CARLOS SUPERDRUG CORP. vs. DSWD, ET. AL
GR No. 166494, June 29, 2007
FACTS:
Ÿ
Petitioners, belonging to domestic corporations and proprietors operating
drugstores in the Philippines, are praying for preliminary injunction assailing
the constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257,
otherwise known as the “Expanded Senior Citizens Act of 2003.” On February 26,
2004, R.A. No. 9257, amending R.A. No. 7432, was signed into law by President
Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a)
of the Act states:
SEC. 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;
Ÿ
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. Provided, further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as
amended.
Ÿ
The DSWD, on May 8, 2004, approved and adopted the Implementing Rules and
Regulations of RA No. 9275, Rule VI, Article 8 which contains the proviso that
the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the BIR and approved by the DOF. With the new law, the Drug Stores Association
of the Philippines wanted a clarification of the meaning of tax deduction. The DOF clarified that under a tax deduction scheme, the tax deduction on discounts was
subtracted from Net Sales together with other deductions which are considered
as operating expenses before the Tax Due was computed based on the Net Taxable
Income. On the other hand, under a tax
credit scheme, the amount of discounts which is the tax credit item, was deducted directly
from the tax due amount.
Ÿ
The DOH issued an Administrative Order that the twenty percent discount
shall include both prescription and non-prescription medicines, whether branded
or generic. It stated that such discount
would be provided in the purchase of medicines from all establishments
supplying medicines for the exclusive use of the senior citizens.
Ÿ
Drug store owners assail the law with the contention that granting the
discount would result to loss of profit and capital especially that such law
failed to provide a scheme to justly compensate the discount.
ISSUE: WON Section 4(a) of the Expanded Senior Citizens Act is
unconstitutional or not violative of Article 3 Section 9 of the Constitution
which provides that private property shall not be taken for public use without
just compensation and the equal protection clause of Article 3 Section 1.
HELD:
Ÿ
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. The
measure is not the taker’s gain but the owner’s loss. The word just is used to intensify the meaning
of the word compensation, and to
convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full and ample.
Ÿ
The law grants a twenty percent discount to senior citizens for medical
and dental services, and diagnostic and laboratory fees; admission fees charged
by theaters, concert halls, circuses, carnivals, and other similar places of
culture, leisure and amusement; fares for domestic land, air and sea travel;
utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. 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.
Ÿ
The law is a legitimate exercise of police power which, similar to the
power of eminent domain, has general welfare for its object. Police power is
not capable of an exact definition, but has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and provide
enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been described as
“the most essential, insistent and the least limitable of powers, extending as
it does to all the great public needs.” It is “[t]he power vested in the
legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties
or without, not repugnant to the constitution, as they shall judge to be for
the good and welfare of the commonwealth, and of the subjects of the same.”
Ÿ MMDA vs Bel Air Village Association
Ÿ Date: March 27, 2000
Ÿ Petitioner: Metropolitan Manila Development Authority
Ÿ Respondent: Bel Air Village Association Inc
Ÿ
Ÿ Ponente: Puno
Ÿ
Ÿ Facts: MMDA is a government agency tasked with the
delivery of basic services in Metro Manila. Bel-Air Village Association, Inc.
is a non-stock, non-profit corporation whose members are homeowners in Bel-Air
Village, a private subdivision in Makati City. BAVA is the registered owner of
Neptune Street, a road inside Bel-Air Village.
Ÿ On December 30, 1995, respondent received from
petitioner, through its Chairman, a notice dated December 22, 1995 requesting
respondent to open Neptune Street to public vehicular traffic starting January
2, 1996. BAVA was apprised that the perimeter wall separating the subdivision
from the adjacent Kalayaan Avenue would be demolished.
Ÿ On January 2, 1996, BAVA instituted against
petitioner before the RTC a civil case for injunction. Respondent prayed for
the issuance of a TRO and preliminary injunction enjoining the opening of
Neptune Street and prohibiting the demolition of the perimeter wall. The trial
court issued a temporary restraining order the following day. After due
hearing, the trial court denied the issuance of preliminary injunction.
Ÿ On appeal, the CA rendered a Decision on the merits
of the case finding that the MMDA has no authority to order the opening of
Neptune Street, a private subdivision road and cause the demolition of its
perimeter walls. It held that the authority is lodged in the City Council of
Makati by ordinance.
