SAN BEDA UNIVERSITY

College of Law

Social Legislation on Senior Citizens

(RA No. 7432, as amended by RA Nos. 9257, 9994, and 10645)

In Partial Fulfillment of the Requirements for the Course

Agrarian Law and Social Legislation

by

Group 4/ Block 2I
Agustin, Ian G.
Carrera, Joanna Marie V.
Villanueva, Joanne Angela E.

Submitted to
Atty. Algie Kwillon B. Mariacos

June 21, 2022

TABLE OF CONTENTS
I.INTRODUCTION
A. Summary of the law and amendments …………………………………………………...…....1
B. Policies and purposes ………………………………………………………………...………..1
C. Beneficiaries of the law ………………………………………………………………………..2

II. THE ROLE OF THE GOVERNMENT IN IMPLEMENTING THE LAW

A. The role of the national government …………………………………………………………..4
B. Government agencies involved ………………………………………………………………..5
C. The role of the local government ……………………………………………………………...6
D. The role of senior citizens ……………………………………………………………………..7

III. MAXIMIZING CONTRIBUTION OF SENIOR CITIZENS TO NATION-BUILDING

A. Employment …………………………………………………………………………...………8
B. Education ………………………………………………………………………………………8

IV. BENEFITS AND PRIVILEGES FOR SENIOR CITIZENS

A. Discounts for senior citizen
1) Grocery and household items…………………………………………………….10
2) Food (Restaurants)……………………………………………………………….12
3) Health…………………………………………………………………………….13
4) Travel…………………………………………………………………………….14
5) Lodging and Leisure……………………………………………………………..14
6) Utility (Water and electricity)……………………………………………………15
7) Funeral and burial expenses……………………………………………………...15
B. Benefits for establishments providing discounts…………………………………...……15
C. Other privileges for senior citizens
1) Income Tax exemption…………………………………………………………..16
2) Exemption from training fees……………………………………………………16
3) Free medical and dental services in government facilities………………………16
4) Free vaccination for indigent senior citizens…………………………………….17
5) Benefits and privileges for retirees………………………………………………17
6) Express lane……………………………………………….……………………..17
7) Additional government assistance……………………………………………….17

V. PENAL PROVISIONS AND ADMINISTRATIVE REMEDY

A. Penalties, Offenses, Prescription of Action……………………………………………...18
B. Administrative remedy through OSCA………………………………………………….20

VI. JURISPRUDENCE………………………………………………………………………….21
 REPUBLIC ACT NO. 7432
(An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant
Benefits and Special Privileges and for Other Purposes)
as amended by Republic Act No. 9257 (Expanded Senior Citizens Act of 2003), Republic Act
No. 9994 (Expanded Senior Citizens Act of 2010), and Republic Act No. 10645 (An Act
Providing for the Mandatory PhilHealth Coverage for All Senior Citizens)

I. INTRODUCTION
A. SUMMARY OF THE LAW AND AMENDMENTS

What is RA 7432?
RA 7432 introduced social legislation for senior citizens in 1992. Its salient features may be
grouped into two: those 1) maximizing the contribution of senior citizens to nation-building,
particularly the provisions encouraging employment and education of qualified senior citizens who
are still eager to work, and 2) granting benefits and privileges, particularly the provisions on
discounts, exemption from income tax, and other entitlements.

What are the purposes and salient features of the amendments?

The legislature granted additional benefits through RA 9257, the Expanded Senior Citizens Act
of 2003. Even more benefits were added through a second amendatory law, RA 9994, or the
Expanded Senior Citizens Act of 2010.

RA 9994 granted exemption from Value-Added Tax (VAT)1 in the availment of certain goods and
services, in addition to discounts already provided in RA 9257. Prior to the enactment of RA 9994,
VAT reached up to 12%, due to RA 9337, most commonly known as the Expanded Value-Added
Tax (EVAT) Law. So while the senior citizen can avail of a 20% discount on certain goods, VAT
in the amount of 12% will be added on top of it. Generally, then, the senior citizen would be left
with only an 8% discount. Thus, the exemption from VAT for certain goods and services is
arguably one of the most beneficial additions in the second amendatory law.

Another important benefit granted by RA 9994 is the social pension for indigent senior citizens in
the amount of PhP500 per month, to be administered by the Department of Social Welfare and
Development (DSWD). RA 9994 did not provide for the immediate appropriation of this monthly
pension, but the funds were made to be included in the DSWD budget in subsequent General
Appropriations Acts, beginning in the fiscal year of 2011.2

RA 9994 also provided for a mandatory PhilHealth coverage for indigent seniors. This provision
has been further amended through Republic Act No. 10645, which expanded the coverage of the
mandatory PhilHealth coverage to all senior citizens, rich or poor.3

B. POLICIES AND PURPOSES

The social legislation on senior citizens is driven by the constitutional mandate and state policies
on the humanization of laws.

1
An illustration for the special computation deducting VAT is provided under Part IV of this report, page 13
2
Explanatory note for RA 9994 by Ralph Recto, Fifteenth Congress of the Republic of the Philippines
3
Further discussion under Part IV of this report

1
What are the policies behind the law?
Article XV, Section 4 of the 1987 Constitution provides that “[t]he family has the duty to care for
its elderly members but the State may also do so through just programs of social security.”

The State has also assumed the policies to promote a just and dynamic social order that will ensure
the prosperity and independence of the nation and free the people from poverty (Article II, Section
9, 1987 Constitution), promote social justice in all phases of national development (Article II,
Section 10, 1987 Constitution), value the dignity of every human person and guarantee full respect
for human rights (Article II, Section 11, 1987 Constitution).

Additionally, Article XIII, Section 11 of the 1987 Constitution provides that “[t]he 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.”

What are the objectives of the law?

Consistent with the constitutional principles above mentioned, RA 9994 has the following
objectives:
1) To recognize the rights of senior citizens to take their proper place in society and make it
a concern of the family, community, and government;
2) To give full support to the improvement of the total well-being of the elderly and their full
participation in society, considering that senior citizens are integral part of Philippine
society;
3) To motivate and encourage the senior citizens to contribute to nation building;
4) To encourage their families and the communities they live with to reaffirm the valued
Filipino tradition of caring for the senior citizens;
5) To provide a comprehensive health care and rehabilitation system for disabled senior
citizens to foster their capacity to attain a more meaningful and productive ageing; and
6) To recognize the important role of the private sector in the improvement of the welfare of
senior citizens and to actively seek their partnership.

