CASE DIGEST
Manila Memorial Park Inc. et al v. Secretary of DSWD and DOF
G.R.
No. 175356, December 3, 2013
Principle: The
power to tax is "a principal attribute of sovereignty." Such inherent
power of the State anchors on its "social contract with its citizens which
obliges it to promote public interest and common good."
Facts: This case
involves the constitutionality of Section 4 of Republic Act No. 7432 as amended
by Republic Act No. 92571 as well as the implementing rules and regulations
issued by respondents DSWD and DOF.
The provisions allow
the 20% discount given by business establishments to senior citizens only as a
tax deduction from their gross income. The provisions amend an earlier law that
allows the senior citizen discount as a tax credit from their total tax
liability. Thus, the
petitioners assailed he constitutionality of the tax deduction scheme
prescribed under RA 9257 and the IRR issued by the DSWD and the DOF.
The petitioners posit
that the tax deduction scheme contravenes Article III, Section
9 of the Constitution,
which provides that: "private property shall not be taken for public use
without just compensation."
On the other hand, the respondents maintain that the tax deduction scheme is a legitimate exercise of the State’s police power.
Issue: Whether
or not Section 4 of Republic Act No. 7432 as amended by Republic Act No. 9257,
as well as its IRR is invalid and unconstitutional.
Ruling: No. The
enactment of the provision as well as its implementing rules is a proper exercise
of the inherent power to tax and police power. The determination that it will
be a tax deduction, not a tax credit, is an exercise of the power to tax. The
scope of the legislative power to tax necessarily includes not only the power
to determine the rate of tax but the method of its collection as well.
Thus, this means that
the power to tax also allows Congress to determine matters as whether tax rates
will be applied to gross income or net income and whether costs such as
discounts may be allowed as a deduction from gross income or a tax credit from
net income after tax.
In the present case, there is no showing that the tax
deduction scheme is confiscatory. The portion of the 20% discount petitioners
are made to bear under the tax deduction scheme will not result in a complete
loss of business for private establishments.
As illustrated earlier,
these establishments are free to adjust factors as prices and costs to recoup
the 20% discount given to senior citizens. Neither is the scheme arbitrary. In
fact, this Court has consistently upheld the doctrine that "taxing power may be used
as an implement of police power" in order to promote the general
welfare of the people.
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