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.
constitutionality
mandatory discount
medicine
A

Case Summary (G.R. No. 194561)

Factual Background

R.A. No. 7277 enacted in 1992 established rights and privileges for disabled persons. R.A. No. 9442, enacted in 2007, amended R.A. No. 7277, retitled it as the Magna Carta for Persons with Disability, and granted persons with disability a mandatory twenty percent (20%) discount on medicine purchases. The law provided that establishments granting the discount may claim tax deductions under specified rules. The IRR and several administrative issuances by NCDA, DOF, and DOH prescribed implementing mechanisms including the issuance of PWD identification cards and documentation and tax rules for establishments.

Administrative and Regulatory Measures

The IRR of R.A. No. 9442, NCDA A.O. No. 1, DOF Revenue Regulations No. 1-2009, and DOH A.O. No. 2009-0011 set operational details. The NCDA order prescribed procedures for issuance of the PWD Identification Card (IDC), indicated the documentary bases to confirm disability, and differentiated requirements for apparent and non-apparent disabilities. The DOF regulation limited how establishments may deduct the discount from gross income. The DOH order detailed conditions for dispensing medicines and required prescriptions and purchase booklets to prevent abuse.

Petition and Relief Sought

On July 28, 2009 petitioners filed a Petition for Prohibition in the Court of Appeals with an application for Temporary Restraining Order and/or Writ of Preliminary Injunction. Petitioners sought to annul and enjoin implementation of Section 32 of R.A. No. 7277 as amended by R.A. No. 9442, the IRR provisions, NCDA A.O. No. 1, DOF Revenue Regulation No. 1-2009, and DOH A.O. No. 2009-0011.

Procedural History in the Court of Appeals

The Court of Appeals dismissed the petition and upheld the constitutionality of the challenged statutory and administrative provisions in a Decision dated July 26, 2010. The CA suspended the effectivity of NCDA A.O. No. 1 pending proof of its filing with the Office of the National Administrative Register (ONAR) and publication. After respondents submitted proof of publication and filing, the CA in a Resolution dated November 19, 2010 denied petitioners’ motion for reconsideration and lifted the suspension. Petitioners then brought the case to the Supreme Court by Petition for Review on Certiorari.

Issues Presented to the Supreme Court

Petitioners raised four principal constitutional challenges: (i) that the mandatory PWD discount is an invalid exercise of eminent domain because it effects a taking without just compensation, rather than a valid exercise of police power; (ii) that Section 32 of R.A. No. 7277 as amended and the implementing regulations violate due process; (iii) that statutory and regulatory definitions of “disability” and implementing provisions are unconstitutionally vague and ambiguous; and (iv) that the statutory scheme violates the equal protection clause by singling out drugstores to bear the burden of the discount.

Petitioners’ Core Contentions

Petitioners contended that the mandated discount constituted a taking of property rights because it imposed an uncompensated transfer of wealth from drugstores to PWDs and therefore implicated the eminent domain requirement of just compensation. They argued that the documentation bases for PWD entitlement under Section 32 were unrelated to medical findings and thus deprived establishments of procedural safeguards required by due process. Petitioners further asserted that definitions of disability in the statute and IRR were vague and that NCDA A.O. No. 1 improperly delegated medical determinations to nonmedical persons. Finally, petitioners maintained that the law violated the equal protection clause by imposing the discount burden principally on retail drugstores while exempting other actors in the pharmaceutical distribution chain.

Respondents’ Position and Defenses

Respondents defended the provisions as a legitimate exercise of police power aimed at promoting public welfare and the social function of property consistent with the Constitution. They argued that the IRR and NCDA and DOH issuances provided reasonable procedural safeguards, that the PWD-ID issuance process required medical certification for non-apparent disabilities, and that teachers and employers could validly confirm apparent disabilities. Respondents also invoked the availability of tax deductions under DOF Revenue Regulations No. 1-2009 as a form of reimbursement to establishments and contended that the statutory classification for PWD privileges satisfied equal protection rational-basis review.

Court of Appeals’ Ruling

The Court of Appeals held that R.A. No. 7277 as amended by R.A. No. 9442 and the challenged administrative issuances were constitutional. The CA applied by analogy the Court’s prior ruling in Carlos Superdrug Corporation et al. v. DSWD, et al., which upheld a mandatory twenty percent discount for senior citizens under the exercise of police power. The CA found the PWD discount to pursue a valid public objective, to employ reasonably related means, and to afford establishments statutory tax deductions that mitigated any burden.

Supreme Court’s Ruling and Disposition

The Supreme Court denied the petition and affirmed the Court of Appeals Decision dated July 26, 2010 and Resolution dated November 19, 2010. The Supreme Court agreed that the mandatory PWD discount was a valid exercise of police power rather than an uncompensated taking under eminent domain. The Court upheld the constitutionality of Section 32 of R.A. No. 7277 as amended and the assailed administrative issuances.

Police Power versus Eminent Domain Analysis

The Court reiterated that police power is the authority of the State to promote public welfare by restraining or regulating the use of liberty and property and that it yields to no exact definition because of its comprehensiveness. The Court contrasted police power with eminent domain, noting that the latter requires payment of just compensation for condemnations. The Court found that the statutory discount serves the general welfare, is directed at a legitimate public interest rooted in constitutional provisions recognizing the social function of property and priority for the needs of the disabled, and that the means employed—mandating discounts and permitting tax deductions as reimbursement—are reasonably related and not unduly oppressive.

Due Process and Procedural Safeguards Analysis

Addressing due process concerns, the Court read Section 32 together with the IRR and NCDA rules and the DOH administrative order. The Court observed that NCDA A.O. No. 1 required medical certification for non-apparent disabilities and limited nonmedical confirmation to apparent disabilities. The DOH order imposed prescription and purchase-booklet requirements and recordkeeping obligations to prevent abuse. On that basis the Court found that the statutory and administrative schemes provided adequate procedural safeguards and comported with substantive due process.

Vagueness and Definition of Disability

The Court rejected the vagueness challenge to statutory and regulatory definitions of disability. It noted that R.A. No. 7277, its amendment, the IRR,

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