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. Doctrine: When a party challeges the constitutionality of a law, the burden of proof rests upon him. Facts: 1.
Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432 ,3 as amended by RA 9257, 9257 ,4 and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction.
2. On February 26, 2004, RA 9257 8 amended certain provisions of RA 7432, to wit: SECTION 4. Privileges for the Senior Citizens. – The – 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 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 ci tizens; 3. 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. Issue: -
Whether the Senior Citizen’s Discount that can be claimed as Tax Deductions by establishments establishments is invalid and unconstitutional unconstitutional
Held: -
NO, It is Constitutional, Constituti onal, and a valid exercise of police power.
Ratio: -
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. Petitioners assert that Section 4(a) of the law is unconstitutional unconstituti onal 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
-
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. 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. As to the constitutionality of RA 9257 and its implementing rules and regulations, respondents contend that petitioners failed to overturn its presumption of constitutionality Court Ruling o The law is a legitimate exercise of police power which, similar to the power of eminent domain, has general welfare for its object. 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." The petitioners cannot claim that they will be at a loss due to small mark ups and only a 32% recovery of the 20% discount. But they have not substantiated this claim with income statements of their 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. 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. It is not an exercise by the state of the power of Eminent Domain o 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. The obiter in Central Luzon Drug Corporation,78 however, describes the 20% discount as an exercise of the power of eminent domain and the tax credit, under the previous law, equivalent to the amount of discount given as the just compensation therefor. 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 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. Petitioners argue that we have previously ruled in Central Luzon Drug Corporation37 that the 20% discount is an exercise of the power of eminent domain, thus, requiring the payment of just compensation.
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. We adopted a similar line of reasoning in Carlos Superdrug Corporation85 when we ruled that 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. 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 (1) not all customers of a business establishment are senior citizens (2) the level of its profit margins on goods and services offered to the general public. 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. 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. 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.
-
-
-
WHEREFORE, the Petition is hereby DISMISSED for lack of merit.
