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[Tax on individuals – Senior Citizen Law]

03 Carlos Superdrug Corp v DSWD

June 29, 2007 | Azcuna, J. |

● PGMA signed into law RA 9257, the Expanded Senior Citizens Act of 2003
○ Senior citizens are entitled to a 20% discount from all establishments
○ The establishment may claim the discounts granted as tax deductions
● Drug Stores Association of the Philippines asked for clarification regarding the meaning
of the “tax deduction” offered by RA 9257 in relation to the “tax credit” previously
available in the original Senior Citizens Act
○ In a tax credit, the amount is deducted after computing for the total amount of
tax due
○ In the tax deduction, the amount is deducted before computing for the total tax
due (computed with other deductions)
● DOH issued AO 171 and 177, stating that the 20% discount shall apply in the purchase of
all kinds of medicine, regardless if they’re branded or generic
● Petitioners Carlos Superdrug assail the constitutionality of the Act on the ground that it
violates the equal protection clause, and that it deprives them of their private property
without just compensation

W/N the Sec 4 of RA 9257 is constitutional for imposing upon establishments the burden of
partly-subsidizing a government program by offering tax discounts

YES. The law is a legitimate exercise of police power which has general welfare for its
object. Property rights must yield to general welfare (but must be sheltered by due
● Article XV Sec 4 of the Constitution states that the State may design programs of social
security for the elderly members
● Article XIII Sec 11 states that essential goods, health, and other social services shall be
available to all people at affordable cost, and that there shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children.
● Petitioners have not come up with a financial report to properly show that the tax deduction
scheme is disadvantageous to them

WHEREFORE, petition dismissed

Tax deduction vs Tax credit
- TD reimburses establishment only to a fraction of the tax discount; TC reimburses
establishment peso-for-peso (32% vs 100% of the amount)
- TD is deducted before computing for the taxable income; TC is deducted after
computing for the taxable income*
o *(Taxable income x tax) – tax credit = tax to be paid