issues, too, usually involve technical considerations that are
within the agency's specific competence and which, for the courts, would require
additional time and resources to study and consider.50 Of course, the Supreme Court
cannot really avoid the issues that a petition for certiorari, filed with the lower courts
may present; the case may be bound ultimately to reach the Court, albeit as an appeal
from the rulings of the lower courts.
3. Situations Where a Petition for Certiorari May Be Used
There are two distinct situations where a writ of certiorari or prohibition may be sought.
Each situation carries requirements, peculiar to the nature of each situation, that lead
to distinctions that should be recognized in the use of certiorari under Rule 65 and
under the courts' expanded jurisdiction.
The two situations differ in the type of questions raised. The first is the constitutional
situation where the constitutionality of acts are questioned. The second is the non-
constitutional situation where acts amounting to grave abuse of discretion are
challenged without raising constitutional questions or violations.
The process of questioning the constitutionality of a governmental action provides a

notable area of comparison between the use of certiorari in the traditional and the
expanded modes.
Under the traditional mode, plaintiffs question the constitutionality of a

governmental action through the cases they file before the lower courts; the defendants
may likewise do so when they interpose the defense of unconstitutionality of the law
under which they are being sued. A petition for declaratory relief may also be used to
question the constitutionality or application of a legislative (or quasi-legislative) act
before the court.51
For quasi-judicial actions, on the other hand, certiorari is an available remedy, as acts

or exercise of functions that violate the Constitution are necessarily committed with
grave abuse of discretion for being acts undertaken outside the contemplation of the
Constitution. Under both remedies, the petitioners should comply with the traditional
requirements of judicial review, discussed below. 52 In both cases, the decisions of these
courts reach the Court through an appeal by certiorari under Rule 45.
In contrast, existing Court rulings in the exercise of its expanded jurisdiction have

allowed the direct filing of petitions for certiorari and prohibition with the Court to
question, for grave abuse of discretion, actions or the exercise of a function that violate
the Constitution.53 The governmental action may be questioned regardless of whether it
is quasi-judicial, quasi-legislative, or administrative in nature. The Court's expanded
jurisdiction does not do away with the actual case or controversy requirement for
presenting a constitutional issue, but effectively simplifies this requirement by merely
requiring a prima facie showing of grave abuse of discretion in the exercise of the
governmental act.54
To return to judicial review heretofore mentioned, in constitutional cases where the

question of constitutionality of a governmental action is raised, the judicial power the
courts exercise is likewise identified as the power of judicial review - the power to
review the constitutionality of the actions of other branches of government. 55 As a rule,
as required by the hierarchy of courts principle, these cases are filed with the lowest
court with jurisdiction over the matter. The judicial review that the courts undertake
requires:
1) there be an actual case or controversy calling for the exercise of judicial power;
(2) the person challenging the act must have "Standing" to challenge; he must have a personal
and substantial interest in the case such that he has sustained, or will sustain, direct injury
as a result of its enforcement;
(3) the question of constitutionality must be raised at the earliest possible opportunity; and
(4) the issue of constitutionality must be the very lis mota of the case.56
The lower court's decision under the constitutional situation reaches the Supreme Court
through the appeal process, interestingly, through a petition for review
on certiorari under Rule 45 of the Rules of Court.
In the non-constitutional situation, the same requirements essentially apply, less

the requirements specific to the constitutional issues. In particular, there must be an
actual case or controversy and the compliance with requirements of standing, as
affected by the hierarchy of courts, exhaustion of remedies, ripeness, prematurity, and
the moot and academic principles.
A.3.a. The "Standing" Requirement
Under both situations, the party bringing suit must have the necessary "standing." This
means that this party has, in its favor, the demandable and enforceable right or interest
giving rise to a justiciable controversy after the right is violated by the offending party.
The necessity of a person's standing to sue derives from the very definition of judicial
power. Judicial power includes the duty of the courts to settle actual controversies
involving rights which are legally demandable and enforceable. Necessarily, the person
availing of a judicial remedy must show that he possesses a legal interest or right to it,
otherwise, the issue presented would be purely hypothetical and academic. This
concept has been translated into the requirement to have "standing" in judicial
review,57 or to be considered as a "real-party-in-interest" in civil actions, 58 as the
"offended party" in criminal actions59 and the "interested party" in special proceedings. 60
While the Court follows these terms closely in both non-constitutional cases and
constitutional cases under the traditional mode, it has relaxed the rule in constitutional
cases harrdled under the expanded jurisdiction mode. in the latter case, a prima
facie showing that the questioned governmental act violated the Constitution,
effectively disputably shows an injury to the sovereign Filipino nation who approved the
Constitution and endowed it with authority, such that the challenged act may be
questioned by any Philippine citizen before the Supreme Court. 61 In this manner, the
"standing" requirement is relaxed compared with the standard of personal stake or
injury that the traditional petition requires.
The relaxation of the standing requirement has likewise been achieved through the
application of the "transcendental importance doctrine" under the traditional mode for
constitutional cases.62 (Under the traditional mode, "transcendental importance" not
only relaxes the standing requirement, but also allows immediate access to this Court,
thus exempting the petitioner from complying with the hierarchy of courts
requirement.)63
More importantly perhaps, the prima facie showing of grave abuse of discretion in

constitutional cases also implies that the injury alleged is actual or imminent, and not
merely hypothetical.
Through this approach, the Court's attention is directed towards the existence of an
actual case or controversy - that is, whether the government indeed violated the
Constitution to the detriment of the Filipino people without the distractions of
determining the existence of transcendental importance indicators unrelated to the
dispute and which do not at all determine whether the Court properly exercises its
power of judicial review.
Parenthetically, in the traditional mode, the determination of the transcendental

importance of the issue presented,64 aside from simply relaxing the standing
requirement, may result in the dilution of the actual case or controversy element
because of the inextricable link between standing and the existence of an actual case or
controversy.
Consider, in this regard, that an actual case or controversy that calls for the exercise of
judicial power necessarily requires that the party presenting it possesses the standing
to mount a challenge to a governmental act. A case or controversy exists when there is
an actual dispute between parties over their legal rights, which remains in conflict at
the time the dispute is presented before the court. 65 Standing, on the other hand,
involves a personal and substantial interest in the case because the petitioner has
sustained, or will sustain, direct injury as a result of the violation of its right. 66
With the element of "standing" (or the petitioner's personal or substantial stake or
interest in the case) relaxed, the practical effect is to dilute the need to show that an
immediate actual dispute over legal rights did indeed take place and is now the subject
of the action before the court.67
In both the traditional and the expanded modes, this relaxation carries a ripple effect
under established jurisprudential rulings,68 affecting not only the actual case or
controversy requirement, but compliance with the doctrine of hierarchy of courts,
discussed in greater detail below.
A.3.b. The Hierarchy of Courts Principle
Another requirement that a certiorari petition carries, springs from the principle of

"hierarchy of courts" which recognizes the various levels of courts in the country as
they are established under the Constitution and by law, their ranking and effect of their
rulings in relation with one another, and how these different levels of court interact with
one another.69 Since courts are established and given their defined jurisdictions by law,
the hierarchy of the different levels of courts should leave very little opening for
flexibility (and potential legal questions), but for the fact that the law creates courts at
different and defined levels but with concurrent jurisdictions.
The Constitution itself has partially determined the judicial hierarchy in the Philippine
legal system by designating the Supreme Court as the highest court with irreducible
powers; its rulings serve as precedents that other courts must follow 70 because they
form part of the law of the land. 71 As a rule, the Supreme Court is not a trial court and
rules only on questions of law, in contrast with the Court of Appeals and other
intermediate courts72 which rule on both questions of law and of fact. At the lowest level
of courts are the municipal and the regional trial courts which handle questions of fact
and law at the first instance according to the jurisdiction granted to them by law.
Petitions for certiorari and prohibition fall under the concurrent jurisdiction of the

regional trial courts and the higher courts, all the way up to the Supreme Court. As a
general rule, under the hierarchy of courts principle, the petition must be brought to
the lowest court with jurisdiction;73 the petition brought to the higher courts may be
dismissed based on the hierarchy principle. Cases, of course, may ultimately reach the
Supreme Court through the medium of an appeal.
The recognition of exceptions to the general rule is provided by the Supreme Court
through jurisprudence, i.e., through the cases that recognized the propriety of filing
cases directly with the Supreme Court. This is possible as the Supreme Court has the
authority to relax the application of its own rules. 74
As observed above, this relaxation waters down other principles affecting the remedy
of certiorari. While the relaxation may result in greater and closer supervision by the
Court over the lower courts and quasi-judicial bodies under Rule 65, the effect may not
always be salutary in the long term when it is considered that this may affect the
constitutional standards for the exercise of judicial power, particularly the existence of
an actual case or controversy.
The "transcendental importance" standard, in particular, is vague, open-ended and

value-laden, and should be limited in its use to exemptions from the application of the
hierarchy of courts principle. It should not carry any ripple effect on the constitutional
requirement for the presence of an actual case or controversy.
4. The petition for certiorari and prohibition against the DOH Letter was filed
before the wrong court.
In the present case, the act alleged to be unconstitutional refers to the cease and desist
order that the DOH issued against GAMCA's referral decking system. Its
constitutionality was questioned through a petition for certiorari and prohibition before
the RTC. The case reached this Court through a Rule 45 appeal by certiorari under the
traditional route.
In using a petition for certiorari and prohibition to assail the DOHCDO letters, GAMCA

committed several procedural lapses that rendered its petition readily dismissible by
the RTC. Not only did the petitioner present a premature challenge against an
administrative act; it also committed the grave jurisdictional error of filing the
petition before the wrong court.
A.4.a. The DOH CDO letters were issued in the exercise of the DOH's quasi-
judicial functions, and could be assailed through Rule 65 on certiorari and
prohibition.
A cease and desist order is quasi-judicial in nature, as it applies a legislative policy to

an individual or group within the coverage of the law containing the policy.
The Court, in Municipal Council of Lemery, Batangas v. Provincial Board of

Batangas,75 recognized the difficulty of d fining the precise demarcation line between
what are judicial and what are administrative or ministerial functions, as the exercise of
judicial functions may involve the performance of legislative or administrative duties,
and the performance of administrative or ministerial duties may, to some extent,
involve the exercise of functions judicial in character. Thus, the Court held that
the nature of the act to be performed, rather than of the office, board, or body
which performs it, should determine whether or not an action is in the discharge of a
judicial or a quasi-judicial function.76
Generally, the exercise of judicial functions involves the determination of what the law
is, and what the legal rights of parties are under this law with respect to a matter in
controversy. Whenever an officer is clothed with this authority and undertakes to
determine those questions, he acts judicially. 77
In the administrative realm, a government officer or body exercises a quasi-judicial

function when it hears and determines questions of fact to which the legislative policy is
to apply, and decide, based on the law's standards, matters relating to the enforcement
and administration of the law.78
The DOH CDO letter directed GAMCA to cease and desist from engaging in the referral
decking system practice within three days from receipt of the letter. By issuing this
CDO letter implementing Section 16 of RA No. 10022, the DOH (1) made the finding of
fact that GAMCA implements the referral decking system, and (2) applied Section 16 of
RA No. 10022, to conclude that GAMCA's practice is prohibited by law and should be
stopped.
From this perspective, the DOH acted in a quasi-judicial capacity: its CDO letter
determined a question of fact, and applied the legislative policy prohibiting the referral
decking system practice.
Notably, cease and desist orders have been described and treated as quasi-judicial acts
in past cases, and had even been described as similar to the remedy of injunction
granted by the courts.79
A.4.b. The petitions for certiorari and prohibition against the DOH CDO letters
fall within the jurisdiction of the Court of Appeals.
Since the CDO Letter was a quasi-judicial act, the manner by which GAMCA assailed it
before the courts of law had been erroneous; the RTC should not have entertained
GAMCA's petition.
First, acts or omissions by quasi-judicial agencies, regardless of whether the remedy

involves a Rule 43 appeal or a Rule 65 petition for certiorari, is cognizable by the Court
of Appeals. In particular, Section 4, Rule 65 of the Rules of Court provides:
Section 4. When and where petition filed. The petition shall be filed not later than sixty
(60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions
of a lower court or of a corporation, board, officer or person, in the Regional Trial Court
exercising jurisdiction over the territorial area as defined by the Supreme Court. It may
also be filed in the Court of Appeals whether or not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it
involves the acts or omissions of a quasi-judicial agency, unless otherwise
provided by law or these Rules, the petition shall be filed in and cognizable
only by the Court of Appeals. (emphasis, italics, and underscoring supplied)
Since the DOH is part of the Executive Department and has acted in its quasi-judicial
capacity, the petition challenging its CDO letter should have been filed before the Court
of Appeals. The RTC thus did not have jurisdiction over the subject matter of the
petitions and erred in giving due course to the petition for certiorari and prohibition
against the DOH CDO letters. In procedural terms, petitions for certiorari and
prohibition against a government agency are remedies avaiJable to assail its quasi-
judicial acts, and should thus have been filed before the CA.
The provision in Section 4, Rule 65 requiring that certiorari petitions challenging quasi-

judicial acts to be filed with the CA is in full accord with Section 9 of Batas Pambansa
Blg. 12980 on the same point. Section 9 provides:
Section 9. Jurisdiction.- The Court of Appeals shall exercise:
1. Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;
xxxx
3. Exclusive appellate jurisdiction over all final judgments, resolutions, orders

or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commission, including the Securities and Exchange Commission, the Social
Security Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph 4 of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
xxxx
(emphases, italics, and underscoring supplied)

