Manila Memorial V DSWD

Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc.
v Secretary of Department of Social Welfare and Development

(DSWD) and Department of Finance (DOF)
G.R. No. 175356, 3 December 2013, EN BANC, (Del Castillo, J.)
Police Power as an attribute to promote the common good would be diluted if on the mere plea of some people, that they will suffer some earnings or
losses, a questioned provision would be invalidated.
FACTS: Petitioners assail the constitutionality of Republic Act No. (RA) 7432, as amended by RA9257, and the Implementing
Rules and Regulations (IRR) issued by the Department of Social Welfare and Development (DSWD) and Department of
Finance (DOF) insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax
deduction.
RA9257 was issued amending the previous provision to include funeral and burial services for the death of senior
citizens. In addition, under Sec. 4 of RA9257, the establishments listed therein may claim the discount as tax deduction based
on the net cost of goods sold or services rendered, provided that the cost of the discount shall be allowed as deduction from
gross income and that the total amount of claimed tax deduction net of VAT shall be included in the gross sales receipts. In
contrast with RA9257 which considers the 20% discount as a tax credit deductible from the tax liability of the said
establishment. The Sec. of DOF and DSWD also issued IRRs to implement the provisions.
The Petitioners assert that the said provision violates Section 4, Article 15 and Section 11, Article 13 of the
Constitution because it shifts the State’s constitutional mandate or duty of improving the welfare of elderly to the private
sector. Under the tax deduction scheme, the private sector shoulders 65% of the discount because only 35% of it is actually
returned by the government.
ISSUE: 1) Whether or not the petition presents and actual case or controversy
2) Whether or not Sec. 4 of RA9257 and the IRRs issued are invalid and unconstitutional.
HELD: Petition DENIED.
There exists an actual case or controversy

An actual case or controversy exists when there is “a conflict of legal rights” or “an assertion of opposite of legal
claims susceptible of judicial resolution”. 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.
The validity of the 20% senior citizen discount and tax deduction scheme under RA9257, as an exercise of
police power of the State has already been settled in Carlos Superdrug Corporation
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. A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not meet
the definition of just compensation.
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. Given these, it is incorrect
for 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, so that they have not been able to show properly
whether or not the tax deduction scheme really works greatly to their disadvantage.
The subject regulation not an exercise of the power of eminent domain but a police power measure. The obiter in
Central Luzon Drug Corporation describes the 20% discount as an exercise of the power of eminent domain and the tax
credit, under the previous law, equivalent to the amount of discount given as the just compensation therefor. The reason is
that: (1) the discount would have formed part of the gross sales of the establishment were it not for the law prescribing the
20% discount, and (2) the permanent reduction in total revenues is a forced subsidy corresponding to the taking of private
property for public use or benefit. The flaw in this reasoning is in its premise. It presupposes that the subject regulation, which
impacts the pricing and, hence, the profitability of a private establishment, automatically amounts to a deprivation of property
without due process of law. If this were so, then all price and rate of return on investment control laws would have to be
invalidated because they impact, at some level, the regulated establishment’s profits or income/gross sales, yet there is no
provision for payment of just compensation.

Manila Memorial V DSWD

Uploaded by

Copyright:

Available Formats

Manila Memorial V DSWD

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Manila Memorial V DSWD

Uploaded by

Copyright:

Available Formats

Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc.

v Secretary of Department of Social Welfare and Development

HELD: Petition DENIED.

There exists an actual case or controversy

You might also like