FIRST DIVISION
Liberty is a blessing without which life is a misery, but liberty should not be made
[G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION
OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of
section 1 of Commonwealth Act No. 648 do not confer legislative power upon the Director of
Public Works and the Secretary of Public Works and Communications. The authority therein
conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit
upon, and avoid obstructions on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely
the ascertainment of the facts and circumstances upon which the application of said law is to
be predicated. To promulgate rules and regulations on the use of national roads and to
determine when and how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly discharged by the National
Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for executing the law. But
it cannot be said that the exercise of such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth
Act No. 548 was passed by the National Assembly in the exercise of the paramount police power
of the state. Said Act, by virtue of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law, therefore, the National Assembly
was prompted by considerations of public convenience and welfare. It was inspired by a desire
to relieve congestion of traffic, which is, to say the least, a menace to public safety. Public
welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote
the general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and burdens, in
order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31
Phil., 218). To this fundamental aim of our Government the rights of the individual are
subordinated.
to prevail over authority because then society will fall into anarchy. Neither should authority be
made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and,
personal discipline, so that there may be established the resultant equilibrium, which means
peace and order and happiness for all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the residuum of liberty which resides in the
people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preservation.
3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic forces
by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption
by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in
the interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that should
be equally and evenly extended to all groups as a combined force in our social and economic
life, consistent with the fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the greatest good to the
greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before this court this petition for a writ of prohibition against the respondents, A. D. Williams, as
Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works;
Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as
Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940,
resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m.
and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at
Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the
date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic
Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the
measure proposed in the resolution aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of
the Secretary of Public Works and Communications, to promulgate rules and regulations to
regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director
of Public Works, in his first indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation made by the Chairman of
the National Traffic Commission as aforesaid, with the modification that the closing of Rizal
Avenue to traffic to animal-drawn vehicles be limited to the portion thereof extending from the
railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of
Public Works and Communications, in his second indorsement addressed to the Director of
Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue
be closed to traffic of animal-drawn vehicles, between the points and during the hours as above
indicated, for a period of one year from the date of the opening of the Colgante Bridge to
traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and
caused to be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the
places above-mentioned to the detriment not only of their owners but of the riding public as
well.
It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public
Works, with the approval of the Secretary of Public Works and Communications, is authorized to
promulgate rules and regulations for the regulation and control of the use of and traffic on
national roads and streets is unconstitutional because it constitutes an undue delegation of
legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early
Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: ’The
true distinction therefore is between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the
latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County,
1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat.,
1) may be committed by the Legislature to an executive department or official. The Legislature
may make decisions of executive departments or subordinate officials thereof, to whom it has
committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed.,
141.) The growing tendency in the decisions is to give prominence to the ’necessity’ of the
case."cralaw virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works, with the approval of the Secretary of
Public Works and Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such rules and regulations,
with the approval of the President, may contain provisions controlling or regulating the
construction of buildings or other structures within a reasonable distance from along the national
roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of
Public Works and his duly authorized representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and
interest, or for a specified period, with the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power upon the Director of Public Works
and the Secretary of Public Works and Communications. The authority therein conferred upon
them and under which they promulgated the rules and regulations now complained of is not to
determine what public policy demands but merely to carry out the legislative policy laid down
by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions
on, roads and streets designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the traffic makes such action necessary
or advisable in the public convenience and interest." The delegated power, if at all, therefore, is
not the determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate rules
and regulations on the use of national roads and to determine when and how long a national
road should be closed to traffic, in view of the condition of the road or the traffic thereon and
the requirements of public convenience and interest, is an administrative function which cannot
be directly discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the exercise of such discretion is the making
of the law. As was said in Locke’s Appeal (72 Pa. 491): "To assert that a law is less than a law,
because it is made to depend on a future event or act, is to rob the Legislature of the power to
act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet
developed, or to things future and impossible to fully know." The proper distinction the court said
was this: "The Legislature cannot delegate its power to make the law; but it can make a law to
delegate a power to determine some fact or state of things upon which the law makes, or
intends to make, its own action depend. To deny this would be to stop the wheels of
government. There are many things upon which wise and useful legislation must depend which
cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and
determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June
12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065,
promulgated June 26, 1940, this Court had occasion to observe that the principle of separation
of powers has been made to adapt itself to the complexities of modern governments, giving rise
to the adoption, within certain limits, of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern governments. Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the laws, the rigidity of the theory of
separation of governmental powers has, to a large extent, been relaxed by permitting the
delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations calculated to promote public interest.
The petitioner further contends that the rules and regulations promulgated by the respondents
pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference
with legitimate business or trade and abridge the right to personal liberty and freedom of
locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise
of the paramount police power of the state.
Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to
promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was
prompted by considerations of public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic. which is, to say the least, a menace to public safety. Public welfare,
then, lies at the bottom of the enactment of said law, and the state in order to promote the
general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and burdens, in
order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus, 31
Phil., 218). To this fundamental aim of our Government the rights of the individual are
subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into anarchy. Neither should authority be
made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and
personal discipline, so that there may be established the resultant equilibrium, which means
peace and order and happiness for all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the residuum of liberty which resides in the
people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preservation.
The scope of police power keeps expanding as civilization advances. As was said in the case of
Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is
a continuing one, and a business lawful today may in the future, because of the changed
situation, the growth of population or other causes, become a menace to the public health and
welfare, and be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it
was observed that "advancing civilization is bringing within the police power of the state today
things which were not thought of as being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of public opinion, with an increasing
desire on the part of the masses and of the government to look after and care for the interests
of the individuals of the state, have brought within the police power many questions for
regulation which formerly were not so considered."cralaw virtua1aw library
The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and
economic security of all the people. The promotion of social justice, however, is to be achieved
not through a mistaken sympathy towards any given group. Social justice is "neither communism,
nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the welfare
of all the people, the adoption by the Government of measures calculated to insure economic
stability of all the competent elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored
principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that should
be equally and evenly extended to all groups as a combined force in our social and economic
life, consistent with the fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the greatest good to the
greatest number."cralaw virtua1aw library
In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against
the petitioner. So ordered.
Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
G.R. No. 110861 November 14, 1994
ORO ENTERPRISES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO, respondents.
Reyes, Navarro & Associates for petitioner.
Jose C. Espinas for private respondent.
VITUG, J.:
In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March 1993
decision and 29th May 1993 order of respondent National Labor Relations Commission (NLRC)
directing petitioner to pay private respondent Loreto Cecilio retirement pay in the amount of
P61,500.00.
Private respondent was first employed by petitioner in August of 1949. After working
continuously with the company for forty one (41) years, private respondent manifested, on 03
September 1990, her intention to retire from work by filing with petitioner a "Claim for
Retirement Pay."
In her claim, private respondent pleaded that "the retirement pay she (was) receiving from the
Social Security System in the total sum of five
hundred pesos (P500.00) a month could hardly (suffice to) meet her daily subsistence . . . ."1
On 15 September 1990, petitioner wrote private respondent, informing her that it was in no
financial position to give her any retirement benefit apart from the retirement pay she was
already receiving from the Social Security System ("SSS"). Nonetheless, she was offered a house
and lot located in San Jose, del Monte, Bulacan, in accordance with a "plan" 2 which was then
still being conceived by the company president for retiring employees. The offer did not
materialize, nor did the proposed company plan come into being, for one reason or another.
On 26 September 1990, private respondent filed her complaint with the Office of the Labor
Arbiter (docketed as NLRC Case No. 00-09-05167-90). In her position paper, she reiterated —
. . . that she has been employed and faithfully worked for petitioner
continuously for forty-one (41) years until she reached the age of 65 on 19
August 1990; that when she requested petitioner for her "retirement or
termination pay," the President of the company refused to comply; and that
the lot being offered to her which is located in Bulacan would not meet her
basic needs for subsistence in the remaining years of her life."3
On 04 October 1990, petitioner filed its own position paper, stating
that —
. . . private respondent was not dismissed from the service but voluntarily
stopped working on September 15, 1990; that it has no collective bargaining
agreement or any other agreement or established policy concerning
payment of retirement benefits to employees who reach a certain age
except that which is required by the Social Security Law; that it has not
agreed, whether expressly or impliedly, to pay any retirement benefit to
