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A Time to Return the Favor

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It is an unwritten rule of life that not only one should treasure the good deeds of our elders but whenever possible, return the favor. It is not because we fear the old saying that: “Ang hindi lumingon sa pinanggalingan, hindi
makakarating sa paroroonan”, it is not because of the long-time Filipino principle:

“Ang Utang na Loob” and neither because of our faith in “good karma” but it is simply because of love, appreciation, understanding, respect and obedience (LAURO) to those who are ahead of us. And because of LAURO, it is time to
return the favor to our SENIOR CITIZENS.

Perhaps, without my Senior Citizens at home (my Dad & my Mom) this cannot be written. Perhaps, without the Senior Citizens of today the Republic of the Philippines will not be an independent government. Perhaps, without the Senior Citizens there can be no good congressmen and senators to write the laws of the land. Perhaps, without the Senior Citizens there will no us, no people that would comprise a State, people that is very essential in
determining the existence of a State. Perhaps, no Senior Citizens of today would mean no executive branch of government, neither the judiciary nor the legislative department.

As a matter of fact, even our 1987 Constitution Section 11, Article XIII commands that, “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. The State shall endeavor to provide free medical
care to paupers.” [Emphasis supplied]

In this view, Republic Act No. 9994, AN ACT GRANTING ADDITIONAL BENEFITS AND
AND FOR OTHER PURPOSES" provides among others the grants and privileges for the Senior


The senior citizens shall be entitled to the following:

a. The grant of twenty percent (20%) discount and exemption from the value -added tax (VAT),
if applicable, on the sale of the following goods and services from all establishments, for the
exclusive use and enjoyment or availment of the senior citizen:

1. On the purchase of medicines, including the purchase of influenza and pnuemococcal
vaccines, and such other essential medical supplies, accessories and equipment to be determined by the Department of Health (DOH). Note: The DOH is mandated to establish guidelines and mechanism of compulsory rebates in the sharing of burden of discounts among retailers, manufacturers and distributors, taking into consideration their
respective margins;

2. On the professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home health care services;

3. On the professional fees of licensed professional health providing home health care services as endorsed by private hospitals or employed through home health care employment agencies;

4. On medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities, outpatient clinics, and home health care services, in accordance with the rules and regulations to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth);

5. In actual fare for land transportation travel in public utility buses (PUBs), public utility jeepneys (PUJs), taxis, Asian utility vehicles (AUVs), shuttle services and public railways, including Light Rail Transit (LRT), Mass Rail Transit (MRT), and Philippine National Railways (PNR);

6. In actual transportation fare for domestic air transport services and sea shipping vessels and the like, based on the actual fare and advanced booking;

7. On the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers;

8. On admission fees charged by theaters, cinema houses and concert halls, circuses, leisure and amusement; and

9. On funeral and burial services for the death of senior citizens;

b. Exemption from the payment of individual income taxes of senior citizens who are considered to be minimum wage earners in accordance with Republic Act No. 9504;

c. The grant of a minimum of five percent (5%) discount relative to the monthly utilization of water and electricity supplied by the public utilities:Provided, That the individual meters for the foregoing utilities are registered in the name of the senior citizen residing therein:Provided, further, That the monthly consumption does not exceed one hundred kilowatt hours (100 kWh) of electricity and thirty cubic meters (30 m3) of water:Provided, furthermore, That the privilege is granted per household regardless of the number of senior citizens residing therein;

d. Exemption from training fees for socioeconomic programs;

e. Free medical and dental services, diagnostic and laboratory fees such as, but not limited to, x-rays, computerized tomography scans and blood tests, in all government facilities, subject to the guidelines to be issued by the DOH in coordination with the PhilHealth;

f. The DOH shall administer free vaccination against the influenza virus and pneumococcal disease for indigent senior citizen patients;

g. Educational assistance to senior citizens to pursue pot secondary, tertiary, post tertiary, vocational and technical education, as well as short-term courses for retooling in both public and private schools through provision of scholarships, grants, financial aids, subsides and other incentives to qualified senior citizens, including support for books, learning materials, and uniform allowances, to the extent feasible:Provided, That senior citizens shall meet minimum admission requirements;

h. To the extent practicable and feasible, the continuance of the same benefits and privileges given by the Government Service Insurance System (GSIS), the Social Security System (SSS) and the PAG-IBIG, as the case may be, as are enjoyed by those in actual service;

