Carlos SuperDrug v.

DSWD (SAMMY) lodging establishments, restaurants and recreation centers, and purchase of
June 29, 2007 | AZCUNA, J. | Police Power medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior
PETITIONER: CARLOS SUPERDRUG CORP. citizens;
RESPONDENTS: DEPARTMENT OF SOCIAL WELFARE and 5. Petitioners assert that Section 4(a) of the law is unconstitutional because it
DEVELOPMENT (DSWD) constitutes deprivation of private property. Compelling drugstore owners
and establishments to grant the discount will result in a loss of profit and
SUMMARY: Petitioner filed a case assailing the constitutionality of Section capital because according to them drugstores impose a mark-up of only 5%
4(a) of Republic Act (R.A.) No. 9257, otherwise known as the "Expanded to 10% on branded medicines, and the law failed to provide a scheme
Senior Citizens Act of 2003” as well as its tax deduction scheme. Argued that whereby drugstores will be justly compensated for the discount.
such law is:
(1) confiscatory because it infringes Art. III, Sec. 9 of the Constitution which ISSUE/s: WoN RA 9257 is constitutional. – YES
provides that private property shall not be taken for public use without just
compensation; RULING: WHEREFORE, the petition is DISMISSED for lack of merit.
(2) violation of the equal protection clause (Art. III, Sec. 1) enshrined in
ourConstitution which states that "no person shall be deprived of life, liberty or RATIO:
property without due process of law, nor shall any person be denied of the equal 1. The law is a legitimate exercise of police power which, similar to the power
protection of the laws;" and of eminent domain, has general welfare for its object. Police power is not
(3) the 20% discount on medicines violates the constitutional guarantee in capable of an exact definition, but has been purposely veiled in general
Article XIII, Section 11that makes "essential goods, health and other social terms to underscore its comprehensiveness to meet all exigencies and
services available to all people at affordable cost. provide enough room for an efficient and flexible response to
SC: The law is a legitimate exercise of Police Power. Police power as an conditions and circumstances, thus assuring the greatest benefits.
attribute to promote the common good would be diluted considerably if on the Accordingly, it has been described as the most essential, insistent and the
mere plea of petitioners that they will suffer loss of earnings and capital, the least limitable of powers, extending as it does to all the great public needs.
questioned provision is invalidated. It is [t]the power vested in the legislature by the constitution to make,
ordain, and establish all manner of wholesome and reasonable laws,
DOCTRINE: When the conditions so demand as determined by the legislature, statutes, and ordinances, either with penalties or without, not repugnant to
property rights must bow to the primacy of police power because property the constitution, as they shall judge to be for the good and welfare of the
rights, though sheltered by due process, must yield to general welfare. commonwealth, and of the subjects of the same.
In the exercise of police power, the state can intervene in the operations of a 2. For this reason, when the conditions so demand as determined by the
business which may result in an impairment of property rights in the process. legislature, property rights must bow to the primacy of police power
because property rights, though sheltered by due process, must yield to
FACTS: general welfare.
1. Petitioners are domestic corporations and proprietors operating drugstores 3. Police power as an attribute to promote the common good would be
in the Philippines. diluted considerably if on the mere plea of petitioners that they will
2. Public respondents, on the other hand, include the DSWD, DOH, DOF, suffer loss of earnings and capital, the questioned provision is
DOJ, and the DILG, specifically tasked to monitor the drugstores’ invalidated. Moreover, in the absence of evidence demonstrating the
compliance with the law; promulgate the implementing rules and alleged confiscatory effect of the provision in question, there is no basis for
regulations for the effective implementation of the law; and prosecute and its nullification in view of the presumption of validity which every law has
revoke the licenses of erring drugstore establishments. in its favor.
3. President Gloria Macapagal-Arroyo signed into law R.A. No. 9257 4. Given these, it is incorrect for petitioners to insist that the grant of the senior
otherwise known as the “Expanded Senior Citizens Act of 2003.” citizen discount is unduly oppressive to their business, because petitioners
4. Sec. 4(a) of the Act states that The senior citizens shall be entitled to the have not taken time to calculate correctly and come up with a financial
following: (a) the grant of twenty percent (20%) discount from all report, so that they have not been able to show properly whether or not
establishments relative to the utilization of services in hotels and similar the tax deduction scheme really works greatly to their disadvantage.
5. In treating the discount as a tax deduction, petitioners insist that they will
incur losses. However,the petitioner's computation is clearly flawed.
6. For purposes of reimbursement, the law states that the cost of the discount
shall be deducted from gross income, the amount of income derived from
all sources before deducting allowable expenses, which will result in net
income.
7. Here, petitioners tried to show a loss on a per transaction basis, which
should not be the case. An income statement, showing an accounting of
petitioners sales, expenses, and net profit (or loss) for a given period could
have accurately reflected the effect of the discount on their income. Absent
any financial statement, petitioners cannot substantiate their claim that
they will be operating at a loss should they give the discount. In addition,
the computation was erroneously based on the assumption that their
customers consisted wholly of senior citizens. Lastly, the 32% tax rate is to
be imposed on income, not on the amount of the discount.
8. While the Constitution protects property rights, petitioners 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.