In accordance with these objectives, RA 9994 shall:

1) Establish mechanisms whereby the contributions of the senior citizens are maximized;
2) Adopt measures whereby our senior citizens are assisted and appreciated by the community
as a whole;
3) Establish a program beneficial to the senior citizens, their families and the rest of the
community they serve: and
4) Establish community-based health and rehabilitation programs for senior citizens in every
political unit of society. (Section 2, RA 9994)

C. INTENDED BENEFICIARIES
Who shall benefit from RA 7432, as amended?
The following are entitled to benefits and privileges under the law:
1) Senior citizens - The law defines a senior citizen as any resident citizen of the Philippines
at least sixty (60) years old. (Section 3, RA 9994)

2
 From this definition, we can formulate three (3) requisites: i) Filipino citizenship, ii)
residence in the Philippines, and iii) age of at least 60 years old.
Exception: Senior citizens with dual citizenship may avail of the benefits of RA 7432, as
amended, provided they i) prove their Filipino citizenship and ii) have at least 6 months
residency in the Philippines (Rule III, Article 5.1, IRR of RA 9994)
2) Private entities providing discounts to senior citizens - Retailers, whether natural or
juridical, restaurants, hotels, and other establishments who shall provide the discounts
under RA 7432, as amended, are likewise granted benefits in the form of tax deduction.4
3) DSWD-accredited senior citizens centers and residential care institutions or group homes,
as well as individuals or non-governmental institutions caring for or establishing homes,
residential communities, or retirement villages solely for senior citizens are also given
incentives.5

4
Further discussion under Part IV-B of this report
5
Further discussion under Part II-A2

3
II. THE ROLE OF THE GOVERNMENT IN IMPLEMENTING THE LAW
A. THE ROLE OF THE NATIONAL GOVERNMENT
Section 5 of RA 9994 mandates government agencies to provide programs for senior citizens in
the fields of 1) employment, 2) education,* 3) health, 4) social services and foster care, 5) housing,
and 6) public transport. (Section 5a-f, RA 9994)

1) Health
The DOH, in coordination with local government units (LGUs), non-governmental
organizations (NGOs), and people's organizations (POs) for senior citizens, shall institute
a national health program6 and shall provide an integrated health service for senior citizens.
It shall train community-based health workers among senior citizens and health personnel
to specialize in geriatric medicine and care. Currently, one of the health programs
implemented by DOH in furtherance of the law is the Healthy and Productive Ageing
Program.7

A “senior citizens’ ward” shall be established in every government hospital throughout the
country, for the exclusive use of senior citizens. When the urgency of public necessity so
requires, it may be used for emergency purposes, but after which, it shall be reverted to its
nature as geriatric ward. (Section 5c, RA 9994)

2) Social Services and Foster Care

The DSWD, in cooperation with the Office of Senior Citizens Affairs (OSCA), LGUs,
NGOs, and POs for senior citizens, shall develop and implement programs and social
services for senior citizens. (Rule V, Article 16, IRR of RA 9994)

To encourage better care in nursing homes, the government shall grant at least fifty percent
(50%) discount on the consumption of electricity, water, and telephone by DSWD-
accredited senior citizens centers and residential care institutions or group homes that are
government-run or organized and operated by non-stock, non-profit domestic corporations,
primarily for the purpose of promoting the well-being of abandoned, neglected, unattached
or homeless senior citizens. (Article 12, Section 2, IRR of RA 9994)

The government shall also provide the following incentives to individuals or non-
governmental institutions caring for or establishing homes, residential communities, or
retirement villages solely for, senior citizens: 1) realty tax holiday for the first five (5) years
starting from the first year of operation and/or implementation of foster care program; and
2) priority in the construction or maintenance of provincial or municipal roads leading to
the aforesaid home, residential community, or retirement village. (Rule V, Article 19, IRR
of RA 9994)

* Provisions on employment and education under Section 5 of RA 9994 are discussed separately under Part III of this report for
discourse purposes.
6
The national health program for senior citizens shall, among others, be harmonized with the National Prevention of Blindness
Program of the DOH.
7
National Government Portal (Gov.PH) <https://doh.gov.ph/health-programs/healthy-and-productive-ageing-program>

4
 3) Housing
The national government shall include in its national shelter program the special housing
needs of senior citizens, such as establishment of housing units for the elderly. (Section 5e,
RA 9994)

The Housing and Land Use Regulatory Board (HLURB) is designated to formulate housing
rules on how to develop subdivisions suitable for senior citizens. The Home Development
Mutual Fund (HDMF) shall promote the establishment of elderly residence and shall
review its existing circulars particularly the limitation of the age requirements of sixty-five
(65) years old at the date of the loan application and seventy (70) years old at loan maturity.
It shall also consider the concept of pension in lieu of compensation.

The housing program for the poor senior citizens which include the establishment/donation
of group/foster homes for the neglected, abused, and unattached or homeless senior citizens
and those incapable of self-care including its management, maintenance, and operations
shall be established in accordance with EO 105, approving and directing the
implementation of the program, "Provision of Group/Foster Home for Neglected,
Abandoned, Abused, Unattached and Poor Older Persons and Persons with Disabilities"
promulgated on May 16, 2002. (Rule V, Article 17, Sections 1 and 2, IRR of RA 9994)

4) Public Transport
The DOTC and its attached agencies and sectoral officers shall improve the
implementation of programs to assist senior citizens to fully gain access in the use of public
transport facilities. The minimum requirements and standards to make transportation
facilities and utilities for public use accessible to senior citizens shall be developed to
enhance the mobility of senior citizens. There shall be strict implementation of courtesy
space and seats for the exclusive use of senior citizens in all transport system. As far as
practicable, PUVs shall also strive to install safe lower stepping boards. (Rule V, Article
18, IRR of RA 9994)

B. GOVERNMENT AGENCIES INVOLVED

Which government agencies and entities are relevant in the implementation of RA 7432, as
amended?
1) The Office for Senior Citizens Affairs (OSCA) shall be the primary entity to address the
concerns of the senior citizens.8 The law mandates that there shall be an OSCA established
in all cities and municipalities, under the Office of the Mayor. An office space established
at the Office of the Mayor shall likewise be provided. (Rule VI, Article 21, Section 5, IRR
of RA 9994)

Who shall head the OSCA?

Each OSCA shall be headed by a senior citizen appointed by the City or Municipal Mayor,
chosen from a list of three (3) nominees as recommended by a general assembly of DSWD-
accredited or LGU-registered senior citizens organizations in the city or municipality. (Rule VI,
Article 21, Section 2, IRR of RA 9994)

8
Senior citizens can first course their complaints through OSCA. Further discussion under Part V of this report

5
What are the qualifications of the OSCA Head?
The OSCA Head must be: 1) a Filipino citizen and resident of the municipality or city for at least
one (1) year; 2) a registered voter of the concerned city or municipality; 3) able to read and write;
4) physically and mentally capable of performing the tasks of OSCA Head; 5) a bonafide member
of a duly registered senior citizens organization which has a track record of at least three
consecutive years; 6) [of] good moral character; and 7) at least a high school graduate. (Rule VI,
Article 21, Section 1, IRR of RA 9994)

What are the functions of the OSCA?

