GR NO.

16006 , March 14, 2008

Planters Products Inc, Petitioner
VS
erti!hil cor!oration , res!ondent
FACTS:
Petitioner PPI "Planters Products Inc.,# and !ri$ate res!ondent erti!hil are !ri$ate
cor!orations incor!orated under Phili!!ine la%s. &he' are (oth en)a)ed in the i*!ortation and
distri(ution o+ +ertili,ers, !esticides and a)ricultural che*icals.
On -une ., 1/80, then President erdinand Marcos, e1ercisin) his le)islati$e !o%ers,
issued 2OI No. 1460 %hich !ro$ided, a*on) others, +or the i*!osition o+ a ca!ital reco$er'
co*!onent "3R3# on the do*estic sale o+ all )rades o+ +ertili,ers in the Phili!!ines. &he 2OI
!ro$ides4
.. &he 5d*inistrator o+ the ertili,er Pesticide 5uthorit' to include in its
+ertili,er !ricin) +or*ula a ca!ital contri(ution co*!onent o+ not less
than P 10 !er (a). &his ca!ital contri(ution shall (e collected until ade6uate
ca!ital is raised to *a7e PPI $ia(le. Such ca!ital contri(ution shall (e
a!!lied (' P5 to all do*estic sales o+ +ertili,ers in the Phili!!ines.
Pursuant to the 2OI, erti!hil !aid P10 +or e$er' (a) o+ +ertili,er it sold in the do*estic *ar7et
to the ertili,er and Pesticide 5uthorit' "P5#. P5 then re*itted the a*ount collected to the
ar 8ast 9an7 and &rust 3o*!an', the de!ositar' (an7 o+ PPI. erti!hil !aid P6,68/,144 to P5
+ro* -ul' 8, 1/80 to -anuar' 24, 1/86.
erti!hil +iled a co*!laint +or collection and da*a)es a)ainst P5 and PPI %ith the R&3
in Ma7ati. It 6uestioned the constitutionalit' o+ 2OI No. 1460 +or (ein) un:ust, unreasona(le,
o!!ressi$e, in$alid and an unla%+ul i*!osition that a*ounted to a denial o+ due !rocess o+
la%. erti!hil alle)ed that the 2OI solel' +a$ored PPI, a !ri$atel' o%ned cor!oration, %hich used
the !roceeds to *aintain its *ono!ol' o+ the +ertili,er industr'.
In its 5ns%er, P5, throu)h the Solicitor General, countered that the issuance o+ 2OI No.
1460 %as a $alid e1ercise o+ the !olice !o%er o+ the State in ensurin) the sta(ilit' o+ the +ertili,er
industr' in the countr'. It also a$erred that erti!hil did not sustain an' da*a)e +ro* the 2OI
(ecause the (urden i*!osed (' the le$' +ell on the ulti*ate consu*er, not the seller.