private respondent or any of its employees; and that in Llora Motors,
Inc., and/or Constantino Carlota, Jr. vs. Honorable Franklin Drilon, et al., (G.R.
No. 82895, Nov. 7, 1989), this Honorable Court . . . ruled that payment of
retirement benefits cannot be required in the absence of a collective
bargaining agreement or other contractual basis or
any established employer policy providing the grant of such retirement
benefits.4
On 11 February 1991, Labor Arbiter Edilberto J. Pangan, to whom the case was assigned,
rendered a decision, the dispositive portions of which read:
DAHIL DITO, inuutusan ang Oro Enterprises, Inc. na bayaran and
nagsusumbong na si Bb. Loreto L. Cecilio ng kanyang bayad sa
pamamahinga (Retirement Benefits), batay sa kalahating buwan sahod sa
bawat isang taong paglilingkod (half month pay for every year of service),
nagkakahalaga ng ANIMNAPU AT TATLONG LIBONG PISO (P63,000.00).
Gayon din, ipinag-uutos na bayaran ng sampung bahagi (10%) nang
nasabing halaga o ANIM NA LIBO AT TATLONG DAANG PISO (P6,300.00) bilang
bayad sa manananggol, sa paghahain ng usaping ito.
At ang kabuuang dapat ibayad ng isinusumbong ay ANIMNAPU AT SIYAM NA
LIBO AT TATLONG DAANG PISO (P69,300.00).
 Sapagkat salat sa sapat na batayan, ang kahilingan sa bayad pinsala, ay
IPINAG-KAKAIT (DENIED).
IPINAG-UUTOS.5
Petitioner appealed to the NLRC. Private respondent likewise interposed her own appeal
insofar as the decision denied her claim for damages.
During the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No.
76416 took effect, providing among other things, thusly:
Art. 287. Retirement. — Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one half (1/2) month salary for every year
of service, a fraction of at least six (6) months being considered as one whole
year.
Unless the parties provide for broader inclusions, the term "one half (1/2)
month salary" shall mean fifteen (15) days plus one twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.
xxx xxx xxx
Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article 288 of this Code.7
On 22 March 1993, the NLRC rendered its decision awarding to private respondent a
retirement pay on the basis of Republic Act 7641; hence —
WHEREFORE, the respondent is hereby directed to pay complainant a
retirement pay of P61,500.00. Since complainant's cause of action became
meritorious only out of the curative effect of R.A. 7641, her award of 10%
attorney's fee must fail.8
Petitioner filed a motion for reconsideration. In an Order, dated 19 May 1993, the NLRC denied
the motion for lack of merit.
In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part of the
NLRC in applying R.A. No. 7641. Petitioner argues that the law, which became effective only
on 07 January 1993, cannot be given any such retroactive effect as to cover private
respondent who, at the age of 65 years, retired from employment with petitioner on 03
September 1990.
At the time private respondent supposedly ceased to work with petitioner, Article 287 of the
Labor Code, then in force, provided:
Art. 287. Retirement. — Any employee maybe retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any
collective bargaining or other agreement.
Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn, expressed:
Sec. 13. Retirement. — In the absence of any collective bargaining
agreement or other applicable agreement concerning terms and conditions
of employment which provides for retirement at an older age, an employee
maybe retired upon reaching the age of sixty (60) years.
Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to
a bonafide retirement plan or in accordance with the applicable individual or
collective agreement or established employer policy shall be entitled to all the
retirement benefits provided therein or to termination pay equivalent at least
to one-half month salary for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one whole year.
Private respondent, sustained by the Labor Arbiter, posits that there being no collective
bargaining agreement ("CBA") that granted retirement benefits, conformably with Section 14
of the Implementing Rules aforequoted, she should be entitled to a "termination pay
equivalent at least to one-half month salary for every year of service . . . .
This particular issue has long been put to rest. In Llora Motors, Inc., vs. Drilon, 179 SCRA 175, Mr.
Justice Florentino P. Feliciano, speaking for the Court in an eruditely written ponencia,
explained:
Section 14 (a) refers to "termination pay equivalent to at least one-half (1/2)
month for every year of service" while Section 14 (b) mentions "termination pay
to which the employee would have been entitled had there been no such
retirement fund" as well as "termination pay the employee is entitled to
receive." It should be recalled that Sections 13 and 14 are found in
Implementing Rule I which deals with both "termination of employment" and
"retirement." It is important to keep the two (2) concepts of "termination pay"
and "retirement benefits" separate and distinct from each other. Termination
pay or separation pay is required to be paid by an employer in particular
situations identified by the Labor Code itself or by Implementing Rule
I.9 Termination pay where properly due and payable under some applicable
provision of the Labor Code or under Section 4 (b) of Implementing Rule I,
must be paid whether or not an additional retirement plan has been set up
under an agreement with the employer or under an "established employer
policy."
What needs to be stressed, however, is that Section 14 of Implementing Rule I,
like Article 287 of the Labor Code, does not purport to require "termination
pay" to be paid to an employee who may want to retire but for whom no
additional retirement plan had been set up prior agreement with the
employer. Thus, Section 14 itself speaks of an employee "who is retired
pursuant to a bona-fide retirement plan or in accordance with the applicable
individual or collective agreement or established employer policy." What
Section 14 of Implementing Rule I may be seen to be saying is that where
termination pay is otherwise payable to an employee under an applicable
provision of the Labor Code, and an additional or consensual retirement plan
exists, then payments under such retirement plan may be credited against the
termination pay that is due, subject, however, to certain conditions. These
conditions are: (a) that payments under the additional retirement plan cannot
have the effect of reducing the amount of termination pay due and payable
to less than one-half (1/2) month's salary for every year of service and (b) the
employee cannot be made to contribute to the termination pay that he is
entitled to receive under some provision of the Labor Code; in other words,
the employee is entitled to the full amount of his termination pay plus at least
the return of his own contributions to the additional retirement plan. 10
While there apparently was some kind of a retirement plan then being devised by the
company president for its retiring employees, it was, however, never formalized or
implemented. The Labor Arbiter found thusly:
Sa usaping pinag-uusapan ay mayroong plano sa pamamahinga (retirement
plan) at ito nga, ay ang sinasabing lote na ipagkakaloob sa mga
manggagawang may mahigit na sampung (10) taong paglilingkod, ngunit
hanggang ngayon ay ito ay isang panaginip lamang. Wala pa, ni isang naisa-
katuparan. At isa pa, napakalayo ang nasabing pook (San Jose del Monte,
Bulacan) para sa isang katulad ng nagsusumbong upang doon siya tuluyan
pumanaw, sa kabila ng kanyang pag-iisa. Kaya't ang sinasabing lote ay
pansamantalang pang-palubag-loob lamang, at hindi seryosong biyaya o
tunay na alay-biyaya.11
It then goes without saying, applying Llora Motors, that the beneficial provisions of Section 14 of
Implementative Rules cannot properly be invoked by private respondent.
Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can favorably apply to private
respondent's case.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection
measure and as a curative statute that — absent a retirement plan devised by, an agreement
with, or a voluntary grant from, an employer — can respond, in part at least, to the financial
well-being of workers during their twilight years soon following their life of labor. There should be
little doubt about the fact that the law can apply to labor contracts still existing at the time the
statute has taken effect, and that its benefits can be reckoned not only from the date of the
law's enactment but retroactively to the time said employment contracts have started. On this
score, the case of Allied Investigation Bureau, Inc., vs. Ople, 91 SCRA 265, finds strong
relevance:
1. There is no question that petitioner had agreed to grant retirement benefits
to private respondent. It would, however, limit such retirement benefits only
from the date of the effectivity of the Labor Code. That is its contention. The
refutation given in the Comment of Solicitor General Estelito P. Mendoza is
persuasive. As was pointed out, "in the computation thereof, public
respondents acted judiciously in reckoning the retirement pay from the time
private respondent started working with petitioner since respondent
employee's application for retirement benefits and the company's approval of
the same make express mention of Sections 13 and 14, Rule 1, Book VI of the
Implementing Rules and Regulations of the Labor Code as the basis for
retirement pay. Section 14 (a) of said rule provides that an employee who is
retired pursuant to a bona-fide retirement plan or in accordance with the
applicable individual or collective agreement or established employer policy
shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent to at least one-half month salary for every year of
service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year.'' Further it was stated: "This position taken by
public respondents squares with the principle that social legislation should be
interpreted in favor of workers in the light of the Constitutional mandate that
the State shall afford protection to labor."
2. Petitioner's insistence that the retirement benefits should date only from the
time that the present Labor Code came into force could be based on the
assumption that it should not be given a retroactive effect. That would be to
ignore the well-settled principle that police power legislation intended to
promote public welfare applies to existing contracts. It was held in Ongsiako
v. Gamboa, decided in 1950, that a police power measure being remedial in
character covers existing situations; otherwise, it would be self-defeating. Abe
v. Foster Wheeler Corporation, this Court, speaking through Justice Barrera, is
even more in point. In that case, the contracts of employment were entered
into at a time when there was no law granting the workers said right. Such
being the case, it was then contended that the application as to them of the
subsequent enactment would amount to an impairment of contractual
obligations. In refuting such a view, it was made clear in the opinion that
"constitutional guaranty of non-impairment . . . is limited by the exercise of the
police power of the State, in the interest of public health, safety, morals and
general welfare." The latest reiteration of such a doctrine came in Gutierrez
v. Cantada, decided barely a month ago.
3. Nor is it accurate to assert that the right to retirement benefits started from
the enactment of the present Labor Code. That would be to ignore the social
justice and protection to labor provisions of the 1935 Constitution. In the
leading case of Antamok Goldfields Mining Company v. Court of Industrial
Relations, decided in 1940, a concurring opinion of Justice Laurel to this effect
was cited: "By and large, these provisions in our Constitution all evince and
express the need of shifting emphasis to community interest with a view to
affirmative enhancement of human values." He had occasion to repeat it in
his well-known definition of social justice in Calalang v. Williams, decided the
same year. Thus: "Social justice is "neither communism, nor despositism, nor
atomism, nor anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic stability of all the
component elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principle of salus populi
est suprema lex." The present Civil Code, which took effect on August 13, 1950,
has a chapter on labor contracts, the first article of which recognizes that the
relations between capital and labor "are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common
good."
Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was
still pending consideration by the NLRC. Still for determination at the time was, among other
things, the issue of whether or not private respondent has, in fact, been effectively retired.
Petitioner asserts that private respondent has never reported for work after the rejection of her
application for retirement benefits. This claim is denied by private respondent, who avers that
she did report for work again but that petitioner has refused to accept her on the ground of
abandonment of duty. The Labor Arbiter has made these findings:
Sa sinasabi ng isinusumbong na ang nagsusumbong daw ay kusang-loob na
tinalikuran ang paglilingkod (abandonment of work) ay mahirap paniwalaan.
Ang isang manggagawa na iningatan ang matapat niyang paglilingkod sa
loob ng mahabang panahon, ay hindi basta na lamang lilisan at
ipahahamak ito. Ang isang manggagawa na sa kanyang huling taon nang
paglilingkod, ay walang dahilan na karaka-raka na lilisan ito upang ang
biyayang tatanggapin ay masalalay sa alinlangan. Ang sinasabing pag-lisan
ay hindi na-aayon sa katutuhanan ng pangyayari (natural course of events),
kaya't hindi namin ito masasang-ayunan.
Ang katotohanan nito, ay noong malaman ni Gng. Marietta G. Holmgren,
Pangulo ng isinusumbong (Oro Enterprises, Inc.) na ang nagsusumbong ay
naglilingkod pa, ay nagalit ito at ang sabi, "pag nalaman ng SSS na
nag(papa)trabaho pa ako na retired na, ay malilintikan kami (referring to Oro
 Enterprises, Inc.) sa SSS. . . ." Kaya't noong siya (naglilingkod) ay pumasok
noong Setyembre 15, 1990, ay sinabihan siya na ito na ang kahulihulihan
niyang araw ng paglilingkod. At simula noon ay hindi na siya pumasok. At ang G.R. No. 186560 November 17, 2010
sinasabing ulat ng pagputol ng paglilingkod (letter of termination) na may
petsang Oktubre 12, 1990, ay walang sapat na batayan. 12
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,
vs.
The NLRC, in turn, has said: FERNANDO P. DE LEON, Respondent.