1) Plan, develop, implement, and monitor yearly work programs consistent with the objective of
the Senior Citizens Act, in consultation with the City or Municipal Social Work and Development
Officer and senior citizen organizations;
2) Draw up a list of available and required services which can be provided by registered federations
and associations of senior citizens;
3) Maintain and regularly update on a quarterly basis the list of senior citizens;
4) Issue national uniform individual identification cards and purchase booklets free of charge,
5) Serve as a general information and liaison center for senior citizens;
6) Monitor compliance of the provisions of the Senior Citizens Act particularly the grant of special
discounts and privileges to senior citizens;
7) Facilitate the creation of a city or municipality coordinating and monitoring board consisting of
OSCA Head, the City or Municipal Social Work and Development Officer, and the presidents of
concerned duly registered senior citizens organizations to deliberate and act on complaints;
8) Report to the mayor, any entity found violating any provision of the Senior Citizens Act;
9) Assist the senior citizens in filing complaints or charges against any entity refusing to comply
with the privileges granted under the Senior Citizens Act before the Department of Justice, the
Provincial Prosecutor’s Office, or regular courts
10) Assist with the concerned person in investigating abuses of the privileges;
11) Establish linkages and work together with NGOs, POs, and barangays. (Rule VI, Article 21,
Section 4, IRR of RA 9994)

2) National Coordinating and Monitoring Board (NCMB) - The law established NCMB as an
inter-agency coordinating and monitoring mechanism at the national level on the
implementation of RA 9994. The NCMB may call on other government agencies, NGOs,
and people's organizations to serve as resource persons as the need arises. Resource persons
have no voting rights at the Board. (Rule VIII, Article 25, IRR of RA 9994)

3) As discussed in Part II, Section A of this report, other agencies such as DSWD and DOH
must coordinate to fulfill the provisions of the law on government assistance.
Administrative orders and other issuances by the DOH, DTI, DA, and BFAD are likewise
relevant in the implementation of provisions on discounts in basic necessities, prime
commodities, and medicines.

C. THE ROLE OF THE LOCAL GOVERNMENT

How do LGUs play a part in the implementation of RA 7432 as amended?
Since RA 7432, as amended, establishes the OSCA in every city and municipality, the LGUs play

6
an important role in the execution of the social legislation on senior citizens. The Office of the
Mayor shall exercise supervision over the OSCA relative to their plans, activities, and programs
for senior citizens. (Rule VI, Article 21, Section 6, IRR of RA 9994)

Can the LGUs impose benefits different from those provided in the national legislation?
Yes, provided that these benefits would not violate the law nor be prejudicial to the senior citizen.
There is nothing in the law that prohibits LGUs from imposing benefits for senior citizens that are
more beneficial than those imposed by the law. For instance, the City of Makati, through an
ordinance,9 granted senior citizens free movies at select cinema-partners,10 while the minimum
compliance with the law is “20% discount with VAT exemption on admission fees charged by
theaters, cinema houses and concert halls, circuses, carnivals, and other similar places of culture,
leisure and amusement such as museums and parks.” (RA 9994 IRR, Rule IV, Article 7, Section 5)

D. THE ROLE OF SENIOR CITIZENS

Do senior citizens have a role in the implementation of RA 7432, as amended?
Yes.
1) Senior citizens are encouraged to have their Senior Citizens’ ID Card.
How can a senior citizen avail of a Senior Citizen ID Card?
The OSCA provides for the Senior Citizens’ ID cards of all senior citizens within its
jurisdiction. Senior citizens or their duly authorized representatives shall go to the OSCA
of the city or municipality of their residence to get their Senior Citizens’ ID card. Upon
registration with OSCA, the senior citizen may also be given a purchase booklet for basic
necessities, prime commodities, and medicines.

Does this mean that a senior citizen will be unable to avail of a discount without the
Senior Citizen ID card?
No. The law provides that in the availment of the privileges under Section 4, the senior
citizen, or his/her duly authorized representative, may submit as proof of his/her
entitlement thereto any of the following: 1) an identification card issued by the OSCA of
the place where the senior citizen resides; 2) the passport of the senior citizen concerned;
[or] 3) other documents that establish that the senior citizen is a citizen of the Republic and
is at least sixty (60) years of age as further provided in the implementing rules and
regulations. (Section 4, RA 9994)

Since the ID is issued by an OSCA of a city or municipality, does that mean that the
ID can only be used in that city or municipality?
No. Senior Citizens’ ID cards issued by any OSCA shall be honored nationwide. (Rule IV,
Article 6, IRR of RA 9994)

2) Senior citizens are enjoined from abusing the benefits and privileges they are granted under
RA 7432 as amended. The law provides for penal sanctions.11

9
Press release, City Government of Makati, published on the Makati Web Portal
<https://www.makati.gov.ph/content/news/5981>
10
This perk was suspended amid the COVID-19 threat. <https://newsinfo.inquirer.net/1241424/makati-suspends-free-movies-
for-seniors-amid-coronavirus-threa>
11
Penalties are discussed in full under Part V of this report

7
III. MAXIMIZING THE CONTRIBUTION OF SENIOR CITIZENS TO NATION-
BUILDING
What does “maximizing the contribution of senior citizens to nation-building” mean?
One of the objectives of RA 7432 as amended is to give full support to the improvement of the
total well-being of the elderly and their full participation in society, considering that senior citizens
are an integral part of Philippine society. The law seeks to provide opportunities for capable senior
citizens to further realize holistic development, such as in employment and education.

RA 7432 also aims to recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership. Thus, to achieve its purpose of
making employment available to senior citizens who are qualified and still eager to work, the
government gives incentives to employers who hire senior citizens, while putting emphasis and
due regard to senior citizens’ protection under labor laws.

A. EMPLOYMENT
Does this mean mandatory work for senior citizens?
No. Only “senior citizens who have the capacity and desire to work, or be re-employed, shall be
provided information and matching services to enable them to be productive members of society.
Terms of employment shall conform with the provisions of the Labor Code, as amended, and other
laws, rules and regulations.” (Section 5a, RA 9994)

What are the benefits given to establishments who will employ seniors?
Private entities that will employ senior citizens as employees upon effectivity of RA 9994 shall be
entitled to an additional deduction from their gross income, equivalent to fifteen percent (15%) of
the total amount paid as salaries and wages to senior citizens subject to the provision of Section
34 of the National Internal Revenue Code (NIRC), as amended, and the Revenue Regulations to
be issued by the BIR and approved by the DOF; Provided, however, That such employment shall
continue for a period of at least six (6) months; Provided, further, That the net annual income of
the senior citizen does not exceed the poverty level for that year as determined by NEDA thru the
NSCB. (Rule V, Article 13, Section 2, IRR of RA 9994)

B. EDUCATION
The Department of Education (DepEd), the DOST-TRC, the Technical Education and
Skills Development Authority (TESDA), and the Commission on Higher Education (CHED), in
consultation with non-governmental (NGOs) and people's organizations (POs) for senior citizens,
shall institute a program that will ensure access of senior citizens to formal and non-formal
education. They are to:

1) Formulate and implement relevant and effective course designs and educational
programs;
2) Conduct the necessary training for the implementation of the appropriate
curriculum for the purpose;
3) Ensure the availability of the needed-educational facilities in the form of modular
programs and other distance and alternative learning materials;

8
 4) In coordination with OSCA and the City or Municipal Social Welfare and
Development Officer, shall conduct assessment and profiling of senior citizens who
wanted to study; and
5) Conduct continuing research and development programs for the necessary and
relevant education of the senior citizens. (Rule V, Article 14, IRR of RA 9994)

Educational assistance shall be granted to senior citizens to pursue post secondary, post tertiary,
as well as vocational or technical education in both public and private schools through provision
of scholarships, grants, financial aid, subsidies, and other incentives to qualified senior citizens,
including support for books, learning materials, and uniform allowance, to the extent feasible:
Provided, that senior citizens shall meet minimum admission requirements. (Rule IV, Article 11,
Section 5, IRR of RA 9994)

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 IV. BENEFITS AND PRIVILEGES FOR SENIOR CITIZENS
A. Discounts
What are the discounts for senior citizens?
Senior citizens are entitled to discounts in select goods and services. These may be classified into:
1) Grocery and household items
2) Food (Restaurants)
3) Health
4) Travel
5) Lodging and Leisure
6) Utility (Water and electricity)
7) Funeral and burial expenses

1) 5% discount on grocery and household items

RA 9994 provides, “To the extent possible, the government may grant special discounts in special
programs for senior citizens on purchase of basic necessities and prime commodities, subject to
the guidelines to be issued for the purpose by the DTI and the DA within (30) days from effectivity
of these Rules. Provided, That such special programs and their guidelines shall be developed by
the concerned department within the concerned department's jurisdiction.”

