PLANTERS. V. FERTIPHIL CORP the state.
the state. But each one is distinct from the other – police power is for the
FACTS:
• Marcos issued LOI 1465, imposing a capital recovery
component of Php10.00 per bag of fertilizer
- Levy to continue until adequate capital is raised
to make PPI financially viable
• Fertiphil remitted to the Fertilizer and Pesticide Authority (FPA), which
then remitted said amount to Far East Bank and Trust Company, the
depository bank of PPI
- Php6,689,144 was remitted from 1985 to 1986
• After EDSA, Fertiphil demanded from PPI a refund of the amount it
remitted; PPI refused
•Fertiphil filed a complaint for collection and damages
- questioned constitutionality of LOI 1465
- claimed it was unjust, unreasonable,
oppressive, invalid and an unlawful
imposition that amounted to a denial of
due process
• FPA: Issuance of LOI 1465 was a valid exercise of police power of the state
in insuring the fertilizer industry
- Fertiphil did not sustain any damage because the burden imposed by
the levy fell on the ultimate consumer, not the seller
Issues:
1. WON the issuance of LOI 1465 was an exercise of
the police power of the state
2. WON the levy was for a public purpose
Ratio:
1. The imposition of the levy was a exercise of the taxation power of the
state. Both the power of taxation and police power are inherent powers of
regulation of a behavior or conduct, while taxation is for revenue
generation.
While it is true that the power to tax can be used as an
implement of police power, the primary purpose of the levy was revenue
generation. If the purpose is primarily revenue, or if revenue is, at least, one
of the real and substantial purposes, then the exaction is properly
called a tax.
AIn the present case, the imposition of Php10 per bag is too
excessive to serve a mere regulatory purpose.
Even if it was an exercise of the police power of the state, the
LOI would still be invalid as it did not comply
with the test of “lawful subjects” and “lawful means”. Specifically, that the
interest of the public, generally, requires its exercise, and that the means
employed are reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals.
2. An inherent limitation on the power of taxation is public purpose. Taxes
are exacted for a purely public purpose, and thus cannot be used for purely
private purposes or for the exclusive benefit of private persons.
LOI 1465 is not for a public purpose. First, it is expressly provided
that the levy be imposed to benefit a private company – PPI. Second, the
levy was conditional and dependent on PPI becoming financially viable.
Third, the levies were directly remitted and deposited in FEBTC, the bank of
PPI, which used said remittances to pay of PPI’s debts. All of these show that
the purpose for the issuance of LOI 1465 was to support a private company
which clearly did not comply with the public purpose requirement for the
imposition of taxes.