Power of Taxation as an Implement of the Power of Eminent Domain
CIR vs. Central Luzon Drug Corp., G.R. No. 159647, April 15, 2005
FACTS ISSUES RULING
entral Luzon Drug Corporation (CLDC) is a
C 1. W hetherornotthediscountsgranted heSupremeCourtruledinfavoroftheCIR,
T
domestic corporation engaged in retailing byCLDCtoseniorcitizensareaform stating that the discounts granted by CLDC
medicines and other pharmaceutical of tax credit. to senior citizens were not a form of tax
products16. In 1996, it operated nearly six 2. Whether or not CLDC is entitled to a credit. The Court held that the discounts
drugstores under the business name tax refund/credit for the amount of were a social benefit granted by CLDC to
"Mercury Drug." From January to December P904,769.00. senior citizens and that there was no legal
1996, CLDC granted a 20% discount to basis for treating the discounts as a tax
qualified seniorcitizenspursuanttoRepublic credit. The Court further stated that the
Act No169. 7432. The total amount power of taxation, as an implement of the
representingthe20%salesdiscountgranted powerofeminentdomain,mustbeexercised
by CLDC to qualified senior citizens in accordance with the law and that there
amounted to P904,769.00. was no legal provision allowing the grant of
tax credits for discounts given to senior
n January 16,1998,CLDCfiledaclaimfor
O citizens.
tax refund/credit with the Commissioner of
Internal Revenue (CIR) for the amount of
P904,769.00, representing the 20% sales
discount it granted to senior citizens. The
CIRdidnotactontheclaim,leadingCLDCto
elevate the matter to the Court of Tax
Appeals (CTA) via a Petition for Review169.
TheCTAruledinfavorofCLDC,holdingthat
thediscountsgrantedtoseniorcitizenswere
a form of tax credit.