Through the Joint DTI-DA Administrative Order (JAO) No. 10-02 Series of 2010, senior citizens
are given a 5% discount of the regular retail price of basic necessities and prime commodities,
without exemption from the value-added tax (VAT). The JAO No. 10-02 has been amended by
JAO No. 12-02 Series of 2012, and JAO No. 17-02, Series of 2017.

Does the 5% discount for grocery items apply to all kinds of grocery items?
No. The 5% discount only applies to basic necessities and prime commodities as defined by law.
The IRR defined these two terms by way of enumeration, allowing inclusion of “other
commodities as may be classified by the DTI and the DA according to Republic Act No. 7581 or
the Price Act.”

Under the Joint DTI-DA-DOE Administrative Order (JAO) No. 17-02, Series of 2017, these
items are:

BASIC NECESSITIES PRIME COMMODITIES

1. All kinds and variants of rice 1. Flour

2. Corn
3. All kinds of bread (except
pastries and cakes)
4. Fried, dried, and canned fish
and other marine products
(including frozen and in
various modes of packaging)
5. Fresh pork, beef, and poultry
meat
6. All kinds of fresh eggs
Basic necessities are goods vital to the needs of
consumers for their sustenance and existence
2. Dried, processed, and canned
pork, beef, and poultry meat
3. Dairy products not falling
under Section 1 (a) of the
Joint DTI-DA-DOE AO 17-
02
4. Onions and garlic
5. Vinegar, patis, and soy sauce
6. Toilet/Bath soap
7. Fertilizer
10

Prime commodities are goods not considered as basic

necessities but are essential to consumers
 (excluding quail eggs) 8. Pesticides
7. Potable water in bottles and 9. Herbicides
containers 10. Poultry needs, livestock feeds,
8. Fresh and processed milk and fishery feeds
(excluding milk labeled as food 11. Veterinary products
supplement) 12. Paper, school supplies
9. Fresh vegetables including root 13. Nipa shingle
crops 14. Sawali
10. Fresh fruits 15. Cement, clinker, GI sheets
11. Locally manufactured instant 16. Hollow blocks
noodles 17. Plywood
12. Coffee and coffee creamer 18. Plyboard
13. All kinds of sugar (excluding 19. Construction nails
sweetener) 20. Batteries (excluding cellphone
14. All kinds of cooking oil and automotive batteries)
15. Salt 21. Electrical supplies and light
16. Powdered, liquid, bar laundry bulbs
and detergent soap 22. Steel wires
17. Firewood
18. Charcoal
19. All kinds of candles
20. Household liquefied petroleum
gas, not more than 11 kgs. LPG
content once every five (5)
months bought from LPG
dealers
21. Kerosene, not more than 2
liters per month

The list of basic necessities and prime commodities are usually printed in the purchase booklet.

Can the senior avail of the discount for as much product as they want as long as it is a basic
necessity or a prime commodity?
No. The JAO 17-02 provides a cap on the amount that can be discounted, which is PhP1,300 per
calendar month. This amount is non-cumulative. So, if Lola X has only used her grocery discount
in the amount of PhP1,000 this week, she can’t add the unused PhP300 to next week’s cap to be
able to discount up to PhP1,600. The PhP1,300 shall be spent on at least four (4) kinds of basic
necessities.
Can a senior citizen ask for the 5% discount in a sari-sari store?
It depends. If the sari-sari store has a capitalization of less than PhP100,000, then no.
The discounts may be availed of in retailers such as supermarkets, grocery stores, to convenience
stores, but not in stalls in food courts, food carts, food vendors, and sari-sari stores with a
capitalization of less than One Hundred Thousand Pesos (PhP100,000), public and private wet
markets, “talipapa,” and cooperative stores. (JAO 17-02)

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Are online purchases/telecom purchases included?
Yes. The 1,300-cap per week is also applicable for online/phone purchases. The most recent
guidelines on availment of senior citizen benefits through online and phone purchases are provided
under the Joint Memorandum (JMC) No. 1 Series of 2022.

Does this mean the law is more open to abuses since anyone may be able to falsify documents
online?
No. The JMC No. 1 Series of 2022 provides for rules and protocols that may be observed so the
goods will ultimately be for the exclusive consumption of the senior citizen: e.g. upon delivery,
the senior citizen or their duly authorized representative must present their OSCA ID/government
ID evidencing senior citizen status. If none can be presented, the merchant can charge the full
amount.

Can someone else buy the discountable grocery items for the senior citizens?
Yes, provided they are the senior citizen’s “duly authorized representative.”
Under the JMC No. 1 Series of 2022, the senior citizen can authorize any person through an
authorization letter duly signed by the senior citizen.

Can the senior citizen use a credit card?

Yes. The availment of discounts under RA 7432, as amended, may be through purchase using a
credit card. (Rule IV, Article 8, Section 6, IRR of RA 9994)

Does the credit card need to be under the name of the senior citizen?
No. RA 9994 does not distinguish as to whom the credit must be registered or named. Additionally,
the JMC No. 1 Series of 2022 provides that “The statutory discount provided by law shall be
observed by business establishments regardless of who is the source of payment or mode of
payment, provided that the goods and services are for the exclusive use of the Senior Citizen….”

2) 20% discount with VAT exemption on food (Restaurants)

Senior citizens are entitled to a 20% discount with VAT exemption for the purchase of food, drinks,
dessert, and other consumable items served by establishments offered for the consumption of the
general public. For dine-in services, the privilege must be personally availed of by the senior
citizen and no proxies/authorization in favor of another person will be honored. (Rule IV, Article
7, Section 3 b and c, IRR of RA 9994)

Suppose Lola X went to McDo with her grandson. Can she use the discount for a kiddie
meal?
No. The purchase shall be for the “exclusive use and enjoyment” (personal consumption) of the
senior citizen only. The 20% discount shall not apply to “children’s meals” primarily prepared and
marketed for children. (Rule IV, Article 7, Section 3c, IRR of RA 9994)

What if Lola X dines with her grandson, daughter, and son-in-law. How will her discount be
computed?
The discount shall be processed separately as an independent transaction from the senior citizen’s
non-eligible companions to ensure that it is for their exclusive consumption. (Rule IV, Article 7,
Section 3e, IRR of RA 9994)

12
Can the discount and VAT exemption be availed of through take-out and delivery orders?
Yes. The privilege may be availed of during take-out orders as long as the senior citizen orders
and presents valid identification.