After all, the least that could be said here is that the complainant filed her DECISION
claim for retirement pay only on January 7, 1993 the date R.A.
No. 7641 took effect and that against the backdrop that she retired only on
NACHURA, J.:
September 15, 1990, her monetary claim could be treated as well filed within
the three (3) years prescriptive period set by law . . . . 13
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
Petitioner Government Service Insurance System (GSIS) seeks the nullification of the
Given the above findings, which must be accorded due respect, we cannot see our way clear
Decision1 dated October 28, 2008 and the Resolution2 dated February 18, 2009 of the Court of
to attributing to NLRC grave abuse of discretion in concluding thereby that private
Appeals (CA) in CA-G.R. SP No. 101811.
respondent's claim for retirement benefits should accordingly be held to fall within the ambit of
Republic Act No. 7641. Grave abuse of discretion, albeit an elastic phrase, 14 has always been
understood as a capricious and whimsical exercise of judgment as is equivalent to lack of Respondent Fernando P. de Leon retired as Chief State Prosecutor of the Department of
jurisdiction, such as, to exemplify, "where the power is exercised in an arbitrary or despotic Justice (DOJ) in 1992, after 44 years of service to the government. He applied for retirement
manner." 15 under Republic Act (R.A.) No. 910, invoking R.A. No. 3783, as amended by R.A. No. 4140, which
provides that chief state prosecutors hold the same rank as judges. The application was
approved by GSIS. Thereafter, and for more than nine years, respondent continuously received
WHEREFORE, the petition for certiorari is DISMISSED, and the decision of the NLRC is AFFIRMED.
his retirement benefits, until 2001, when he failed to receive his monthly pension. 3

SO ORDERED.
Respondent learned that GSIS cancelled the payment of his pension because the Department
of Budget and Management (DBM) informed GSIS that respondent was not qualified to retire
under R.A. No. 910; that the law was meant to apply only to justices and judges; and that
having the same rank and qualification as a judge did not entitle respondent to the retirement
benefits provided thereunder. Thus, GSIS stopped the payment of respondent’s monthly
pension.4

Respondent wrote GSIS several letters but he received no response until November 9, 2007,
when respondent received the following letter from GSIS:

Dear Atty. De Leon:

This is in response to your request for resumption of pension benefit.

