Case 4 notes

This case is about the petitioners Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc.,
domestic corporations engaged in the business of providing funeral and burial services, against
public respondents Secretaries of the Department of Social Welfare and Development (DSWD) and
the Department of Finance with regards to the 20% discount given to the elderly.

Issues:

WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY

WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES
AND REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%)
DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE
ESTABLISHMENTS, ARE INVALID AND UNCONSTITUTIONAL. 9

Arguments

Petitioners are not questioning the 20% discount granted to senior citizens but are only assailing the
constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules and
regulations issued by the DSWD and the DOF due to the fact that it goes against the constitution which
provides that private property shall not be taken for public use without just compensation
It was also stated that the tax deduction scheme adopted by the government is justified by police
power. However, the petitioners assert that although both police power and the power of eminent
domain have the general welfare for their object, there are still traditional distinctions between the
two"  and that "eminent domain cannot be made less supreme than police power
18

Tax deduction scheme also shifts the duty of the state which is to improve the welfare of the elderly
to the private sector.

Lastly, it affects the businesses of the petitioners.

Counter:

Filing directly to the supreme court disregards the hierarchy of courts.

Petitioners failed to prove that the tax deduction treatment is not a "fair and full equivalent of the loss
sustained" by them.

Respondents still claim or maintain that the tax deduction scheme is a legitimate exercise of the State’s
police power.

Points - WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY

Actual case or controversy exists when there is "a conflict of legal rights" or "an assertion of opposite
legal claims susceptible of judicial resolution. The Petition must therefore show that "the
governmental act being challenged has a direct adverse effect on the individual challenging it."

In this case, the tax deduction scheme challenged by petitioners has a direct adverse effect on them.
Thus, it cannot be denied that there exists an actual case or controversy.
Points - validity of the 20% senior citizen discount and tax deduction scheme under RA 9257,
as an exercise of police power of the State, has already been settled in Carlos Superdrug
Corporation.

If it is police power, no just compensation is warranted. But if it is eminent domain, the tax deduction
scheme is unconstitutional because it is not a peso for peso reimbursement of the 20% discount
given to senior citizens. Thus, it constitutes taking of private property without payment of just
compensation.

tax deduction scheme does not fully reimburse petitioners for the discount privilege accorded to
senior citizens.

The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit. This constitutes compensable taking for which petitioners
would ordinarily become entitled to a just compensation. Just compensation is defined as the full and
fair equivalent of the property taken from its owner by the expropriator.

question of whether the State, in promoting the health and welfare of a special group of citizens, can
impose upon private establishments the burden of partly subsidizing a government program. The
Court believes so. 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.

As a form of reimbursement, the law provides that business establishments extending the twenty
percent discount to senior citizens may claim the discount as a tax deduction. The law is a legitimate
exercise of police power which, similar to the power of eminent domain, has general welfare for its
object

Respondents claim that this is within the police power. However, Police power as an attribute to
promote the common good would be diluted considerably if on the mere plea of petitioners that they
will suffer loss of earnings and capital, the questioned provision is invalidated. It is also incorrect for
the petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their
business, because petitioners have not taken time to calculate correctly and come up with a financial
report. petitioners tried to show a loss on a per transaction basis which was not meant by the act.
Absent any financial statement, petitioners cannot substantiate their claim that they will be operating
at a loss should they give the discount.

Point - No compelling reason has been proffered to overturn, modify or abandon the ruling in
Carlos Superdrug Corporation.

This refers to the 20% discount is an exercise of the power of eminent domain which is requiring the
payment of just compensation.

They have asserted that the tax deduction scheme under the assailed law does not provide for
sufficient just compensation. The privilege enjoyed by senior citizens does not come directly from the
State, but rather from the private establishments concerned. Petitioners felt that they have been
deprived of its revenues due to this tax deduction.
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of
private property. The tax deduction does not fully reimburse the establishments giving the 20%
discount which goes against the “just compensation” according to law.

Point - The 20% senior citizen discount is an exercise of police power.

Police power is the inherent power of the State to regulate or to restrain the use of liberty and
property for public welfare.

Eminent domain, on the other hand, is the inherent power of the State to take or appropriate private
property for public use

The respondents defended that it is an exercise of police power since it does not acquire the specific
properties but merely regulates the pricing of goods and services provided to the elderly in order to
honor their contributions to the country and to promote their welfare.

petitioners therein failed to prove that the 20% discount is arbitrary, oppressive or confiscatory. We
noted that no evidence, such as a financial report, to establish the impact of the 20% discount on the
overall profitability of petitioners was presented in order to show that they would be operating at a
loss due to the subject regulation or that the continued implementation of the law would be
unconscionably detrimental to the business operations of petitioners

Under the specific circumstances of this case, such determination can only be made upon the
presentation of competent proof which petitioners failed to do. A law, which has been in operation for
many years and promotes the welfare of a group accorded special concern by the Constitution,
cannot and should not be summarily invalidated on a mere allegation that it reduces the profits or
income/gross sales of business establishments.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit.