Planters Products Inc vs Fertiphil Corp
G.R. No. 166006 | March 14, 2008
FACTS
Petitioner PPI and respondent Fertiphil are private corporations
incorporated under Philippine laws, both engaged in the
importation and distribution of fertilizers, pesticides and
agricultural chemicals.
The then President Marcos issued Letter of Instruction (LOI)
1465, imposing a capital recovery component of Php10.00 per
bag of fertilizer. The levy was to continue until adequate
capital was raised to make PPI financially viable. Fertiphil
remitted to the Fertilizer and Pesticide Authority (FPA),
which was then remitted the depository bank of PPI.
Fertiphil paid P6,689,144 to FPA from 1985 to 1986.
After the 1986 Edsa Revolution, FPA voluntarily stopped the
imposition of the P10 levy. Fertiphil demanded from PPI a
refund of the amount it remitted, however PPI refused.
Fertiphil filed a complaint for collection and damages,
questioning the constitutionality of LOI 1465, claiming that it
was unjust, unreasonable, oppressive, invalid and an
unlawful imposition that amounted to a denial of due
process.
PPI argues that Fertiphil has no locus standi to question the
constitutionality of LOI No. 1465 because it does not have a
"personal and substantial interest in the case or will sustain
direct injury as a result of its enforcement." It asserts that
Fertiphil did not suffer any damage from the imposition
because "incidence of the levy fell on the ultimate consumer or
the farmers themselves, not on the seller fertilizer company.
ISSUE
Whether or not the levy made in accordance with LOI No.
1465 is valid.
RULING
LOI No. 1465 is unconstitutional. The imposition of the levy
was an exercise by the State of its taxation power. The primary
purpose of the levy is revenue generation. If the purpose is
primarily revenue, or revenue is, at least, one of the real and
substantial purposes, then the exaction is properly called a tax.
An inherent limitation on the power of taxation is public
purpose --- taxes are exacted only for a public purpose. LOI
No. 1465 was not for a public purpose as it was imposed to
benefit PPI, a private corporation. The framers of the LOI
named PPI as the ultimate beneficiary of the taxes levied under
the LOI. Taxes cannot be used for purely private purposes or
for the exclusive benefit of private persons. The power to tax
exists for the general welfare, hence, implicit in its power is the
limitation that it should be used only for public purpose.