Facts:

The case presents a Petition for Review on Certiorari filed by the Drugstores Association of the Philippines, Inc. and Northern Luzon Drug Corporation (collectively referred to as "petitioners") against several government agencies, including the 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 (collectively referred to as "respondents"). This petition arose from a decision made by the Court of Appeals (CA) dated July 26, 2010, which dismissed the petitioners' Petition for Prohibition, thereby upholding the constitutionality of a mandatory twenty percent (20%) discount on the purchases of medicine by persons with disabilities (PWD). The legal foundation for the discount originates from Republic Act No. 7277, known as the "Magna Carta for Disabled Persons," enacted on March 24, 1992, and

...

Facts:

Legislative Background and Statutory Framework

• Republic Act (R.A.) No. 7277 was enacted on March 24, 1992, establishing the "Magna Carta for Disabled Persons" by providing for the rehabilitation, self-development, and integration of disabled persons into mainstream society.
• The law defined key terms such as “disabled persons,” “impairment,” and “disability,” establishing the criteria for eligibility of benefits.
• On April 30, 2007, R.A. No. 9442 was enacted to amend R.A. No. 7277, changing terminologies from “disabled persons” to “persons with disability” (PWD) and granting additional privileges, notably a mandatory twenty percent (20%) discount on the purchase of medicines.
• The amendment also provided a tax deduction mechanism for establishments that granted such discounts, allowing them to deduct the net cost of the discount from their gross income subject to the provisions of the National Internal Revenue Code.

Regulatory and Administrative Issuances

• The Implementing Rules and Regulations (IRR) of R.A. No. 9442 were jointly promulgated by multiple government agencies including 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 the Department of Agriculture.
• The IRR detailed the definition of terms and the privileges for PWDs, specifically confirming the 20% discount in the purchase of medicines and outlining the requirements for obtaining such privileges.
• Subsequent administrative issuances further refined the guidelines:
• NCDA Administrative Order (A.O.) No. 1, Series of 2008, prescribed guidelines for the issuance of PWD Identification Cards (IDC) which serve as proof of eligibility.
• DOF Revenue Regulations No. 1-2009 clarified the tax incentive rules, including conditions under which the discount may be deducted by establishments.
• DOH Administrative Order No. 2009-0011 provided detailed guidelines on the implementation of the discount for both branded and unbranded generic medicines.

Facts on the Petition and Procedural History

• Petitioners (Drugstores Association of the Philippines, Inc. and Northern Luzon Drug Corporation) initiated a Petition for Review on Certiorari, seeking a temporary restraining order and/or writ of preliminary injunction.
• Their petition sought to annul and set aside the decisions and resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 109903, which had upheld the constitutionality of the mandatory 20% discount for PWDs.
• During the petition, petitioners argued that:
• The discount amounted to an invalid exercise of the power of eminent domain because it failed to provide just compensation.
• The process for determining PWD status was deficient, allegedly violating the due process clause by relying on documents that were not medically conclusive of disability.
• The definitions and guidelines under various issuances (including NCDA A.O. No. 1 and DOH A.O. No. 2009-0011) were vague, ambiguous, and unconstitutional.
• The CA had rendered a Decision on July 26, 2010, affirming the constitutionality of R.A. 7277 as amended and the related administrative issuances, subject to a temporary suspension of the effectivity of NCDA A.O. No. 1 pending compliance with filing and publication requirements.
• A subsequent CA Resolution dated November 19, 2010 lifted the suspension of NCDA A.O. No. 1 once compliance was demonstrated by the respondents.

Contentions Raised by the Petitioners

• Petitioners contended that the PWD discount is an improper exercise of eminent domain rather than a valid exercise of police power, arguing that:
• It imposed a de facto taking of property without the payment of just compensation.
• The basis for the discount (acceptance of various identification documents) did not ensure a proper determination of disability.
• They further argued that the provisions in question violated due process and equal protection by creating arbitrary and vague criteria and by singling out drugstores to bear the discount burden, unlike other sectors in the pharmaceutical industry.

Issue:

Whether the mandatory twenty percent (20%) discount for persons with disability (PWD) on the purchase of medicines constitutes a valid exercise of the State’s police power or an impermissible exercise of eminent domain requiring just compensation.

• Does the discount measure serve a legitimate public purpose aimed at promoting the welfare of PWDs?
• Is the intervention by the State in the business operations of drugstores justified under the exercise of police power?

Whether Section 32 of R.A. No. 7277 as amended by R.A. No. 9442 and its related administrative issuances, including NCDA A.O. No. 1, DOF Revenue Regulations No. 1-2009, and DOH A.O. No. 2009-0011, violate the due process clause.

• Are the methods and guidelines employed for the verification of disability (using various forms of identification and certificates) procedurally sound and constitutionally adequate?

Whether the definitions of “disability” as provided under various statutory and regulatory provisions (including R.A. No. 7277, R.A. No. 9442, the IRR, and NCDA A.O. No. 1) are unconstitutionally vague or ambiguous.

• Is the language used in these definitions sufficiently precise to enable consistent and fair implementation of the law?

Whether the mandatory PWD discount violates the equal protection clause by singling out drugstores and imposing a unique financial burden on them compared to other entities in the pharmaceutical industry.

• Does the classification and differential treatment in favor of PWDs satisfy the requirement of rational basis review under the equal protection guarantee?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)