For delivery orders, the IRR of RA 9994 provides that the privilege shall apply subject to the
condition that the senior citizen ID card number must be given over the phone and the senior
citizen ID card must be presented upon delivery.

The Most Expensive Meal Combination (MEMC) shall apply. The MEMC is an amount
corresponding to the combination of the most expensive and biggest single-serving meal with
beverage served in a quick service restaurant, is deemed flexible and is adjusted accordingly by
food establishments to estimate a single food purchase for an individual senior citizen. (Rule IV,
Article 7, Section 3h, IRR of RA 9994)

3) Discounts on Health Products and Services

i. Discounts specified under RA 7432 as amended
Senior citizens are entitled to 20% discount with VAT exemption in the purchase of:
➢ Medicine and drug purchases (generic or branded medicines and drugs, including the
purchase of influenza and pneumococcal vaccines)
➢ Essential medical supplies, accessories, and equipment (e.g. eyeglasses, hearing aids,
dentures)
➢ Medical and dental services in private entities (including laboratory/diagnostic tests
requested by a physician)
➢ Professional fees of a) attending physician/s in all private hospitals, medical facilities,
outpatient clinics, and home health care services and b) licensed professional health
workers providing home health care services as endorsed by private hospitals or employed
through home health care employment agencies. The burden of the discount shall be borne
solely by the employment agency given the health worker's very minimal share compared
to the agency fee. (Rule IV, Article 7, Section 1, IRR RA 9994)

Considering the VAT exemption, how shall the discount be computed?

The 20% discount shall be computed in the following manner:
a) The VAT shall be initially deducted from the Retail Price of the medicine to obtain
the Net Retail Price; and
b) The 20% discount shall be deducted from the Net Retail Price to obtain the Senior
Citizen’s Price.
Illustration: If the Retail Price (inclusive of VAT) of a certain drug is PhP100.0012, the Senior
Citizen’s Price should be computed as follows:

Retail Price PhP100.00

Less: VAT (100/1.12) 10.71
Net Retail Price 89.29
Less: 20% discount 17.86
Senior Citizens’ Price PhP 71.43
12
Computation illustration as provided under DOH Administrative Order 2010-0032, page 4

13
Are small pharmacies included?
Yes. The law provides for no exception. But small pharmacies need not necessarily suffer loss by
providing for discounts, since the law provides that the DOH shall establish guidelines and
mechanism of compulsory rebates in the sharing of burden of discounts among retailers,
manufacturers and distributors, taking into consideration their respective margins. (Section 4a (1)
par 2, RA 9994)13

Do senior citizens need to present a prescription to avail?

Except for over-the-counter (OTC) drugs, a doctor's prescription should be presented. Purchase
slip booklets (issued by OSCA) shall be used to record the kind of OTC medicine purchased, how
many, when and where it was purchased. Likewise, this will help the drugstores to monitor the last
purchase made for a certain medicine. (DOH Administrative Order 2010-0032)

Can vitamins be discounted?

Yes, provided these are medically prescribed by an attending physician for prevention and
treatment of diseases, illness, or injury. (Rule IV, Article 7, Section 1, IRR of RA 9994)

ii. Discounts through mandatory PhilHealth coverage

Amending RA 7432, RA 10645 now mandates PhilHealth coverage for all senior citizens. Funds
necessary to ensure the enrollment of all senior citizens not currently covered by any existing
category shall be sourced from the National Health Insurance Fund of PhilHealth from proceeds
of Republic Act No. 10351, in accordance with the pertinent laws and regulations.

Can a senior avail of a PhilHealth benefit and a benefit under the Expanded Senior
Citizens Act of 2010 at the same time?
Yes. Under the DOH Administrative Order 2010-0032, the VAT exemption and the 20%
discount shall not be charged to the senior citizen’s PhilHealth coverage. Only the 80% of the fees
or charges that the senior citizen is expected to shoulder may be charged to his/her PhilHealth
benefits.

Also, what RA 9994 prohibits is double discount. Rather than a discount per se, PhilHealth is akin
to an insurance since the direct contributors pay premiums, although it is not subject to the
jurisdiction of the Insurance Commission since it has its own charter.

4) 20% Discount with VAT Exemption on Travel Fares

The senior citizen shall be entitled to the privilege in the purchase of fare for:
i. Domestic air and sea travel, including advanced booking; and
ii. Public land transportation, such as public railways including LRT, MRT, and PNR, as
well as buses, jeepneys, taxi, and shuttle services. (Rule IV, Article 7, Section 2, IRR of RA
9994)

5) 20% Discount with VAT Exemption on Lodging and Leisure

Senior citizens are entitled to a 20% discount with VAT exemption for room accommodation and
other amenities such as, but not limited to, hotel-based parlors and barbershops … spa, sauna bath,
13
DOH AO 2010-0032 provides for guidelines in the sharing of burden among retailers, manufacturers, and distributors

14
internet facilities… and other services offered. “Hotel” shall include beach and mountain resorts
(Rule IV, Article 7, Section 3, IRR of RA 9994)

The 20% discount with VAT exemption shall also apply to admission fees charged by theaters,
cinema houses and concert halls, circuses, carnivals, and other similar places of culture, leisure
and amusement such as museums and parks. (Rule IV, Article 7, Section 5, IRR of RA 9994)

Senior citizens are likewise entitled to a 20% discount with VAT exemption for the utilization of
services in the form of fees, charges, and rental for sport facilities or equipment, including golf
cart rentals and green fees, or venues for ballroom dancing, yoga, badminton courts, bowling lanes,
table or lawn tennis, workout gyms, and martial arts facilities.

Are non-profit exclusive golf clubs mandated to give the privilege to senior citizens?
No. Non-profit, stock, and exclusive golf and country clubs are not mandated to give a 20% senior
citizens discount. However, should restaurants and food establishments inside these country clubs
be independent concessionaires and food sold are not consumable items under club membership
dues, they must grant the 20% senior citizen discount. (Rule IV, Article 7, Section 4, IRR of RA
9994)

6) 5% Discount on Utility (Water and Electricity)

This is available on a per household basis regardless of the number of senior citizens residing
therein. The discount will be granted only upon concurrence of the following conditions:
i. The meters must be registered in the name of the senior citizen; and
ii. The monthly consumption does not exceed one hundred kilowatt hours (100 kWh) of
electricity and thirty cubic meters (30m') of water. (Rule IV, Article 12, IRR of RA 9994)

7) 20% Discount with VAT Exemption on Funeral and Burial Expenses

The beneficiary or any person who shall shoulder the funeral and burial expenses of the deceased
senior citizen, shall claim the discount for the deceased senior citizen upon presentation of the
death certificate. Such expenses shall cover the purchase of casket or urn, embalming, hospital
morgue, transport of the body to intended burial site in the place of origin, but shall exclude
obituary publication and the cost of the memorial lot. (Rule IV, Article 7, Section 6, IRR of RA
9994)

B. Benefits Given to Establishments Providing Discounts

In exchange for providing the 20% discounts to senior citizens, are private establishments
given benefits under the law?
Yes. The establishment may claim the discount as tax deduction.
Jurisprudence: Benefits for private establishments with regard to tax under RA 7432 vis-a-vis RA
9257
CIR v. Central Luzon Drug Corporation (2008)
Under RA 7432, the 20% granted by establishments to qualified senior citizens may be claimed
as tax credit. But starting taxable year 2004, after effectivity of RA 9257, the 20% sales discount
is now treated as tax deduction and not as tax credit.
Further amended by RA 9994, Section 4 thereof confirms and clarifies: “The establishment may
claim the discounts granted under subsections (a) and (c) of [Section 4 of RA 9994] as tax

15
deduction based on the 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
VAT, 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
(NICR), as amended.”