I. Retirement benefits of retirees from both the government and the private sector shall be regularly reviewed to ensure their continuing responsiveness and sustainability, and to the extent practicable and feasible, shall be upgraded to be at par with the current scale enjoyed by those in actual service;

J. To the extent possible, the government may grant special discounts in special programs for senior citizens on purchase of basic commodities, subject to the guidelines to be issued for the purpose by the Department of Trade and Industry (DTI) and the Department of Agriculture (DA);

K. Provision of express lanes for senior citizens in all commercial and government establishments; in the absence thereof, priority shall be given to them; and

L. Death benefit assistance of a minimum of Two thousand pesos (Php2, 000.00) shall be given to the nearest surviving relative of a deceased senior citizen which amount shall be subject to adjustments due to inflation in accordance with the guidelines to be issued by the DSWD. [Sec.4]

In the availment of the privileges mentioned above, the senior citizen, or his/her duly authorized representative, may submit as proof of his/her entitled thereto any of the following:

1. An identification card issued by the Office of the Senior Citizen Affairs (OSCA) of the place where the senior citizen resides. Provided, That the identification card issued by the particular OSCA shall be honored nationwide;

2. The passport of the senior citizen concerned; and

3. Other documents that establish that the senior citizen is a citizen of the Republic and is at least sixty (60) years of age as further provided in the implementing rules and regulations.

In the purchase of goods and services which are on promotional discount, the senior citizen can avail of the promotional discount or the discount provided herein, whichever is higher. The writer particularly highlighted the phrase “whichever is higher” because often times this has been violated by several business establishments under the premise that the goods or the services they offered are already on promotional discount as such, the senior citizen can no longer avail of the 20% discount afforded to by law. This is a velar violation of RA 9994, the Expanded Senior Citizen Act. In this case, the offended Senior Citizen may report the same before the Office of the Mayor having jurisdiction of any individual, establishments, business entity or institutions or agency found to have violated this in particular or any of the provision of RA 9994. Par. f, Sec. 6]

Further, the senior citizens shall be entitled to the following government assistance as provided under Sec. 5 of RA 9994:

a. Employment

Senior citizens who have the capacity and desire to work, or be re-employed, shall be provided information and matching services to enable them to be productive members of society. Terms of employment shall conform with the provisions of the Labor Code, as amended, and other laws, rules and regulations.

Private entities that will employ senior citizens as employees, upon the effectivity of this Act, shall be entitled to an additional deduction from their gross income, equivalent to fifteen percent (15%) of the total amount paid as salaries and wages to senior citizens, subject to the provision of Section 34 of the NIRC, as amended. Provided, however, that such employment shall continue for a period of at least six (6) months. Provided, further, that the annual income of the senior citizen does not exceed the latest poverty threshold as determined by the National
Statistical Coordination Board (NSCB) of the National Economic and Development Authority (NEDA) for that year.
The Department of Labor and Employment (DOLE), in coordination with other government agencies such as, but not limited to, the Technology and Livelihood Resource Center (TLRC) and the Department of Trade and Industry (DTI), shall assess, design and implement training programs that will provide skills and welfare or livelihood support for senior citizens.

b. Education

The Department of Education (DepED), the Technical Education and Skills Development Authority (TESDA) and the Commission on Higher Education (CHED), in consultation with nongovernmental organizations (NGOs) and people's organizations (POs) for senior citizens, shall institute programs that will ensure access to formal and non-formal education.

c. Health

The DOH, in coordination with local government units (LGUs), NGOs and POs for senior citizens, shall institute a national health program and shall provide an integrated health service for senior citizens. It shall train community-based health workers among senior citizens and health personnel to specialize in the geriatric care and health problems of senior citizens.

