In 1992, RA 7432 entitled “An Act to Maximize the Contribution of Senior Citizens to Nation Building,
Grant Benefits and Special Privileges and For Other Purposes” was enacted where Section 4 of the said
law provided for the 20% discount on the purchase of medicine by senior citizens. Section 4 further
provided that private establishments may claim the cost as tax credit. In 2004, RA 9257, amending certain
provisions of RA 7432, was enacted modifying the tax treatment of the discount granted to senior citizens
from tax deduction from gross income which shall be computed based on the net cost of goods sold or
services rendered. Because of the modification, ANNA, the owner of a Drugstore which was established
by her ancestors way back 1900, claimed that her business profit was affected, hence, she sought the help
of other drugstore owners and they all filed a case before the court questioning the constitutionality of
the provision modifying the tax treatment of the discount granted to senior citizens mainly based on the
ground that it is tantamount to taking of private property without payment of just compensation. Will the
case prosper? Why or why not? (10 pts.)
No, the case of Anna, the owner of a Drugstore which was established by her ancestors way back
1900, claiming that her business profit was affected by the modification made in 2004 thru RA 9257
amending certain provisions of RA 7432 will not prosper. The amendment modifying the tax treatment
of the discount granted to senior citizens from tax deduction from gross income which shall be computed
based on the net cost of goods sold or services rendered is not proven to affect businesses financial status.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-
building, and to grant benefits and privileges to them for their improvement and well-being as the State
considers them an integral part of our society. The priority given to senior citizens finds its basis in the
Constitution as set forth in the law itself and the court will honor its enforceability.
Reference Case: G.R. No. 175356 (December 03, 2013) MANILA MEMORIAL PARK, INC. AND LA
FUNERARIA PAZ-SUCAT, INC., vs SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT AND THE SECRETARY OF THE DEPARTMENT OF FINANCE
The Supreme Court in the case of Manila Memorial Park vs DSWD held that the 20% discount as well
as the tax deduction scheme is a valid exercise of police power of the State. Further, the discount is a
mere privilege given to a selected class in the community which is unlikely to deprive the ordinary course
of trade and business of the sellers. Hence, the petition has no merit.
It may not always be easy to determine whether a challenged governmental act is an exercise of police
power or eminent domain. The very nature of police power as elastic and responsive to various social
conditions as well as the evolving meaning and scope of public use and just compensation in eminent
domain evinces that these are not static concepts. Because of the exigencies of rapidly changing times,
Congress may be compelled to adopt or experiment with different measures to promote the general
welfare which may not fall squarely within the traditionally recognized categories of police power and
eminent domain. The judicious approach, therefore, is to look at the nature and effects of the challenged
governmental act and decide, on the basis thereof, whether the act is the exercise of police power or
eminent domain. Thus, we now look at the nature and effects of the 20% discount to determine if it
constitutes an exercise of police power or eminent domain.
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. This distinct cultural Filipino practice of honoring the elderly is
an integral part of this law.
Also, the law is not oblivious of the retail side of the pharmaceutical industry and the competitive
pricing component of the business. While the Constitution protects property rights, Anna 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.