Thus, by law and by Supreme Court Rules, the CA is the court with the exclusive
original jurisdiction to entertain petitions for certiorari and prohibition against quasi-
judicial agencies. In short, GAMCA filed its remedy with the wrong court.
A.4.c The petitions for certiorari and prohibition against the DOH CDO letters
were premature challenges - they failed to comply with the requirement that
there be "no other plain, speedy and adequate remedy" and with the doctrine
of exhaustion of administrative remedies.
Second, the Regional Trial Court of Pasay City unduly disregarded the requirements
that there be "no other plain, speedy and adequate remedy at law" and the doctrine of
exhaustion of administrative remedies, when it gave due course to the certiorari and
prohibition petition against the DOH's CDO.
Under Chapter 8, Book IV of Executive Order (EO) No. 292,81 series of 1987, the DOH
Secretary "shall have supervision and control over the bureaus, offices, and agencies
under him"82 and "shall have authority over and responsibility for x x x operation" of the
Department.
Section 1, Chapter 1, Title I, Book III of EO No. 292 in relation with Article VII, Sections
1 and 17 of the Constitution, 83 on the other hand, provides that the "President shall
have control of all the executive departments, bureaus, and offices."
These provisions both signify that remedies internal to the Executive Branch exist
before resorting to judicial remedies: GAMCA could ask the DOH Secretary to
reconsider or clarify its letter-order, after which it could appeal, should the ruling be
unfavorable, to the Office of the President.
Significantly, this was what GAMCA did in the past when the DOH issued Memorandum
Order No. 2008-0210 that prohibited the referral decking system. GAMCA then asked
for the DOH Secretary's reconsideration, and subsequently appealed the DOH's
unfavorable decision with the Office of the President. The OP then reversed
Memorandum Order No. 2008-0210 and allowed the referral decking system to
continue.
That GAMCA had earlier taken this course indicates that it was not unaware of the
administrative remedies available to it; it simply opted to disregard the doctrine of
exhaustion of administrative remedies and the requirement that there be no other
plain, speedy, and adequate remedy in law when it immediately filed its petition
for certiorari with the RTC.
This blatant disregard of the Rule 65 requirements clearly places GAMCA's petition
outside the exceptions that we recognized in the past in relaxing strict compliance with
the exhaustion of administrative remedies requirement.
Jurisprudence84 shows that this Court never hesitated in the past in relaxing the
application of the rules of procedure to accommodate exceptional circumstances when
their strict application would result in injustice. These instances, founded as they are on
equitable considerations, do not include the undue disreiard of administrative remedies,
particularly when they are readily available.85
A.4.d. The petitions for certiorari and prohibition against the DOH CDO letters
should have been dismissed outright, as Rule 65 Petitions for Certiorari and
Prohibition are extraordinary remedies given due course only upon compliance
with the formal and substantive requirements.
Note, at this point, that Rule 65 petitions for certiorari and prohibition are discretionary
writs, and that the handling court possesses the authority to dismiss them outright for
failure to comply with the form and substance requirements. Section 6, Rule 65 of the
Rules of Court in this regard provides:
Section 6. Order to comment. - If the petition is sufficient in form and substance
to justify suclr process, the court shall issue an order requiring the respondent or
respondents to comment on the petition within ten (10) days from receipt of a copy
thereof. Such order shall be served on the respondents in such manner as the court
may direct together with a copy of the petition and any annexes thereto. (emphasis,
italics, and underscoring supplied)
Thus, even before requiring the DOH to comment, the RTC could have assessed the
petition for certiorari and prohibition for its compliance with the Rule 65 requirements.
At that point, the petition for certiorari and prohibition should have been dismissed
outright, for failing to comply with Section 1 and Section 4 of Rule 65. When the court
instead took cognizance of the petition, it acted on a matter outside its jurisdiction.
Consequently, the RTC's resulting judgment is void and carries no legal effect. The
decision exempting GAMCA from the application of the referral decking system should
equally have no legal effect.
Noncompliance with the Section 1, Rule 65 requirement that there be no other plain,
speedy, and adequate remedy in law, on the other hand, is more than just a pro-forma
requirement in the present case. Since the petitions for certiorari and prohibition
challenge a governmental act - i.e. action under the DOH CDO letters, as well as the
validity of the instruments under which these letters were issued - compliance with
Section 1, Rule 65 and the doctrine of exhaustion of administrative remedies that
judicial review requires is also mandatory. To recall a previous discussion, the
exhaustion of administrative remedies is also an aspect of ripeness in deciding a
constitutional issue.
Thus, GAMCA's disregard of the Rules of Court not only renders the petition dismissible
for failure to first exhaust administrative remedies; the constitutional issues GAMCA
posed before the RTC were not also ripe for adjudication.
5. The Regional Trial Court erred in finding grave abuse of discretion on the
part of the DOH's issuance of the DOH CDO letters.
On the merits, we find that the RTC of Pasay reversibly erred in law when it held that
the DOH acted with grave abuse of discretion m prohibiting GAMCA from implementing
the referral decking system.
In exempting GAMCA from the referral decking system that RA No. 10022 prohibits, the
RTC of Pasay City noted that the regulation per se was not unconstitutional, but its
application to GAMCA would violate the principle of sovereign equality and
independence.
While we agree with the RTC's ultimate conclusion upholding the constitutionality of the
prohibition against the referral decking system under RA No. 10022, our agreement
proceeds from another reason; we disagree that the prohibition does not apply to
GAMCA and with the consequent ruling nullifying the DOH's CDO Letter.
A.5.a. The prohibition against the referral decking system under Section 16,
RA No. 10022, is a valid exercise of police power.
In its comment, GAMCA asserts that implementing the prohibition against the referral
decking system would amount to an undue taking of property that violates Article II,
Section 2 of the 1987 Constitution.
It submits that the Securities and Exchange Commission had in fact approved its
Articles of Incorporation and Bylaws that embody the referral decking system; thus, the
DOH cannot validly prohibit the implementation of this system.
GAMCA further claims that its members made substantial investments to upgrade their
facilities and equipment. From this perspective, the August 23, 2010 order constitutes
taking of property without due process of law as its implementation would deprive
GAMCA members of their property.
AMCOW responded to these claims with the argument that the DOH CDO letters
implementing RA No. 10022 are consistent with the State's exercise of the police power
to prescribe regulations to promote the health, safety, and general welfare of the
people. Public interest justifies the State's interference in health matters, since the
welfare of migrant workers is a legitimate public concern. The DOH thus merely
performed its duty of upholding the migrant workers' freedom to consult their chosen
clinics for the conduct of health examinations.
We agree with AMCOW.
The State's police power86 is vast and plenary87 and the operation of a

business,88 especially one that is imbued with public interest (such as healthcare
services),89 falls within the scope of governmental exercise of police power through
regulation.
As defined, police power includes (1) the imposition of restraint on liberty or property,
(2) in order to foster the common good.90 The exercise of police power involves the
"state authority to enact legislation that may interfere with personal liberty or property
in order to promote the general welfare." 91
By its very nature, the exercise of the State's police power limits individual rights and
liberties, and subjects them to the "far more overriding demands and requirements of
the greater number."92 Though vast and plenary, this State power also carries
limitations, specifically, it may not be exercised arbitrarily or unreasonably. Otherwise,
it defeats the purpose for which it is exercised, that is, the advancement of the public
good.93
To be considered reasonable, the government's exercise of police power must satisfy

the "valid object and valid means" method of analysis: first, the interest of the public
generally, as distinguished from those of a particular class, requires interference;
and second, the means employed are reasonably necessary to attain the objective
sought and not unduly oppressive upon individuals. 94
These two elements of reasonableness are undeniably present in Section 16 of RA No.