Ÿ
Ÿ Issue: WON
the MMDA has authority to open Neptune Road to the public
Ÿ
Ÿ Held: No
Ÿ
Ÿ Ratio: MMDA
claims that it has the authority to open Neptune Street to public traffic
because it is an agent of the state endowed with police power in the delivery
of basic services in Metro Manila. One of these basic services is traffic
management which involves the regulation of the use of thoroughfares to insure
the safety, convenience and welfare of the general public. It is alleged that
the police power of MMDA was affirmed by this Court in the consolidated cases
of Sangalang v. IAC. From the premise that it has police
power, it is now urged that there is no need for the City of Makati to enact an
ordinance opening Neptune street to the public.
Ÿ Police power is an inherent attribute of sovereignty.
It has been defined as the power vested by the Constitution in the legislature
to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes and ordinances, either with penalties or without, not repugnant to the
Constitution, as they shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same. The
power is plenary and its scope is vast and pervasive, reaching and justifying
measures for public health, public safety, public morals, and the general
welfare.
Ÿ It bears stressing that police power is lodged
primarily in the National Legislature. It cannot be
exercised by any group or body of individuals not possessing legislative power.
The National Legislature, however, may delegate this power to the President and
administrative boards as well as the lawmaking bodies of municipal corporations
or local government units. Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.
Ÿ Metropolitan or Metro Manila is a body composed of
several local government units - i.e., twelve (12) cities and five (5) municipalities, namely, the
cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon,
Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the
municipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig. With
the passage of RA 7924 in 1995, Metropolitan Manila was declared as a
"special development and administrative region" and the
Administration of "metro-wide" basic services affecting the region
placed under "a development authority" referred to as the MMDA.
Ÿ The implementation of the MMDA’s plans,
programs and projects is undertaken by the local government units, national
government agencies, accredited people’s organizations, non-governmental
organizations, and the private sector as well as by the MMDA itself. For this
purpose, the MMDA has the power to enter into contracts, memoranda of agreement
and other cooperative arrangements with these bodies for the delivery of the
required services within Metro Manila.
Ÿ Clearly, the scope of the MMDA’s function is limited
to the delivery of the seven (7) basic services. One of these is transport and
traffic management which includes the formulation and monitoring of policies,
standards and projects to rationalize the existing transport operations,
infrastructure requirements, the use of thoroughfares and promotion of the safe
movement of persons and goods. It also covers the mass transport system and the
institution of a system of road regulation, the administration of all traffic
enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro
Manila for traffic violations. Under this service, the MMDA is expressly
authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all traffic management
programs." In addition, the MMDA may "install and administer a single
ticketing system," fix, impose and collect fines and penalties for all
traffic violations.
Ÿ It will be noted that the powers of the MMDA are
limited to the following acts: formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies,
installation of a system and administration. There is no syllable in R. A.
No. 7924 that grants the MMDA police power, let alone legislative power.
Even the Metro Manila Council has not been delegated any legislative power.
Unlike the legislative bodies of the local government units, there is no
provision in R. A. No. 7924 that empowers the MMDA or its Council to
"enact ordinances, approve resolutions and appropriate funds for the
general welfare" of the inhabitants of Metro Manila. The MMDA is, as
termed in the charter itself, a "development authority." It is an agency created for the purpose of laying down
policies and coordinating with the various national government agencies,
people’s organizations, non-governmental organizations and the private sector
for the efficient and expeditious delivery of basic services in the vast
metropolitan area. All its functions are administrative in nature and
these are actually summed up in the charter itself
Ÿ Petitioner cannot seek refuge in the cases of Sangalang
v. Intermediate Appellate Court where we upheld a zoning ordinance issued
by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an
exercise of police power. The first Sangalang decision was on the merits
of the petition, while the second decision denied
reconsideration of the first case and in addition discussed the case of Yabut
v. Court of Appeals.
Ÿ Contrary to petitioner’s claim, the two Sangalang cases
do not apply to the case at bar. Firstly, both involved zoning ordinances passed by the municipal council of
Makati and the MMC. In the instant case, the basis for the proposed opening of
Neptune Street is contained in the notice of December 22, 1995 sent by
petitioner to respondent BAVA, through its president. The notice does not cite
any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by
the MMDA, as the legal basis for the proposed opening of Neptune Street.
