Wednesday, February 08, 2012

PPI v. Fertphil Corporation, 548 SCRA 485 (2008)

Facts: Petitioner and private respondent are private corporations incorporated under Philippine laws. They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals. President Marcos issued LOI 1465 which provided, among others, for the imposition of a capital recovery component on the domestic sale of all grades of fertilizers in the Philippines. Pursuant to the LOI, private respondent paid P10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and Pesticide Authority (FPA). After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. Private respondent then demanded from petitioner a refund of the amounts it paid under LOI 1465

Issue: Whether or not the issuance of LOI 1465 is a valid exercise of police power of the State

Held: Petition denied. The RTC and the CA did not err in ruling against the constitutionality of the LOI.

Police power and the power of taxation are inherent powers of the State. These powers are distinct and have different tests for validity. Police power is the power of the State to enact legislation that may interfere with personal liberty or property in order to promote the general welfare, while the power of taxation is the power to levy taxes 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.

An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a public purpose. They 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 a public purpose.

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2 comments: on "PPI v. Fertphil Corporation, 548 SCRA 485 (2008)"

Muhammad Amir said...
This comment has been removed by the author.
Muhammad Amir said...

They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals. PPI Claims helpline

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