DIGEST/ MARIETTA RAEL/Product v. Fertiphil Corp
Product
v. Fertiphil Corp.
G.R. No. 166006 March 14, 2008
REYES, R.T., J.
Lessons Applicable: Bet. private and public suit, easier to file public
suit, Apply real party in interest test for private suit and direct injury test
for public suit, Validity test varies depending on which inherent power
Laws Applicable:
FACTS:
§
President
Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which
provided, among others, for the imposition of a capital recovery component
(CRC) on the domestic sale of all grades of fertilizers which resulted in
having Fertiphil paying P 10/bag sold to the Fertilizer and Perticide Authority
(FPA).
§
FPA
remits its collection to Far East Bank and Trust Company who applies to the
payment of corporate debts of Planters Products Inc. (PPI)
§
After the
Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy.
Upon return of democracy, Fertiphil demanded a refund but PPI refused.
Fertiphil filed a complaint for collection and damages against FPA and PPI with
the RTC on the ground that LOI No. 1465 is unjust, unreaonable oppressive,
invalid and unlawful resulting to denial of due process of law.
§
FPA
answered that it is a valid exercise of the police power of the state in
ensuring the stability of the fertilizing industry in the country and that
Fertiphil did NOT sustain damages since the burden imposed fell on the ultimate
consumers.
§ RTC and CA favored Fertiphil holding that it is an exercise of the power of taxation ad is as such because it is NOT for public purpose as PPI is a private corporation.
ISSUE:
1. W/N Fertiphil has locus standi
2. W/N LOI No. 1465 is an invalid exercise of the power of taxation rather the
police power
Held:
1. Yes. In private suits, locus standi requires a litigant to be a
"real party in interest" or party who stands to be benefited or
injured by the judgment in the suit. In public suits, there is the right
of the ordinary citizen to petition the courts to be freed from unlawful
government intrusion and illegal official action subject to the direct
injury test or where there must be personal and substantial interest in the case
such that he has sustained or will sustain direct injury as a result.
Being a mere procedural technicality, it has also been held that locus standi
may be waived in the public interest such as cases of transcendental importance
or with far-reaching implications whether private or public suit,
Fertiphil has locus standi.
2. As a
seller, it bore the ultimate burden of paying the levy which made its products
more expensive and harm its business. It is also of paramount public
importance since it involves the constitutionality of a tax law and use of
taxes for public purpose.
3. Yes. Police power and the power of taxation are inherent powers of the state
but distinct and have different tests for validity. Police power is the
power of the state to enact the legislation that may interfere with personal
liberty on property in order to promote general welfare. While, the power
of taxation is the power to levy taxes as to be used for public purpose.
The main purpose of police power is the regulation of a behavior or conduct,
while taxation is revenue generation. The lawful subjects and lawful means
tests are used to determine the validity of a law enacted under the police
power. The power of taxation, on the other hand, is circumscribed by
inherent and constitutional limitations.
In this case, it is for purpose of revenue. But it is a robbery for the
State to tax the citizen and use the funds generation for a private
purpose. Public purpose does NOT only pertain to those purpose which are
traditionally viewed as essentially governmental function such as
building roads and delivery of basic services, but also includes those purposes
designed to promote social justice. Thus, public money may now be used for the
relocation of illegal settlers, low-cost housing and urban or
agrarian reform.
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