It appears that you retired under Republic Act No. 910 in 1992 from your position as Chief State
Prosecutor in the Department of Justice. From 1992 to 2001, you were receiving pension
benefits under the said law. Beginning the year 2002, the Department of Budget and
Management through then Secretary Emilia T. Boncodin already refused to release the funds
for your pension benefit on the ground that Chief State Prosecutors are not covered by R.A.
910. This conclusion was later on affirmed by Secretary Rolando G. Andaya, Jr. in a letter dated
6 June 2006.
In view of these, you now seek to secure benefits under Republic Act No. 660 or any other
applicable GSIS law.
We regret, however, that we cannot accede to your request because you have chosen to
retire and in fact have already retired under a different law, Republic Act No. 910, more than
fifteen (15) years ago. There is nothing in the GSIS law which sanctions double retirement unless
the retiree is first re-employed and qualifies once again to retire under GSIS law. In fact, Section
55 of Republic Act No. 8291 provides for exclusivity of benefits which means that a retiree may
choose only one retirement scheme available to him to the exclusion of all others.
Nonetheless, we believe that the peculiarities of your case is a matter that may be jointly
addressed or threshed out by your agency, the Department of Justice, and the Department of
Budget and Management.
Very truly yours,
(signed)
CECIL L. FELEO
Senior Vice President
Social Insurance Group5
Respondent then filed a petition for mandamus before the CA, praying that petitioner be
compelled to continue paying his monthly pension and to pay his unpaid monthly benefits
from 2001. He also asked that GSIS and the DBM be ordered to pay him damages.6
In the assailed October 28, 2008 Decision, the CA resolved to grant the petition, to wit:
WHEREFORE, the petition is GRANTED. The GSIS is hereby ordered to pay without delay
petitioner Atty. Fernando de Leon, his monthly adjusted pension in accordance with other
applicable law not under RA 910. It is also ordered to pay the back pensions which should also
be adjusted to conform to the applicable law from the time his pension was withheld.
SO ORDERED.7
The CA found that GSIS allowed respondent to retire under R.A. No. 910, following precedents
which allowed non-judges to retire under the said law. The CA said that it was not respondent’s
fault that he was allowed to avail of the benefits under R.A. No. 910; and that, even if his
retirement under that law was erroneous, respondent was, nonetheless, entitled to a monthly
pension under the GSIS Act. The CA held that this was not a case of double retirement, but
merely a continuation of the payment of respondent’s pension benefit to which he was clearly
entitled. Since the error in the award of retirement benefits under R.A. 910 was not attributable
to respondent, it was incumbent upon GSIS to continue defraying his pension in accordance
with the appropriate law which might apply to him. It was unjust for GSIS to entirely stop the
payment of respondent’s monthly pension without providing any alternative sustenance to
him.8
The CA further held that, under R.A. No. 660, R.A. No. 8291, and Presidential Decree (P.D.) No.
1146, respondent is entitled to a monthly pension for life. He cannot be penalized for the error
committed by GSIS itself. Thus, although respondent may not be qualified to receive the
retirement benefits under R.A. No. 910, he is still entitled to a monthly pension under R.A. No.
660, P.D. No. 1146, and R.A. No. 8291.9
Petitioner GSIS is now before this Court, assailing the Decision of the CA and the Resolution
denying its motion for reconsideration.
GSIS admits that respondent received monthly pensions from August 1997 until December
2001. Thereafter, the DBM refused to remit the funds for respondent’s pension on the ground
that he was not entitled to retire under R.A. No. 910 and should have retired under another
law, without however specifying which law it was.10 It appears that the DBM discontinued the
payment of respondent’s pension on the basis of the memorandum of the Chief Presidential
Legal Counsel that Chief Prosecutors of the DOJ are not entitled to the retirement package
under R.A. No. 910.
Because of the discontinuance of his pension, respondent sought to convert his retirement
under R.A. No. 910 to one under another law administered by GSIS.11 However, this conversion
was not allowed because, as GSIS avers, R.A. No. 8291 provides that conversion of one’s
retirement mode on whatever ground and for whatever reason is not allowed beyond one
year from the date of retirement.
GSIS assails the CA’s Decision for not specifying under which law respondent’s retirement
benefits should be paid, thus making it legally impossible for GSIS to comply with the
directive.12 It then raises several arguments that challenge the validity of the appellate court’s
decision.
GSIS argues, first, that the CA erred in issuing a writ of mandamus despite the absence of any
specific and clear right on the part of respondent, since he could not even specify the benefits
to which he is entitled and the law under which he is making the claim. 13
Second, GSIS alleges that it had refunded respondent’s premium payments because he opted
to retire under R.A. No. 910, which it does not administer. Thus, GSIS posits that the nexus
between itself and respondent had been severed and, therefore, the latter cannot claim
benefits from GSIS anymore.14
Third, GSIS contends that the CA erred in concluding that respondent would not be unjustly
enriched by the continuation of his monthly pension because he had already benefited from
having erroneously retired under R.A. No. 910. GSIS points out that it had refunded
respondent’s premium contributions. When the Chief Presidential Legal Counsel concluded
that respondent was not entitled to retire under R.A. No. 910, it was implicit recognition that
respondent was actually not entitled to the ₱1.2 million lump sum payment he received, which
he never refunded.15
Fourth, GSIS points out that the CA erred in concluding that respondent was not seeking
conversion from one retirement mode to another. It reiterates that R.A. No. 8291 expressly
prohibits conversion beyond one year from retirement. To compel GSIS to release respondent’s
retirement benefits despite the fact that he is disqualified to receive retirement benefits violates
R.A. No. 8291, and would subject its officials to possible charges under R.A. No. 3019, the Anti-
Graft and Corrupt Practices Act.
Fifth, GSIS contends that respondent is not entitled to the retirement benefits under R.A. No.
8291 because, when he retired in 1992, the law had not yet been enacted. The retirement laws
administered by GSIS at that time were R.A. No. 660, R.A. No. 1616, and P.D. No. 1146.
Lastly, GSIS argues that the writ of mandamus issued by the CA is not proper because it
compels petitioner to perform an act that is contrary to law.
Respondent traverses these allegations, and insists that he has a clear legal right to receive
retirement benefits under either R.A. No. 660 or P.D. No. 1146.16 He claims that he has met all
the conditions for entitlement to the benefits under either of the two laws.17 Respondent
contends that the return of his contributions does not bar him from pursuing his claims because
GSIS can require him to refund the premium contributions, or even deduct the amount
returned to him from the retirement benefits he will receive.18 He also argues that resumption of
his monthly pension will not constitute unjust enrichment because he is entitled to the same as
a matter of right for the rest of his natural life.19
Respondent accepts that, contrary to the pronouncement of the CA, he is not covered by
R.A. No. 8291. He, therefore, asks this Court to modify the CA Decision, such that instead of
Section 13 of R.A. No. 8291, it should be Section 12 of P.D. No. 1146 or Section 11 of R.A. No. 660
to be used as the basis of his right to receive, and the adjustment of, his monthly pension.
Furthermore, respondent argues that allowing him to retire under another law does not
constitute "conversion" as contemplated in the GSIS law. He avers that his application for
retirement under R.A. No. 910 was duly approved by GSIS, endorsed by the DOJ, and
implemented by the DBM for almost a decade. Thus, he should not be made to suffer any
adverse consequences owing to the change in the interpretation of the provisions of R.A. No.
910. Moreover, he could not have applied for conversion of his chosen retirement mode to
one under a different law within one year from approval of his retirement application, because
of his firm belief that his retirement under R.A. No. 910 was proper – a belief amply supported
by its approval by GSIS, the favorable endorsement of the DOJ, and its implementation by the
DBM.20
The petition is without merit.
Initially, we resolve the procedural issue.
GSIS contends that respondent’s petition for mandamus filed before the CA was procedurally
improper because respondent could not show a clear legal right to the relief sought.
The Court disagrees with petitioner. The CA itself acknowledged that it would not indulge in
technicalities to resolve the case, but focus instead on the substantive issues rather than on
procedural questions.21 Furthermore, courts have the discretion to relax the rules of procedure
in order to protect substantive rights and prevent manifest injustice to a party.
The Court has allowed numerous meritorious cases to proceed despite inherent procedural
defects and lapses. Rules of procedure are mere tools designed to facilitate the attainment of
justice. Strict and rigid application of rules which would result in technicalities that tend to
frustrate rather than to promote substantial justice must always be avoided.22
Besides, as will be discussed hereunder, contrary to petitioner’s posture, respondent has a clear
legal right to the relief prayed for. Thus, the CA acted correctly when it gave due course to
respondent’s petition for mandamus.
This case involves a former government official who, after honorably serving office for 44 years,
was comfortably enjoying his retirement in the relative security of a regular monthly pension,
but found himself abruptly denied the benefit and left without means of sustenance. This is a
situation that obviously cries out for the proper application of retirement laws, which are in the
class of social legislation.
The inflexible rule in our jurisdiction is that social legislation must be liberally construed in favor of
the beneficiaries.23 Retirement laws, in particular, are liberally construed in favor of the
retiree24 because their objective is to provide for the retiree’s sustenance and, hopefully, even
comfort, when he no longer has the capability to earn a livelihood. The liberal approach aims
to achieve the humanitarian purposes of the law in order that efficiency, security, and well-
being of government employees may be enhanced.25 Indeed, retirement laws are liberally
construed and administered in favor of the persons intended to be benefited, and all doubts
are resolved in favor of the retiree to achieve their humanitarian purpose.26
In this case, as adverted to above, respondent was able to establish that he has a clear legal
right to the reinstatement of his retirement benefits.
In stopping the payment of respondent’s monthly pension, GSIS relied on the memorandum of
the DBM, which, in turn, was based on the Chief Presidential Legal Counsel’s opinion that
respondent, not being a judge, was not entitled to retire under R.A. No. 910. And because
respondent had been mistakenly allowed to receive retirement benefits under R.A. No. 910,
GSIS erroneously concluded that respondent was not entitled to any retirement benefits at all,
not even under any other extant retirement law. This is flawed logic.
Respondent’s disqualification from receiving retirement benefits under R.A. No. 910 does not
mean that he is disqualified from receiving any retirement benefit under any other existing
retirement law.
The CA, however, incorrectly held that respondent was covered by R.A. No. 8291. R.A. No.
8291 became a law after respondent retired from government service. Hence, petitioner and
even respondent agree that it does not apply to respondent, because the law took effect
after respondent’s retirement.
Prior to the effectivity of R.A. No. 8291, retiring government employees who were not entitled to
the benefits under R.A. No. 910 had the option to retire under either of two laws:
Commonwealth Act No. 186, as amended by R.A. No. 660, or P.D. No. 1146.
In his Comment, respondent implicitly indicated his preference to retire under P.D. No. 1146,
since this law provides for higher benefits, and because the same was the latest law at the
time of his retirement in 1992.27
Under P.D. No. 1146, to be eligible for retirement benefits, one must satisfy the following
requisites:
Section 11. Conditions for Old-Age Pension.
(a) Old-age pension shall be paid to a member who:
(1) has at least fifteen years of service;
(2) is at least sixty years of age; and
(3) is separated from the service.
Respondent had complied with these requirements at the time of his retirement. GSIS does not
dispute this. Accordingly, respondent is entitled to receive the benefits provided under Section
12 of the same law, to wit:
Section 12. Old-Age Pension.
(a) A member entitled to old-age pension shall receive the basic monthly pension for life but in
no case for a period less than five years: Provided, That, the member shall have the option to
convert the basic monthly pensions for the first five years into a lump sum as defined in this Act:
Provided, further, That, in case the pensioner dies before the expiration of the five-year period,
his primary beneficiaries shall be entitled to the balance of the amount still due to him. In
default of primary beneficiaries, the amount shall be paid to his legal heirs.
To grant respondent these benefits does not equate to double retirement, as GSIS mistakenly
claims. Since respondent has been declared ineligible to retire under R.A. No. 910, GSIS should
simply apply the proper retirement law to respondent’s claim, in substitution of R.A. No. 910. In
this way, GSIS would be faithful to its mandate to administer retirement laws in the spirit in
which they have been enacted, i.e., to provide retirees the wherewithal to live a life of relative
comfort and security after years of service to the government. Respondent will not receive ---
and GSIS is under no obligation to give him --- more than what is due him under the proper
retirement law.
It must be emphasized that P.D. No. 1146 specifically mandates that a retiree is entitled to
monthly pension for life. As this Court previously held:
Considering the mandatory salary deductions from the government employee, the
government pensions do not constitute mere gratuity but form part of compensation.
In a pension plan where employee participation is mandatory, the prevailing view is that
employees have contractual or vested rights in the pension where the pension is part of the
terms of employment. The reason for providing retirement benefits is to compensate service to
the government. Retirement benefits to government employees are part of emolument to
encourage and retain qualified employees in the government service. Retirement benefits to
government employees reward them for giving the best years of their lives in the service of
their country.
Thus, where the employee retires and meets the eligibility requirements, he acquires a vested
right to benefits that is protected by the due process clause. Retirees enjoy a protected
property interest whenever they acquire a right to immediate payment under pre-existing law.
Thus, a pensioner acquires a vested right to benefits that have become due as provided under
the terms of the public employees’ pension statute. No law can deprive such person of his
pension rights without due process of law, that is, without notice and opportunity to be heard.28
It must also be underscored that GSIS itself allowed respondent to retire under R.A. No. 910,
following jurisprudence laid down by this Court.
One could hardly fault respondent, though a seasoned lawyer, for relying on petitioner’s
interpretation of the pertinent retirement laws, considering that the latter is tasked to administer
the government’s retirement system. He had the right to assume that GSIS personnel knew
what they were doing.
Since the change in circumstances was through no fault of respondent, he cannot be
prejudiced by the same.1avvphi1 His right to receive monthly pension from the government
cannot be jeopardized by a new interpretation of the law.
GSIS’ argument that respondent has already been enormously benefited under R.A. No. 910
misses the point.
Retirement benefits are a form of reward for an employee’s loyalty and service to the
employer, and are intended to help the employee enjoy the remaining years of his life,
lessening the burden of having to worry about his financial support or upkeep. A pension
partakes of the nature of "retained wages" of the retiree for a dual purpose: to entice
competent people to enter the government service; and to permit them to retire from the
service with relative security, not only for those who have retained their vigor, but more so for
those who have been incapacitated by illness or accident.29
Surely, giving respondent what is due him under the law is not unjust enrichment.
As to GSIS’ contention that what respondent seeks is conversion of his retirement mode, which
is prohibited under R.A. No. 8291, the Court agrees with the CA that this is not a case of
conversion within the contemplation of the law. The conversion under the law is one that is
voluntary, a choice to be made by the retiree. Here, respondent had no choice but to look for
another law under which to claim his pension benefits because the DBM had decided not to
release the funds needed to continue payment of his monthly pension.
Respondent himself admitted that, if the DBM had not suspended the payment of his pension,
he would not have sought any other law under which to receive his benefits. The necessity to
"convert" was not a voluntary choice of respondent but a circumstance forced upon him by
the government itself.
Finally, GSIS would like this Court to believe that because it has returned respondent’s premium
contributions, it is now legally impossible for it to comply with the CA’s directive.
Given the fact that respondent is ineligible to retire under R.A. No. 910, the refund by GSIS of
respondent’s premium payments was erroneous. Hence, GSIS can demand the return of the
erroneous payment or it may opt to deduct the amount earlier received by respondent from
the benefits which he will receive in the future. Considering its expertise on the matter, GSIS
can device a scheme that will facilitate either the reimbursement or the deduction in the most
cost-efficient and beneficial manner.
The foregoing disquisition draws even greater force from subsequent developments. While this
case was pending, the Congress enacted Republic Act No. 10071,30 the Prosecution Service
Act of 2010. On April 8, 2010, it lapsed into law without the signature of the President,31 pursuant