Does this mean there is taking without just compensation?

No.
Jurisprudence: The power being exercised by the State in the imposition of senior citizen discount
is its police power, not eminent domain.
South Luzon v. DSWD (2017)
It is also in further exercise of police power that the legislature opted that the said discount be
claimed as tax deduction, rather than tax credit, by covered establishments. 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.

C. Other Privileges for Senior Citizens

1) Income Tax Exemption
This is available only to minimum wage earners in accordance with Republic Act No. 9504. (Rule
IV Article 11, Section 1, IRR of RA 9994)

Jurisprudence: The exemption from income tax does not include exemption from payment of
membership or association dues
Santos v. Llamas, Jr. (2000)
While it is true that R.A. No. 7432, Sec. 4 grants senior citizens “exemption from the payment of
individual income taxes: provided, that their annual taxable income does not exceed the poverty
level as determined by the National Economic and Development Authority (NEDA) for that year,”
the exemption does not include payment of membership or association dues.

2) Exemption from Training Fees

Senior citizens shall be exempted from training fees for socio-economic programs conducted by
private and government agencies.14 (IRR implementing RA 9994, Rule IV, Article 11, Sec. 2)

3) Free medical and dental services in government facilities

Senior citizens are entitled to free medical and dental services, diagnostic and laboratory fees such
as, but not limited to x-rays, computerized tomography scans, and blood tests in all government
facilities.15 (Sec. 4e of RA 9994)

Note that that "medical services" refer to hospital services, professional services of physicians and
other health care professionals and diagnostics and laboratory tests that the necessary for the
diagnosis or treatment of an illness or injury. On the other hand, "dental servives" refer to oral
examination, cleaning, permanent and temporary filling, extractions and gum treatments,
restoration, replacement or repositioning of teeth, or alteration of the alveolar or periodontium

14
Subject to guidelines to be issued by the DTI, DOLE, DA, TESDA, and DOSTTRC
15
Subject to guidelines to be issued by the DOH in coordination with the PhilHealth

16
process of the maxilla and the mandible that are necessary for the diagnosis or treatment of an
illness or injury, as provided under Sec. 3(d)(e) of RA 9994.

4) Free vaccination for indigent senior citizens

The DOH shall administer free vaccination against the influenza virus and pneumococcal disease
for indigent senior citizen patients. (Sec. 4f, RA 9994)

Indigent senior citizen, refers to any elderly who is frail, sickly or with disability, and without
pension or permanent source of income, compensation or financial assistance from his/her relatives
to support his/her basic needs, as determined by the Department of Social Welfare and
development (DSWD) in consultation with the National Coordinating and Monitoring Board. (Sec.
3h of RA 9994)

5) Benefits and privileges for retirees

Retirement benefits of retirees from both the government and the private sector shall be regularly
reviewed to ensure their continuing responsiveness and sustainability, and to the extent practicable
and feasible, shall be upgraded to be at par with the current scale enjoyed by those in actual service.
(Sec. 4i, RA 9994)

6) Express lane
There shall be express lanes in all commercial and government establishments. In the absence
thereof, priority shall be given to them. (Sec. 4k, RA 9994)

7) Additional government assistance

i. Social pension
The social pension is further granted to indigent senior citizens as defined under RA 9994. Indigent
senior citizens shall be entitled to a monthly stipend amounting to Five hundred pesos (PhP500.00)
to augment the daily subsistence and other medical needs of senior citizens, subject to a review
every two (2) years by Congress, in consultation with the DSWD.

ii. Death benefits

Death benefit assistance is further granted to the nearest surviving relative of a deceased senior
citizen which shall be a minimum of two thousand pesos (P2,000.00), subject to adjustments due
to inflation in accordance with the guidelines to be issued by the DSWD.

iii. Social safety nets

Social safety assistance to cushion the effects of economic shocks shall be available for senior
citizens. This shall include food, medicines, and financial assistance for domicile repair, and shall
be sourced from the disaster/calamity funds of LGUs where the senior citizens reside. 16 (Rule V,
Article 20, Section 2, IRR of RA 9994)

16
Subject to the guidelines to be issued by the DSWD in coordination with DILG

17
V. PENAL PROVISIONS AND ADMINISTRATIVE REMEDY
A. Penalties, Offenses, and Prescription of Action
What are the penalties that may be imposed in violation of RA 7432 as amended?
1) Imprisonment AND fine (imprisonment can range from 6 mos. to 6 years; fine can
range from P50,000 to P200,000)
2) Cancellation or revocation of the business permit
3) Immediate deportation for aliens after service of sentence

Who may be considered offenders?

1) Senior citizen himself or herself
2) Any other person (natural or juridical)
3) Medical practitioner

What are the offenses that may be committed?

1) Refusal to honor the senior citizen card
a. Pegging a maximum amount of food purchase subject to 20% discount and the Value
Added Tax exemption or posting of notice to that effect
b. Refusing to grant the 20% discount and VAT exemption on take-out or drive-thru
orders, it appearing that the purchase is for the exclusive use and enjoyment of senior
citizens
c. Refusing to grant a discount for credit card payments
d. Refusing to grant a 20% discount and VAT exemption on delivery orders, it appearing
that the purchase is for the exclusive use and enjoyment of senior citizens
e. Distinguishing between branded and generic drugs and medicines in giving the 20%
discount
f. Posting notices that the availment of the 20% discount is limited to cash purchases
only
g. Limiting discountable drug and medicines

2) Abuse of senior citizen privileges

a. Committed by the senior citizen himself or herself, his/her representative, or any other
person who:
i. Uses several purchase booklets;
ii. Avails of the discount to buy medicines, drugs, medical accessories, and
supplies not for the use of the senior citizen
b. Committed by a representative of a senior citizen or any other person who uses a
senior citizen card without authority
c. Committed by a medical practitioner who gives medical prescriptions to other persons
in the name of the senior citizen or issues anomalous prescriptions.

Sample problems:

1. Company X is a drug store. A is a senior citizen. One time A went to Company X to buy
medicines prescribed by his physician for his arthritis. He forgot to bring his senior citizen
ID with him. He has, however, his SSS ID with him. When A is about to pay for his
medicines, the cashier asked for his senior citizen’s card. A reached to his bag and handed
out his SSS ID to the cashier. The cashier refused to accept his SSS ID and told A that the

18
 latter could not be given the 20% discount and VAT exemption for A should provide his
senior citizen’s card. Is the cashier correct? If not, can Company X be held liable?

No, the cashier is not correct. Under the Expanded Senior Citizens Act, one of the
privileges to which a senior citizen is entitled to is a 20% discount and VAT exemption on
the purchase of medicines for the exclusive use and enjoyment or availment of the senior
citizen; and in the availment of this mentioned privilege, the senior citizen, or his/her duly
authorized representative, may submit as proof of his/her entitlement thereto any of the
following: (a) senior citizen ID as issued by OSCA or (b) his passport, or (c) other
documents that establish that the senior citizen is a citizen of the Republic and is at least
sixty (60) years of age.