Petitioner MMDA simply relied on its authority under its charter "to
rationalize the use of roads and/or thoroughfares for the safe and convenient
movement of persons." Rationalizing the use of roads and thoroughfares is
one of the acts that fall within the scope of transport and traffic management.
By no stretch of the imagination, however, can this be interpreted as an
express or implied grant of ordinance-making power, much less police power.
Misjuris
Ÿ Secondly, the MMDA is not the same entity as the MMC
in Sangalang. Although the MMC is the forerunner of the present MMDA, an
examination of Presidential Decree (P. D.) No. 824, the charter of the MMC,
shows that the latter possessed greater powers which were not bestowed on the
present MMDA. Jjlex
Ÿ In 1990, President Aquino issued Executive Order (E.
O.) No. 392 and constituted the Metropolitan Manila Authority (MMA). The powers
and functions of the MMC were devolved to the MMA. It ought to be stressed, however, that not all
powers and functions of the MMC were passed to the MMA. The MMA’s power was
limited to the "delivery of basic urban services requiring coordination in
Metropolitan Manila." The MMA’s governing
body, the Metropolitan Manila Council, although composed of the mayors of the
component cities and municipalities, was merely given the power of: (1)
formulation of policies on the delivery of basic services requiring
coordination and consolidation; and (2) promulgation of resolutions and other
issuances, approval of a code of basic services and the exercise of its
rule-making power.
Ÿ Under the 1987 Constitution, the local government units became primarily
responsible for the governance of their respective political subdivisions. The MMA’s
jurisdiction was limited to addressing common problems involving basic
services that transcended local boundaries. It did not have legislative
power. Its power was merely to provide the local government units technical
assistance in the preparation of local development plans. Any semblance of
legislative power it had was confined to a "review [of] legislation
proposed by the local legislative assemblies to ensure consistency among local
governments and with the comprehensive development plan of Metro Manila,"
and to "advise the local governments accordingly."
Ÿ When R.A. No. 7924 took effect, Metropolitan Manila
became a "special development and administrative region" and the MMDA
a "special development authority" whose functions were "without
prejudice to the autonomy of the affected local government units." The
character of the MMDA was clearly defined in the legislative debates enacting
its charter.
Ÿ It is thus beyond doubt that the MMDA is not a local
government unit or a public corporation endowed with legislative power. It is not even a "special metropolitan
political subdivision" as contemplated in Section 11, Article X of the
Constitution. The creation of a "special metropolitan political
subdivision" requires the approval by a majority of the votes cast in a
plebiscite in the political units directly affected. R.
A. No. 7924 was not submitted to the inhabitants of Metro Manila in a
plebiscite. The Chairman of the MMDA is not an official elected by the people,
but appointed by the President with the rank and privileges of a cabinet
member. In fact, part of his function is to perform such other duties as may be
assigned to him by the President, whereas in local
government units, the President merely exercises supervisory authority. This
emphasizes the administrative character of the MMDA.
Ÿ Clearly then, the MMC under P. D. No. 824 is not the
same entity as the MMDA under R. A. No. 7924. Unlike the MMC, the MMDA has no
power to enact ordinances for the welfare of the community. It is the local government units, acting through
their respective legislative councils, that possess legislative power and
police power. In the case at bar, the Sangguniang Panlungsod of Makati City did
not pass any ordinance or resolution ordering the opening of Neptune Street,
hence, its proposed opening by petitioner MMDA is illegal and the respondent
Court of Appeals did not err in so ruling. We desist from ruling on the other
issues as they are unnecessary. Esmso
Ÿ We stress that this decision does not make light of
the MMDA’s noble efforts to solve the chaotic traffic condition in Metro
Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis.
Even our once sprawling boulevards and avenues are now crammed with cars while
city streets are clogged with motorists and pedestrians. Traffic has become a
social malaise affecting our people’s productivity and the efficient delivery
of goods and services in the country. The MMDA was created to put some order in
the metropolitan transportation system but unfortunately the powers granted by
its charter are limited. Its good intentions cannot justify the opening for
public use of a private street in a private subdivision without any legal
warrant. The promotion of the general welfare is not antithetical to the
preservation of the rule of law.