QUESTION: What is Locus Standi? ANSWER: The right to stand before the court to bring action against another party for collection and damage because it was the affected party.
Petitioner PLANTERS PRODUCTS INC. and respondent FERTIPHIL CORP. are private corporations engaged in importation and distribution of FERTILIZERS, PESTICIDES & other Agricultural Products.
Then President Marcos issued a Levy Tax through a Letter of Instruction (LOI No. 1465) imposing capital recovery component of P10 per bag of fertilizer to be remitted to FERTILIZER & PESTICIDE AUTHORITY (FPA). The levy was to continue till adequate capital was raised to make PPI financially viable.
So FertiPhil remitted the same to said agency, which was then remitted to the depository bank of PPI. FertiPhil paid roughly P6M to FPA from 1985 to 1986. Ito yung kasagsagan ng EDSA Revolution.
After the 1986 EDSA Revolution, FPA voluntarily stopped the imposition of the P10 levy. FertiPhil therefore demanded from PPI a full refund of the amount it remitted, however PPI refused.
As a result FertiPhil filed a complaint for collection and damages questioning the constitutionality of LOI 1465, claiming that it was an unjust, unreasonable, oppressive, invalid and unlawful tax 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 doesn’t have a “personal and substantial interest in the case.” Meaning 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 FERTIPHIL has Locus Standi to question the constitutionality of LOI No. 1465. (What is POWER OF TAXATION & POLICE POWER?)
RULING:
FERTIPHIL has Locus Standi. It suffered direct injury because it was a TAX PAYER.
Actually the doctrine of Locus Standi is a mere procedural technicality which may be waived. In the Abaya vs. Ebdane case the court even took a liberal stance stating that “a taxpayer need not be a party to the contract in order to challenge its validity”
I think this is more of a question of whether the imposition operated under the basis of POLICE POWER or the POWER TO TAX which are 2 of the inherent powers of the state.
Police Power is the power of the state to enact legislation that may interfere with personal liberty or property in or to promote the general welfare, while Power of Taxation is the power to levy taxes to be used for public purpose.
The main purpose of each:
Police Power = Regulation of Behavior or Conduct for the Public Welfare
Power of Taxation = Revenue Generation for the Public Welfare
These powers are distinct and have different tests for validity. The “lawful subject” 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.
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 then the exaction is properly called a tax.
FertiPhil wins this case.
