The Supreme Court affirmed that granting a 20% discount on medicines to persons with disabilities (PWDs) is a valid exercise of police power, not an unlawful taking of private property. This ruling ensures PWDs have more affordable access to essential medicines, recognizing their right to health and integration into society. Drugstores must comply with this mandate, but they can claim the discount as a tax deduction, balancing the interests of both PWDs and businesses.
Fairness and Pharmaceuticals: Can Mandatory Discounts for the Disabled Pass Constitutional Muster?
This case, Drugstores Association of the Philippines, Inc. v. National Council on Disability Affairs, revolves around the constitutionality of mandatory discounts for persons with disabilities (PWDs) on medicine purchases. The Drugstores Association of the Philippines (DAP) questioned whether requiring drugstores to provide a 20% discount to PWDs constituted an unlawful taking of private property without just compensation, violating their due process and equal protection rights. DAP argued that the discount unfairly burdened drugstores, particularly retailers, while other entities in the pharmaceutical industry were not similarly obligated. This led to the central question: Does mandating discounts for PWDs fall within the state’s police power, or does it improperly infringe on private property rights?
The legal framework for this case stems from Republic Act (R.A.) No. 7277, also known as the “Magna Carta for Disabled Persons,” later amended by R.A. No. 9442. These laws aim to promote the well-being and integration of PWDs into mainstream society by granting them various privileges and incentives. Section 32 of R.A. No. 7277, as amended, specifically provides a 20% discount for PWDs on medicine purchases. To understand the breadth of the law, it is important to consider its definition of disability. According to Section 4 of R.A. No. 7277:
SECTION 4. Definition of Terms. – For purposes of this Act, these terms are defined as follows:
(a) Disabled Persons are those suffering from restriction of 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;
(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical structure of function;
(c) Disability shall mean (1) a physical or 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.
Implementing rules and regulations (IRR) and administrative orders, such as National Council on Disability Affairs (NCDA) A.O. No. 1 and Department of Health (DOH) A.O. No. 2009-0011, further detail the implementation of these discounts and the requirements for PWD identification. Drugstores Association of the Philippines (DAP) sought to annul these laws, arguing they violated the due process, equal protection, and just compensation clauses of the Constitution.
The Supreme Court rejected DAP’s arguments, drawing an analogy to its earlier ruling in Carlos Superdrug Corporation v. DSWD, which upheld similar discounts for senior citizens. The Court emphasized that the mandated discount is a valid exercise of police power, which allows the state to regulate liberty and property to promote public welfare. The Court explained the difference between police power and eminent domain:
Police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property. On the other hand, the power of eminent domain is the inherent right of the state (and of those entities to which the power has been lawfully delegated) to condemn private property to public use upon payment of just compensation. 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.
According to the Court, the interests of PWDs are intertwined with the broader public interest and benefit. The discount serves a social function, enabling PWDs to access essential medicines at affordable prices, thereby promoting their health and well-being. The Court acknowledged that the Constitution itself, in Article XII Section 6, states that “the use of property bears a social function, and all economic agents shall contribute to the common good.”
Furthermore, the Court found that the means employed by the law are reasonably related to its purpose. While the discount does impose a burden on drugstores, the law also provides a mechanism for reimbursement through tax deductions, as outlined in Section 32 of R.A. No. 9442. Revenue Regulations No. 1-2009 outlines the conditions for claiming the discounts as deduction from gross income. This allows drugstores to recoup some of the cost associated with providing the discount, mitigating the financial impact. The Court held that the discount reduces the taxable income, thereby lowering the tax liability of the establishments involved.
Addressing DAP’s due process concerns, the Court clarified that the identification requirements for PWDs are not arbitrary or vague. NCDA A.O. No. 1 provides guidelines for issuing PWD identification cards (IDs), requiring medical certification or other documentation to confirm the individual’s disability. The IRR of R.A. No. 9442 specifies that the NCDA would adopt IDs issued by local government units (LGUs) for uniformity. Moreover, DOH A.O. No. 2009-0011 mandates that PWDs must present their ID and a doctor’s prescription to avail of the discount, ensuring that the benefit is only extended to legitimate PWDs. Moreover, the Court clarified that DOH A.O. No. 2009-0011 provides a clearer and more defined enumeration of disabilities.
Regarding the equal protection argument, the Court held that R.A. No. 9442 does not unfairly single out drugstores. The law’s classification of PWDs as a distinct group is based on substantial distinctions that are germane to the law’s purpose. Providing discounts to PWDs addresses their unique needs and promotes their integration into society. This classification has a reasonable foundation and is not palpably arbitrary, satisfying the requirements of the equal protection clause. The Court reiterated:
Equality guaranteed under the equal protection clause is equality under the same conditions and among persons similarly situated; it is equality among equals, not similarity of treatment of persons who are classified based on substantial differences in relation to the object to be accomplished.
The ruling emphasizes the state’s power to intervene in the operations of businesses when public interests demand it, even if it results in some impairment of property rights. The Court stated, “Subject to the determination of the courts as to what is a proper exercise of police power using the due process clause and the equal protection clause as yardsticks, the State may interfere wherever the public interests demand it.”
FAQs
| What was the key issue in this case? | The central issue was whether the mandatory 20% discount on medicines for persons with disabilities (PWDs) is a valid exercise of police power or an unconstitutional taking of private property. The Drugstores Association of the Philippines (DAP) argued that it violated their due process and equal protection rights. |
| What is the legal basis for the PWD discount? | The legal basis is Republic Act (R.A.) No. 7277, the “Magna Carta for Disabled Persons,” as amended by R.A. No. 9442. These laws aim to integrate PWDs into society by granting them various privileges, including discounts on medicines and other essential goods and services. |
| What is the difference between police power and eminent domain? | Police power allows the state to regulate liberty and property for public welfare, without compensation. Eminent domain is the right of the state to take private property for public use, but it requires the payment of just compensation. |
| How can drugstores recover the cost of the discount? | Drugstores can claim the discount as a tax deduction, reducing their taxable income and tax liability. This mechanism, outlined in Section 32 of R.A. No. 9442, helps mitigate the financial impact on businesses. |
| What documents are needed to avail of the PWD discount? | PWDs need to present their PWD identification card (ID) and a doctor’s prescription to avail of the discount. The DOH provides guidelines to ensure that the benefit is only extended to legitimate PWDs. |
| Why does the law target drugstores specifically? | The law targets drugstores because they are the primary providers of medicines, essential for the health and well-being of PWDs. The equal protection clause allows for different treatment of groups based on substantial distinctions related to the law’s purpose. |
| What is the role of the NCDA and DOH in implementing the law? | The NCDA issues guidelines for PWD identification cards, while the DOH provides additional guidelines for the 20% discount on medicines. These agencies ensure that the law is implemented effectively and that PWDs can access the benefits they are entitled to. |
| Does the discount apply to all types of medicines? | Yes, the 20% discount applies to all medicines, both branded and generic, for the exclusive use of PWDs. This ensures that PWDs have access to the medicines they need, regardless of brand or cost. |
In conclusion, the Supreme Court’s decision reaffirms the constitutionality and importance of providing discounts to persons with disabilities, recognizing it as a legitimate exercise of police power aimed at promoting their welfare and integration into society. This ruling solidifies the state’s commitment to ensuring equal access to essential goods and services for all its citizens, particularly those facing significant challenges.
For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.
Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Drugstores Association of the Philippines, Inc. v. National Council on Disability Affairs, G.R. No. 194561, September 14, 2016