to Article VI, Section 27(1) of the Constitution.32
Section 24 of R.A. No. 10071 provides:
Section 24. Retroactivity. - The benefits mentioned in Sections 14 and 16 hereof shall be
granted to all those who retired prior to the effectivity of this Act.
By virtue of this express provision, respondent is covered by R.A. No. 10071. In addition, he is
now entitled to avail of the benefits provided by Section 23, that "all pension benefits of retired
prosecutors of the National Prosecution Service shall be automatically increased whenever
there is an increase in the salary and allowance of the same position from which he retired."
Respondent, as former Chief State Prosecutor, albeit the position has been renamed
"Prosecutor General,"33 should enjoy the same retirement benefits as the Presiding Justice of
the CA, pursuant to Section 14 of R.A. No. 10071, to wit:
Section 14. Qualifications, Rank and Appointment of the Prosecutor General. - The Prosecutor
General shall have the same qualifications for appointment, rank, category, prerogatives,
salary grade and salaries, allowances, emoluments, and other privileges, shall be subject to
the same inhibitions and disqualifications, and shall enjoy the same retirement and other
benefits as those of the Presiding Justice of the Court of Appeals and shall be appointed by
the President.34
Furthermore, respondent should also benefit from the application of Section 16 of the law,
which states:
Section 16. Qualifications, Ranks, and Appointments of Prosecutors, and other Prosecution
Officers. – x x x.
Any increase after the approval of this Act in the salaries, allowances or retirement benefits or
any upgrading of the grades or levels thereof of any or all of the Justices or Judges referred to
herein to whom said emoluments are assimilated shall apply to the corresponding prosecutors.
Lastly, and most importantly, by explicit fiat of R.A. No. 10071, members of the National
Prosecution Service have been granted the retirement benefits under R.A. No. 910, to wit:
Section 25. Applicability. - All benefits heretofore extended under Republic Act No. 910, as
amended, and all other benefits that may be extended by the way of amendment thereto
shall likewise be given to the prosecutors covered by this Act.
Hence, from the time of the effectivity of R.A. No. 10071, respondent should be entitled to
receive retirement benefits granted under R.A. No. 910.
Consequently, GSIS should compute respondent’s retirement benefits from the time the same
were withheld until April 7, 2010 in accordance with P.D. No. 1146; and his retirement benefits
from April 8, 2010 onwards in accordance with R.A. No. 910.
A final note. The Court is dismayed at the cavalier manner in which GSIS handled respondent’s
claims, keeping respondent in the dark as to the real status of his retirement benefits for so
long. That the agency tasked with administering the benefits of retired government employees
could so unreasonably treat one of its beneficiaries, one who faithfully served our people for
over 40 years, is appalling. It is well to remind GSIS of its mandate to promote the efficiency
and welfare of the employees of our government, and to perform its tasks not only with
competence and proficiency but with genuine compassion and concern.
WHEREFORE, the foregoing premises considered, the Decision dated October 28, 2008 and the
Resolution dated February 18, 2009 of the Court of Appeals in CA-G.R. SP No. 101811 are
hereby AFFIRMED WITH MODIFICATION. Government Service Insurance System is ORDERED to
(1) pay respondent’s retirement benefits in accordance with P.D. No. 1146, subject to
deductions, if any, computed from the time the same were withheld until April 7, 2010; and (2)
pay respondent’s retirement benefits in accordance with R.A. No. 910, computed from April 8,
2010 onwards.
In order that respondent may not be further deprived of his monthly pension benefits, this
Decision is IMMEDIATELY EXECUTORY.
SO ORDERED.
G.R. No. 78617 June 18, 1990
SALVADOR LAZO, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE INSURANCE SYSTEM
(CENTRAL BANK OF THE PHILIPPINES), respondents.
Oscar P. Paguinto for petitioner.
PADILLA, J.:
This is an appeal from the decision of the respondent Employees Compensation Commission
(ECC) in ECC Case No. 2883 which affirmed the dismissal of petitioner's claim for compensation
against the Government Service Insurance System (GSIS).
The petitioner, Salvador Lazo, is a security guard of the Central Bank of the Philippines assigned
to its main office in Malate, Manila. His regular tour of duty is from 2:00 o'clock in the afternoon
to 10:00 o'clock in the evening. On 18 June 1986, the petitioner rendered duty from 2:00
o'clock in the afternoon to 10:00 o'clock in the evening. But, as the security guard who was to
relieve him failed to arrive, the petitioner rendered overtime duty up to 5:00 o'clock in the
morning of 19 June 1986, when he asked permission from his superior to leave early in order to
take home to Binangonan, Rizal, his sack of rice.
On his way home, at about 6:00 o'clock in the morning of 19 June 1986, the passenger jeepney
the petitioner was riding on turned turtle due to slippery road. As a result, he sustained injuries
and was taken to the Angono Emergency Hospital for treatment. He was later transferred to
the National Orthopedic Hospital where he was confined until 25 July 1986.
For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as
amended. His claim, however, was denied by the GSIS for the reason that —
It appears that after performing your regular duties as Security Guard from
2:00 P.M. to 10:00 P.M. on June 18, 1986, you rendered overtime duty from
10:00 P.M. to 5:06 A.M. of the following day; that at about 5:06 A.M. after
asking permission from your superior you were allowed to leave the Office to
do certain personal matter — that of bringing home a sack of rice and that,
while on your way home, you met a vehicular accident that resulted to (sic)
your injuries. From the foregoing informations, it is evident that you were not at
your work place performing your duties when the incident occurred.1
It was held that the condition for compensability had not been satisfied.
Upon review of the case, the respondent Employees Compensation Commission affirmed the
decision since the accident which involved the petitioner occurred far from his work place and
while he was attending to a personal matter.
Hence, the present recourse.
The petitioner contends that the injuries he sustained due to the vehicular accident on his way
home from work should be construed as "arising out of or in the course of employment" and
thus, compensable. In support of his prayer for the reversal of the decision, the petitioner cites
the case of Pedro Baldebrin vs. Workmen's Compensation Commission,2 where the Court
awarded compensation to the petitioner therein who figured in an accident on his way home
from his official station at Pagadian City to his place of residence at Aurora, Zamboanga del
Sur. In the accident, petitioner's left eye was hit by a pebble while he was riding on a bus.
Respondents claim that the Baldebrin ruling is a deviation from cases earlier decided and
hence, not applicable to the present case.
The Court has carefully considered the petition and the arguments of the parties and finds that
the petitioner's submission is meritorious. Liberally interpreting the employees compensation law
to give effect to its compassionate spirit as a social legislation 3 in Vda. de Torbela u. ECC, 4 the
Court held:
It is a fact that Jose P. Torbela, Sr. died on March 3, 1975 at about 5:45 o'clock
in the morning due to injuries sustained by him in a vehicular accident while
he was on his way to school from Bacolod City, where he lived, to Hinigaran,
Negros Occidental where the school of which he was the principal was
located and that at the time of the accident he had in his possession official
papers he allegedly worked on in his residence on the eve of his death. The
claim is compensable. When an employee is accidentally injured at a point
reasonably proximate to the place at work, while he is going to and from his
work, such injury is deemed to have arisen out of and in the course of his
employment.
Again in Alano v. ECC, 5 it was reiterated:
 Dedicacion de Vera, a government employee during her lifetime, worked as
principal of Salinap Community School in San Carlos City, Pangasinan. Her tour
of duty was from 7:30 a.m. to 5:30 p.m. On November 29, 1976, at 7:00 A-M.,
while she was waiting for a ride at Plaza Jaycee in San Carlos City on her way
to the school, she was bumped and run over by a speeding Toyota mini-bus
which resulted in her instantaneous death. ...
In this case, it is not disputed that the deceased died while going to her place
of work. She was at the place where, as the petitioner puts it, her job
necessarily required her to be if she was to reach her place of work on time.
There was nothing private or personal about the school principal's being at
the place of the accident. She was there because her employment required
her to be there.
More recently, in Vano vs. GSIS & ECC, 6 this Court, applying the above quoted decisions,
enunciated:
Filomeno Vano was a letter carrier of the Bureau of Posts in Tagbilaran City. On
July 31, 1983, a Sunday, at around 3:30 p.m. Vano was driving his motorcycle
with his son as backrider allegedly on his way to his station in Tagbilaran for his
work the following day, Monday. As they were approaching Hinawanan
Bridge in Loay, Bohol, the motorcycle skidded, causing its passengers to be
thrown overboard. Vano's head hit the bridge's railing which rendered him
unconscious. He was taken to the Engelwood Hospital where he was declared
dead on arrival due to severe hemorrhage.
We see no reason to deviate from the foregoing rulings. Like the deceased in
these two (2) aforementioned cases, it was established that petitioner's
husband in the case at bar was on his way to his place of work when he met
the accident. His death, therefore, is compensable under the law as an
employment accident.
In the above cases, the employees were on their way to work. In the case at bar, petitioner
had come from work and was on his way home, just like in the Baldebrin case, where the
employee "... figured in an accident when he was ping home from his official station at
Pagadian City to his place of residence at Aurora, Zamboanga del Sur ...."7 Baldebrin, the
Court said:
The principal issue is whether petitioner's injury comes within the meaning of
and intendment of the phrase 'arising out of and in the course of
employment.'(Section 2, Workmen's Compensation Act). In Philippine
Engineer's Syndicate, Inc. vs. Flora S. Martin and Workmen's Compensation
Commission, 4 SCRA 356, We held that 'where an employee, after working
hours, attempted to ride on the platform of a service truck of the company
near his place of work, and, while thus attempting, slipped and fell to the
ground and was run over by the truck, resulting in his death, the accident may
be said to have arisen out of or in the course of employment, for which reason
his death is compensable. The fact standing alone, that the truck was in
motion when the employee boarded, is insufficient to justify the conclusion
that he had been notoriously negligent, where it does not appear that the
truck was running at a great speed.'And, in a later case, Iloilo Dock &
Engineering Co. vs. Workmen's Compensation Commission, 26 SCRA 102,
103, We ruled that '(e)mployment includes not only the actual doing of the
work, but a reasonable margin of time and space necessary to be used in
passing to and from the place where the work is to be done. If the employee
be injured while passing, with the express or implied consent of the employer,
to or from his work by a way over the employer's premises, or over those of
another in such proximity and relation as to be in practical effect a part of the
employer's premises, the injury is one arising out of and in the course of the
employment as much as though it had happened while the employee was
engaged in his work at the place of its performance. (Emphasis supplied)
In the case at bar, it can be seen that petitioner left his station at the Central Bank several
hours after his regular time off, because the reliever did not arrive, and so petitioner was asked
to go on overtime. After permission to leave was given, he went home. There is no evidence on
record that petitioner deviated from his usual, regular homeward route or that interruptions
occurred in the journey.
While the presumption of compensability and theory of aggravation under the Workmen's
Compensation Act (under which the Baldebrin case was decided) may have been
abandoned under the New Labor Code,8 it is significant that the liberality of the law in general
in favor of the workingman still subsists. As agent charged by the law to implement social
justice guaranteed and secured by the Constitution, the Employees Compensation
Commission should adopt a liberal attitude in favor of the employee in deciding claims for
compensability, especially where there is some basis in the facts for inferring a work
connection to the accident.
This kind of interpretation gives meaning and substance to the compassionate spirit of the law
as embodied in Article 4 of the New Labor Code which states that 'all doubts in the
implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor.'
The policy then is to extend the applicability of the decree (PD 626) to as many employees
who can avail of the benefits thereunder. This is in consonance with the avowed policy of the
State to give maximum aid and protection to labor.9
There is no reason, in principle, why employees should not be protected for a reasonable
period of time prior to or after working hours and for a reasonable distance before reaching or
after leaving the employer's premises.10
If the Vano ruling awarded compensation to an employee who was on his way from home to
his work station one day before an official working day, there is no reason to deny
compensation for accidental injury occurring while he is on his way home one hour after he
had left his work station.
We are constrained not to consider the defense of the street peril doctrine and instead
interpret the law liberally in favor of the employee because the Employees Compensation Act,
like the Workmen's Compensation Act, is basically a social legislation designed to afford relief
to the working men and women in our society.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. Let the case be
remanded to the ECC and the GSIS for disposition in accordance with this decision.
SO ORDERED.
EN BANC
April 25, 2017
G.R. No. 199669
SOUTHERN LUZON DRUG CORPORATION, Petitioner,
vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL COUNCIL FOR THE
WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF FINANCE, and THE BUREAU OF INTERNAL
REVENUE, Respondents
DECISION
REYES, J.:
Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court,
assailing the Decision2 dated June 17, 2011, and Resolution3 dated November 25, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the petition for prohibition
filed by Southern Luzon Drug Corporation (petitioner) against the Department of1 Social
Welfare and Development (DSWD), the National Council for the Welfare of Disabled Persons
(NCWDP) (now National Council on Disability Affairs or NCDA), the Department of Finance
(DOF) and the Bureau of: Internal Revenue (collectively, the respondents), which 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.
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, promulgate implementing rules and
regulations for their effective implementation, as well as prosecute and revoke licenses of
erring1 establishments.
Factual Antecedents
On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens
to Nation-Building, Grant Benefits and Special Privileges and For Other Purposes," was enacted.
Under the said law, a senior citizen, who must be at least 60 years old and has an annual
income of not more than P60,000.00,4 may avail of the privileges provided in Section 4 thereof,
one of which is 20% discount on the purchase of medicines. The said provision states:
Sec. 4. Privileges for the Senior Citizen. - x x x:
a) the grant of twenty percent (20%) discount from all establishments relative to
utilization of transportation services, hotels and similar lodging establishment,
restaurants and recreation centers and purchase of medicine anywhere in the
country: Provided, That private establishments may claim the cost as tax credit[.]
x x x x (Emphasis ours)
To recoup the amount given as discount to qualified senior citizens, covered establishments
can claim an equal amount as tax credit which can be applied against the income tax due
from them.
On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257,
amending some provisions of R.A. No. 7432. The new law retained the 20% discount on the
purchase of medicines but removed the annual income ceiling thereby qualifying all senior
citizens to the privileges under the law. Further, R.A. No. 9257 modified the tax treatment of the
discount granted to senior citizens, from tax credit to tax deduction from gross income,
computed based on the net cost of goods sold or services rendered. The pertinent provision,
as amended by R.A. No. 9257, reads as follows:
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;
xxxx
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. (Emphasis ours)
On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of R.A. No.
9257. Article 8 of Rule VI of the said IRR provides:
Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts
granted under Rule V, Section 4 - Discounts for Establishments; Section 9, Medical and
Dental Services in Private Facilities and Sections 10 and 11 -Air, Sea and Land
Transportation 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; Provided, finally, that the implementation of the tax
deduction shall be subject to the Revenue Regulations to be issued by the Bureau of
Internal Revenue (BIR) and approved by the Department of Finance (DOF). (Emphasis
ours)
The change in the tax treatment of the discount given to senior citizens did not sit well with
some drug store owners and corporations, claiming it affected the profitability of their business.
Thus, on January 13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug), together with
other. corporation and proprietors operating drugstores in the Philippines, filed a Petition for
Prohibition with Prayer for Temporary Restraining Order (TRO) I and/or Preliminary Injunction
before this Court, entitled Carlos Superdrug I Corporation v. DSWD,5docketed as G.R. No.
166494, assailing the constitutionality of Section 4(a) of R.A. No. 9257 primarily on the ground
that it amounts to taking of private property without payment of just compensation. In a
Decision dated June 29, 2007, the Court upheld the constitutionality of the assailed provision,
holding that the same is a legitimate exercise of police power. The relevant portions of the
decision read, thus:
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 CHAPTER 8. Other Privileges and Incentives
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 SEC. 32. Persons with disability shall be entitled to the following:
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."
xxxx

