G.R. No. 175356, December 3, 2013
Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc. v. Secretary of the DSWD and the Secretary of the DOF

FACTS

Petitioners, corporations engaged in the funeral and burial services business, filed a Petition for Prohibition assailing the constitutionality of Section 4 of Republic Act No. 7432 (the Senior Citizens Act), as amended by R.A. No. 9257, and its implementing rules. The law grants senior citizens a 20% discount on goods and services from private establishments, which establishments may then claim the cost of the discount as a tax credit. The petitioners specifically challenge the provision allowing the discount to be claimed as a tax deduction from gross income or gross sales, arguing it constitutes a taking of private property for public use without just compensation.
The petitioners contend that the law imposes a burden solely on private businesses to fund a public welfare program, effectively forcing them to subsidize government responsibility. They argue this mechanism is not a valid exercise of police power but an invalid exercise of eminent domain, as it appropriates their revenues without compensation. The respondents, the Secretaries of the DSWD and DOF, defend the law as a legitimate police power measure aimed at improving the welfare of a marginalized sector.

ISSUE

Whether or not Section 4 of R.A. No. 7432, as amended, and its implementing rules, which grant senior citizens a 20% discount that businesses may claim as a tax credit, constitute a valid exercise of police power or an invalid taking of private property without just compensation.

RULING

The Supreme Court DISMISSED the petition and upheld the constitutionality of the assailed provisions. The Court ruled that the law is a valid exercise of the State’s police power. Police power is the inherent authority of the State to enact legislation for the promotion of public welfare, even if it may regulate or diminish property rights. The Senior Citizens Act clearly serves a legitimate public purpose: the promotion of the health and well-being of the elderly, a constitutionally recognized sector.
The Court emphasized that for a police power measure to be valid, the means employed must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive. The 20% discount, coupled with the tax credit mechanism, is a reasonable means to achieve the law’s objective. The tax credit is not a taking but a form of reimbursement from the government; the establishment is not shouldering the entire cost but is effectively made a conduit for a social welfare benefit, with the state sharing the burden by forgoing tax revenue. The law imposes a reasonable burden on private enterprises as part of their social responsibility, and the means are not so onerous as to be confiscatory. The measure passes the test of a lawful police power regulation for the common good.