10022. The prohibition against the referral decking system is consistent with the State's
exercise of the police power to prescribe regulations to promote the health, safety, and
general welfare of the people. Public interest demands State interference on health
matters, since the welfare of migrant workers is a legitimate public concern.
We note that RA No. 10022 expressly reflects the declared State policies to "uphold the
dignity of its citizens whether in the country or overseas, in general, and Filipino
migrant workers," and to "afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. Towards this end, the State shall provide adequate and timely
social, economic and legal services to Filipino migrant workers." The prohibition against
the referral decking system in Section 16 of RA No. 10022 is an expression and
implementation of these state policies.
The guarantee under Section 16 for OFWs to be given the option to choose a quality
healthcare service provider as expressed in Section 16 (c) 95 of RA No. 10022 is
guaranteed by the prohibition against the decking practice and against monopoly
practices in OFW health examinations.96
Section 16 likewise requires employers to accept health examinations from any DOH-
accredited health facility; a refusal could lead to their temporary disqualification under
pertinent rules to be formulated by the Philippine Overseas Employment Authority
(POEA).97
These rules are part of the larger legal framework to ensure the Overseas Filipino
Workers' (OFW) access to quality healthcare services, and to curb existing practices
that limit their choices to specific clinics and facilities.
Separately from the Section 16 prohibition against the referral decking system, RA No.
10022 also prohibits and penalizes the imposition of a compulsory exclusive
arrangement requiring OFWs to undergo health examinations only from specifically
designated medical clinics, institutions, entities or persons. Section 5, in relation to
Section 6 of RA No. 10022, penalizes compulsory, exclusive arrangements 98 by
imprisonment and fine and by the automatic revocation of the participating medical
clinic's license.
The DOH's role under this framework is to regulate the activities and operations of all
clinics conducting health examinations on Filipino migrant workers as a requirement for
their overseas employment. The DOH is tasked to ensure that:
(c.3) No group or groups of medical clinics shall have a monopoly of exclusively
conducting health examinations on migrant workers for certain receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-
accredited or DOH-operated clinics that will conduct his/her health examinations and
that his or her rights as a patient are respected. The decking practice, which requires
an overseas Filipino worker to go first to an office for registration and then farmed out
to a medical clinic located elsewhere, shall not be allowed; 99
While Section 16 of RA No. 10022 does not specifically define the consequences of
violating the prohibition against the referral decking system, Republic Act No. 4226
(Hospital Licensure Act), which governs the licensure and regulation of hospitals and
health facilities, authorizes the DOH to suspend, revoke, or refuse to renew the license
of hospitals and clinics violating the law.100
These consequences cannot but apply to the violation of the prohibition against the
referral decking system under RA No. 10022. If, under the law, the DOH can suspend,
revoke, or refuse to renew the license of these hospitals upon the finding that they
violated any provision of law (whether those found in RA No. 4226 or in RA No. 10022),
it follows- as a necessarily included lesser power - that the DOH can likewise order
these clinics and their association to cease and desist from practices that the law deems
to be undesirable.
A.5.b. The DOH did not gravely abuse its discretion in issuing the assailed DOH
CDO letters.
As discussed above, the letter-order implementing the prohibition against the referral
decking system is quasi-judicial in nature. This characteristic requires that procedural
due process be observed - that is, that the clinics concerned be given the opportunity to
be heard before the standard found in the law can be applied to them.
Thus, prior to the issuance of the disputed CDO letter, the DOH should have given
GAMCA the opportunity to be heard on whether the prohibition applies to it. Lest this
opportunity to be heard be misunderstood, this DOH obligation raises an issue different
from the question of whether Congress can, under the exercise of police power, prohibit
the referral decking system; this latter issue lies outside the scope of the DOH to pass
upon. The required hearing before the DOH relates solely to whether it properly
implemented, based on the given standards under the law, the prohibition that
Congress decreed under RA No. 10022.
Under normal circumstances, the issuance of a CDO without a prior hearing would
violate GAMCA's procedural due process rights, and would amount to more than a legal
error, i.e., an error equivalent to action without jurisdiction. Rendering a decision quasi-
judicial in nature without providing the opportunity to be heard amounts to a grave
abuse of discretion that divests a quasi-judicial agency of its jurisdiction.
Factual circumstances unique to the present case, however, lead us to conclude that
while it was an error of law for the DOH to issue a CDO without complying with the
requirements of procedural due process, its action did not amount to a grave abuse of
discretion.
Grave abuse of discretion amounts to more than an error of law; it refers to an act that
is so capricious, arbitrary, and whimsical that it amounts to a clear evasion of a positive
duty or a virtual refusal to perform a duty enjoined by law, as where the power is
exercised in an arbitrary and despotic manner because of passion or hostility. 101
Prior to the issuance of its CDO Letter, the DOH had more than sufficient basis to
determine that GAMCA practices the prohibited referral decking system under RA No.
10022. Notably, the DOH had earlier allowed and recognized the referral decking
system that GAMCA practiced through AO 5-01. This recognition was made with
GAMCA's practice in mind. The subsequent administrative orders and department
memorandum suspending and terminating the referral decking system, respectively, all
pertain to the practice that the DOH had authorized under AO 5-01. Even the subject
matter of these issuances do not just pertain to any other referral decking system, but
to the "GAMCA referral decking system."
GAMCA likewise had more than several opportunities to contest the suspension and
eventual revocation of the referral decking system initially pe1mitted under AO 5-01.
Its appeal even reached the Office of the President, which overturned the DOH
Memorandum Order terminating the referral decking system.
That the referral decking system had been subsequently prohibited by law shows the
intent of Congress to prevent and prohibit the practice that GAMCA initiated and which
the President had allowed. The President's duty under our political system is to
implement the law; hence, when Congress subsequently prohibited the practice that
GAMCA initiated, the Executive - including the President -has no choice but to
implement it.
Based on these circumstances, while the DOH erred when it issued its CDO letters
without first giving GAMCA the opportunity to prove whether the practice conducted by
GAMCA is the same practice prohibited under RA No. 10022, the DOH conclusion to so
act, in our view, did not constitute grave abuse of discretion that would have divested it
of jurisdiction.
We note that the DOH had sufficient basis when it determined that the referral decking
system prohibited under RA No. 10022 was the same decking system practiced by
GAMCA. To reiterate, the referral decking system was not something new; it was an old
system that GAMCA practiced and was known to all in its scope and operating details.
That GAMCA had previously questioned the DOH prohibition and had been given ample
opportunity to be heard when it filed an appeal before the OP, negate the conclusion
that GAMCA had been aggrieved by precipitate and unfair DOH action.
To be sure, these factual circumstances do not make the CDO letter compliant with
procedural due process. They mitigate, however, the error committed and render it less
than the capricious, arbitrary, and patent refusal to comply with a positive legal duty
that characterizes an act committed with grave abuse of discretion.
The Court furthermore, in several instances,102 has recognized that an administrative

agency may issue an ex parte cease and desist order, where vital public interests
outweigh the need for procedural due process." In these instances, the Court noted that
the affected establishment may contest the ex parte order, upon which the
administrative agency concerned must conduct a hearing and allow the establishment
to be heard. While jurisprudence has so far used the "vital public interests" standard to
pollution cases, it had not been a grave abuse of discretion on the part of the DOH to
consider that GAMCA's referral decking practice falls within this category. The DOH has
long made the factual finding that the referral decking system hinders our Filipino
seafarers' access to quality and affordable healthcare in its A.O. No. 106, series of
2002.
These circumstances further mitigate whatever legal error the DOH has committed and
render the conclusion that grave abuse of discretion had taken place misplaced.
Since the writs of certiorari and prohibition do not issue against legal errors, but to acts
of grave abuse of discretion, the RTC erred in issuing these writs against the DOH CDO
letters.
6. The prohibition against the referral decking system against GAMCA does not
violate the principle of sovereign equality and independence.
The RTC based its decision to grant the writs of certiorari and prohibition against the
DOH letter-order on the principle of sovereign equality and independence; applying the
referral decking system prohibition against GAMCA violates this principle.
The RTC reasoned out that the prohibition against the referral decking system under
Section 16 of RA No. 10022 must be interpreted to apply only to clinics conducting
health examinations on migrant workers bound for countries that do not require the
referral decking system for the issuance of visas to job applicants.
The RTC observed, too, that the refer al decking system is part of the application
procedure in obtaining visas to enter the GCC States, a procedure made in the exercise
of the sovereign power of the GCC States to protect their nationals from health
hazards, and of their diplomatic power to regulate and screen entrants to their
territories.
It also reasoned out that under the principle of sovereign equality and independence of
States, the Philippines cannot interfere with this system and in fact must respect the
visa-granting procedures of foreign states in the same way that they respect our
immigration procedures. Moreover, to restrain GAMCA which is a mere adjunct of HMC
(an agent of GCC States) is to restrain the GCC States themselves.
AMCOW contests the RTC's conclusion, arguing that the principles of sovereign equality
and independence of States do not apply to the present case. According to AMCOW, the
subject matter of this case pertains to a domestic concern as the law and the
regulations that GAMCA assails relate to the operation of medical clinics in the
Philippines.
It points out that the Philippines gave GAMCA and its members the privilege of
conducting their businesses domestically; hence, their operations are governed by
Philippine laws, specifically by RA No. 10022 which serves as one of the limitations on
the privilege granted to them. GAMCA's right to engage in business should yield to the
State's exercise of police power. In legal contemplation, therefore, the DOH CDO letters
did not prejudice GAMCA's right to engage in business; nor did they hamper the GAMCA
members' business operations.
AMCOW further insists that the August 23, 2010 and November 2, 2010 orders are
consistent with the State's exercise of the police power to prescribe regulations to
promote the health, safety, and general welfare of the people. Public interest demands
State interference on health matters, since the welfare of migrant workers is a
legitimate public concern. The DOH thus merely performed its duty of upholding the
migrant workers' freedom to choose any of its accredited or operated clinics that will
conduct health examinations.
The DOH, for its part, adds that the implementation of RA No. 10022 cannot be
defeated by agreements entered into by GAMCA with the GCC States. The GCC States,
the DOH points out, are not empowered to determine the Philippines' courses of action
with respect to the operation, within Philippine territory, of medical clinics; the conduct
of health examinations; and the freedom of choice of Filipino migrant workers.
GAMCA responds to these arguments by asserting that the referral decking system is a
part of the application procedure for obtaining visas to enter the GCC States. Hence, it
is an exercise of the sovereign power of the GCC States to protect their nationals from
health hazards, and their diplomatic power to regulate and screen entrants to their
territories. To restrain an agent of the GCC States under the control and acting in
accordance with the direction of these GCC States, restrains the GCC States.
GAMCA also points out that the OFWs would suffer grave and irreparable damage and
injury if the DOH CDO letters would be implemented as the GCC States would not issue
working visas without the GAMCA seal attesting that the OFWs had been medically
examined by GAMCA member clinics.
After considering all these arguments, we find that the RTC's decision misapplied the
principle of sovereign independence and equality to the present case. While the
principles of sovereign independence and equality have been recognized in Philippine
jurisprudence, our recogmtmn of this principle does not extend to the exemption of
States and their affiliates from compliance with Philippine regulatory laws.
A.6. The principle of sovereign equality and independence of states does not
exempt GAMCAfrom the referral decking system prohibition under RA No.
10022.
In Republic of Indonesia v. Vinzon,103 we recognized the principle of sovereign

independence and equality as part of the law of the land. We used this principle to
justify the recognition of the principle of sovereign immunity which exempts the State -
both our Government and foreign governments - from suit. We held:
International law is founded largely upon the principles of reciprocity, comity,
independence, and equality of States which were adopted as part of the law of our land
under Article II, Section 2 of the 1987 Constitution. The rule that a State may not be
sued without its consent is a necessary consequence of the principles of independence
and equality of States. As enunciated in Sanders v. Veridiano II, the practical
justification for the doctrine of sovereign immunity is that there can be no legal right
against the authority that makes the law on which the right depends. In the case of
foreign States, the rule is derived from the principle of the sovereign equality of States,
as expressed in the maxim par in parem non habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one another. A contrary attitude would
"unduly vex the peace of nations."
Our recognition of sovereign immunity, however, has never been unqualified. While we
recognized the principles of independence and equality of States to justify a State's
sovereign immunity from suit, we also restricted state immunity to acts jus imperii, or
public acts. We said that once a State enters into commercial transactions (jus
gestionis), then it descends to the level of a private individual, and is thus not immune
from the resulting liability and consequences of its actions. 104
By this recognition, we acknowledge that a foreign government acting in its jus

imperii function cannot be held liable in a Philippine court. Philippine courts, as part of
the Philippine government, cannot and should not take jurisdiction over cases involving
the public acts of a foreign government. Taking jurisdiction would amount to authority
over a foreign government, and would thus violate the principle of sovereign
independence and equality.105
This recognition is altogether different from exempting governments whose agents are
in the Philippines from complying with our domestic laws. 106 We have yet to declare in a
case that the principle of sovereign independence and equality exempts agents of
foreign governments from compliance with the application of Philippine domestic law.
In the present case, GAMCA has not adduced any evidence in the court below, nor has
it presented any argument before us showing that the principle of sovereign equality
and independence has developed into an international custom shielding state agents
from compliance with another state's domestic laws. Under this situation, the Court is in
no position to determine whether the practice that GAMCA alleges has indeed
crystallized into an international custom.
GAMCA has never proven in this case, too, that the GCC has extended its sovereign
immunity to GAMCA. Sovereign immunity belongs to the State, and it must first be
extended to its agents before the latter may be considered to possess sovereign
immunity.
Significantly, the Court has even adopted a restrictive approach in recognizing state
immunity, by distinguishing between a State's jus imperii and jus gestionis. It is only
when a State acts in its jus imperii function that we recognize state immunity. 107
We point out furthermore that the prohibition against the referral decking system
applies to hospitals and clinics, as well as to OFW employers, and does not seek to
interfere with the GCC's visa requirement processes. RA 10022 prohibits hospitals and
clinics in the Philippines from practicing the referral decking system, and employers
from requiring OFWs to procure their medical examinations from hospitals and clinics
practicing the referral decking system.
The regulation applies to Philippine hospitals and clinics, as well as to employers of

OFWs. It does not apply to the GCCs and their visa processes. That the regulation could
affect the OFWs' compliance with the visa requirements imposed by GCCs does not
place it outside the regulatory powers of the Philippine government.
In the same manner, GCC states continue to possess the prerogative to apply their visa
requirements to any foreign national, including our OFWs, who seeks to enter their
territory; they may refuse to grant them entry for failure to comply with the referral
decking system, or they may adjust to the prohibition against the referral decking
system that we have imposed. These prerogatives lie with the GCC member-states and
do not affect at all the legality of the prohibition against the referral decking system.
Lastly, the effect of the prohibition against the referral decking system is beyond the
authority of this Court to consider. The wisdom of this prohibition has been decided by
Congress, through the enactment of RA No. 10022. Our role in this case is merely to
determine whether our government has the authority to enact the law's prohibition
against the referral decking system, and whether this prohibition is being implemented
legally. Beyond these lies the realm of policy that, under our Constitution's separation
of powers, this Court cannot cross.
WHEREFORE, in the light of these considerations, we hereby GRANT the petitions.