For this reason, when the conditions so demand as determined by the legislature,
(c) At least twenty percent (20%) discount for the purchase of medicines in all
property rights must bow to the primacy of police power because property rights,
drugstores for the exclusive use or enjoyment of persons with disability;
though sheltered by due process, must yield to general welfare.

xxxx
xxxx

The establishments may claim the discounts granted in subsections (a), (b), (c), (e), (t)
Moreover, the right to property has a social dimension. While Article XIII of the
and (g) as taxdeductions based on the net cost of the goods sold or services
Constitution provides the precept for the protection of property, various laws and
rendered: Provided, however, That the cost of the discount shall be allowed as
jurisprudence, particularly on agrarian reform and the regulation of contracts and
deduction from gross income for the same taxable year that the discount is
public utilities, continuously serve as a reminder that the right to property can be
granted: Provided, further, That the total amount of the claimed tax deduction net of
relinquished upon the command of the State for the promotion of public good.
value-added tax if applicable, shall be included in their gross sales receipts for tax
Undeniably, the success of the senior citizens program rests largely on the support
purposes and shall be subject to proper documentation and to the provisions of the
imparted by petitioners and the other private establishments concerned. This being
National Internal Revenue Code (NIRC), as amended. (Emphasis ours)
the case, the means employed in invoking the active participation of the private
sector, in order to achieve the purpose or objective of the law, is reasonably and
directly related. Without sufficient proof that Section 4(a) of RA. No. 9257 is arbitrary, Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD, Department
and that the continued implementation of the same would be unconscionably of Education, DOF, Department of Tourism and the Department of Transportation and
detrimental to petitioners, the Court will refrain from quashing a legislative act. Communications.8Sections 5 .1 and 6.1.d thereof provide:

WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations omitted) Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are
defined as follows:
On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing
decision. Subsequently, the Court issued Resolution dated August 21, 2007, denying the said 5.1. Persons with Disability are those individuals defined under Section 4 of RA
motion with finality. 7 7277, "An Act Providing for the Rehabilitation, Self-Development and Self-
Reliance of Persons with Disability as amended and their integration into the
Mainstream of Society and for Other Purposes." This is defined as a person
Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for Disabled
suffering from restriction or different abilities, as a result of a mental, physical or
Persons" was enacted, codifying the rights and privileges of PWDs. Thereafter, on April 30, 2007,
sensory impairment, to perform an activity in a manner or within the range
R.A. No. 9442 was enacted, amending R.A. No. 7277. One of the salient amendments in the
considered normal for human being. Disability shall mean: (1) a physical or
law is the insertion of Chapter 8 in Title 2 thereof, which enumerates the other privileges and
mental impairment that substantially limits one or more psychological,
incentives of PWDs, including the grant of 20% discount on the purchase of medicines. Similar
physiological or anatomical function of an individual or activities of such
to R.A. No. 9257, covered establishments shall claim the discounts given to PWDs as tax
individual; (2) a record of such an impairment; or (3) being regarded as
deductions from the gross income, based on the net cost of goods sold or services rendered.
having such an impairment.
Section 32 ofR.A. No. 9442 reads:
 xxxx Unyielding, the petitioner filed the instant petition, raising the following assignment of errors, to
wit:
6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the
purchase of medicine for the exclusive use and enjoyment of persons with I
disability. All drug stores, hospital, pharmacies, clinics and other similar
establishments selling medicines are required to provide at least twenty THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR PROHIBITION FILED WITH
percent (20%) discount subject to the guidelines issued by DOH and THE CA IS AN IMPROPER REMEDY TO ASSAIL THE CONSTITUTIONALITY OF THE 20%, SALES
PHILHEALTH. DISCOUNT FOR SENIOR CITIZENS AND PWDs;

On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for TRO II
and/or Writ of Preliminary Injunction9 with the CA, seeking to declare as unconstitutional (a)
Section 4(a) of R.A. No. 9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR,
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME COURT'S RULING IN CARLOS
insofar as these provisions only allow tax deduction on the gross income based on the net cost
SUPERDRUG CONSTITUTES STARE DECISIS;
of goods sold or services rendered as compensation to private establishments for the 20%
discount that they are required to grant to senior citizens and PWDs. Further, the petitioner
prayed that the respondents be permanently enjoined from implementing the assailed III
provisions.
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE 20%,
Ruling of the CA SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs IS A VALID EXERCISE OF POLICE
POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT
DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO THE PETITIONER AND
On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
OTHER SIMILARLY SITUATED DRUGSTORES;
Superdrug10particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police power.
Moreover, the CA held that considering that the same question had been raised by parties
similarly situated and was resolved in Carlos Superdrug, the rule of stare decisis stood as a IV
hindrance to any further attempt to relitigate the same issue. It further noted that jurisdictional
considerations also compel the dismissal of the action. It particularly emphasized that it has no THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE 20°/o
original or appellate jurisdiction to pass upon the constitutionality of the assailed laws, 11 the SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs DOES NOT VIOLATE THE PETITIONER'S
same pertaining to the Regional Trial Court (RTC). Even assuming that it had concurrent RIGHT TO EQUAL PROTECTION OF THE LAW; and
jurisdiction with the RTC, the principle of hierarchy of courts mandates that the case be
commenced and heard by the lower court. 12 The CA further ruled that the petitioner resorted V
to the wrong remedy as a petition for prohibition will not lie to restrain the actions of the
respondents for the simple reason that they do not exercise judicial, quasi-judicial or ministerial
duties relative to the issuance or implementation of the questioned provisions. Also, the petition THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE
was wanting of the allegations of the specific acts committed by the respondents that DEFINITIONS OF DISABILITIES AND PWDs ARE NOT VAGUE AND DO NOT VIOLATE THE
demonstrate the exercise of these powers which may be properly challenged in a petition for PETITIONER'S RIGHT TO DUE PROCESS OF LAW.16
prohibition.13
Ruling of the Court
The petitioner filed its Motion for Reconsideration of the Decision dated June 17, 2011 of the
14

