7432 as amended by ra 9257 and the implementing rules

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of Section 4 of Republic Act (RA) No. 7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction. Petitioners raise the following issues: A. WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY. B. WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES AND REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%) DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE ESTABLISHMENTS, ARE INVALID AND UNCONSTITUTIONAL. Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but are only assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules and regulations issued by the DSWD and the DOF. Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution, which provides that: “[p]rivate property shall not be taken for public use without just compensation.” In support of their position, petitioners cite Central Luzon Drug Corporation, where it was ruled that the 20% discount privilege constitutes taking of private property for public use which requires the payment of just compensation, and Carlos Superdrug Corporation v. Department of Social Welfare and Development, where it was acknowledged that the tax deduction scheme does not meet the definition of just compensation. The Petition lacks merit. Petitioners argue that we have previously ruled in Central Luzon Drug Corporation that the 20% discount is an exercise of the power of eminent domain, thus, requiring the payment of just compensation. They urge us to re- examine our ruling in Carlos Superdrug Corporation which allegedly reversed the ruling in Central Luzon Drug Corporation. They also point out that Carlos Superdrug Corporation recognized that the tax deduction scheme under the assailed law does not provide for sufficient just compensation. We agree with petitioners’ observation that there are statements in Central Luzon Drug Corporation describing the 20% discount as an exercise of the power of eminent domain. This, notwithstanding, we went on to rule in Carlos Superdrug Corporation that the 20% discount and tax deduction scheme is a valid exercise of the police power of the State. The present case, thus, affords an opportunity for us to clarify the above-quoted statements in Central Luzon Drug Corporation and Carlos Superdrug Corporation. First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug Corporation is obiter dicta and, thus, not binding precedent. As stated earlier, in Central Luzon Drug Corporation, we ruled that the BIR acted ultra vires when it effectively treated the 20% discount as a tax deduction, under Sections 2.i and 4 of RR No.
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