CASE DIGEST
Luzon Drug Corp. v DSWD
[GR 199669 April 25, 2017]
Subject: Taxation Law
Facts:
Southern Luzon Drug Corp’s
petition sought to prohibit the implementation of Section 4(a) of Republic Act
(R.A.) No. 9257, otherwise known as the "Expanded Senior Citizens Act of
2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta
for Disabled Persons," particularly the granting of 20% discount on the
purchase of medicines by senior citizens and persons with disability (PWD), respectively,
and treating them as tax deduction, instead of tax credit under the previous
law. The claim the is unconstitutional and it impairs their right to earn
profit
The petitioner is a
domestic corporation engaged in the business of drugstore operation in the
Philippines while the respondents are government agencies, office and bureau
tasked to monitor compliance with R.A. Nos. 9257 and 9442.
Issue: Whether or not the questioned
law by the petitioner is unconstitutional. (No)
Ruling:
Petitioner’s argument the
law is confiscatory in the sense that the State takes away a portion of its supposed
profits does not hold ground because the subject provisions only affect the petitioner's right to
profit, and not earned profits.
Unfortunately for the petitioner,
the right to profit is not a vested
right or an entitlement that has accrued on the person or entity such that
its invasion or deprivation warrants compensation. Vested rights are
"fixed, unalterable, or irrevocable."
In the exercise of police
power, "property rights of private individuals are subjected to restraints
and burdens in order to secure the general comfort, health, and prosperity of
the State." Even then, the State's claim of police power cannot be
arbitrary or unreasonable. The proper exercise of the police power requires the
concurrence of a lawful subject and a lawful method.
More importantly, it is in the
exercise of its police power that the Congress enacted R.A. Nos. 9257 and 9442,
the laws mandating a 20% discount on purchases of medicines made by senior
citizens and PWDs. It is also in further exercise of this power that the
legislature opted that the said discount be claimed as tax deduction, rather
than tax credit, by covered establishments.
The subjects of R.A. Nos.
9257 and 9442, i.e., senior citizens and PWDs, are individuals whose well-being
is a recognized public duty. As a public duty, the responsibility for their
care devolves upon the concerted efforts of the State, the family and the community.
The 20% Sales Discount for Senior Citizens and PWDs is a valid
exercise of police power.
After all, the overriding purpose of the exercise of the power is
to promote general welfare, public health and safety, among others. It is a
measure, which by sheer necessity, the State exercises, even to the point of
interfering with personal liberties or property rights in order to advance
common good.
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