Yes, Company X can be held liable for violation of the Expanded Senior Citizens Act. Said
law not only punishes the refusal to honor a senior citizen’s card and abuse of privileges
under the Act, but also any violation of the provisions of said Act which may include the
refusal to grant privileges under Sec. 4 of said Act. In this case, A should not be refused a
20% discount and a VAT exemption on his purchase of his medicines for the reason that
he does not have his senior citizen card but instead only has his SSS ID. The law expressly
provides that other documents may be presented as proof of entitlement so long as it shows
his Philippine citizenship and his age—this include the SSS ID of the senior citizen. (RA
9994, in relation to Rule III, Art. 5, par. 5 of the IRR of RA 9994)

2. A is the eldest daughter of B. A is 40 years old who has hypertension, a condition which
B, a 65-year-old man, also has. B has a medical prescription for hypertension. A, knowing
that B is entitled to a discount under the Expanded Senior Citizens’ Act, asked B if A can
borrow B’s medical prescription for hypertension. B, also needing to buy his medicines for
hypertension, agreed and gave A his prescription. A went to the drug store and bought
Losartan, the medicine for hypertension, and used B’s medical prescription. Is there a
violation of the Expanded Senior Citizens Act?

Yes, there is a violation of said Act. Said Act punishes among others the abuse of privileges
of the senior citizen, particularly, availing of the discount to buy medicines not for the use
of the senior citizen. In this case, A and B abused the privileges granted to B in using B’s
senior citizen’s card to buy medicines which is not only for the use of B, but also for the
use of A. The mere fact that some of the medicines bought may also be used by B for he is
likewise suffering from hypertension and that he will need the medicines himself cannot
be regarded as a defense in this case.

Is there a prescription period for actions?

RA 9994 does not expressly provide for the prescription of actions arising from said law. Hence,
the provisions of the Civil Code for civil actions, as well as those of Act No. 3326 for criminal
actions for violation of special laws may be held applicable.

Under the Civil Code, actions based on obligations created by law are prescribed after 10 years
from the time the right of action accrues.

Under Act No. 3326, the following are the rules of prescription as applied to RA 9994:
19
 · 4 years - for abuse of privileges. This is considering that the abuse of privileges may be
punishable for less than two years of imprisonment. (Note, however, that the law does
not provide for the maximum period for imprisonment. Instead, it only provides for a
minimum of period, which is “not less than six months”)

· 8 years - for first violation, as well as subsequent violation under the Act. This is for the
aforementioned violations are punishable by imprisonment of not less than 2 years to a
maximum of 6 years.

B. Administrative Remedy
If a senior citizen has a complaint against an establishment, do they need to file with regular
courts?
Not necessarily. Complaints may be brought first before the OSCA.
Following RA 9257 (Expanded Senior Citizens Act of 2003), in consonance with the IRR and the
mandate of the OSCA, the DILG issued Memorandum Circular No. 2006-77 providing
guidelines for a complaint form to be filled up by a senior citizen and a simple and uniform
procedure on handling such complaints.

The OSCA provides the Complaint Form, assists the complainant/s, and discusses and deliberates
the complaint.

What should be resolved by the OSCA?

The OSCA must conclude whether or not a case may be filed against the respondent and to report
the case to the Mayor, or that an amicable settlement has been reached. The OSCA shall assist the
complainant/s should they desire to file the appropriate charges to the proper court.

20
VI. JURISPRUDENCE

Commissioner of Internal Revenue (CIR) v. Central Luzon Drug Corporation

554 SCRA 398, G.R. No. 159610
June 12, 2008
Doctrine: Tax credit vis-a-vis tax deduction; Under RA 7432, the 20% granted by establishments
to qualified senior citizens may be claimed as tax credit. But starting taxable year 2004, after
effectivity of RA 9257, the 20% sales discount is now treated as tax deduction and not as tax
credit

FACTS: Central Luzon Drug Corporation (CLDC) is a domestic corporation engaged in the retail
of medicines and other pharmaceuticals. It operated eight drugstores under the name and style
“Mercury Drug” in 1997. Pursuant to RA 7432 and BIR Revenue Regulations 2-94, CLDC granted
a 20% sales discount to senior citizens on the purchase of medicines for calendar year 1997.

Section 4(a) of RA 9257 grants “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,” and provides
that “private establishments may claim the cost as tax credit.”

Thus, CLDC filed with CIR a claim for tax refund or credit of overpaid income tax for 1997.
Respondent alleged that the overpaid tax was the result of the wrongful implementation of RA
7432, that it treated the 20% sales discount as a deduction from gross sales in compliance with RR
2-94, instead of treating it as a tax credit under Section 4(a) of RA 7432. Upon elevation to the
Court of Appeals (CA), CIR was ordered to grant CLDC a tax credit certification. Hence, this
petition.

ISSUE: Whether or not CLDC is entitled to tax credit for the calendar year 1997 with regard to
discounts given to senior citizens?

RULING: Yes. Tax credit is a peso-for-peso reduction from a taxpayer’s tax liability. It is a direct
subtraction from the tax payable to the government. On the other hand, RR 2-94 treated the amount
of senior citizens’ discount as a tax deduction which is only a subtraction from gross income
resulting in a lower taxable income. The law cannot be amended by a mere regulation because
administrative agencies may not enlarge, alter, or restrict the provisions of the law. Thus, the law
is clear. Section 4(a) of RA 7432 expressly provides that private establishments may claim the cost
as a tax credit. Under RA 7432, Congress granted the tax credit benefit to all covered
establishments without conditions.17

But on February 26, 2004, RA 9257 otherwise known as the “Expanded Senior Citizens Act of
2003, was signed into law and became effective on March 21, 2004. Section 4 of RA 9257
amended Section 4 of RA 7432. Section 4(a) of RA 9257 reads: “The establishment may claim the

17
The net loss incurred in a taxable year does not preclude the grant of tax credit because by its nature, the tax credit may still be
deducted from a future, not present, tax liability. However, the senior citizen’s discount granted as a tax credit cannot be
refunded. (CIR v. Central Luzon Drug Corporation, G.R. No. 159610)

21
discounts granted… as a tax deduction based on the net cost of the goods sold or services
rendered.” Contrary to the provision in RA 7432 where the senior citizens’ discount granted by all
covered establishments can be claimed as tax credit, RA 9257 now specifically provides that this
discount should be treated as tax deduction. Nonetheless, the instant case covers the taxable year
1997, and is thus governed by the old law, RA 7432.

Mercury Drug Corporation vs. CIR

654 SCRA 124, G.R. No. 164050
July 20, 2011

Doctrine: 20% sales discount granted by establishments to qualified senior citizens is now
treated as tax deduction and not as tax credit

FACTS: Mercury Drug filed with the CIR claims for tax refund for the years 1993 and 1994,
asserting that RA 7432 allows a tax credit for sales discounts granted to senior citizens.