The national health program for senior citizens shall, among others, be harmonized with the National Prevention of Blindness Program of the DOH.

Throughout the country, there shall be established a "senior citizens' ward" in every government hospital. This geriatric ward shall be for the exclusive use of senior citizens who are in need of hospital confinement by reason of their health conditions. However, when urgency of public necessity purposes so require, such geriatric ward may be used for emergency purposes, after which, such "senior citizens' ward" shall be reverted to its nature as geriatric ward.

d. Social Services

At least fifty percent (50%) discount shall be granted on the consumption of electricity, water, and telephone by the senior citizens center and residential care/group homes that are government-run or non-stock, non-profit domestic corporation organized and operated primarily for the purpose of promoting the well-being of abandoned, neglected, unattached, or homeless senior citizens, subject to the guidelines formulated by the DSWD.

1. Self and social enhancement services" which provide senior citizens opportunities for socializing, organizing, creative expression, and self-improvement;

2. After care and follow-up services" for citizens who are discharged from the homes or institutions for the aged, especially those who have problems of reintegration with family and community, wherein both the senior citizens and their families are provided with counseling;

3. Neighborhood support services" wherein the community or family members provide caregiving services to their frail, sick, or bedridden senior citizens; and

4. Substitute family care " in the form of residential care or group homes for the abandoned, neglected, unattached or homeless senior citizens and those incapable of self-care.

e. Housing

The national government shall include in its national shelter program the special housing needs of senior citizens, such as establishment of housing units for the elderly.

f. Access to Public Transport

The Department of Transportation and Communications (DOTC) shall develop a program to assist senior citizens to fully gain access to public transport facilities.

g. Incentive for Foster Care

The government shall provide incentives to individuals or nongovernmental institution caring for or establishing homes, residential communities or retirement villages solely for, senior citizens, as follows:

1. Realty tax holiday for the first five (5) years starting from the first year of operation; and

2. Priority in the construction or maintenance of provincial or municipal roads leading to the aforesaid home, residential community or retirement village.

H Additional Government Assistance

1. Social Pension

Indigent senior citizens shall be entitled to a monthly stipend amounting to Five hundred pesos (Php500.00) to augment the daily subsistence and other medical needs of senior citizens, subject to a review every two (2) years by Congress, in consultation with the DSWD.

2. Mandatory PhilHealth Coverage

All indigent senior citizens shall be covered by the national health insurance program of PhilHealth. The LGUs where the indigent senior citizens resides shall allocate the necessary funds to ensure the enrollment of their indigent senior citizens in accordance with the pertinent laws and regulations.

3. Social Safety Nets

Social safety assistance intended to cushion the effects of economics shocks, disasters and calamities shall be available for senior citizens. The social safety assistance which shall include, but not limited to, food, medicines, and financial assistance for domicile repair, shall be sourced from the disaster/calamity funds of LGUs where the senior citizens reside, subject to the guidelines to be issued by the DSWD.


Any person who refuses to honor the senior citizen card issued by our government or violates any provision of RA 9994 shall suffer the following penalties:

a. For the first violation, imprisonment of not less than two (2) years but not more than six (6) years and a fine of not less than Fifty thousand pesos (Php50,000.00) but not exceeding One hundred thousand pesos (Php100,000.00);

b. For any subsequent violation, imprisonment of not less than two (2) years but not more than six (6) years and a fine of not less than One Hundred thousand pesos (Php100,000.00) but not exceeding Two hundred thousand pesos (Php200,000.00); and

c. Any person who abuses the privileges granted herein shall be punished with imprisonment of not less than six (6) months and a fine of not less than Fifty thousand pesos (Php50,000.00) but not more than One hundred thousand pesos (Php100,000.00).

If the offender is a corporation, partnership, organization or any similar entity, the officials thereof directly involved such as the president, general manager, managing partner, or such other officer charged with the management of the business affairs shall be liable therefor.