CA, but the same was denied in a Resolution 15 dated November 25, 2011. Prohibition may be filed to question
the constitutionality of a law
In the assailed decision, the CA noted that the action, although denominated as one for
prohibition, seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No. 9257 and
Section 32 of R.A. No.9442. It held that in such a case, the proper remedy is not a special civil 1
action but a petition for declaratory relief, which falls under the exclusive original jurisdiction of
the RTC, in the first instance, and of the Supreme Court, on appeal. 17
The Court clarifies.
Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of
authority and is directed against proceedings that are done without or in excess of jurisdiction,
or with grave abuse of discretion, there being no appeal or other plain, speedy, and
adequate remedy in the ordinary course of law. It is the remedy to prevent inferior courts,
corporations, boards, or persons from usurping or exercising a jurisdiction or power with which
they have not been vested by law. 18 This is, however, not the lone office of an action for
prohibition. In Diaz, et al. v. The Secretary of Finance, et al., 19 prohibition was also recognized
as a proper remedy to prohibit or nullify acts of executive officials that amount to usurpation of
legislative authority. 20 And, in a number of jurisprudence, prohibition was allowed as a proper
action to assail the constitutionality of a law or prohibit its implementation.
In Social Weather Stations, Inc. v. Commission on Elections,21therein petitioner filed a petition
for prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or the "Fair Elections
Act," which prohibited the publication of surveys within 15 days before an election for national
candidates, and seven days for local candidates. Included in the petition is a prayer to
prohibit the Commission on Elections from enforcing the said provision. The Court granted the
Petition and struck down the assailed provision for being unconstitutional. 22
In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,23 therein petitioner assailed the
constitutionality of paragraphs (c ), (d), (f) and (g) of Section 36 of R.A. No. 9165, otherwise
known as the "Comprehensive Dangerous Drugs Act of 2002," on the ground that they
constitute undue delegation of legislative power for granting unbridled discretion to schools
and private employers in determining the manner of drug 'testing of their employees, and that
the law constitutes a violation of the right against unreasonable searches and seizures. It also
sought to enjoin the Dangerous Drugs Board and the Philippine Drug Enforcement Agency
from enforcing the challenged provision.24 The Court partially granted the petition by declaring
Section 36(f) and (g) of R.A. No. 9165 unconstitutional, and permanently enjoined the
concerned agencies from implementing them. 25
In another instance, consolidated petitions for prohibitions26 questioning the constitutionality of
the Priority Development Assistance Fund were deliberated upon by this Court which ultimately
granted the same.
Clearly, prohibition has been found an appropriate remedy to challenge the constitutionality
of various laws, rules, and regulations.
There is also no question regarding the jurisdiction of the CA to hear and decide a petition for
prohibition. By express provision of the law, particularly Section 9(1) of Batas Pambansa Bilang
129,27 the CA was granted "original jurisdiction to issue writs
of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or I
processes, whether or not in aid of its appellate jurisdiction." This authority· the CA enjoys
concurrently with RTCs and this Court.
In the same manner, the supposed violation of the principle of the ·. hierarchy of courts does
not pose any hindrance to the full deliberation of the issues at hand. It is well to remember that
"the judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases involving
warring factual allegations. For this reason, litigants are required to [refer] to the trial courts at
the first instance to determine the truth or falsity of these contending allegations on the basis of
the evidence of the parties. Cases which depend on disputed facts for decision cannot be
brought immediately before appellate courts as they are not triers of facts. Therefore, a strict
application of the rule of hierarchy of courts is not necessary when the cases brought before
the appellate courts do not involve factual but legal questions."28
Moreover, the principle of hierarchy of courts may be set aside for special and important
reasons, such as when dictated by public welfare and ' the advancement of public policy, or
demanded by the broader interest of justice.29 Thus, when based on the good judgment of the
court, the urgency and significance of the issues presented calls for its intervention, it should
not hesitate to exercise its duty to resolve.
The instant petition presents an exception to the principle as it basically raises a legal question
on the constitutionality of the mandatory discount and the breadth of its rightful beneficiaries.
More importantly, the resolution of the issues will redound to the benefit of the public as it will
put to rest the questions on the propriety of the granting of discounts to senior citizens and
PWDs amid the fervent insistence of affected establishments that the measure transgresses
their property rights. The Court, therefore, finds it to the best interest of justice that the instant
petition be resolved.
The instant case is not barred by
stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos
Superdrug constitutes as stare decisis or law of the case which bars the relitigation of the issues
that had been resolved therein and had been raised anew in the instant petition. It argues that
there are substantial differences between Carlos Superdrug and the circumstances in the
instant case which take it out from the operation of the doctrine of stare decisis. It cites that
in Carlos Superdrug, the Court denied the petition because the petitioner therein failed to
prove the confiscatory effect of the tax deduction scheme as no proof of actual loss was
submitted. It believes that its submission of financial statements for the years 2006 and 2007 to
prove the confiscatory effect of the law is a material fact that distinguishes the instant case
from that of Carlos Superdrug. 30
The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the
instant case, not because of the petitioner's submission of financial statements which were
wanting in the first case, but because it had the good sense of including questions that had
not been raised or deliberated in the former case of Carlos Superdrug, i.e., validity of the 20%
discount granted to PWDs, the supposed vagueness of the provisions of R.A. No. 9442 and
violation of the equal protection clause.
Nonetheless, the Court finds nothing in the instant case that merits a reversal of the earlier
ruling of the Court in Carlos Superdrug. Contrary to the petitioner's claim, there is a very slim
difference between the issues in Carlos Superdrug and the instant case with respect to the
nature of the senior citizen discount. A perfunctory reading of the circumstances of the two
cases easily discloses marked similarities in the issues and the arguments raised by the
petitioners in both cases that semantics nor careful play of words can hardly obscure.
In both cases, it is apparent that what the petitioners are ultimately questioning is not the grant
of the senior citizen discount per se, but the manner by which they were allowed to recoup the
said discount. In particular, they are protesting the change in the tax treatment of the senior
citizen discount from tax credit to being merely a deduction from gross income which they
claimed to have significantly reduced their profits.
This question had been settled in Carlos Superdrug, where the Court ruled that the change in
the tax treatment of the discount was a valid exercise of police power, thus:
Theoretically, the treatment of the discount as a deduction reduces the net income of
the private establishments concerned. The discounts given would have entered the
coffers and formed part of the gross sales of the private establishments, were it not for
R.A. No. 9257.
xxxx
A tax deduction does not offer full reimbursement of the senior citizen discount. As
such, it would not meet the definition of just compensation.
Having said that, this raises the question of whether the State, in promoting the health
and welfare of a special group of citizens, can impose upon private establishments the
burden of partly subsidizing a government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior
citizens to nation-building, and to grant benefits and privileges to them for their
improvement and well-being as the State considers them an integral part of our
society.
The priority given to senior citizens finds its basis in the Constitution as set forth in the law
itself. Thus, the Act provides:
SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV, Section
4 of the Constitution, it is the duty of the family to take care of its elderly
members while the State may design programs of social security for them. In
addition to this, Section 10 in the Declaration of Principles and State Policies
provides: "The State shall provide social justice in all phases of national
development." Further, Article XIII, Section 11, provides: "The State shall adopt
an integrated and comprehensive approach to health development which
shall endeavor to make essential goods, health and other social services
available to all the people at affordable cost. There shall be priority for the
needs of the underprivileged sick, elderly, disabled, women and children."
Consonant with these constitutional principles the following are the declared
policies of this Act:
xxxx
(f) To recognize the important role of the private sector in the improvement of
the welfare of senior citizens and to actively seek their partnership.
To implement the above policy, 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.
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."
For this reason, when the conditions so demand as determined by the legislature,
property rights must bow to the primacy of police power because proper rights,
though sheltered by due process, must yield to general welfare. 31 (Citations omitted
and emphasis in the original)
Verily, it is the bounden duty of the State to care for the elderly as they reach the point in their
lives when the vigor of their youth has diminished and resources have become scarce. Not
much because of choice, they become needing of support from the society for whom they
presumably spent their productive days and for whose betterment they' exhausted their
energy, know-how and experience to make our days better to live.
In the same way, providing aid for the disabled persons is an equally important State
responsibility. Thus, the State is obliged to give full support to the improvement of the total well-
being of disabled persons and their integration into the mainstream of society. 32This entails the
creation of opportunities for them and according them privileges if only to balance the playing
field which had been unduly tilted against them because of their limitations.
The duty to care for the elderly and the disabled lies not only upon the State, but also on the
community and even private entities. As to the State, the duty emanates from its role as parens
patriae which holds it under obligation to provide protection and look after the welfare of its
people especially those who cannot tend to themselves. Parens patriae means parent of his or
her country, and refers to the State in its role as "sovereign", or the State in its capacity as a
provider of protection to those unable to care for themselves. 33 In fulfilling this duty, the State
may resort to the exercise of its inherent powers: police power, eminent domain and power of
taxation.
In Gerochi v. Department of Energy,34the Court passed upon one of the inherent powers of the
state, the police power, where it emphasized, thus:
[P]olice power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. It is the most pervasive, the least limitable,
and the most demanding of the three fundamental powers of the State. The
justification is found in the Latin maxim salus populi est suprema lex (the welfare of the
people is the supreme law) and sic utere tuo ut alienum non laedas (so use your
property as not to injure the property of others). As an inherent attribute of sovereignty
which virtually extends to all public needs, police power grants a wide panoply of
instruments through which the State, as parens patriae, gives effect to a host of its
regulatory powers. We have held that the power to "regulate" means the power to
protect, foster, promote, preserve, and control, with due regard for the interests, first
and foremost, of the public, then of the utility and of its patrons. 35 (Citations omitted)
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 petitioner, however, claims that the change in the tax treatment of the discount is illegal as
it constitutes taking without just compensation. It even submitted financial statements for the
years 2006 and 2007 to support its claim of declining profits when the change in the policy was
implemented.
The Court is not swayed.
To begin with, the issue of just compensation finds no relevance in the instant case as it had
already been made clear in Carlos Superdrug that the power being exercised by the State in
the imposition of senior citizen discount was its police power. Unlike in the exercise of the power
of eminent domain, just compensation is not required in wielding police power. This is precisely
because there is no taking involved, but only an imposition of burden.
In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., 36 the Court ruled that by
examining the nature and the effects of R.A. No. 9257, it becomes apparent that the
challenged governmental act was an exercise of police power. It was held, thus:
[W]e now look at the nature and effects of the 20% discount to determine if it
constitutes an exercise of police power or eminent domain.
 The 20% discount is intended to improve the welfare of senior citizens who, at their
age, are less likely to be gainfully employed, more prone to illnesses and other
disabilities, and, thus, in need of subsidy in purchasing basic commodities. It may not
be amiss to mention also that the discount serves to honor senior citizens who
presumably spent the productive years of their lives on contributing to the
development and progress of the nation. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law.
As to its nature and effects, the 20% discount is a regulation affecting the ability of
private establishments to price their products and services relative to a special class of
individuals, senior citizens, for which the Constitution affords preferential concern. In
turn, this affects the amount of profits or income/gross sales that a private
establishment can derive from senior citizens. In other words, the subject regulation
affects the pricing, and, hence, the profitability of a private establishment. However, it
does not purport to appropriate or burden specific properties, used in the operation or
conduct of the business of private establishments, for the use or benefit of the public,
or senior citizens for that matter, but merely regulates the pricing of goods and services
relative to, and the amount of profits or income/gross sales that such private
establishments may derive from, senior citizens.
The subject regulation may be said to be similar to, but with substantial distinctions
from, price control or rate of 'return on investment control laws which are traditionally
regarded as police power measures. x x x.37 (Citations omitted)
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."38 Even
then, the State's claim of police power cannot be arbitrary or unreasonable. 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. To warrant such interference, two requisites must concur: (a) the interests of the public
generally, as distinguished from those of a particular class, require the interference of the!
State; and (b) the means employed are reasonably necessary to the: attainment of the object
sought to be accomplished and not unduly oppressive upon individuals. In other words, the
proper exercise of the police power requires the concurrence of a lawful subject and a lawful
method.39
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. In Article XIII,
Section 1 of the Constitution, the State is mandated to give highest priority to the enactment of
measures that protect and enhance the right of all the people to human dignity, reduce
social, economic, and political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power1 for the common good. The more apparent manifestation
of these social inequities is the unequal distribution or access to healthcare services. To: abet in
alleviating this concern, the State is committed to adopt an integrated! and comprehensive
approach to health development which shall endeavor to make essential goods, health and
other social services available to all the people at affordable cost, with priority for the needs of
the underprivileged sick, elderly, disabled, women, and children.40
In the same manner, the family and the community have equally significant duties to perform
in reducing social inequality. The family as the basic social institution has the foremost duty to
care for its elderly members.41 On the other hand, the community, which include the private
sector, is recognized as an active partner of the State in pursuing greater causes. The private
sector, being recipients of the privilege to engage business in our land, utilize our goods as well
as the services of our people for proprietary purposes, it is only fitting to expect their support in
measures that contribute to common good. Moreover, their right to own, establish and
operate economic enterprises is always subject to the duty of the State to promote distributive
justice and to intervene when the common good so demands.42
The Court also entertains no doubt on the legality of the method taken by the legislature to
implement the declared policies of the subject laws, that is, to impose discounts on the
medical services and purchases of senior citizens and PWDs and to treat the said discounts as
tax deduction rather than tax credit. The measure is fair and reasonable and no credible proof
was presented to prove the claim that it was confiscatory. To be considered confiscatory,
there must be taking of property without just compensation.
Illuminating on this point is the discussion of the Court on the concept of taking in City of Manila
v. Hon. Laguio, Jr.,43 viz.:
There are two different types of taking that can be identified. A "possessory" taking
occurs when the government confiscates or physically occupies property. A
"regulatory" taking occurs when the government's regulation leaves no reasonable
economically viable use of the property.
xxxx
No formula or rule can be devised to answer the questions of what is too far and when
regulation becomes a taking. In Mahon, Justice Holmes recognized that it was "a
question of degree and therefore cannot be disposed of by general propositions." On
 many other occasions as well, the U.S. Supreme Court has said that the issue of when
regulation constitutes a taking is a matter of considering the facts in each case. x x x.
What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of property in
a manner that interferes with reasonable expectations for use. A regulation that
permanently denies all economically beneficial or productive use of land is, from the
owner's point of view, equivalent to a "taking" unless principles of nuisance or property
law that existed when the owner acquired the land make the use prohibitable. When
the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking.
xxxx
A restriction on use of property may also constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose or if it has an unduly
harsh impact on the distinct investment-backed expectations of the
owner.44 (Citations omitted)
The petitioner herein attempts to prove its claim that the pertinent provisions of R.A.
Nos. 9257 and 9442 amount to taking by presenting financial statements purportedly
showing financial losses incurred by them due to the adoption of the tax deduction
scheme.
For the petitioner's clarification, the presentation of the financial statement is not of compelling
significance in justifying its claim for just compensation. What is imperative is for it to establish
that there was taking in the constitutional sense or that, in the imposition of the mandatory
discount, the power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi,45five circumstances must be
present in order to qualify "taking" as an exercise of eminent domain. First, the expropriator
must enter a private property. Second, the entrance into private property must be for more
than a momentary period. Third, the entry into the property should be under warrant or color of
legal authority. Fourth, the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected. Fifth, the utilization of the property for public use must be
in such a way as to oust the owner and deprive him of all beneficial enjoyment of the
property. 46
The first requirement speaks of entry into a private property which clearly does not obtain in this
case. There is no private property that is; invaded or appropriated by the State. As it is, the
petitioner precipitately deemed future profits as private property and then proceeded to
argue that the State took it away without full compensation. This seemed preposterous
considering that the subject of what the petitioner supposed as taking was not even earned
profits but merely an expectation of profits, which may not even occur. For obvious reasons,
there cannot be taking of a contingency or of a mere possibility because it lacks physical
existence that is necessary before there could be any taking. Further, it is impossible to quantify
the compensation for the loss of supposed profits before it is earned.
The supposed taking also lacked the characteristics of permanence 47 and
consistency.1âwphi1 The presence of these characteristics is significant because they can
establish that the effect of the questioned provisions is the same on all establishments and
those losses are indeed its unavoidable consequence. But apparently these indications are
wanting in this case. The reason is that the impact on the establishments varies depending on
their response to the changes brought about by the subject provisions. To be clear,
establishments, are not prevented from adjusting their prices to accommodate the effects of
the granting of the discount and retain their profitability while being fully compliant to the laws.
It follows that losses are not inevitable because establishments are free to take business
measures to accommodate the contingency. Lacking in permanence and consistency, there
can be no taking in the constitutional sense. There cannot be taking in one establishment and
none in another, such that the former can claim compensation but the other may not. Simply
told, there is no taking to justify compensation; there is only poor business decision to blame.
There is also no ousting of the owner or deprivation of ownership. Establishments are neither
divested of ownership of any of their properties nor is anything forcibly taken from them. They
remain the owner of their goods and their profit or loss still depends on the performance of
their sales.
Apart from the foregoing, covered establishments are also provided with a mechanism to
recoup the amount of discounts they grant the senior citizens and PWDs. It is provided in
Section 4(a) of R.A. No. 9257 and Section 32 of R.A. No. 9442 that establishments may claim the
discounts as "tax deduction based on the net cost of the goods sold or services rendered."
Basically, whatever amount was given as discount, covered establishments may claim an
equal amount as an expense or tax deduction. The trouble is that the petitioner, in protesting
the change in the tax treatment of the discounts, apparently seeks tax incentive and not
merely a return of the amount given as discounts. It premised its interpretation of financial
losses in terms of the effect of the change in the tax treatment of the discount on its tax liability;
hence, the claim that the measure was confiscatory. However, as mentioned earlier in the
discussion, loss of profits is not the inevitable result of the change in tax treatment of the
discounts; it is more appropriately a consequence of poor business decision.
It bears emphasizing that the law does not place a cap on the amount of mark up that
100 x ₱10.00 = ₱1,000.00
covered establishments may impose on their items. This rests on the discretion of the
establishment which, of course, is expected to put in the price of the overhead costs, Deduction: ₱100.00
expectation of profits and other considerations into the selling price of an item. In a simple
illustration, here is Drug A, with acquisition cost of ₱8.00, and selling price of ₱10.00. Then comes Profit: ₱100.00
a law that imposes 20% on senior citizens and PWDs, which affected Establishments 1, 2 and 3.
Let us suppose that the approximate number of patrons who purchases Drug A is 100, half of
which are senior citizens and PWDs. Before the passage of the law, all of the establishments are On the other hand, Establishment 2, mindful that the new law will affect the profitability of the
earning the same amount from profit from the sale of Drug A, viz.: business, made a calculated decision by increasing the mark up of Drug A to ₱3.20, instead of
only ₱2.00. This brought a positive result to the earnings of the company.
Before the passage of the law:
Establishment 2