Accordingly, we REVERSE and SET ASIDE the orders dated August 10, 2012 and April
12, 2013 of the Regional Trial Court of Pasay City, Branch 108, in Sp. Civil Action No.
R-PSY-10-04391-CV.
Costs against respondent GAMCA.
SO ORDERED. cralawlawlibrary
Sereno, C. J., Carpio, Velsco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo,
Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.
Leonen, J., In the result. See separate opinion.
Jardeleza,*J., No part prior OSG action.
Caguioa, J., on leave.
Endnotes:
*
No part due to prior action as Solicitor General.
1
G.R. No. 207132, rollo, pp. 13-55; G.R. No. 207205, id. at 8-37. G.R. No. 207132 is
entitled Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) represented
herein by its President, Dr. Rolando Villote v. GCC Approved Medical Centers
Assodation. Inc, et al.; while G.R. No. 207205 is entitled Hon. Enrique T. Ona, in his
capacity as Secretary of the Department of Health v. GCC Approved Medical Centers
Association, Inc. and Christian E. Cangco.
2
Penned by Judge Maria Rosario B. Ragasa, id. at 56-66 (G.R. No. 207132) and at 38-
48 (G.R. No. 207205).
3
Id. at 68 (G.R. No. 207132) and at 49 (G.R. No. 207205).
4
The case was originally rallled to RTC, Branch 110 under Judge Petronilo A. Sulla, Jr.;
it was reraffled to Branch 108 alter Judge Sulla inhibited himself from the case on
GAMCA's petition for inhibition (per the Republic's petition in G.R. No. 207205), rollo, p.
14). See G.R. No. 207132, id. at 223-228 for copy of the resolution on the motion for
inhibition (dated June 2011) issued by Judge Sulla.
5
Id. at 50 (G.R. No. 207205).
6
Dated April 26, 2002, G.R. No. 207205, rollo, p. 52.
7
Dated July 16, 2004, G.R. No. 207205, id. at 53.
8
Dated August 30, 2004, G.R. No. 207205, id. at 54-55.
9
Id. at 349-350 (G.R. No. 207132) and at 56-57 (G.R. No. 207205).
10
Id. at 349.
11
12
An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers
and Overseas Filipinos Act of 1995, as Amended, Further Improving the Standard of
Protection and Promotion of the welfare of Migrant Workers, Their Families and
Overseas Filipinos in Distress, and for Other Purpose.
13
Omnibus Rules and Regula.tions Implementing the Migrant Workers And Overseas
Filipino Act of 1995. As Amended by Republic Act No. 10022.
14
Signed by Alexander A. Padilla, Undersecretary of Health, Head of Health Regulation
Cluster, id. at 139-140 (G.R. No. 207132) and at 63-64 (G.R. No. 207205).
15
Id. at 141-173 (G.R. No. 207132).
The case was originally raffled to RTC, Branch 110 (RTC Br. 110) whose presiding judge
was Judge Petronilo A. Sulla, Jr. On GAMCA's motion for inhibition, the case was
subsequently reraffled to RTC, Branch 108 under Judge Maria Rosario B. Ragasa.
16
Signed by Alexander A. Padilla, Undersecretary of Health, Head of Health Regulation
Cluster, id. at 192 (GR. No. 207132) and at 65 (G.R. No. 207205).
17
Id. at 193-204 (G.R. No. 207132).
18
Id. at 214 (G.R. No. 207132).
The November 24, 2010 order reads in full:

There being no opposition from the opposing Counsels to the 'Urgent Motion For Leave
to Intervene and File Opposition-in-Intervention', movant's Counsel or Intervenor is
hereby allowed to file said Opposition or Comment to the Application for Temporary
Restraining Order and as a matter of fact, the Court takes notice that said
Comment/Opposition is already attached to the said Urgent Motion, and since the
petitioner and the respondent's [sic] Counsels, respectively, are no longer adducing
further arguments in support of their respective positions relative to the Application for
TRO, Jet the said application together with the respective opposition thereto of the
respondents and intervenor be submitted for resolution. Let the hearing on the
Application for Preliminary Injunction be tentatively scheduled on February 16, 2011 at
8:30 a.m.
19
In an order dated March 14, 2011 (rollo, p. 215 [G.R. No. 207132]), the RTC, Branch
110 ordered AMCOW to pay the docket fees within ten days from receipt of the order,
and to file a memorandum until March 17, 2011. AMCOW complied with the order to
submit memorandum and the directive to pay the docket fees (id. at 216-218 [G.R. No.
207132]).
20
21
Dated August 2, 2011, id. at 233-234 (G.R. No. 207132) and at 70-71 (G.R. No.
207205).
22
Supra note 2.
23
Supra note 3.
24
Rollo, pp. 312-314 (G.R. No. 207132) and pp. 72-74 (G.R. No. 207205).
25
cralawred Id. at 95-96 (G.R. No. 207205).
26
Id. at 472-479 (G.R. No. 207132).
27
Id. at 442-446 (G.R. No. 207132).
28
Id. at 451-453 (G.R. No. 207132).
29
See: Landbank of the Philippines v. Court of Appeals, G.R. No. 129368, August 25,
2003, 409 SCRA 455 where the Court held:
A writ of certiorari has been called a "supervisory or superintending" writ. It was a
common law writ of ancient origin. Its earliest use was in the crown or criminal side of
the Court of King's Bench. Its use on the civil side later came into general use.
Certiorari is a remedy narrow in scope and inflexible in character. It is not a general
utility tool in the legal workshop.
See also: Barangay Blue Ridge "A" of QC v. Court of Appeals, 377 Phil. 49, 53
(1999); Lalican v. Vergara, 342 Phil. 485 (1997); Silverio v. Court of Appeals, G.R. No.
L-39861, March 17, 1986, 141 SCRA 527.
30
479 Phil. 768 (2004).
31
Id. at 779-780.
32
CONSTITUTION, Art. VIII, Sec. 1.
33
460 Phil. 830 (2003).
34
Id. at 883, 909-910, citing I Record of the Constitutional Commission 434-436 (1986).
35
Tiangco v. Land Bank of the Philippines, GR. No. 153998, October 6, 2010, 632 SCRA
256, 271, Villanueva v. People, G.R. No. 188630, February 23, 2011, 644 SCRA 358,
368.
36
See, for instance, the following cases where the Court gave due course
to certiorari petitions that question, at the first instance, the constitutionality of
governmental acts that are not quasi-judicial or judicial in nature: Belgica v. Executive
Secretary, 721 Phil. 416 (2013), questioning the constitutionality of the Disbursement
Acceleration Progam; Disini v. Secretary of Justice, questioning the constitutionality of
the Cybercrime Prevention Act; Imbong v. Ochoa, 732 Phil. 1 (2014) questioning the
constitutionality of the Reproductive Health Law; Araullo v. Aquino, 737 Phil. 457
(2014), questioning the constitutionality of the Priority Development Assistance
Fund; Diocese of Bacolod v. Comelec, 747 SCRA 1 (2015), questioning the Commission
on Election's administrative actions against the Diocese of Bacolod; and Saguisag v.
Executive Secretary, available
at sc.judiciary.gov.ph/jurisprudence/2016/toc/January.php, questioning the
constitutionality of the Philippine government's Enhanced Defense Cooperation
Agreement with the United States.
37
Cf Section 1 of Rule 65 of the Rules of Court, which provides a remedy
"When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction" with the more general grant of
jurisdiction "to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government" in Article VIII, Section 1 of the 1987 Constitution.
38
This requirement is reflected from the text of the 1987 Constitution, from its
definition of judicial power in Article VIII, Section 1, which requires "actual
controversies" and its enumeration of the Supreme Court's jurisdiction in Article Vlll,
Section 5, which pertains to "cases."
See also Justice Arturo Brion's Separate Concurring Opinion in Villanueva v. JBC, G.R.
No. 211833, April 7, 2015, sc.judiciary.gov.ph.
39
Note the pattern in our Rules of Civil Procedure requiring a party to be a "real party in
interest" to lodge an action, and for parties to have "a legal interest" in order to
intervene.
Thus, Rule 3, Section 2 provides:

Section 2. Parties in interest. - A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of
the suit. Unless otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party in interest. (2a)
Rule 19, Section 1, provides:
Section 1. Who may intervene. - A person who has a legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intervenor's rights may be fully protected in a separate proceeding.
(2[a], [b]a, R12)
Note, too, that criminal actions initiated against the accused, the People of the
Philippines has been recognized as "the offended party". People of the Philippines v.
Santiago, 255 Phil. 851 (1989).
Lastly, the Rules of Court on Special Proceedings require that parties have an interest in
the proceeding they initiate to establish a status, a right, or a particular fact.
40
While "ripeness" is a concept found in constitutional litigation, it is not without
counterparts in other proceedings. In civil proceedings, for instance, the failure to
exhaust administrative remedies before availing of judicial relief renders a civil action
immediately dismissible for being premature. Laguna CATV Network, Inc. v. Maraan
(DOLE), 440 Phil. 734 (2002). Too, the failure to comply with the requisite barangay
mediation prior to initiating certain cases also renders the action premature and
dismissible. LOCAL GOVERNMENT CODE, Chapter VII.
41
The writ of prohibition can be sought when the tribunal, board or body exercises
judicial, quasi-judicial or ministerial functions. RULES OF COURT, Rule 65, Sec. 1.
42
Ysidro v. Leonardo-de Castro, 681 Phil. 1, 14-17 (2012).
43
RULES OF COURT, Rule 65, Sec. 6.
44
45
The doctrine of exhaustion of administrative remedies applies regardless of the
kind of suit initiated before the courts. Courts, for reasons of law, comity and
convenience, should not entertain suits unless the available administrative
remedies have first been resorted to and the proper authorities have been given an
appropriate opportunity to act and correct their alleged errors, if any, committed in the
administrative forum. Factoran, Jr. v. Court of Appeals, G.R. No. L-93540, December
13, 1999, 320 SCRA 530, 539, citing University of the Philippines v. Catungal, Jr., G.R.
No. 121863, May 5, 1997, 272 SCRA 221, 240; Carale v. Abarintos, 336 Phil. 126, 137
(1997).
46
Merida Water District et al. v. Bacarro, et al., G.R. No. 165993, September 30,
2008, sc.judiciary.gov.ph, citing Sunville Timber Products, Inc. v. Abad, G.R. No.
85502, February 24, 1992, 206 SCRA 482, 486-487.
47
See the Court's discussion in Abakada Guro Partylist v. Purisima, G.R. No. 166715,
August 14, 2008, 562 SCRA 251, viz:
An actual case or controversy involves a conflict of legal rights, an assertion of opposite
legal claims susceptible of judicial adjudication. A closely related requirement is
ripeness, that is, the question must be ripe for adjudication. A constitutional
question is ripe for adjudication wllen tlte cllallenged governmetttal act ltas a
direct and existing adverse effect on the itldividual challenging it. Thus, to be
ripe for judicial adjudication, the petitioner must show an existing personal stake in the
outcome of the case or an existing or imminent injury to himself that can be redressed
by a favorable decision of the Court.
48
A case or issue is considered moot and academic when it ceases to present a
justiciable controversy by virtue of supervening events, so that an adjudication of the
case or a declaration on the issue would be of no practical value or use. In such
instance, there is no actual substantial relief which a petitioner would be entitled to,
and which would be negated by the dismissal of the petition. Courts generally decline
jurisdiction over such case or dismiss it on the ground of mootness. Carpio v. CA, G.R.
No. 183102, February 27, 2013, 692 SCRA 162, 174, citing Osmeña III v. Social
Security System of the Philippines, 559 Phil. 723, 735 (2007).
49
ACWS, Ltd. v. Dumlao, 440 Phil. 787, 801-802 (2002); Zabat v. Court of Appeals, 393
Phil. 195, 206 (2000).
50
See Antipolo Realty Corporation v. National Housing Authority, G.R. No. L-50444,
August 31, 1987, 153 SCRA 399; University of the Philippines v. Catungal, supra note
45.
51
See Rules of Court, Rule 63.
52
See Rules of Court, Rule 65.
53
Supra note 36.
54
See Justice Arturo Brion's discussion on the expanded jurisdiction of the Court
in Imbong v. Ochoa, supra note 36 at 279, 281-294; Araullo v. Aquino, supra note 36,
at 641, 681-696; and Saguisag v. Executive Secretary, supra note 36, at 5-12.
In Imbong, Justice Brion pointed out:

Under the expanded judicial power, justiciability expressly depends only on the
presence or absence of grave abuse of discretion, as distinguished from a situation
where the issue of constitutional validity is raised within a traditionally justiciable case
where the elements of actual controversy based on specific legal rights must exist. In
fact, even if the requirements for strict justiciability are applied, these requisites can
already be taken to be present once grave abuse of discretion is prima facie shown to
be present. Supra note 36, at 286.
55
Congressman Enriquez v. Executive Secretary, 602 Phil. 64 (2009).
Judicial review was introduced as part of the colonial control oflegislation in the
Philippines. The Organic Acts (Philippine Bill of 1902 and Jones Law of 1916) defined
the authority and limit of the powers of the government in the Philippines. In this sense
they were like constitutions, albeit they did not proceed from the sovereign will of the
Filipino people, but were statutes enacted by the US Congress.
These organic acts provided for the review by the US Supreme Court of decisions of the
Philippine Supreme Court "in all actions, cases, causes and proceedings ... in which the
Constitution or any statute, treaty, title, right or privilege of the United States is
involved."
On this basis, in Casanovas v. Hord (8 Phil. 125), the Court declared Section 134 of
Internal Revenue Act No. 1189 void for violating Section 5 of the Philippine Bill of 1902,
which in turn provided that "no law impairing the obligation of contracts shall be
enacted."
The Commonwealth of the Philippines, in adopting the 1935 Constitution, impliedly

recognized judicial review as part of judicial power, Article VIII, Section 2, viz:
SEC. 2. x x x the Supreme Court of its original jurisdiction over cases affecting
ambassadors, other public ministers, and consuls, nor of its jurisdiction to review,
revise, reverse, modify, or affirm on appeal, certiorari, or writ of error, as the law or
the rules of court may provide, final judgments and decrees of inferior courts in -
(1) All cases in which the constitutionality or validity of any treaty, law, ordinance, or
executive order or regulation is in question.
x x x x (emphasis supplied)
Similar language has been used in Section 5, Article X of the 1973 Constitution on the
jurisdiction of the Supreme Court, and in Section 4, Article VIII of the 1987
Constitution.
To this day, judicial review has been part of the Philippine legal system, and Angara v.
Electoral Commission's (63 Phil. 139) exposition on the power of judicial review still
holds doctrinal value, viz:
The Constitution is a definition of the powers of government. Who is to determine the
nature, scope and extent of such powers? The Constitution itself has provided for the
instrumentality of the judiciary as the rational way. And when the judiciary mediates to
allocate constitutional boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of the legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish
for the parties in an actual controversy the rights which that instrument secures and
guarantees to them. This is in truth all that is involved in what is termed
"judicial supremacy" which properly is the power of judicial review under the
Constitution.
56
Id. at 73 citing Francisco, Jr. v. House of Representatives, supra note 33, at 892-893,
citing Angara v. Electoral Commission, 63 Phil. 139 (1936).
57
As established by jurisprudence, standing involves a personal and substantial interest
in the case such that the petitioner has sustained, or will sustain, direct injury as a
result of the violation of its rights. Kilosbayan, Inc. v. Morato, G.R. No. 118910, July 17,
1995, 246 SCRA 540, 562-563, citing Baker v. Carr, 369 U.S. 186, 7 L. Ed. 633
(1962); Bayan v. Zamora, G.R. No. 138570, October 10, 2000, 342 SCRA 449,
478; Galicto v. Aquino, 683 Phil. 141, 170-174 (2012).
58
59
People of the Philippines v. Santiago, supra note 39.
60
See the following provisions of the Rules of Court on Special Proceedings: Rule 74,
Sec. 2; Rule 76, Sec. 1; Rule 79, Sec.1; Rule 89, Sec. 1; Rule 90, Sec. 1; Rule 93, Sec.
4; Rule 107 Sec. 1; Rule 108, Section 1; and Rule 109 Sec. 1.
61
Supra note 54.
62
David v. Gloria Macapagal-Arroyo, G.R. No. 171396, May 3, 2006, sc.judiciary.gov.ph.
63
Notably, Justice Arturo Brion's Separate Opinion in Araullo v. Aquino, supra note 36
at 661, 684 pointed out that "The traditional rules on hierarchy of courts and
transcendental importance, far from being grounds for the dismissal of the petition
raising the question of unconstitutionality, are necessarily reduced to rules relating to
the level of court that should handle the controversy, as directed by the Supreme
Court."
64
The Court has yet to detennine what falls within the general description of
"transcendental importance". Note that despite the vagueness of this concept, its
application has resulted in the relaxation of recognized rules in constitutional litigation
and has led to a non-uniform approach in exercising judicial review.
In other words, no element of predictability definitively exists in applying the

transcendental importance doctrine. The Court has merely been using "determinants" of
transcendental importance in place of a clear definition of the term. These
"determinants" include:
(1) the character of the funds or other assets involved in the case; (2) the presence of
a clear case of disregard of a constitutional or statutory prohibition by the public
respondent agency or instrumentality of the government; and (3) the lack of any other
party with a more direct and specific interest in raising the questions being
raised. Senate of the Philippines v. Ermita, G.R. No. 169777, April 20, 2006, 488 SCRA
1, 39-40; and Francisco v. Nagmamalasakit na mga Manananggol ng mga
Manggagawang Pilipino, Inc., G.R. No. 160261, November 10, 2003, 415 SCRA 44,
139, citing Kilosbayan v. Guingona, G.R. No. 113375, May 5, 1994, 232 SCRA 110,
155-157.
These determinants, however, are largely irrelevant to the existence of an actual case
or controversy and as such should not be made the basis of relaxing the standing
requirement.
That the funds or assets involved in the case has a "character" - presumably public or
that which the public has an interest in - does not have any connection to whether the
petition presents an actual controversy. That there is no other party with a more direct
and specific interest in raising the questions raised is an even more bothersome
determinant: the fact that there is no party with a direct and specific interest
necessarily implies that there is no dispute to begin with.
Concededly, there may be incidents where a governmental agency's disregard of clear

constitutional and statutory prohibitions imply the existence of a dispute. The
determinant, however, is too vague and does not require that the disregard relate to
the issues raised in the petition.
The standing requirement may seem innocuous at first glance, but it is inextricably
linked to the presence of an actual case or controversy so that it should not be relaxed
on grounds that are outside of the issues presented before the Court. By relaxing the
standing requirement, we also relax the case or controversy requirement. Without a
showing of direct injury on the part of the petitioner, his legal right in the dispute is
also questionable. How could there be a legal right subject of a dispute, when the party
putting it forward failed to show that he has been injured, or is about to be injured by
the governmental act? When we use determinants outside of and irrelevant to the
existence of an actual case or controversy, we run the risk of deciding cases that may
not have a justiciable issue to begin with, and thus go outside the bounds of judicial
review.
65
Supra note 55.
66
Kilosbayan, Inc. v. Morato, supra note 57; Bayan v. Zamora, G.R. No.
138570, supra note 57; Galicto v. Aquino, supra note 57.
See also Justice Arturo D. Brion's Dissenting Opinion in Diocese of Bacolod v. Comelec,
supra note 36, pointing out that:
Failure to meet any of these requirements [for judicial review] justifies the Court's
refusal to exercise its power of judicial review under the Court's traditional power. The
Court, however, has, in several instances, opted to relax one or more of these
requirements to give due course to a petition presenting issues of transcendental
importance to the nation.
In these cases, the doctrine of transcendental importance relaxes the standing
requirement, and thereby indirectly relaxes the injury embodied in the actual case or
controversy requirement. Note at this point that an actual case or controversy is
present when the issues the case poses are ripe for adjudication, that is, when the act
being challenged has had a direct adverse effect on the individual challenging it.
Standing, on the other hand, requires a personal and substantial interest manifested
through a direct injury that the petitioner has or will sustain as a result of the
questioned act.
Thus, when the standing is relaxed because of the transcendental importance doctrine,
the character of the injury presented to fulfill the actual case or controversy
requirements likewise tempered.
When we, for instance, say that the petitioners have no standing as citizens or as
taxpayers but we nevertheless give the petition due course, we indirectly acknowledge
that the injury that they had or will sustain is not personally directed towards them, but
to the more general and abstract Filipino public.
68
See, for example, Justice Arturo D. Brion's Opinion in Cawad v. Abad, G.R. No.
207145, July 28, 2015, 764 SCRA 32, noting problems when the Court relaxes the rules
on certiorari to accommodate quasi-legislative acts, because of the "paramount
importance" of the case, viz:
In several cases, however, we reversed the decision of the Court of Appeals denying a
petition for certiorari against a quasi-legislative act based on the terms of the Rules of
Court. In these reversals, we significantly noted the paramount importance of resolving
the case on appeal and, on this basis, relaxed the requirements of the petition
for certiorari filed in the lower court.
This kind of approach, to my mind, leads to an absurd situation where we effectively

hold that the CA committed an error of law when it applied the rules as provided in the
Rules of Court.
To be sure, when we so act, we send mixed and confusing signals to the lower courts,
which cannot be expected to know when a certiorari petition may or should be allowed
despite being the improper remedy.
Additionally, this kind of approach reflects badly on the Court as an institution, as it