ISSUE:
5+ter the 1/86 8dsa Re$olution, P5 $oluntaril' sto!!ed the i*!osition o+ the P10
le$'. ;ith the return o+ de*ocrac', erti!hil de*anded +ro* PPI a re+und o+ the a*ounts it !aid
under 2OI No. 1460, (ut PPI re+used to accede to the de*and.
&he unconstitutionalit' o+ the 2OI No 1460 %hich is 6uestioned due u!on the )eneral
rule o+ ta1 %hich i*!lies that < +or !u(lic !ur!oses <
&he 3onstitutionalit' o+ 2OI No. 1460 cannot (e collaterall' attac7ed and (e decreed $ia
a de+ault :ud)e*ent in a case +iled +or collection and da*a)es %here the issue o+
constitutionalit' is not the$er' 2is Mota o+ the case. Neither can 2OI No. 1460 (e challen)ed ('
an' !erson or entit' %hich has no standin) to do so.
2OI No. 1460 (ein) a la% i*!le*ented +or the !ur!ose o+ assurin) the +ertili,er su!!l'
and distri(ution in the countr', and +or (ene+itin) a +oundation created (' la% to hold in trust +or
*illions o+ +ar*ers their stoc7 o%nershi! in PPI constitutes a $alid le)islation !ursuant to the
e1ercise o+ ta1ation and !olice !o%er +or !u(lic !ur!oses
&he a*ount collected under the ca!ital reco$er' co*!onent %as re*itted to the
)o$ern*ent and (eca*e )o$ern*ent +unds !ursuant to an e++ecti$e and $alidl' enacted la%
%hich i*!osed duties and con+erred ri)hts (' $irture o+ the !rinci!le o+
O!erati$e act= !rior to an' declaration o+ unconstituitionalit' o+ 2OI No. 1460
&he !rinci!le o+ un:ust $e1ation"should (e enrich*ent# +inds no a!!lication in the instant
case
< to la' %ith one hand, the !o%er o+ the )o$ern*ent on the !ro!ert' o+ the citi,en, and
%ith the other to (esto% u!on it +a$oured indi$iduals to aid !ri$ate enter!rises and (uild u!
!ri$ate +ortunes, is nonetheless ro((er' (ecause it is done under the +or*s o+ la% and is called
ta1ation <
HELD:
&he Planters Products Inc. "PPI# *ust re+und the !aid le$ies o+ erti!hil cor!oration due to
un:ust $e1ation o+ the unconstitutionalit' o+ 2OI No. 1460 %hich !ertains to ta1 la% (ut
e$entuall' +ailed to +ollo% the )eneral rule o+ instead in !rioriti,in) < )eneral !u(lic < asserts
!ri$ate )ro%th enter!rise %hich *i)ht (e considered as ro((er' i+ and so ta1ation in$ol$es
!ri$ate !ro!ert' enhance*ents.
RULING:
;e shall +irst tac7le the !rocedural issues o+ locus standi and the :urisdiction o+ the R&3 to
resol$e constitutional issues.

Fertiphil has locus standi because it suffered
direct injury; doctrine of standing is a mere
procedural technicality which may be waived.
Taxes are exacted only for a public purpose.
The P10 levy is unconstitutional because it was
not for a public purpose. The levy was imposed to
give undue benefit to PP.
Via R&34 On No$e*(er 20, 1//1, the R&3 rendered :ud)*ent in +a$or o+ erti!hil, dis!osin) as
+ollo%s4
;>8R8OR8, in $ie% o+ the +ore)oin), the 3ourt here(' renders :ud)*ent in +a$or o+ the
!lainti++ and a)ainst the de+endant Planters Product, Inc., orderin) the latter to !a' the +or*er4

1# the su* o+ P6,6/8,144.00 %ith interest at 12? +ro* the ti*e
o+ :udicial de*and@
2# the su* o+ P100,000 as attorne'As +ees@
.# the cost o+ suit.

SO ORB8R8B.
&ested (' the standards o+ constitutionalit' as set +orth in the a+oreC6uoted :uris!rudence, it is
6uite e$ident that 2OI 1460 inso+ar as it i*!oses the a*ount o+ P10 !er +ertili,er (a) sold in the
countr' and orders that the said a*ount should )o to the de+endant Planters Product, Inc. is
unla%+ul (ecause it $iolates the *andate that a ta1 can (e le$ied onl' +or a !u(lic !ur!ose and
not to (ene+it, aid and !ro*ote a !ri$ate enter!rise such as Planters Product, Inc.
Via 3ourt o+ 5!!eals 4 35 Becision

On No$e*(er 28, 200., the 35 handed do%n its decision a++ir*in) %ith *odi+ication that
o+ the R&3, %ith the +ollo%in) fallo4

IN VI8; O 522 &>8 OR8GOING, the decision a!!ealed +ro* is
here(' AFFIRMED, su(:ect to the MODIFICATION that the a%ard o+
attorne'As +ees is here(' DELETED.
&he 35 held that e$en on the assu*!tion that 2OI No. 1460 %as issued under the !olice !o%er
o+ the state, it is still unconstitutional (ecause it did not !ro*ote !u(lic %el+are. &he 35
e1!lained4

In declarin) 2OI 1460 unconstitutional, the trial court held that the le$'
i*!osed under the said la% %as an in$alid e1ercise o+ the StateAs !o%er o+
ta1ation inas*uch as it $iolated the inherent and constitutional !rescri!tion that
ta1es (e le$ied onl' +or !u(lic !ur!oses. It reasoned out that the a*ount collected
under the le$' %as re*itted to the de!ositor' (an7 o+ PPI , %hich the latter used to
ad$ance its !ri$ate interest.