If the offender is an alien or a foreigner, he/she shall be deported immediately after service of sentence.
Upon filing of an appropriate complaint, and after due notice and hearing, the proper authorities may also cause the cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any person, establishment or business entity that fails to abide by the provisions of RA 9994.

[Sec. 10]Notice that not only business establishments be that an individual, a corporation, partnership, organization or any similar entity, the officials thereof directly involved with the management of the business affairs can be held liable under the law but also those person who abuses the grants privileges provided by the law such as those who will fictitiously present themselves as Senior Citizen, fraudulently claim granting the discount in order to escape
taxation, etc.

A senior citizen or elderly simply refers to resident citizen of the Philippines at least sixty (60) years old. [par. a, Sec. 2] By exclusion, aliens and non-resident citizen are not covered by RA 9994. On the other hand, an indigent senior citizen, refers to any elderly who is frail, sickly or with disability, and without pension or permanent source of income, compensation or financial assistance from his/her relatives to support his/her basic needs, as determined by the Department of Social Welfare and development (DSWD) in consultation with the National Coordinating and Monitoring Board. [par. h, Sec. 2]


Seemingly, RA 9994 appears to be a one-sided law. It is allegedly favoring only the Senior Citizens. To put to picture the truth, the discounts granted by the government are burdens imposed upon the business establishments providing goods or services. If one is buying tablets of medicine for Php100.00, with the discount the Senior Citizen will only have to pay Php80.00. Question may arise if the cost or capital to produce and/or buy such medicine in
order to make it available for sale is Php95.00, the seller in this case will incur a net loss of Php15.00. Another question may arise. Why is the seller bound to take this loss?, why is the seller obliged to take part in this government program or why is the seller mandated to give up the portion of his property or services? Is it simply just to return the favor to the Senior Citizens?

Many would even say that this is an unlawful taking of properties without just compensation,without due process.

What then are the possible constitutional issues to be raised by those allegedly affected by the burden of the discount?

1. The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution which provides that private property shall not be taken for public use without just compensation?

2. It violates the equal protection clause (Art. III, Sec. 1) enshrined in our Constitution which states that "no person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied of the equal protection of the law? and

3. The 20% discount on medicines violates the constitutional guarantee in Article XIII, Section 11 that makes "essential goods, health and other social services available to all people at affordable cost?

The foregoing issues are raised and settled in the case of Carlos Superdrug Corporation vs. DSWD [G.R. No. 166494, 29 June 2007], the Honorable Supreme Court said:

While the petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private property. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly compensated for the discount, still the law was held to be constitutional.

Based on the DOF Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible expense that is subtracted from the gross income and results in a lower taxable income. Stated otherwise, it is an amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of tax which is
due. Being a tax deduction, the discount does not reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.

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(Asamended by RA 9994).

The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. This constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker’s gain but the owner’s loss. The wordjustis used to intensify the meaning of the wordcompensation, and to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.

A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not meet the definition of just compensation.

According to the Supreme Court, 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 property rights, though sheltered by due process, must yield to general welfare. Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no basis for its nullification in view of the presumption of validity which every law has in its favor.

The law states that the cost of the discount shall be deducted from gross income,the amount of income derived from all sources before deducting allowable expenses, which will result in net income. [Attention barristers!]

Further in this case, it is unfair for petitioners to criticize the law because they cannot raise the prices of their medicines given the cutthroat nature of the players in the industry. It is a business decision on the part of petitioners to peg the mark-up at 5%. Selling the medicines below acquisition cost, as alleged by petitioners, is merely a result of this decision. Inasmuch as pricing is a property right, petitioners cannot reproach the law for being oppressive, simply because they cannot afford to raise their prices for fear of losing their customers to competition.