applies the highly arbitrary standard of 'paramount importance' in place of what is
written in the Rules. A suspicious mind may even attribute malicious motives when the
Court invokes a highly subjective standard such as "paramount importance."
The public, no less, is left confused by the Court's uneven approach. Thus, it may not
hesitate to file a petition that violates or skirts the margins of the Rules or its
jurisprudence, in the hope that the Court would consider its presented issue to be of
paramount importance and on this basis take cognizance of the petition.
69
See Rayos, et al. v. City of Manila, 678 Phil. 952 (2011).
70
See Section 1, Article VIII of the 1987 Constitution, vesting judicial power in one
Supreme Court and other courts as may be created by law. Presently, Batas Pambansa
Blg. No. 129 established the courts of general jurisdiction in the Philippines, and
provides for their hierarchy.
71
See Section 4, paragraph 3 of the 1987 Constitution impliedly recognizing the binding
effect of the doctrines created by the cases promulgated by the Court; note, too, Article
8 of the Civil Code providing that "Art. 8. Judicial decisions applying or interpreting the
laws or the Constitution shall form a part of the legal system of the Philippines."
72
Far Eastern Surety and Insurance Co. Inc. v. People of the Philippines, G.R. No.
170618, November 20, 2013, sc.judiciary.gov.ph.
73
Thus, in Rayos, et. al. v. City of Manila, supra note 69, at 957, the Court held:
Indeed, this Court, the Court of Appeals and the Regional Trial Courts exercise
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction. However, such concurrence in jurisdiction does
not give petitioners unbridled freedom of choice of court forum. In Heirs of Bertuldo
Hinog v. Melicor, citing People v. Cuaresma, the Court held:
This Court's original jurisdiction to issue writs of certiorari is not exclusive. It
is shared by this Court with Regional Trial Courts and with the Court of Appeals. This
concurrence of jurisdiction is not, however, to be taken as according to parties seeking
any of the writs an absolute, unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and also serves as a general
determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Court's original jurisdiction to issue these
writs should be allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive jurisdiction, and
to prevent further over-crowding of the Court's docket. (Emphasis supplied, citations
omitted)
74
Under the principle of hierarchy of courts, direct recourse to this Court is improper
because the Supreme Court is a court of last resort and must remain to be so for it to
satisfactorily perform its constitutional functions, thereby allowing it to devote its time
and attention to matters within its exclusive jurisdiction and preventing the
overcrowding of its docket. Nonetheless, the invocation of this Court's original
jurisdiction to issue writs of certiorari has been allowed in certain instances on the
ground of special and important reasons clearly stated in the petition, such as, (1)
when dictated by the public welfare tmd tlte advancement of public policy; (2)
when demanded by the broader interest of justice; (3) when the challenged
orders were patent nullities; or (4) when analogous exceptional and
compelling circumstances called for and justified the immediate and direct
handling of the case. (emphasis supplied) Dy v. Bibat-Palamos, 717 Phil. 776, 782-
783 (2013).
75
56 Phil. 260 (1931).
76
Id. at 268. This statement finds full support from the current wording of the Rule on
Certiorari, Rule 65 whose Section 1 provides:
Section 1. Petition for certiorari. - When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to Jack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
77
Santiago, Jr. v. Bautista, G.R. No. L-25024, March 30, 1970, 32 SCRA 188, 198,
citing In State ex rel. Board of Commrs. v. Dunn (86 Minn. 301, 304).
78
Bedol v. Comelec, G.R. No. 179830, December 3, 2009, 606 SCRA 554.
79
The Court has consistently recognized the grant of the power to issue a cease and
desist order as an exercise of a government agency's quasi-judicial function. See: The
Honorable Monetary Board v. Philippine Veterans Bank, G.R. No. 189571, January 21,
2015, sc.judiciary.gov.ph; Vivas v. The Monetary Board of the Bangko Sentral ng
Pilipinas. G.R. No. 191424, August 7, 2013, 703 SCRA 290, 304; Bank of Commerce v.
Planters Development Bank And Bangko Sentral Ng Pilipinas, G.R. Nos. 154470-71,
September 24, 2012, 681 SCRA 521, 555 citing citing United Coconut Planters Bank v.
E. Ganzon, Inc., G.R. No. 168859, June 30,2009, 591 SCRA 321, 338-341; Freedom
from Debt Coalition et al. v. Energy Regulatory Commission et al., G.R. No. 161113,
June 15, 2004, 432 SCRA 157; and Laguna Lake Development Authority v. Court of
Appeals, G.R. No. 110120, March 16, 1994, 231 SCRA 292.
80
The Judiciary Reorganization Act of 1980.
81
Administrative Code of 1987, enacted on July 25, 1987.
82
Section 38, Chapter 7, Book IV of Executive Order No. 292 defines supervision and
control in this wise:
Supervision and Control. - Supervision and control shall include authority to act directly
whenever a specific function is entrusted by law or regulation to a subordinate; direct
the performance of duty; restrain the commission of acts; review, approve, reverse or
modify acts and decisions of subordinate officials or units; determine priorities in the
execution of plans and programs; and prescribe standards, guidelines, plans and
programs. Unless a different meaning is explicitly provided in the specific law governing
the relationship of particular agencies, the word "control" shall encompass supervision
and control as defined in this paragraph.
83
Article VII, Section 1 of the Constitution states that:
Section 1. The executive power shall be vested in the President of the Philippines.
Article VII, Section 17, on the other hand, provides:
Section 17. The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed.
84
See, among others, Cipriano v. Marcelino, 150 Phil. 336 (1972); Republic v. Lacap,
G.R. No. 158253, March 2, 2007, 517 SCRA 255; Buston-Arendain v. Gil, G.R. No.
172585, June 26, 2008, 555 SCRA 561; Vigilar v. Aquino, G.R. No. 180388, January
18, 2011, 639 SCRA 77.
85
See Abe-abe, et al. v. Manta, G.R. No. L-4827, May 31, 1979, 90 SCRA 524; Sandoval
v. Caneba, G.R. No. 90503, September 27, 1990, 190 SCRA 77; Merida Water District
et al. v. Bacarro, et al., supra note 46; Cabungcal et al. v. Lorenzo et al., 623 Phil. 329
(2009); Addition Hills v. Megaworld Properties, 686 Phil. 76 (2012), Samar II Electric
Cooperative v. Seludo, 686 Phil. 786 (2012).
86
Police power is the inherent power of the State to regulate or to restrain the use of
liberty and property for public welfare Gerochi v. Department of Energy, 554 Phil. 563,
579 (2007); Didipio EarthSavers' Multi-Purpose Association, Inc. (DESAMA) v. Gozun,
G.R. No. 157882, March 30, 2006, 485 SCRA 586, 604, citing U.S. v. Torribio, 15 Phil.
85, 93 (1910) and Rubi v. The Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).
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 Social Justice
Society (SJS) v. Atienza, Jr., G.R. No. 156052, February 13, 2008, 545 SCRA 92, 139.
The only limitation is that the restriction imposed should be reasonable, not
oppressive Mirasol v. Department of Public Works and Highways, 523 Phil. 713, 747
(2006).
87
It is the most pervasive, the least limitable, and the most demanding of the three
fundamental powers of the State. The justification is found in the Latin maxims salus
populi est suprema lex (the welfare of the people is the supreme law) and sic utere tuo
ut alienum non laedas (so use your property as not to injure the property of others). As
an inherent attribute of sovereignty which virtually extends to all public needs, police
power grants a wide panoply of instruments through which the State, as parens patriae,
gives effect to a host of its regulatory powers JMM Promotion and Management, Inc. v.
Court of Appeals, G.R. No. 120095, August 5, 1996, 260 SCRA 319, 324.
88
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. Social Justice Society (SJS) v. Atienza, Jr., supra note 86, at 139-
140; Patalinghug v. Court of Appeals, G.R. No. 104786, January 27, 1994, 229 SCRA
554, 559, citing Sangalang v. Intermediate Court, G.R. Nos. 71169, 76394, 74376 and
82281, December 22, 1988, 168 SCRA 634; Ortigas & Co. Ltd. Partnership v. Feati
Bank and Trust Co., No. L-24670, December 14, 1989, 94 SCRA 533.
89
See Pharmaceutical and Healthcare Association of the Philippines v. Duque, et al.,
G.R. No. 173034, October 9, 2007, 535 SCRA 265; St. Lukes's Medical Center
Employees Association-AFW v. National Labor Relations Commission, G.R. No. 162053,
March 7, 2007, 517 SCRA 677; Beltran v. Secretary of Health, G.R. No. 133640,
November 25, 2005, 476 SCRA 168, 196; Pollution Adjudication Board v. Court of
Appeals, G.R. No. 93891, March 11, 1991, 195 SCRA 112, 123-124; Tablarin v.
Gutierrez, G.R. No. L-78164, July 31, 1987, 152 SCRA 730, 741; Lorenzo v. Director of
Health, 50 Phil. 595, 597 (1927); and Rivera v. Campbell, 34 Phil. 348, 353-354
(1916).
90
Basco et al. v. Philippine Amusement and Gaming Corporation, 274 Phil. 323 (1991).
91
Id.
92
Philippine Association of Service Exporters v. Drilon, 246 Phil. 393, 399 (1988).
93
Id.
94
US. v. Toribio, 15 Phil. 85; Fabie v. City of Manila, 21 Phil. 486; Case v. Board of
Health, 24 Phil. 256; Bautista v. Juinio, 127 SCRA 329; Ynot v. IAC, 148 SCRA 659.
95
Section 16. Under Section 23 of Republic Act No. 8042, as amended, add new
paragraphs (c) and (d) with their corresponding subparagraphs to read as follows:
(c) Department of Health. - The Department of Health (DOH) shall regulate the
activities and operations of all clinics which conduct medical, physical, optical, dental,
psychological and other similar examinations, hereinafter referred to as health
examinations, on Filipino migrant workers as requirement for their overseas
employment. Pursuant to this, the DOH shall ensure that:
(c.1) The fees for the health examinations are regulated, regularly monitored and duly
published to ensure that the said fees are reasonable and not exorbitant;
(c.2) The Filipino migrant worker shall only be required to undergo health examinations
when there is reasonable certainty that he or she will be hired and deployed to the
jobsite and only those health examinations which are absolutely necessary for the type
of job applied for or those specifically required by the foreign employer shall be
conducted;
(c.3) No group or groups of medical clinics shall have a monopoly of

exclusively conducting Health examinations on migrant workers for certain
receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of
the DOHaccredited or DOH-operated clinics that will conduct his/her health
examinations and that his or her right as a patient are respected. The decking
practice, which requires an overseas Filipino worker to go first to an office for
registration and then farmed out to a medical clinic located elsewhere, shall
not be allowed; x x x (Emphasis supplied)
96
Supra note 95.
97
The pertinent part of the provision reads: Any Foreign employer who does not honor
the results of valid health examinations conducted by a DOH-accredited or DOH-
operated clinic shall be temporarily disqualified from the participating in the overseas
employment program, pursuant to POEA rules and regulations.
98
Section 5 of Republic Act No. 8042, as amended by Republic Act 1022 now includes:
In addition to the acts enumerated above, it shall also be unlawful for any person or
entity to commit the following prohibited acts:
xxxx
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino

worker is required to undergo health examinations only from specifically designated
medical clinics, institutions, entities or persons, except in the case of a seafarer whose
medical examination cost is shouldered by the principal/shipowner;
xxxx
99
Supra note 95.
100
Section 11 of Republic Act No. 4226 provides:
Section 11. Revocation of License. - The licensing agency may suspend or revoke a
license already issued for any of the following grounds: (a) repeated violation by the
licensee of any provision of this Act or of any other existing law; (b) repeated violation
of rules and regulations prescribed in the implementation of this Act; or (c) repeated
failure to make necessary corrections or adjustments required by the licensing agency
in the improvement of facilities and services.
101
Office of the Ombudsman v. Magno, G.R. No. 178923, November 27, 2008, 572
SCRA 272, 286-287 citing Microsoft Corporation v. Best Deal Computer Center
Corporation, 438 Phil. 408, 414 (2002); Suliguin v. Commission on Elections, G.R. No.
166046, March 23, 2006, 485 SCRA 219, 233; Natalia Realty, Inc. v. Court of Appeals,
440 Phil. 1, 19-20 (2002); Philippine Rabbit Bus Lines, Inc. v. Goimco, Sr., 512 Phil.
729, 733-734 (2005) citing Land Bank of the Philippines v. Court of Appeals, 456 Phil.
755, 786 (2003); Duera v. Court of Appeals, 424 Phil. 12, 20 (2002), citing Cuison v.
Court of Appeals, G.R. No. 128540, April 15, 1998, 289 SCRA 159, 171.
102
Laguna Lake Development Authority v. Court of Appeals, G.R. No. 110120, March 16,
1994, 231 SCRA 292, Pollution Adjudication Board v. Court of Appeals, 272-A Phil. 66
(1991).
103
G.R. No. 154705, June 26, 2003, 405 SCRA 126.
104
China National Machinery & Equipment Corp. v. Santamaria, et al., G.R. No. 185572,
February 7, 2012, sc.judiciary.gov.ph; Holy See v. Rosario, G.R. No. 101949, December
1, 1994, 238 SCRA 524, 535; JUSMAG v. National Labor Relations Commission, G.R.
No. 108813, December 15, 1994, 239 SCRA 224, 231-232.
105
Arigo v. Swift, G.R. No. 206510, September 16, 2014, 735 SCRA 208,
citing Minucher v. Court of Appeals, 445 Phil. 250 (2003).
106
x x x the privilege is not an immunity from the observance of the law of the
territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the
exercise of territorial jurisdiction. Id. at 132.
107
United States of America v. Ruiz, 221 Phil. 179, 182-183 & 184 (1985).
CONCURRING AND DISSENTING OPINION
LEONEN, J.:
I concur in the result.
I.
The special civil actions filed with the Regional Trial Court were both for the issuance of
a writ of certiorari and a writ of prohibition. Thus, in the very opening paragraph of the
discussion of the Regional Trial Court in question:
The present Petition for Certiorari and Prohibition seeks: a) the issuance of a writ of
prohibition to enjoin and prohibit respondent Secretary from enforcing and
implementing Department of Health (DOH) Order dated August 23, 2010 on the ground
that it was issued with grave abuse of discretion amounting to lack or excess of
jurisdiction; and b) the declaration of Paragraphs c.3 and c.4, Section 16, of Republic
Act (R.A.) No. 10022 and Section 1(c) and 1(d), Rule XI of the Implementing Rules and
Regulations (IRR) as unconstitutional for being contrary to the generally accepted
principles of international law, i.e., the principle of sovereign equality and independence
of states.1
The dispositive portion of the Regional Trial Court's questioned Decision 2 reads:
WHEREFORE, the petition is hereby granted. Accordingly, the writ of CERTIORARI is
hereby issued declaring null and void ab initio the August 23, 2010 Order and
November 2, 2010 reiterating Order of the respondent DOH secretary. A writ of
Prohibition is likewise issued directing the respondent DOH Secretary and all persons
acting on his behalf to cease and desist from implementing the assailed Orders against
the petitioners. The August 1, 2011 writ of preliminary injunction is hereby made
permanent. Civil Case No. 04-0670 is hereby dismissed for being moot and
academic.3 (Emphasis supplied)
Section 21 of Batas PambansaNo. 129 provides:
Section 21. Original jurisdiction in other cases. - Regional Trial Courts shall exercise
original jurisdiction:
(1) In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction which may be enforced in any part of their respective
regions[.] (Emphasis supplied)
The Regional Trial Court of Pasay had jurisdiction over the remedies invoked, which
were petitions for a writ of certiorari and a writ of prohibition. However, it did not have
jurisdiction to enjoin to issue the writs for its intended scope.
The Order of the Department of Health dated August 23, 2010 4 and its reiterative Order
dated November 2, 20105 was nationwide in its scope. After all, the Department of
Health is a nationwide agency. The respondent GCC Approved Medical Centers
Association, Inc. did not clearly and convincingly show that all its members were
located only within the territorial jurisdiction of the Regional Trial Court of Pasay City.
For these reasons alone, the decision of the court a quo is null and void for having been
issued without jurisdiction. Thus, the Petitions should be granted.
II.
In my view, it is not necessary to bifurcate the Special Civil Action for certiorari into a
"traditional" track and an "expanded" mode. The present rules are already sufficient for
this Court to exercise its fundamental power of judicial review described in part in
Article VIII, Section 1.6
Neither would it be correct to limit any of our certiorari powers, even on an "expanded"
basis, to questions, which only raise constitutional issues. An act of any government
branch, agency, or instrumentality that violates a statute or a treaty is grave abuse of
discretion. The Constitution does not distinguish the cause for grave abuse. 7 Neither
should this Court, unless, in the guise of promulgating rules of procedure, we wish to
effect an amendment of the Constitution.
Finally, I express my reservations relating to the absolute necessity for a decision of

this Court before any other organ of government can act on its rational belief in the
bending nature of any customary international norms or a general principle of
international law. Our constitutional adherence to international law is by virtue of
incorporation through Article II, Section 28 or Article VII, Section 21 of the
Constitution.9 Judicial action is not required for these norms to be binding. Neither of
these modes of incorporation require it.
III.
Fundamental to constitutional litigation is the assurance that judicial review should only
happen when there is an actual case or controversy. That is, the judiciary is not an
advisory body to the President, Congress, or any other branch, instrumentality, or
agency of the government. Thus, absent any actual or sufficiently imminent breach,
which will cause an injury to a fundamental right, a provision of law or an
administrative regulation cannot be challenged. This Court is co-equal with the other
branches of government.10 The Constitution is a legible, written document capable of
being read by all. Its ambiguity may only be clarified through judicial review when it
becomes apparent through the existence of an actual situation. The mere existence of
subordinate norms - in the form of a statue, treaty or administrative rule - is not
enough. There has to be parties who tend to be directly and substantially injured under
a specific concrete set of facts.11
The confusion with certiorari in my view, is brought about by instances in the recent
past where actions, which should have been considered as ones for declaratory relief,
were acted upon by this Court as if they were certiorari actions. For example, in James
M. Imbong, et al. v. Hon. Paquito N. Ochoa, Jr., et al. 12 or the Reproductive Health (RH)
cases, this Court took cognizance of the Petitions even if there were still no
Implementing Rules, no doctor or health practitioner threatened with sanctions, no
couple or spouse whose prerogatives were to be curtailed. In my dissent, I pointed to
the dangers of speculative arguments, mainly, that our imagination substituted for
actual facts. Imagination took precedence over actual controversy.
The same with the case of Jose Jesus M. Disini, et al. v. The Secretary of Justice, et
al.13 In that case, there was no cybercrime committed. There was no cybercrime
threatened to be committed, no social media part removed, no advertising in
cyberspace prohibited. Again, although denominated as certiorari actions, the petitions
were in actuality actions for declaratory relief.
Petitions for certiorari as provided in Rule 65 are available only to correct acts done in a
judicial or quasi-judicial procedure.14 This ensures that the power of judicial review can
only be exercised when there is an actual controversy. No judicial action can happen
without interested parties, who suffer injury and therefore ready to plead the facts that
give actual rise to their real injury. This is the same with quasi-judicial actions.
Ministerial or administrative actions, which will cause or threaten to cause injury can be
corrected through a Writ of Prohibition, not a Writ of Certiorari. In both cases, the
requirement of the absence of a plain, speedy, and adequate remedy in the ordinary
course of the law conforms with the deferential nature of judicial review in
constitutional cases. The requirement in both cases that there be a clear finding of
grave abuse of discretion amounting to lack of jurisdiction is sufficient to meet the
scope of all our powers of judicial review.
The suggestion to expand the present rules on Petitions for Certiorari opens a very
dangerous road towards changing our place in the Constitutional order. It will transform
this Court to a virtual overload that will review legislative and executive acts, even
without the presence of an actual controversy, simply because in our collective and
subjective view, there may be some amorphous and undefined but gut feeling
transcendental interest involved.
It is in this respect that I wage this Court to tread with an abundance of all caution
even as I respect the erudite observations of Justice Arturo Brion. This Court must
clothe itself with humility as it reviews its past cases in the light of a full understanding
of our constitutional role if and when we do exercise our power to amend the rules.
In my view, discussions are thus premature.
IV.
In Restituto Ynot v. Intermediate Appellate Court, et al.,15 this Court called a trial court
to task when it hesitated to decide on the constitutionality of an Executive Order in the
presence of a clearly pleaded actual case. After all, the plain text of Article VIII, Section
5 (2) (a) states:
Section 5. The Supreme Court shall have the following powers:
....
(2) Review, revise, reverse, modify or affirm an appeal or certiorari, as the law or the
Rules of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or the validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order instruction,
ordinance, or regulation is in question. (Emphasis provided)
To limit constitutional questions only for the determination of this Court at first instance
and even in its "expanded" mode is not consistent with this provision. It may also be
inconsistent with Article VIII, Section 2 of the Constitution:
Section 2. The Congress shall have the power to define, prescribe, and apportion the
jurisdiction of various courts but may not deprive the Supreme Court of its jurisdiction
over cases enumerated in Section 5 hereof.
As earlier pointed out, Section 21 of Batas Pambansa Bilang 129 grants jurisdiction to
the Regional Trial Court in Petitions for Certiorari and Prohibition. The only qualification
is that the writs "... may be enforced in any part of their respective jurisdictions." 16
For this Court to reduce this jurisdiction further is to amend Batas Pambansa Bilang
129, therefore breaching our solemn commitment to a Constitution that removes from
us the power to prescribe jurisdiction.
V.
I join Justice Lucas Bersamin's observations that the issuance of a Cease and Desist
Order does not per se mean that the actions taken by the Department of Health is
quasi-judicial in nature. In my view, the executive department in applying and
implementing the law does not only do so by mere advice or persuasion to those who
do not follow its provisions. The executive is not without its own set of legally mandated
coercive powers short of any kind of adjudication. The issuance of an order to cease
and desist in the Petitioners' continuing violation of the law is one of them. The type of
cease and order in the case was therefore an administrative act. If at all, the proper
action to question its constitutionality is a Petition for a Writ of Prohibition not a Writ of
Certiorari. However, due to the scope of the writ requested, it should have been filed
with the Court of Appeals, not the Regional Trial Court.
ACCORDINGLY, I vote to DISMISS the Petitions.
Endnotes:
1
Rollo, p. 56.
2
Id. at 56-66. The Regional Trial Court Decision was promulgated on August 10, 2012
and penned by Judge Maria Rosario B. Ragasa of Branch 108 of the Regional Trial Court
of Pasay City.
3
Id. at 66.
4
Id. at 19-20.
5
Id. at 20.
6
CONST., art. VIII, sec. 1 states:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
of jurisdiction on the part of any branch or instrumentality of the Government.
7
CONST., art. VIII, sec. 1.
8
CONST., art. VIII, sec. 1 states:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
of jurisdiction on the part of any branch or instrumentality of the Government.
9
CONST., art. VII, sec. 21 states:
Section 21. No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate.
10
Jose Alejandrino v. Manuel L. Quezon, et al., 46 Phil. 83 (1924) [Per J. Malcolm, En
Banc].
11
The Province of North Cotabato v. The Government of the Republic of the Philippines
Peace Panel on Ancestral Domain (GRP), 589 Phil. 387 (2008) [Per J. Carpio Morales,
En Banc].
12
732 Phil. 1 (2014) [Per J. Mendoza, En Banc].
13
727 Phil. 28 (2014) [Per J. Abad, En Banc].
14
RULES OF COURT, Rule 65, sec. 1 states that:
Section 1. Petition for certiorari. — When any tribunal, board or officer exercising

judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there
is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law,
a person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
15
232 Phil. 615 (1987) [Per J. Cruz, En Banc].
16
Batas Blg. 129, sec. 21.
G.R. No. 162053 March 7, 2007
ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND

