Case Summary (G.R. No. 199669)
Key Individuals and Context
Petitioner Southern Luzon Drug Corporation, a domestic drugstore operator, challenges the mandatory 20% discount granted to senior citizens and persons with disability (PWDs) under Republic Acts 9257 and 9442 and the tax treatment thereof. Respondents include the Department of Social Welfare and Development (DSWD), National Council on Disability Affairs (formerly NCWDP), Department of Finance (DOF), and Bureau of Internal Revenue (BIR), tasked with implementing and enforcing the discount and its tax treatment.
Petitioner
Argues that the mandatory discount and its treatment as a tax deduction (instead of a full tax credit) amount to a taking of private property without just compensation, violating due process, equal protection, and the takings clause.
Respondents
Maintain that the discount scheme is a valid exercise of police power under the 1987 Constitution, that affected establishments may recover costs via tax deductions, and that there is no compensable taking or unconstitutional discrimination.
Key Dates
• RA 7432 (1992): Introduced 20% senior-citizen discount with tax-credit reimbursement and an income ceiling.
• RA 9257 (2004): Removed income ceiling; changed reimbursement from tax credit to tax deduction.
• RA 7277 (1992): Magna Carta for Disabled Persons established PWD privileges.
• RA 9442 (2007): Added 20% PWD discount; allowed reimbursement as tax deduction.
• CA Decision (June 17, 2011) and Resolution (Nov. 25, 2011): Dismissed petition for prohibition.
• SC Decision (April 25, 2017): Denied petition for review on certiorari.
Applicable Law
• 1987 Constitution, Article XIII (Social Justice), Article XV (Family and Social Security).
• Republic Act Nos. 7432 (as amended by 9257) and 7277 (as amended by 9442).
• Implementing Rules and Regulations of RA 9257 and RA 9442 issued by DSWD, DOF, and BIR.
Factual Antecedents
Under RA 7432 senior citizens (age ≥ 60, income ≤ P60,000) received 20% discounts on medicines and could claim tax credits for these discounts. RA 9257 extended privileges to all senior citizens and shifted reimbursement to tax deductions based on net cost of goods sold. RA 9442 granted a similar 20% discount to PWDs with reimbursement as tax deductions.
Procedural History
On February 26, 2008 petitioner filed before the CA a petition for prohibition with prayer for TRO/PI to declare Sections 4(a) of RA 9257 and 32 of RA 9442 unconstitutional and to enjoin their implementation. The CA dismissed for: (1) improper remedy (should have been declaratory relief); (2) stare decisis (Carlos Superdrug); (3) lack of proof of taking; and (4) absence of ministerial/quasi-judicial act by respondents. The CA denied reconsideration. Southern Luzon Drug filed a Rule 45 petition before the Supreme Court.
Issues Presented
I. Whether petition for prohibition lies to assail constitutionality of discount provisions.
II. Whether stare decisis bars relitigation of senior-citizen discount issues.
III. Whether mandatory 20% discount and tax-deduction scheme constitute an uncompensated taking under eminent domain.
IV. Whether the scheme violates equal protection by disregarding ability to pay.
V. Whether definitions of “disability” and “PWD” in RA 9442 are vague, violating due process.
Ruling on Procedural Issues
• Proper Remedy: The SC held that a petition for prohibition may likewise be used to challenge a law’s constitutionality and to enjoin its execution, citing precedent.
• Jurisdiction: CA has original jurisdiction over prohibition; hierarchy of courts and stare decisis are not impediments where only legal questions are involved.
• Stare Decisis: Carlos Superdrug did not bar consideration because this petition raises additional issues (PWD discount, vagueness, equal protection).
Substantive Rulings
• Police Power vs. Eminent Domain: The discount scheme is a regulation under police power—no appropriation of specific private property—and thus does not require just compensation.
• Takings Clause: The discount does not take private property in the constitutional sense, as there is no permanent ouster of ownership or
Case Syllabus (G.R. No. 199669)
Facts and Parties
- Southern Luzon Drug Corporation (“petitioner”) is a domestic corporation engaged in drugstore operations in the Philippines.
- Respondents are the Department of Social Welfare and Development (DSWD), the National Council for the Welfare of Disabled Persons (now National Council on Disability Affairs or NCDA), the Department of Finance (DOF), and the Bureau of Internal Revenue (BIR).
- The petitioner challenged Sections 4(a) of R.A. No. 9257 (Expanded Senior Citizens Act of 2003) and Section 32 of R.A. No. 9442 (amending the Magna Carta for Disabled Persons), which mandate a 20% discount on the purchase of medicines by senior citizens and persons with disability (PWDs) and treat the discount as a tax deduction.
Statutory Background
- R.A. No. 7432 (1992) granted senior citizens (60 years old, income ≤ P60,000) a 20% discount on medicines and allowed covered establishments to claim discounts as tax credits.
- R.A. No. 9257 (2004) removed the income ceiling for senior citizens’ discounts and converted the tax credit into a tax deduction based on net cost of goods sold or services rendered.
- DSWD issued IRR for R.A. 9257 (May 28, 2004), Article 8 of Rule VI, confirming the tax deduction scheme and requiring BIR‐DOF‐approved Revenue Regulations.
- R.A. No. 7277 (1992) codified the rights of PWDs; R.A. No. 9442 (2007) added a 20% discount on medicines to PWDs and allowed establishments to treat the discount as a tax deduction under conditions mirroring R.A. 9257.
- Joint IRR of R.A. No. 9442 defined “persons with disability” (Section 5.1) and mandated a 20% discount on medicines (Section 6.1.d), with implementing guidelines by DOH and PhilHealth.
Prior Jurisprudence
- In Carlos Superdrug Corporation v. DSWD (G.R. No. 166494, June 29, 2007), petitioners unsuccessfully challenged Section 4(a) of R.A. 9257 as an uncompensated taking; the Supreme Court held the discount scheme a valid exercise of police power.
- Carlos Superdrug’s motion for reconsideration was denied (Resolution, Aug. 21, 2007).
- In Manila Memorial Park, Inc. v. DSWD (722 Phil. 538, 2013), the Court reaffirmed that the 20% discount for senior citizens and its tax deduction scheme are valid exercises of police power, not taking under eminent d