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing component of the business. While the Constitution protects property rights, petitioners must accept the realities of business and the State, in the exercise of police power, can intervene in the operations of a business which may result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the precept for the protection of property, various laws and jurisprudence, particularly on agrarian reform and the regulation of contracts and public utilities, continuously serve as a reminder that the right to property can be relinquished upon the command of the State for the promotion of public good.

Undeniably, the success of the senior citizens program rests largely on the support imparted by petitioners and the other private establishments concerned. This being 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 R.A. No. 9257 [Now RA 9994] is arbitrary, and that the continued implementation of the same would be unconscionably detrimental to petitioners, the Court will
refrain from quashing a legislative act. [Supra]

In another case, it was held that the concept ofpublic useis no longer confined to the traditional notion ofuse by the public, but held synonymous withpublic interest,public benefit,public welfare, andpublic convenience.The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. The discounts given would have entered the coffers and formed part of thegross salesof the private establishments concerned, were it not for RA 7432 [Now RA 9994]. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property forpublic use or benefit.

The taxation power can also be used as an implement for the exercise of the power of eminent domain. Tax measures are but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for apublic purpose." In recent years, the power to tax has indeed become a most effective tool to realize social justice,public welfare, and the equitable distribution of wealth. [Central Luzon Drug Corp. vs. CIR, G.R. No. 159647, 15 April 2005]

In a most recent case, Manila Memorial Park, Inc., vs. DSWD, G.R. No. 175356, 3 December 2013, it was held that [T]he privilege enjoyed by senior citizens does not come directly from the State, but rather from the private establishments concerned. Accordingly, the tax credit benefit [now tax deduction] granted to these establishments can be deemed as their just compensation for private property taken by the State for public use. The concept of public use is no longer confined to the traditional notion of use by the public, but held synonymous with public interest, public benefit, public welfare, and public convenience. The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned, were it not for RA 7432 [now RA 9994]. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. As a result of the 20 percent discount imposed by RA 7432 [now Ra 9994], respondent becomes entitled to a just compensation.

This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the discounts given, but also to the promptness in its release. Equivalent to the payment of property taken by the State, such issuance — when not done within a reasonable time from the grant of the discounts — cannot be considered as just compensation. In effect, respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt, through the certificate, of the equivalent amount it needs to cope with the reduction in its revenues.

Besides, the taxation power can also be used as an implement for the exercise of the power of eminent domain. Tax measures are but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for a public purpose." In recent years, the power to tax has indeed become a most effective tool to realize social justice, public welfare, and the equitable distribution of wealth.

While it is a declared commitment under Section 1 of RA 7432, social justice "cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection.

The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto." For this reason, a just compensation for income that is taken away from respondent becomes necessary.

It is in the tax credit that our legislators find support to realize social justice, and no administrative body can alter that fact. To put it differently, a private establishment that merely breaks even — without the discounts yet — will surely start to incur losses because of such discounts. The same effect is expected if its mark-up is less than 20
percent, and if all its sales come from retail purchases by senior citizens. Aside from the observation we have already raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales. Operating at a loss through no fault of its own, it will realize that the tax credit limitation under RR 2-94 is inutile, if not improper. Worse, profit-generating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing, because no
taxes are due from the latter.

It is worthy to mention that Republic Act No. 7432 had undergone two (2) amendments; first in 2003 by Republic Act No. 9257 and most recently in 2010 by Republic Act No. 9994. The 20% sales discount granted by establishments to qualified senior citizens is now treated as tax deduction and not as tax credit.

Meaning, the establishment may claim the discounts granted under subsections (a) and (c) of section 4 of RA 9994 as tax deduction based on the 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 VAT, 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 (NICR), as amended.

In justifying taxation as an implement of the power of eminent domain, taxation is defined as a process inherent in every state to exercise the power to exact a proportional enforced contribution imposed upon persons, property, or rights to raise revenue in order to defray the necessary and legitimate expenses of the government.

For detailed discussions on tax implications see: The Secrets of Income Taxation [2013Edition] and Tax 2: Revealed [2014 Edition] penned by Assoc. Dean JLChavez, Jr.

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