Drug A
Drug A
Acquisition cost ₱8.00
Selling price ₱10.00 Acquisition cost ;₱8.00
Selling price ₱11.20
Number of patrons 100
Number of patron 100
Sales: Senior Citizens/PWDs 50

100 x ₱10.00 = ₱1,000.00 Sales

Profit: ₱200 100 x ₱10.00 = ₱1,000.00

Deduction: ₱112.00
After the passage of the law, the three establishments reacted differently. Establishment 1 was
passive and maintained the price of Drug A at ₱8.00 which understandably resulted in Profit: ₱208.00
diminution of profits.
For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just to even out the
Establishment 1 effect of the law. This measure left a negligible effect on its profit, but Establishment 3 took it as
a social duty: to share in the cause being promoted by the government while still maintaining
profitability.
Drug A

Acquisition cost ₱8.00 Establishment 3

Selling price ;₱10.00

Number of patrons 100 Drug A

Senior Citizens/PWD 50
Acquisition cost ₱8.00
Sales Selling price ₱11.20

Number of patrons 100
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱110.00
Profit: ₱190.00
The foregoing demonstrates that it is not the law per se which occasioned the losses in the
covered establishments but bad business I judgment. One of the main considerations in
making business decisions is the law because its effect is widespread and inevitable. Literally,
anything can be a subject of legislation. It is therefore incumbent upon business managers to
cover this contingency and consider it in making business strategies. As shown in the illustration,
the better responses were exemplified by Establishments 2 and 3 which promptly put in the
additional costs brought about by the law into the price of Drug A. In doing so, they were able
to maintain the profitability of the business, even earning some more, while at the same time
being fully compliant with the law. This is not to mention that the illustration is even too simplistic
and not' the most ideal since it dealt only with a single drug being purchased by both regular
patrons and senior citizens and PWDs. It did not consider the accumulated profits from the
other medical and non-medical products being sold by the establishments which are
expected to further curb the effect of the granting of the discounts in the business.
It is therefore unthinkable how the petitioner could have suffered losses due to the mandated
discounts in R.A. Nos. 9257 and 9442, when a fractional increase in the prices of items could
bring the business standing at a balance even with the introduction of the subject laws. A level
adjustment in the pricing of items is a reasonable business measure to take in order to adapt to
the contingency. This could even make establishments earn more, as shown in the illustration,
since every fractional increase in the price of covered items translates to a wider cushion to
taper off the effect of the granting of discounts and ultimately results to additional profits
gained from the purchases of the same items by regular patrons who are not entitled to the
discount. Clearly, the effect of the subject laws in the financial standing of covered companies
depends largely on how they respond and forge a balance between profitability and their
sense of social responsibility. The adaptation is entirely up to them and they are not powerless
to make adjustments to accommodate the subject legislations.
Still, the petitioner argues that the law is confiscatory in the sense that the State takes away a
portion of its supposed profits which could have gone into its coffers and utilizes it for public
purpose. The petitioner claims that the action of the State amounts to taking for which it should
be compensated.
To reiterate, 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."48 More extensively, they
are depicted as follows:
Rights which have so completely and definitely accrued to or settled in a person that
they are not subject to be defeated or cancelled by the act of any other private
person, and which it is right and equitable that the government should recognize and
protect, as being lawful in themselves, and settled according to the then current rules
of law, and of which the individual could not be deprived arbitrarily without injustice,
or of which he could not justly be deprived otherwise than by the established methods
of procedure and for the public welfare. x x x A right is not 'vested' unless it is more
than a mere expectation based on the anticipated continuance of present laws; it
must be an established interest in property, not open to doubt. x x x To be vested in its
accurate legal sense, a right must be complete and consummated, and one of which
the person to whom it belongs cannot be divested without his consent.x x
x.49 (Emphasis ours)
Right to profits does not give the petitioner the cause of action to ask for just compensation, it
being only an inchoate right or one that has not fully developed50 and therefore cannot be
claimed as one's own. An inchoate right is a mere expectation, which may or may not come
into existence. It is contingent as it only comes "into existence on an event or condition which
may not happen or be performed until some other event may prevent their
vesting."51 Certainly, the petitioner cannot claim confiscation or taking of something that has
yet to exist. It cannot claim deprivation of profit before the consummation of a sale and the
purchase by a senior citizen or PWD.
Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not come
into being until the occurrence or realization of a condition precedent. It is a mere
"contingency that might never eventuate into a right. It stands for a mere possibility of profit
but nothing might ever be payable under it."52
The inchoate nature of the right to profit precludes the possibility of compensation because it
lacks the quality or characteristic which is necessary before any act of taking or expropriation
can be effected. Moreover, there is no yardstick fitting to quantify a contingency or to
determine compensation for a mere possibility. Certainly, "taking" presupposes the existence of
a subject that has a quantifiable or determinable value, characteristics which a mere
contingency does not possess.
Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say that it
is within the province of Congress to do so in the exercise of its legislative power. It has the
authority to choose the subject of legislation, outline the effective measures to achieve its
declared policies and even impose penalties in case of non-compliance. It has the sole
discretion to decide which policies to pursue and devise means to achieve them, and courts
often do not interfere in this exercise for as long as it does not transcend constitutional
limitations. "In performing this duty, the legislature has no guide but its judgment and discretion
and the wisdom of experience."53 In Carter v. Carter Coal Co.,54legislative discretion has been
described as follows:
Legislative congressional discretion begins with the choice of means, and ends with
the adoption of methods and details to carry the delegated powers into effect. x x x
[W]hile the powers are rigidly limited to the enumerations of the Constitution, the
means which may be employed to carry the powers into effect are not restricted,
save that they must be appropriate, plainly adapted to the end, and not prohibited
by, but consistent with, the letter and spirit of the Constitution. x x x. 55 (Emphasis ours)
Corollary, whether to treat the discount as a tax deduction or tax credit is a matter addressed
to the wisdom of the legislature. After all, it is within its prerogative to enact laws which it deems
sufficient to address a specific public concern. And, in the process of legislation, a bill goes
through rigorous tests of validity, necessity and sufficiency in both houses of Congress before
enrolment. It undergoes close scrutiny of the members of Congress and necessarily had to
surpass the arguments hurled against its passage. Thus, the presumption of validity that goes
with every law as a form of deference to the process it had gone through and also to the
legislature's exercise of discretion. Thus, in lchong, etc., et al. v. Hernandez) etc., and
Sarmiento,56the Court emphasized, thus:
It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of determining
the policy of the State, is by force of circumstances primarily the judge of necessity,
adequacy or reasonableness and wisdom, of any law promulgated in the exercise of
the police power, or of the measures adopted to implement the public policy or to
achieve public interest.x x x.57 (Emphasis ours)
The legislature may also grant rights and impose additional burdens: It may also regulate
industries, in the exercise of police power, for the protection of the public. R.A. Nos. 9257 and
9442 are akin to regulatory laws, the issuance of which is within the ambit of police power. The
minimum wage law, zoning ordinances, price control laws, laws regulating the operation of
motels and hotels, laws limiting the working hours to eight, and the like fall under this
category. 58
Indeed, regulatory laws are within the category of police power measures from which
affected persons or entities cannot claim exclusion or compensation. For instance, private
establishments cannot protest that the imposition of the minimum wage is confiscatory since it
eats up a considerable chunk of its profits or that the mandated remuneration is not
commensurate for the work done. The compulsory nature of the provision for minimum wages
underlies the effort of the State; as R.A. No. 672759 expresses it, to promote productivity-
improvement and gain-sharing measures to ensure a decent standard of living for the workers
and their families; to guarantee the rights of labor to its just share in the fruits of production; to
enhance employment generation in the countryside through industry dispersal; and to allow
business and industry reasonable returns on investment, expansion and growth, and as the
Constitution expresses it, to affirm labor as a primary social economic force. 60
Similarly, the imposition of price control on staple goods in R.A. No. 7581 61 is likewise a valid
exercise of police power and affected establishments cannot argue that the law was
depriving them of supposed gains. The law seeks to ensure the availability of basic necessities
and prime commodities at reasonable prices at all times without denying legitimate business a
fair return on investment. It likewise aims to provide effective and sufficient protection to
consumers against hoarding, profiteering and cartels with respect to the supply, distribution,
marketing and pricing of said goods, especially during periods of calamity, emergency,
widespread illegal price manipulation and other similar situations.62
More relevantly, in Manila Memorial Park, Inc.,63it was ruled that it is within the bounds of the
police power of the state to impose burden on private entities, even if it may affect their
profits, such as in the imposition of price control measures. There is no compensable taking but
only a recognition of the fact that they are subject to the regulation of the State and that all
personal or private interests must bow down to the more paramount interest of the State.
This notwithstanding, the regulatory power of the State does not authorize the destruction of
the business. While a business may be regulated, such regulation must be within the bounds of
reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be
oppressive amounting to an arbitrary interference with the business or calling subject of
regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power. 64 After all, regulation only signifies control
or restraint, it does not mean suppression or absolute prohibition. Thus, in Philippine
Communications Satellite Corporation v. Alcuaz, 65 the Court emphasized:
The power to regulate is not the power to destroy useful and harmless enterprises, but
is the power to protect, foster, promote, preserve, and control with due regard for the
 interest, first and foremost, of the public, then of the utility and of its patrons. Any
regulation, therefore, which operates as an effective confiscation of private property
or constitutes an arbitrary or unreasonable infringement of property rights is void,
because it is repugnant to the constitutional guaranties of due process and equal
protection of the laws. 66 (Citation omitted)
Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of regulation,
allow undue interference in an otherwise legitimate business.1avvphi1 On the contrary, it was
shown that the questioned laws do not meddle in the business or take anything from it but only
regulate its realization of profits.
The subject laws do not violate the
equal protection clause
The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause
in that it failed to distinguish between those who have the capacity to pay and those who do
not, in granting the 20% discount. R.A. No. 9257, in particular, removed the income
qualification in R.A. No. 7432 of'₱60,000.00 per annum before a senior citizen may be entitled
to the 20o/o discount.
The contention lacks merit.
The petitioner's argument is dismissive of the reasonable qualification on which the subject laws
were based. In City of Manila v. Hon. Laguio, Jr., 67 the Court emphasized:
Equal protection requires that all persons or things similarly situated should be treated
alike, both as to rights conferred and responsibilities imposed. Similar subjects, in other
words, should not be treated differently, so as to give undue favor to some and
unjustly discriminate against others. The guarantee means that no person or class of
persons shall be denied the same protection of laws which is enjoyed by other persons
or other classes in like circumstances.68 (Citations omitted)
"The equal protection clause is not infringed by legislation which applies only to those persons
falling within a specified class. If the groupings are characterized by substantial distinctions that
make real differences, one class may be treated and regulated differently from another." 69 For
a classification to be valid, (1) it must be based upon substantial distinctions, (2) it must be
germane to the purposes of the law, (3) it must not be limited to existing conditions only, and
(4) it must apply equally to all members of the same class. 70
To recognize all senior citizens as a group, without distinction as to income, is a valid
classification. The Constitution itself considered the elderly as a class of their own and deemed
it a priority to address their needs. When the Constitution declared its intention to prioritize the
predicament of the underprivileged sick, elderly, disabled, women, and children,71 it did not
make any reservation as to income, race, religion or any other personal circumstances. It was
a blanket privilege afforded the group of citizens in the enumeration in view of the vulnerability
of their class.
R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures
that protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities. 72 Specifically, it caters to the welfare of all senior citizens.
The classification is based on age and therefore qualifies all who have attained the age of 60.
Senior citizens are a class of their own, who are in need and should be entitled to government
support, and the fact that they may still be earning for their own sustenance should not
disqualify them from the privilege.
It is well to consider that our senior citizens have already reached the age when work
opportunities have dwindled concurrently as their physical health.1âwphi1 They are no longer
expected to work, but there are still those who continue to work and contribute what they can
to the country. Thus, to single them out and take them out of the privileges of the law for
continuing to strive and earn income to fend for themselves is inimical to a welfare state that
the Constitution envisions. It is tantamount to penalizing them for their persistence. It is
commending indolence rather than rewarding diligence. It encourages them to become
wards of the State rather than productive partners.
Our senior citizens were the laborers, professionals and overseas contract workers of the past.
While some may be well to do or may have the capacity to support their sustenance, the
discretion to avail of the privileges of the law is up to them. But to instantly tag them. as
undeserving of the privilege would be the height of ingratitude; it is an outright discrimination.
The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442 and
in granting them discounts.1âwphi1 It needs no further explanation that PWDs have special
needs which, for most,' last their entire lifetime. They constitute a class of their own, equally
deserving of government support as our elderlies. While some of them maybe willing to work
and earn income for themselves, their disability deters them from living their full potential. Thus,
the need for assistance from the government to augment the reduced income or productivity
brought about by their physical or intellectual limitations.
There is also no question that the grant of mandatory discount is germane to the purpose of
R.A. Nos. 9257 and 9442, that is, to adopt an integrated and comprehensive approach to
health development and make essential goods and other social services available to all the
people at affordable cost, with special priority given to the elderlies and the disabled, among
others. The privileges granted by the laws ease their concerns and allow them to live more
comfortably.
The subject laws also address a continuing concern of the government for the welfare of the
senior citizens and PWDs. It is not some random predicament but an actual, continuing and
pressing concern that requires preferential attention. Also, the laws apply to all senior citizens
and PWDs, respectively, without further distinction or reservation. Without a doubt, all the
elements for a valid classification were met.
The definitions of "disabilities" and
"PWDs" are clear and unequivocal
Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in defining the
terms "disability" and "PWDs," such that it lack comprehensible standards that men of common
intelligence must guess at its meaning. It likewise bewails the futility of the given safeguards to
prevent abuse since government officials who are neither experts nor practitioners of medicine
are given the authority to issue identification cards that authorizes the granting of the privileges
under the law.
The Court disagrees.
Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as
follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result
of a mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being[.]
On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as
follows:
5.1. PersonswithDisability are those individuals defined under Section 4 of [R.A. No.]
7277 [or] An Act Providing for the Rehabilitation, Self-Development and Self-Reliance
of Persons with Disability as amended and their integration into the Mainstream of
Society and for Other Purposes. This is defined as a person suffering from restriction or
different abilities, as a result of a mental, physical or sensory impairment, to perform an
activity in a manner or within the range considered normal for human being. Disability
shall mean (1) a physical 1or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of
such individual; (2) a record of such an impairment; or (3) being regarded as having
such an impairment.
The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of
the United Nations Convention on the Rights of Persons with Disabilities which reads:
Persons with disabilities include those who have long-term physical, mental,
intellectual or sensory impairments which in interaction with various barriers may hinder
their full and effective participation in society on an equal basis with others. (Emphasis
and italics ours)
The seemingly broad definition of the terms was not without good reasons. It
recognizes that "disability is an evolving concept"73 and appreciates the "diversity of
PWDs."74 The terms were given comprehensive definitions so as to accommodate the
various forms of disabilities, and not confine it to a particular case as this would
effectively exclude other forms of physical, intellectual or psychological impairments.
Moreover, in Estrada v. Sandiganbayan, 75 it was declared, thus:
A statute is not rendered uncertain and void merely because general terms are used
therein, or because of the employment of terms without defining them; much less do
we have to define every word we use. Besides, there is no positive constitutional or
statutory command requiring the legislature to define each and every word in an
enactment. Congress is not restricted in the form of expression of its will, and its inability
to so define the words employed in a statute will not necessarily result in the vagueness
or ambiguity of the law so long as the legislative will is clear, or at least, can be
gathered from the whole act x x x.76 (Citation omitted)
At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As regards the
petitioner's claim that the law lacked reasonable standards in determining the persons entitled
to the discount, Section 32 thereof is on point as it identifies who may avail of the privilege and
the manner of its availment. It states:
Sec. 32. x x x
The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto:
 (I) An identification card issued by the city or municipal mayor or the School Licensed Teacher duly
barangay captain of the place where the persons with disability resides; Assessment signed by the School
Principal
(II) The passport of the persons with disability concerned; or
Certificate of  Head of the Business
Disability
(III) Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP).
Establishment
It is, however, the petitioner's contention that the foregoing authorizes government officials
who had no medical background to exercise discretion in issuing identification cards to those  Head of Non-
claiming to be PWDs. It argues that the provision lends to the indiscriminate availment of the Government
privileges even by those who are not qualified. Organization

The petitioner's apprehension demonstrates a superficial understanding of the law and its
implementing rules. To be clear, the issuance of identification cards to PWDs does not depend
on the authority of the city or municipal mayor, the DSWD or officials of the NCDA (formerly
NCWDP). It is well to remember that what entitles a person to the privileges of the law is
his disability, the fact of which he must prove to qualify. Thus, in NCDA Administrative Order
(A.O.) No. 001, series of 2008, 77 it is required that the person claiming disability must submit the
following requirements before he shall be issued a PWD Identification Card:
1. Two "1 x l" recent ID pictures with the names, and signatures or thumb marks at the
back of the picture.
2. One (1) Valid ID
3. Document to confirm the medical or disability condition 78
To confirm his disability, the person must obtain a medical certificate or assessment, as the
case maybe, issued by a licensed private or government physician, licensed teacher or head
of a business establishment attesting to his impairment. The issuing entity depends on whether
the disability is apparent or non-apparent. NCDAA.O. No. 001 further provides:79
Non-Apparent Medical Licensed Private or
Disability Certificate Government Physician
To provide further safeguard, the Department of Health issued A.O. No. 2009-0011, providing
guidelines for the availment of the 20% discount on the purchase of medicines by PWDs. In
making a purchase, the individual must present the documents enumerated in Section VI(4)(b
), to wit:
i. PWD identification card x x x
ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic
name of the medicine, dosage form, dosage strength, quantity, signature over printed
name of physician, physician's address, contact number of physician or dentist,
professional license number, professional tax receipt number and narcotic license
number, if applicable. To safeguard the health of PWDs and to prevent abuse of [R.A.
No.] 9257, a doctor's prescription is required in the purchase of over-the-counter
medicines. x x x.

iii. Purchase booklet issued by the local social/health office to PWDs for free containing
DISABILITY DOCUMENT ISSUING ENTITY the following basic information:
Apparent Medical Licensed Private or
Disability Certificate Government Physician a) PWD ID number

b) Booklet control number

c) Name of PWD j) Authorization letter of the PWD x x x in case the medicine is bought
by the representative or caregiver of the PWD.
d) Sex
The PWD identification card also has a validity period of only three years which facilitate in the
e) Address monitoring of those who may need continued support and who have been relieved of their
disability, and therefore may be taken out of the coverage of the law.
f) Date of Birth
At any rate, the law has penal provisions which give concerned establishments the option to
file a case against those abusing the privilege Section 46(b) of R.A. No. 9442 provides that
g) Picture
"[a]ny person who abuses the privileges granted herein shall be punished with imprisonment of
not less than six months or a fine of not less than Five Thousand pesos (₱5,000.00), but not more
h) Signature of PWD than Fifty Thousand pesos (₱50,000.00), or both, at the discretion of the court." Thus, concerned
establishments, together with the proper government agencies, must actively participate in
i) Information of medicine purchased: monitoring compliance with the law so that only the intended beneficiaries of the law can
avail of the privileges.
i.1 Name of medicine
Indubitably, the law is clear and unequivocal, and the petitioner claim of vagueness to cast
i.2 Quantity uncertainty in the validity of the law does not stand.

i.3 Attending Physician WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and
Section 32 of Republic Act No. 9442 are hereby declared CONSTITUTIONAL.
i.4 License Number
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i.5 Servicing drug store name
SO ORDERED.
i.6 Name of dispensing pharmacist