FIRST DIVISION
G.R. No. 202417. July 25, 2023
HON. CORAZON J. SOLIMAN, IN HER CAPACITY AS SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, PETITIONER, v. CARLOS T. SANTOS,1 RESPONDENT.
G.R. No. 203245
THE MANILA SOUTHWOODS GOLF AND COUNTRY CLUB, INC.,2 PETITIONER, v. CARLOS T. SANTOS, JR., RESPONDENT.
D E C I S I O N
MARQUEZ, J.:
Are non-profit, stock golf and country clubs mandated to give a 20% senior citizen discount to their senior members on their monthly dues, locker rentals, and other charges pertaining to their use of the clubs' facilities and equipment?
Petitioner The Manila Southwoods Golf and Country Club, Inc. (Manila Southwoods), does not think so. To support its position, Manila Southwoods cites paragraph 2, Section 4, Article 7, Rule IV, Implementing Rules and Regulations (IRR), Republic Act No. 9994 (RA 9994), or the Expanded Senior Citizens Act of 2010, which reads as follows:
Section 4. RECREATION CENTERS - Non-profit, stock golf and country clubs which are not open to the general public, and are private and for exclusive membership only as duly proven by their official Securities and Exchange (SEC) registration papers, are not mandated to give the 20% senior citizens discount. However, should restaurants and food establishments inside these country clubs be independent concessionaires and food sold are not consumable items under club membership dues, they must grant the 20% senior citizen discount. (Emphasis supplied)On the other hand, respondent Carlos T. Santos, Jr. (Santos, Jr.) believes that he and other senior members of such clubs are entitled to the 20% senior citizen discount, and that the cited provision of the IRR is invalid for being contrary to the plain language of Sec. 4(a)(7), RA 9994, which reads as follows:
SEC. 4. Privileges for the Senior Citizens. — The senior citizens shall be entitled to the following:Respondent Santos, Jr. is a regular member of petitioner Manila Southwoods. Citing Sec. 4(a), RA 9257, the law on senior citizens' benefits, Santos formally requested that Manila Southwoods apply the 20% discount on his monthly dues, locker rentals, and other fees/charges pertaining to his use of Manila Southwoods' golf facilities and equipment.3 However, Manila Southwoods refused to apply the 20% discount to these charges, pursuant to the exemption provided in the IRR for non-profit, stock golf and country clubs that are not open to the general public.4
(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 senior citizens: x x x x (7) on the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers[.] (Emphasis supplied)
WHEREFORE, in the light of the foregoing premises, 2nd paragraph of Sec. 4, Art. 7, Rule IV of the Implementing Rules and Regulations of R.A. No. 9994 is hereby declared INVALID.In finding for Santos and declaring the assailed IRR provision invalid, the RTC cited Carlos Superdrug Corp. v. Department of Social Welfare and Development9 and held that RA 9994 grants a 20% discount to senior citizens for the utilization of services in recreation centers, and that the law is a legitimate exercise of police power which has for its object the general welfare.10 The RTC held that "the language of the law is clear, plain and unequivocal."11 Moreover, the RTC rejected Manila Southwoods' argument that the benefits derived from an exclusive non-profit, stock golf and country club are neither basic nor essential and do not redound to the benefit of the general public, and are thus beyond the scope of RA 9994. On the contrary, the RTC held that RA 9994 does not make any distinction as to who are entitled to its benefits, and that the purpose of the law is to "lighten the economic burden of senior citizens and those taking care of them."12
The private defendant, [Manila Southwoods], as mandated by R.A. 9994 is ORDERED to grant the plaintiff 20% discount for the exclusive use, utilization and enjoyment or availment of the services of private defendant's recreation centers.
No pronouncement as to claims for Damages and Attorney's Fees.
IT IS SO ORDERED.8
A "question of law" exists when the doubt hinges on what the law is on a certain set of facts or circumstances, while a "question of fact" exists when the issue raised on appeal pertains to the truth or falsity of the alleged facts. The test for determining whether the supposed error was one of "law" or "fact" is whether the reviewing court can resolve the issues without evaluating the evidence, in which case it is a question of law; otherwise, it is one of fact. In other words, where there is no dispute as to the facts, the question of whether the conclusions drawn from these facts are correct is a question of law. If the question posed, however, requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relationship to each other, the issue is factual.47 (Emphasis supplied)In the instant cases, the Court is not asked to determine whether Manila Southwoods is in fact a non-profit, stock golf and country club. The only issue decided by the RTC and raised before this Court is whether the assailed IRR provision is valid. This is a question of law which is the proper subject of a direct recourse to this Court under Rule 45.
The above requisites reflect the nature of administrative rules and regulations as a product of delegated legislative power. Being the product of delegated legislative power, such rules and regulations may not exceed the scope of the statutory authority granted by the legislature to the administrative agency. As previously held by the Court:
- Its promulgation must be authorized by the legislature;
- It must be promulgated in accordance with the prescribed procedure;
- It must be within the scope of the authority given by the legislature; and
- It must be reasonable.49
The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law.17 They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former must prevail.50 (Emphasis supplied)Thus, "[i]n case of conflict between the law and the IRR, the law prevails. There can be no question that an IRR or any of its parts not adopted pursuant to the law is no law at all and has neither the force nor the effect of law. The invalid rule, regulation, or part thereof cannot be a valid source of any right, obligation, or power."51
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, 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.60 (Emphasis supplied)Moreover, even the DSWD's contemporaneous construction of Sec. 4(a), RA 9994, recognizes that the law is not limited to "basic goods and services." As correctly pointed out by Santos, the following goods and services expressly made subject to the 20% senior citizen discount under Sec. 4(a), RA 9994 and its IRR cannot, by any stretch of the imagination, be characterized as "basic goods and services:"
Under Sec. 4(a)(8), the discount is expressly made applicable to "concert halls, circuses, carnivals and other similar places of culture, leisure and amusement." Sec. 3(a) of the IRR covers "massage parlor, spa, sauna bath, aromatherapy rooms, workout gyms, swimming pools, jacuzzis, ktv bars." Sec. 4 of the IRR covers "ballroom dancing, yoga and martial arts facilities." The IRR even states that the discount applies in fine dining restaurants (Rule III, Art. 5.8.). Under any stretch of the imagination, the above can hardly be considered as basic goods and services, but the senior citizens discount applies to them by express provision of the law.61 (Emphasis supplied)Indeed, to limit the application of RA 9994 to "underprivileged" senior citizens and the 20% senior citizen discount under Sec. 4(a), RA 9994, to "basic goods and services," and to create blanket exceptions beyond the contemplation of the law, would run counter to the "inflexible rule" that "social legislation must be liberally construed in favor of the beneficiaries." As explained in Government Service Insurance System v. De Leon:62
The inflexible rule in our jurisdiction is that social legislation must be liberally construed in favor of the beneficiaries. Retirement laws, in particular, are liberally construed in favor of the retiree 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. 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.63 (Emphasis supplied)In Republic v. Pryce Corporation, Inc.,64 the Court was asked to determine whether the 20% senior citizen discount on "funeral and burial services" under RA 9994 and its predecessors includes interment services. The Court held that interment services are indeed included within the scope of "funeral and burial services," explaining that:
The exclusion of interment services from the coverage of the statutorily mandated senior citizen discount is not provided for in the law. Corollary, the IRR, which does not expressly exclude interment services, cannot be interpreted to support the conclusion of the RTC. Indeed, a law cannot be amended by a mere regulation, and the administrative agency issuing the regulation may not enlarge, alter, or restrict the provisions of the law it administers.65 (Emphasis and underscoring supplied)In view of the foregoing, the Court finds that the DSWD exceeded its delegated authority and the assailed IRR provision is an invalid administrative issuance. Sec. 4(a)(7), RA 9994, refers to recreation centers and does not provide an exemption for non-profit, stock golf and country clubs, nor does the law otherwise authorize the DSWD or any other administrative agency to create such an exemption. Consequently, the sale of goods and services by associations or non-profit, stock golf and country clubs to their senior citizen members for a fee, exclusive of their membership dues, such as the use of golf carts and locker rentals, is subject to the 20% senior citizen discount.
x x x membership fees, assessment dues, and the like are not subject to VAT because in collecting such fees, the club is not selling its service to the members. Conversely, the members are not buying services from the club when dues are paid; hence, there is no economic or commercial activity to speak of as these dues are devoted for the operations/maintenance of the facilities of the organization. As such, there could be no "sale, barter or exchange of goods or properties, or sale of a service" to speak of, which would then be subject to [value-added tax (VAT)] under the 1997 NIRC.69 (Emphasis and underscoring supplied)The Court reiterated this ruling in Commissioner of Internal Revenue v. Federation of Golf Clubs of the Philippines, Inc.,70 where it held:
As to VAT, the Court interpreted that RMC No. 35-2012 erroneously included the gross receipts of recreational clubs on membership fees, assessment dues, and the like as subject to VAT because Section 105 of the 1997 NIRC specified the taxability of only those which deal with the "sale, barter or exchange of good or properties, or sale of service." In collecting such fees from their members, recreational clubs are not selling any kind of service, in the same way that the members are not procuring service from them. Thus, "there could be no sale, barter or exchange of goods or properties, or sale of a service to speak of, which would then be subject to VAT under the 1997 NIRC."71 (Emphasis supplied)The Court's reasoning on the nature of "membership fees, assessment dues, and the like" for purposes of the imposition of VAT applies with equal force to the 20% senior citizen discount under RA 9994.
x x x the best method of interpretation is that which makes laws consistent with other laws which are to be harmonized rather than having one considered repealed in favor of the other. Time and again, it has been held that every statute must be so interpreted and brought in accord with other laws as to form a uniform system of jurisprudence – interpretere et concordare legibus est optimus interpretendi. Thus, if diverse statutes relate to the same thing, they ought to be taken into consideration in construing any one of them, as it is an established rule of law that all acts in pari materia are to be taken together, as if they were one law.73 (Emphasis supplied; citations omitted)Thus, the Court's ruling in Association of Non-Profit Clubs, Inc. that membership fees or dues do not involve the sale of a good or service for purposes of VAT liability under the Tax Code equally holds true with respect to the 20% senior citizen discount under Sec. 4(a), RA 9994. To conclude otherwise and rule that membership dues involve the sale of a service for purposes of the 20% senior citizen discount under Sec. 4(a), RA 9994, but not for purposes of VAT liability under the Tax Code, defies logic.
x x x every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment. Because the law must not be read in truncated parts, its provisions must be read in relation to the whole law. The statute's clauses and phrases must not, consequently, be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing the meaning of any of its parts in order to produce a harmonious whole. Consistent with the fundamentals of statutory construction, all the words in the statute must be taken into consideration in order to ascertain its meaning.74 (Emphasis supplied; citations omitted)Moreover, "[i]t is a cardinal rule in statutory construction that no word, clause, sentence, provision or part of a statute shall be considered surplusage or superfluous, meaningless, void and insignificant. To this end, a construction which renders every word operative is preferred over that which makes some words idle and nugatory."75 Consequently, the Court may not ignore the requirement of a sale of goods and services in Sec. 4(a) and limit its analysis to Sec. 4(a)(7), as such an interpretation would render some parts of RA 9994 "idle and nugatory."
WHEREFORE, premises considered, the consolidated Petitions in G.R. Nos. 202417 and 203245 are PARTIALLY GRANTED. The Decision and Order dated 15 June 2012 and 30 July 2012, respectively, of the Regional Trial Court, Branch 92, Quezon City in Civil Case No. Q-11-70344, entitled "Carlos T. Santos, Jr. v. The Manila Southwoods Golf & Country Club, Inc. and Hon. Corazon J. Soliman, in her Official Capacity as Secretary of the Department of Social Welfare and Development" are MODIFIED. Petitioner The Manila Southwoods Golf & Country Club, Inc. is ORDERED to grant its qualified members a twenty percent (20%) discount on the sale of its services, but not on the collection of membership dues and other fees collected for the privilege of membership.
- Sec. 4(a)(7), RA 9994, does not apply to membership dues, because such dues are not payment for the sale of a service. While the assailed IRR provision is invalid for being beyond the scope of RA 9994 and Sec. 4(a)(7) thereof, associations charging membership dues are not required to give the 20% senior citizen discount on such dues. This is not an exemption drawn from the invalid assailed IRR provision or any other administrative rule. Rather, it is based on the clear language of Sec. 4(a), RA 9994, which mandates the grant of the 20% senior citizen discount on the sale of the goods and services enumerated by the same law but not on the collection of dues for the privilege of membership.
- However, Sec. 4(a)(7) applies to the payment of fees for locker rentals as well as other charges pertaining to the members' purchase of services provided by the club. In paying these fees, the purchasing member is availing of the club's services, and not for the privilege of membership in the club. Thus, there is a sale of service as contemplated in Sec. 4(a)(7), and golf and country clubs are required to provide qualified members with the 20% senior citizen discount mandated by RA 9994.
Endnotes:
* On leave.
1 Also referred to as "Carlos T. Santos, Jr." in some parts of the rollo.
2 Also referred to as "The Manila Southwoods Golf & Country Club, Inc."
3 Rollo (G.R. No. 203245), p. 83. While Santos' formal request cited RA 9257, RA 9994 had already taken effect by the time this request was made (i.e., 17 June 2010.). Thus, Manila Southwoods' response correctly cited RA 9994 and its IRR.
4 Id. at 87.
5 Rollo (G.R. No. 202417), pp. 53-60; rollo (G.R. No. 203245), pp. 96-103; docketed as Civil Case No. Q-11-70344.
6 Rollo (G.R. No. 202417), p. 39.
7 Id. at 37-52. Penned by Presiding Judge Eleuterio L. Bathan.
8 Id. at 52.
9 553 Phil. 120 (2007).
10 Rollo (G.R. No. 203245), p. 48.
11 Id. at 49; emphasis supplied.
12 Id. at 50.
13 Id. at 51.
14 Id. at 52-54.
15 Id. at 55.
16 Id. at 57.
17 Id. at 246-265.
18 Rollo (G.R. No. 202417), pp. 37-52.
19 Rollo (G.R. No. 203245), p. 57.
20 Id. at 328.
21 Id.
22 Rollo (G.R. No. 202417), p. 19.
23 Id. at 20-21.
24 Id. at 22.
25 Id. at 23.
26 Id. at 24-26.
27 Id. at 26.
28 Id. at 29.
29 Rollo (G.R. No. 203245), pp. 17-21.
30 Id. at 21-23.
31 Id. at 23-25.
32 Id.
33 Id. at 25-29.
34 Id. at 29-33.
35 Rollo (G.R. No. 202417), pp. 204-205.
36 Id. at 205.
37 Id. at 208-209.
38 Id. at 209.
39 Id. at 211-213.
40 Id. at 217-218.
41 Id. at 225-226.
42 Rollo (G.R. No. 203245), p. 284.
43 Id. at 289.
44 Id.
45 Colmenar v. Colmenar, G.R. No. 252467, 21 June 2021, citing Daswani v. Banco de Oro, 765 Phil. 88, 97 (2015).
46 G.R. No. 252467, 21 June 2021.
47 Id.
48 Pantaleon v. Metro Manila Development Authority, G.R. No. 194335, 17 November 2020.
49 Province of Pampanga v. Romulo, G.R. No. 195987, 12 January 2021, citing Executive Secretary v. Southwing Heavy Industries, Inc., 518 Phil. 103 (2006).
50 Smart Communications, Inc. v. National Telecommunications Commission, 456 Phil. 145, 156 (2003).
51 Lokin, Jr. v. Commission on Elections, 635 Phil. 372, 401 (2010).
52 Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, 308 Phil. 63, 71 (1994).
53 See also Department of Trade and Industry v. Steelasia Manufacturing Corp., G.R. No. 238263, 16 November 2020, on the rule-making power of the Department of Trade and Industry.
54 Philippine Chamber of Commerce and Industry v. Department of Energy, G.R. Nos. 228588, 229143 & 229453, 2 March 2021, citing Equi-Asia Placement, Inc. v. Department of Foreign Affairs, 533 Phil. 590 (2006).
55 Alliance for the Family Foundation, Philippines, Inc. v. Garin, 809 Phil. 897, 917 (2017).
56 Chavez v. Judicial and Bar Council, Sen. Francis Joseph G. Escudero and Rep. Niel C. Tupas, Jr., 691 Phil. 173, 199 (2012).
57 Adasa v. Abalos, 545 Phil. 168, 186 (2007); citations omitted.
58 Id. at 186-187.
59 809 Phil. 315 (2017).
60 Id. at 356.
61 Rollo (G.R. No. 202417), pp. 208-209.
62 649 Phil. 610 (2010).
63 Id. at 622.
64 G.R. No. 243133, 16 March 2023.
65 Id.
66 Emphasis supplied.
67 Rollo (G.R. No. 203245), p. 289.
68 G.R. No. 228539, 26 June 2019.
69 Id.
70 G.R. No. 226449, 28 July 2020.
71 Id.
72 635 Phil. 447 (2010).
73 Id. at 458.
74 Id. at 454.
75 Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue (Resolution), 616 Phil. 387, 401-402 (2009); emphasis supplied.cralawredlibrary