Title
Drugstores Association of the Philippines, Inc. vs. National Council on Disability Affairs
Case
G.R. No. 194561
Decision Date
Sep 14, 2016
A law granting PWDs a 20% medicine discount was upheld as constitutional, deemed a valid exercise of police power, and compliant with due process and equal protection.

Case Summary (G.R. No. 194561)

Key Dates and Procedural Posture

Statutory background begins with R.A. No. 7277 (1992). R.A. No. 9442 amended R.A. No. 7277 in 2007 to, among other things, guarantee a 20% discount to PWDs on medicines and allow establishments to claim tax deductions. The NCDA issued Administrative Order No. 1 (Apr. 23, 2008); the DOF promulgated Revenue Regulations No. 1-2009 (Dec. 9, 2008); DOH issued A.O. No. 2009-0011 (May 20, 2009). Petitioners filed a Petition for Prohibition with the Court of Appeals (July 28, 2009); the CA upheld the measures (Decision July 26, 2010) but temporarily suspended NCDA A.O. No. 1 pending proof of publication/filing; the suspension was lifted (Resolution Nov. 19, 2010). The Supreme Court denied the petition and affirmed the CA (Decision rendered Sept. 14, 2016).

Applicable Constitutional Basis

Because the decision date is post‑1990, the Court applied the 1987 Constitution. The decision specifically invokes Article XII, Section 6 (social function of property and State duty to promote distributive justice) and Article XIII, Section 11 (integrated health policy and priority for the needs of the underprivileged, sick, elderly, disabled, women and children) as constitutional foundations for the statutory scheme.

Statutory and Administrative Framework

R.A. No. 7277 (Magna Carta for Disabled Persons), as amended by R.A. No. 9442, grants PWDs at least a 20% discount on medicines and other basic services (Section 32) and provides that establishments granting such discounts may claim tax deductions based on net cost of goods sold, subject to documentation and revenue regulations. The IRR of R.A. 9442, NCDA A.O. No. 1, DOF Revenue Regulations No. 1-2009, and DOH A.O. No. 2009-0011 set out implementing rules on the issuance of PWD identification cards, documentary requisites for availing discounts, recordkeeping, limits on dispensing, and the mechanism for tax deductions by establishments.

Issues Raised by Petitioners

Petitioners presented four principal constitutional challenges to the mandatory 20% PWD discount and its implementing issuances: (1) the measure is an invalid exercise of eminent domain because it confiscates private property without just compensation, rather than a valid exercise of police power; (2) the scheme violates due process because entitlement can be established by documents unrelated to medical findings; (3) statutory and regulatory definitions of “disability” are vague and ambiguous; and (4) the law violates equal protection by singling out drugstores and retailers to shoulder the burden.

Supreme Court Holding — Overview

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held that (a) the 20% PWD discount is a valid exercise of the State’s police power, not an unconstitutional taking; (b) the statutory and regulatory scheme satisfies substantive due process because it contains reasonable procedural safeguards and medical verification requirements; (c) the definitions of disability provided by the statute and implementing issuances are not unconstitutionally vague; and (d) the classification and the allocation of burdens satisfy the equal protection clause.

Police Power versus Eminent Domain: Reasoning and Application

The Court applied established doctrine distinguishing police power from eminent domain. Police power permits reasonable restraints on property and business use to promote public welfare; eminent domain requires payment of just compensation for appropriation of property. The Court found the legislative objective—promotion of PWD welfare and integration into society—legitimate and grounded in constitutional policy (Articles XII and XIII). The measure meets the two‑part test for a valid police power enactment: (1) a lawful subject — public welfare in favor of a recognized vulnerable class (PWDs); and (2) a lawful method — a reasonably necessary and not unduly oppressive means to accomplish that objective. The Court emphasized that absent evidence of a confiscatory or confiscation‑equivalent effect on petitioners’ businesses, the presumption of lawfulness and legislative discretion must be respected. Moreover, the availability of tax deductions under the revenue regulation operates as a mitigating reimbursement mechanism that reduces the economic impact on establishments.

Due Process: Procedural Safeguards and Medical Verification

Petitioners argued entitlement could be established by local IDs or passports unrelated to medical examination. The Court rejected that contention by construing Section 32 together with the IRR and NCDA A.O. No. 1. NCDA A.O. No. 1 and the DOH A.O. build in procedural safeguards: for non‑apparent (non‑visible) disabilities a medical certificate from a licensed private or government physician is required; for apparent disabilities, limited certification by teachers or employers is allowed because the disability is visible and the certifier has a factual basis; DOH A.O. No. 2009‑0011 requires a physician’s prescription, purchase booklets, recordkeeping, and quantity limits (generally not exceeding one month’s supply). These layered requirements ensure that the substantive entitlement to discounts is tied to appropriate medical or factual verification, thereby satisfying substantive due process.

Vagueness: Definitions of “Disability”

Petitioners asserted that statutory and regulatory definitions of disability were overly broad or susceptible to varying interpretations. The Court held the definitions in R.A. No. 7277 as amended, the IRR, NCDA A.O. No. 1, and DOH A.O. No. 2009‑0011 provide sufficient specificity, including seven named categories of disability and illustrative examples (psychosocial, chronic illness, learning, mental, visual, orthopedic, communication). The Court emphasized deference to administrative agencies with specialized competence in defining and implementing technical categories: where statutes provide a workable framework and administrative rules fill in details, courts will not interfere absent arbitrary or unreasonable action. The Court concluded the challenged definitions are not vague as applied.

Equal Protection: Classification and Rational Basis

Challenging the constitutionality under the equal protection clause, petitioners argued the law unfairly singles out retail drugstores. The Court applied the rational basis standard for economic and social legislation and recognized that classifications must be reasonable and germane to legislativ

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