MARIBEL S. SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL CENTER,
INC., Respondents.
DECISION
AZCUNA, J.:
Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA) dated
January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision2 dated August 23, 2002 rendered
by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00.
The antecedent facts are as follows:
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private
respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of
Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic
Technology.
On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the "Radiologic
Technology Act of 1992." Said law requires that no person shall practice or offer to practice as a
radiology and/or x-ray technologist in the Philippines without having obtained the proper certificate of
registration from the Board of Radiologic Technology.
On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of
private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to
comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the
unlicensed employee will be transferred to an area which does not require a license to practice if a
slot is available.
On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner Maribel
S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and passing the
forthcoming examination scheduled in June 1997; otherwise, private respondent SLMC may be
compelled to retire her from employment should there be no other position available where she may
be absorbed.
On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services
issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC
Registration form/Examination Permit per Memorandum dated March 4, 1997.
On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC and that the latter is giving
her the last chance to take and pass the forthcoming board examination scheduled in June 1998;
otherwise, private respondent SLMC shall be constrained to take action which may include her
separation from employment.
On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel
S. Santos informing the latter that the management of private respondent SLMC has approved her
retirement in lieu of separation pay.
On November 26, 1998, the Personnel Manager of private respondent SLMC issued a "Notice of
Separation from the Company" to petitioner Maribel S. Santos effective December 30, 1998 in view
of the latter's refusal to accept private respondent SLMC's offer for early retirement. The notice also
states that while said private respondent exerted its efforts to transfer petitioner Maribel S. Santos to
other position/s, her qualifications do not fit with any of the present vacant positions in the hospital.
In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of private
respondent SLMC, requesting the latter to give "due consideration" to the organization's three (3)
regular members of his organization (petitioner Maribel S. Santos included) "for not passing yet the
Board of Examination for X-ray Technology," "by giving them an assignment in any department of
your hospital awaiting their chance to pass the future Board Exam."
On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a "Notice of
Separation from the Company" to petitioner Maribel S. Santos effective February 5, 1999 after the
latter failed to present/ submit her appeal for rechecking to the Professional Regulation Commission
(PRC) of the recent board examination which she took and failed.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC
for illegal dismissal and non-payment of salaries, allowances and other monetary benefits. She
likewise prayed for the award of moral and exemplary damages plus attorney's fees.
In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal
Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources
Director of private respondent SLMC, requested the latter to accommodate petitioner Maribel S.
Santos and assign her to the vacant position of CSS Aide in the hospital arising from the death of an
employee more than two (2) months earlier.
In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:
Gentlemen:
Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant regular
position of a CSS Aide in Ms. Maribel Santos' behalf.
The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially on
minimum requirements of the job and the need to meet said requirements, as well as other pre-
employment requirements, in order to be considered for the vacant position. As a matter of fact, Ms.
Santos is welcome to apply for any vacant position on the condition that she possesses the
necessary qualifications.
As to the consensus referred to in your letter, may I correct you that the agreement is, regardless of
the vacant position Ms. Santos decides to apply, she must go through the usual application
procedures. The formal letter, I am afraid, will not suffice for purposes of recruitment processing. As
you know, the managers requesting to fill any vacancy has a say on the matter and correctly so. The
manager's inputs are necessarily factored into the standard recruitment procedures. Hence, the
need to undergo the prescribed steps.
Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer while she was
employed with SLMC given the prescribed period. She was given 30 days from issuance of the
notice of termination to look for appropriate openings which incidentally she wittingly declined to
utilize. She did this knowing fully well that the consequences would be that her application beyond
the 30-day period or after the effective date of her termination from SLMC would be considered a re-
application with loss of seniority and shall be subjected to the pertinent application procedures.
Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos at the
time successfully managed to get herself transferred to E.R. because she opted to apply for the
appropriate vacant position and qualified for it within the prescribed 30-day period. The other X-ray
Technologist, on the other hand, as you may recall, was eventually terminated not just for his failure
to comply with the licensure requirement of the law but for cause (refusal to serve a customer).
Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the opportunity
given her, or assuming she was not qualified for any vacant position even if she tried to look for one
within the prescribed period, I simply cannot understand why she also refused the separation pay
offered by Management in an amount beyond the minimum required by law only to re-apply at
SLMC, which option would be available to her anyway even (if she) chose to accept the separation
pay!
Well, here's hoping that our Union can timely influence our employees to choose their options well
as it has in the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of private
respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:
Dear Mr. Calderon:
This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms. Rita
Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms regarding the re-
hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the position of Secretary at the
Dietary Department. In that meeting, Ms. Santos replied that she would think about the offer. To
date, we still have no definite reply from her. Again, during the conference held on Dec. 14, 1999,
Atty. Martir promised to talk to Ms. Santos, and inform us of her reply by Dec. 21, 1999. Again we
failed to hear her reply through him.
Please be informed that said position is in need of immediate staffing. The Dietary Department has
already been experiencing serious backlog of work due to the said vacancy. Please note that more
than 2 months has passed since Ms. Marasigan offered this compromise. Management cannot
afford to wait for her decision while the operation of the said department suffers from vacancy.
Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If we
fail to hear from her or from you as her representatives by that time, we will consider it as a waiver
and we will be forced to offer the position to other applicants so as not to jeopardize the Dietary
Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent
SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five
Hundred Pesos (₱115,500.00) representing her separation pay. All other claims of petitioner were
dismissed for lack of merit.
Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.
On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the
Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution
promulgated on December 27, 2002.
Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned,
affirmed the decision of the NLRC.
Hence, this petition raising the following issues:
I. Whether the CA overlooked certain material facts and circumstances on petitioners' legal
claim in relation to the complaint for illegal dismissal.
II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity
the issues on the merit of petitioner's constitutional right of security of tenure.3
For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its comment4 that:
1) the petition should be dismissed for failure of petitioners to file a motion for reconsideration; 2) the
CA did not commit grave abuse of discretion in upholding the NLRC and the Labor Arbiter's ruling
that petitioner was legally dismissed; 3) petitioner was legally and validly terminated in accordance
with Republic Act Nos. 4226 and 7431; 4) private respondent's decision to terminate petitioner
Santos was made in good faith and was not the result of unfair discrimination; and 5) petitioner
Santos' non-transfer to another position in the SLMC was a valid exercise of management
prerogative.
The petition lacks merit.
Generally, the Court has always accorded respect and finality to the findings of fact of the CA
particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by
substantial evidence.5 True this rule admits of certain exceptions as, for example, when the judgment
is based on a misapprehension of facts, or the findings of fact are not supported by the evidence on
record6 or are so glaringly erroneous as to constitute grave abuse of discretion.7 None of these
exceptions, however, has been convincingly shown by petitioners to apply in the present case.
Hence, the Court sees no reason to disturb such findings of fact of the CA.
Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally
dismissed by private respondent SLMC on the basis of her inability to secure a certificate of
registration from the Board of Radiologic Technology.
The requirement for a certificate of registration is set forth under R.A. No. 74318 thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. - Unless
exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or offer to
practice as a radiologic and/or x-ray technologist in the Philippines without having obtained the
proper certificate of registration from the Board.
It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos'
separation from work is her failure to pass the board licensure exam for X-ray technicians, a
precondition for obtaining the certificate of registration from the Board. It is argued, though, that
petitioner Santos' failure to comply with the certification requirement did not constitute just cause for
termination as it violated her constitutional right to security of tenure. This contention is untenable.
While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be
reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace,
education, order, safety, and the general welfare of the people. Consequently, persons who desire to
engage in the learned professions requiring scientific or technical knowledge may be required to
take an examination as a prerequisite to engaging in their chosen careers.9 The most concrete
example of this would be in the field of medicine, the practice of which in all its branches has been
closely regulated by the State. It has long been recognized that the regulation of this field is a
reasonable method of protecting the health and safety of the public to protect the public from the
potentially deadly effects of incompetence and ignorance among those who would practice
medicine.10 The same rationale applies in the regulation of the practice of radiologic and x-ray
technology. The clear and unmistakable intention of the legislature in prescribing guidelines for
persons seeking to practice in this field is embodied in Section 2 of the law:
Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed by
radiation as well as to ensure safe and proper diagnosis, treatment and research through the
application of machines and/or equipment using radiation.11
In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its
decision dated August 23, 2002:
The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's inherent
police power. It should be noted that the police power embraces the power to prescribe regulations
to promote the health, morals, educations, good order, safety or general welfare of the people. The
state is justified in prescribing the specific requirements for x-ray technicians and/or any other
professions connected with the health and safety of its citizens. Respondent-appellee being
engaged in the hospital and health care business, is a proper subject of the cited law; thus, having in
mind the legal requirements of these laws, the latter cannot close its eyes and [let] complainant-
appellant's private interest override public interest.
Indeed, complainant-appellant cannot insist on her "sterling work performance without any
derogatory record" to make her qualify as an x-ray technician in the absence of a proper certificate of
Registration from the Board of Radiologic Technology which can only be obtained by passing the
required examination. The law is clear that the Certificate of Registration cannot be substituted by
any other requirement to allow a person to practice as a Radiologic Technologist and/or X-ray
Technologist (Technician).12
No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos
was undertaken by it conformably to an existing statute. It is undeniable that her continued
employment without the required Board certification exposed the hospital to possible sanctions and
even to a revocation of its license to operate. Certainly, private respondent could not be expected to
retain petitioner Santos despite the inimical threat posed by the latter to its business. This
notwithstanding, the records bear out the fact that petitioner Santos was given ample opportunity to
qualify for the position and was sufficiently warned that her failure to do so would result in her
separation from work in the event there were no other vacant positions to which she could be
transferred. Despite these warnings, petitioner Santos was still unable to comply and pass the
required exam. To reiterate, the requirement for Board certification was set by statute. Justice,
fairness and due process demand that an employer should not be penalized for situations where it
had no participation or control.13
It would be unreasonable to compel private respondent to wait until its license is cancelled and it is
materially injured before removing the cause of the impending evil. Neither can the courts step in to
force private respondent to reassign or transfer petitioner Santos under these circumstances.
Petitioner Santos is not in the position to demand that she be given a different work assignment
when what necessitated her transfer in the first place was her own fault or failing. The prerogative to
determine the place or station where an employee is best qualified to serve the interests of the
company on the basis of the his or her qualifications, training and performance belongs solely to the
employer.14 The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the
different Divisions of the NLRC (nor in the courts) managerial authority.15
While our laws endeavor to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and enforcement in the
interest of fair play.16 Labor laws, to be sure, do not authorize interference with the employer's
judgment in the conduct of the latter's business. Private respondent is free to determine, using its
own discretion and business judgment, all elements of employment, "from hiring to firing" except in
cases of unlawful discrimination or those which may be provided by law. None of these exceptions is
present in the instant case.
The fact that another employee, who likewise failed to pass the required exam, was allowed by
private respondent to apply for and transfer to another position with the hospital does not constitute
unlawful discrimination. This was a valid exercise of management prerogative, petitioners not having
alleged nor proven that the reassigned employee did not qualify for the position where she was
transferred. In the past, the Court has ruled that an objection founded on the ground that one has
better credentials over the appointee is frowned upon so long as the latter possesses the minimum
qualifications for the position.17 Furthermore, the records show that Ms. Santos did not even
seriously apply for another position in the company.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chairperson
Chief Justice
ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

Associate Justice Asscociate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in
the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.
REYNATO S. PUNO
Chief Justice

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G.R. No.

SOUTHERN LUZON DRUG CORPORATION, Petitioner,

20% discount on the purchase of medicines. The said provision states:

Sec. 4. Privileges for the Senior Citizen. - x x x:

WHEREFORE, the petition is DISMISSED for lack of merit. (Citations omitted)

CHAPTER 8. Other Privileges and Incentives

SEC. 32. Persons with disability shall be entitled to the following:

5.1. Persons with Disability are those individuals defined under Section 4 of RA

6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

Ruling of the Court

Prohibition may be filed to question

The Court clarifies.

officials that amount to usurpation of legislative authority. And, in a number of jurisprudence,

The instant case is not barred by

The Court believes so.

SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:

SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV, Section 4 of the

the police power, where it emphasized, thus:

The Court is not swayed.

order to qualify "taking" as an exercise of eminent domain. First, the expropriator must enter a

Before the passage of the law:

Co., legislative discretion has been described as follows:

suppression or absolute prohibition. Thus, in Philippine Communications Satellite

The subject laws do not violate the

The contention lacks merit.

The definitions of "disabilities" and

The Court disagrees.

(a) Disabled persons are those suffering from restriction or different abilities, as a result of a

Moreover, in Estrada v. Sandiganbayan, it was declared, thus:

(II) The passport of the persons with disability concerned; or

before he shall be issued a PWD Identification Card:

2. One (1) Valid ID

DISABILITY DOCUMENT ISSUING ENTITY

Non-Apparent Medical Licensed Private or

i. PWD identification card x x x

b) Booklet control number

i) Information of medicine purchased:

i.1 Name of medicine

i.3 Attending Physician

i.4 License Number

i.5 Servicing drug store name

i.6 Name of dispensing pharmacist

j) Authorization letter of the PWD x x x in case the medicine is bought by the

MARIA LOURDES P.A. SERENO

(See Dissenting Opinion)

TERESITA J. LEONARDO-DE CASTRO DIOSDADO M. PERALTA

(See Separate Opinion) (No Part)

ALFREDO BENJAMIN S. CAGUIOA SAMUEL R. MARTIREZ

MARIA LOURDES P.A. SERENO

G.R. No. 156052 March 7, 2007

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S.

The antecedents are as follows.

On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.

xxx xxx xxx

The issues raised by petitioners are as follows:

(On official leave)

G.R. No. 166494 June 29, 2007

The antecedents are as follows:

Tax Deduction Tax Credit

Less: Operating Expenses: