2. Manila Memorial Park, Inc. vs.

Secretary of the Department of Social Welfare and Development 711

SCRA 302 , December 03, 2013, G.R. No. 175356

FACTS:

Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432,3 as amended by RA
9257,4 and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow
business establishments to claim the 20% discount given to senior citizens as a tax deduction.

On February 26, 2004, RA 92578 amended certain provisions of RA 7432, to wit:

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and purchase
of medicines in all establishments for the exclusive use or enjoyment of senior citizens, including funeral
and burial services for the death of senior citizens;

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based on
the net cost of the goods sold or services rendered: Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year that the discount is granted.

ISSUE:
Whether or not R.A. 7432 is a valid exercise of Police Power. Yes.

HELD:

The Supreme Court held that thus, even if the current law, through its tax deduction scheme (which
abandoned the tax credit scheme under the previous law), does not provide for a peso for peso
reimbursement of the 20% discount given by private establishments, no constitutional infirmity obtains
because, being a valid exercise of police power, payment of just compensation is not warranted

In the exercise of police power, a property right is impaired by regulation, or the use of property is
merely prohibited, regulated or restricted to promote public welfare. In such cases, there is no
compensable taking, hence, payment of just compensation is not required.

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.

Because all laws enjoy the presumption of constitutionality, courts will uphold a law’s validity if any set
of facts may be conceived to sustain it. Indubitably, the one assailing the law has the heavy burden of
proving that the regulation is unreasonable, oppressive or confiscatory, or has gone “too far” as to
amount to a “taking.” Yet, here, the Dissent would have this Court nullify the law without any proof of
such nature.

Prior to the sale of goods or services, a business establishment may be subject to State regulations, such
as the 20% senior citizen discount, which may impact the level or amount of profits or income/gross
sales that can be generated by such establishment.

It should be noted though that potential profits or income/gross sales are relevant in police power and
eminent domain analyses because they may, in appropriate cases, serve as an indicia when a regulation
has gone “too far” as to amount to a “taking” under the power of eminent domain.
2. Manila Memorial Park, Inc. vs. Secretary of the Department of Social Welfare and Development 711
SCRA 302 , December 03, 2013, G.R. No. 175356

The State has, in the past, regulated prices and profits of business establishments. In other words, this
type of regulatory measures is traditionally recognized as police power measures so that the senior
citizen discount may be considered as a police power measure as well.

There is nothing in the Constitution that prohibits Congress from regulating the profits or income/gross
sales of industries and enterprises without franchises. On the contrary, the social justice provisions of
the Constitution enjoin the State to regulate the “acquisition, ownership, use, and disposition” of
property and its increments.

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.

CARPIO, J., Dissenting Opinion:

View that when police power is exercised, there is no just compensation to the citizen who loses his
private property. When eminent domain is exercised, there must be just compensation

View that taking under the exercise of police power does not require any compensation because the
property taken is either destroyed or placed outside the commerce of man; In order to be valid, the
taking of private property by the government under eminent domain has to be for public use and there
must be just compensation.

View that the taking of property under Section 4 of R.A. 7432 is an exercise of the power of eminent
domain and not an exercise of the police power of the State.

View that Section 9, Article III of the 1987 Constitution speaks of private property without any
distinction. It does not state that there should be profit before the taking of property is subject to just
compensation

View that in the case of the senior citizen’s discount, the private establishment is compensated only in
the equivalent amount of 32% of the mandatory discount. There are no services rendered by the senior
citizens, or any other form of payment, that could make up for the 68% balance of the mandatory
discount. Clearly, the private establishments cannot recover the full amount of the discount they give
and thus there is taking to the extent of the amount that cannot be recovered

View that the State cannot compel private establishments without franchises to grant discounts, or to
operate at a loss, because that constitutes taking of private property for public use without just
compensation

View that the State has the power to regulate the conduct of the business of private establishments as
long as the regulation is reasonable, but when the regulation amounts to permanent taking of private
property for public use, there must be just compensation because the regulation now reaches the level
of eminent domain

View that due to the patent unconstitutionality of Section 4 of R.A. 7432, as amended by R.A. 9257,
providing that private establishments may claim the 20% discount to senior citizens as tax deduction,
the old law, or Section 4 of R.A. 7432, which allows the 20% discount as tax credit, is automatically
reinstated.
2. Manila Memorial Park, Inc. vs. Secretary of the Department of Social Welfare and Development 711
SCRA 302 , December 03, 2013, G.R. No. 175356

DECISION:

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