CIR failed to act upon the claim, so Mercury filed a petition for review with the Court of Tax
Appeals (CTA), which partially granted petitioner’s claim. The CTA ordered CIR to grant a tax
credit certificate to Mercury Drug and declared null and void CIR Revenue Regulations No. 2-94
which treats the 20% discount as a deduction from gross sales. In computing for the tax credit,
CTA applied the acquisition cost of the medicines sold. Mercury moved for partial reconsideration.
Petitioner asserted that the claim for tax credit must be based on the whole, actual 20% discount
given to senior citizens and not just the acquisition cost of the item availed. On appeal, the CA
sustained the decision of CTA. Hence, this petition.

Petitioner adopted a two-tiered approach in its defense: 1) That in addition to the direct expenses
incurred in acquiring the medicine, operating expenses or administrative overhead are likewise
incurred. Limiting the tax credit on the acquisition cost amounts to a taking of property for public
use without just compensation; 2) That the term “cost” should at least include all business expenses
directly incurred to produce the merchandise and to bring them to their present location and use.

ISSUE: Whether or not Mercury Drug is entitled to a tax credit equivalent to the actual amounts
of the 20% sales discount for the taxable years 1993 and 1994?

RULING: Yes, Section 4(a) of RA 7432 specifically allows the 20% senior citizen’s discount to
be claimed as a tax credit and not merely as a tax deduction from gross sales or gross income. The
law is however silent as to how the “cost of the discount” as tax credit should be construed. In a
line of cases, such as Bicolandia Drug Corporation v. CIR, Cagayan Valley Drug Corporation v.
CIR, and ME Holding Corporation v. CA, the Court construed the term “cost” as referring to the
amount of the 20% discount extended by a private establishment to senior citizens in the purchase
of medicines.

However, the 20% sales discount granted by establishments to qualified senior citizens is now
treated as tax deduction and not as tax credit. It is worthy to mention that Republic Act No. 7432
had undergone two (2) amendments; first in 2003 by Republic Act No. 9257 and most recently in
2010 by Republic Act No. 9994. The 20% sales discount granted by establishments to qualified

22
senior citizens is now treated as tax deduction and not as tax credit. As declared in CIR v. Central
Luzon Drug Corporation (2008), starting taxable year 2004, the 20% sales discount granted by
establishments to qualified senior citizens is to be treated as tax deduction, no longer as tax credit.

This case covers the taxable years 1993 and 1994, thus, RA 7432 applies. The petition was granted
and CIR was ordered to issue tax credit certificates in favor of Mercury Drug.

Carlos Superdrug Corporation v. Department of Social Welfare and Development (DSWD)

526 SCRA 130, G.R. No. 166494
June 29, 2007
Doctrine: Section 4(a) of RA 9257 is a valid exercise of police power: The State can impose
upon private establishments the burden of partly subsidizing a government program

FACTS: Petitioners are domestic corporations and proprietors operating drugstores in the
Philippines, assailing the constitutionality of Section 4(a) of RA 9257 (Expanded Senior Citizens
Act of 2003).

Section 4(a) of RA 9257 grants “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.” The
establishments may claim the discounts as tax deduction based on the net cost of the goods sold or
services rendered.

Petitioners argued that the provision 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.

ISSUE: Whether or not Section 4(a) of RA 9257 is valid?

RULING: Yes. The Court upheld the constitutionality of Section 4(a) of RA 9257 as a valid
exercise of police power.

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. 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.

23
However, a tax deduction does not reduce taxes owed on a peso for peso basis but merely offers a
fractional reduction in taxes owed. Simply put, it does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just compensation. Having said that,
in promoting the health and welfare of a special group of citizens, can the State 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 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. In an attempt to demonstrate the alleged loss on their income,
petitioners tried to show a loss on a per transaction basis, which should not be the case. 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.

Southern Luzon Drug Corporation vs. DSWD and BIR

824 SCRA 164, G.R. No. 199669
April 25, 2017
Doctrine: The power being exercised by the State in the imposition of senior citizen discount is
police power. There is no issue of just compensation because there is no taking involved. Rather,
there is only an imposition of burden.

FACTS: Following RA 9257, the change in the tax treatment of the discount (from RA 7432) did
not sit well with drugstore owners. Southern Luzon Drug Corporation sought to enjoin respondent
agencies from implementing Section 4(a) of RA 9257.

ISSUE: Whether or not Section 4(a) of RA 9257 is an invalid exercise of eminent domain?

RULING: No. The issue of just compensation finds no relevance in the instant case as it had
already been made clear in Carlos Superdrug v. DSWD that the power being exercised by the State
in the imposition of senior citizen discount was its police power. 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. 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.

Santos, Jr. vs. Llamas

322 SCRA 529, Adm. Case No. 4749
January 20, 2000
Doctrine: Exemption from income tax does not include membership or association dues

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FACTS: Atty. Soliman Santos, Jr. filed a complaint for misrepresentation and non-payment of
Integrated Bar of the Philippines (IBP) member dues against Atty. Francisco Llamas.

Llamas admitted to engaging in law practice without paying his IBP dues since 1992, and
indicating “IBP-Rizal 259060” in his pleadings filed in court. In his defense, however, Llamas
argued he was only engaged in a limited practice and believed in good faith that he is exempt from
payment of taxes, such as income tax, under RA 7432 Section 4 as a senior citizen since 1992.

ISSUE: Whether or not Llamas is exempt from paying IBP membership dues under RA 7432?

RULING: No, he is not exempted. In accordance with Sections 9 and 10 of Rule 139-A, Rules of
Court, Llamas can engage in the practice of law only by paying his dues, and it does not matter
that his practice is limited.

While it is true that R.A. No. 7432, grants senior citizens "exemption from the payment of
individual income taxes: provided, that their annual taxable income does not exceed the poverty
level as determined by the National Economic and Development Authority (NEDA) for that year,"
the exemption however does not include payment of membership or association dues.

Estoconing v. People
G.R. No. 231298
October 7, 2020

Doctrine: Tax-exempt entity could not be mandated to grant a 20% discount.

FACTS: Petitioner is a general manager of Siliman University Cooperative. Said Cooperative is

a primary multi-purpose cooperative duly registered with the Cooperative Development Authority
which provides food and catering services, among others, to both its members and non-members
alike. Private complainant is a member of the Cooperative who, on several occasions, bought soft
drinks from the Cooperative and who, on all those occasions, asked for a senior citizen's discount.
The discount, however, was not extended to him by said Cooperative which prompted him to
eventually file a complaint against the petitioner for violation of the Expanded Senior Citizens’
Act, for refusing to give him the senior citizen discount.

Petitioner argued that the Cooperative is exempted from granting senior citizen discount for the
reason that the cooperative is exempted from tax under RA 9520. In other words, since the senior
citizen's discount is really chargeable to the government and that establishments which give senior
citizen's discount shall be consequently entitled to a tax deduction therefore, then the cooperative
which is exempted from tax must not be required to grant senior citizen's discount anymore.

ISSUE: Whether petitioner’s argument is correct?

RULING: Yes, as a tax-exempt entity provided under RA 9520, the Silliman University
Cooperative could not have availed of a tax deduction to offset a portion of the senior citizen
discounts it issued to its clients, whether member or non-member. Thus, to insist that it was

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nevertheless mandated to issue a 20% discount would have been confiscatory and a deprivation of
private property without due process of law. In this case, the Court ruled in favor of the petitioner
and acquitted him.

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