ABAYA vs. EBDANE, JR.

QUESTION:  Must a Taxpayer be a party to a contract in order to challenge it's validity?

ANSWER:  NO. Ratio: TAXPAYER SUIT  

Petitioners Plaridel M. Abaya who claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen, and Plaridel C. Garcia (birds of the same feather ;p) likewise claiming that he filed the suit as a taxpayer, former military officer, and a Filipino citizen, mainly seeking to nullify a DPWH resolution which recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of the civil works known as Contract Package No. 1. They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and China Road & Bridge Corporation pursuant to said resolution. 

Respondent defends Petitioners don’t have Locus Standi since they are not party to the contract.

ISSUE:

Do petitioners have the LOCUS STANDI (Legal Standing) to file the instant case against the government notwithstanding  that they are not a party to the contract to challenge its validity?

RULING:

YES. As TAXPAYERS  they have Locus Standi to file the present suit. 

Briefly stated, locus standi is a right of appearance in a court of justice on a given question. More particularly, it is a party’s personal and substantial interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged. 

Locus standi however is merely a matter of procedure and it has been recognized that in some cases, suits are not brought by parties who have been personally injured by operation of law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest.  Consequently , the court in a catena of cases, has invariably adopted a liberal stance on locus standi, including those cases involving taxpayers. 

Ito yung kaya minsan maynaririnig kang nagfafile ng kaso pero wala naman silang kinalaman sa kontrata or agreement or deal and sinasabi lang nila "at baket taxpayer ako ah? baket ba?".  It is what you call a TAXPAYER’S SUIT. The prevailing doctrine in Taxpayer's Suit is to allow taxpayers to question government contracts especially pag merong

1. illegal disbursement of public funds
2. the public money is being deflected to some other purpose or to someone's private bank account, or they see
3. wastage of public funds through the enforcement of an invalid or unconstitutional law entered into by the national government or GOCCs  allegedly in contravention of the law. 

Significantly, a taxpayer need not be a party to the contract to challenge its validity.  

So if you see the same or have personal knowledge of the same, do remember that as taxpayer, you have the legal standing (locus standi) to file a case in court against the irregularity you see in the government. So di mo na kailangan magsumbong pa kay President Digong, and di mo na din kailangan pang magcreate ng sangkatutak na memes sa social media.  You yourself as taxpayer have the right to question those irregularities in court, kaya sige dong, day, ate, koya ifile mo na yung case, sige te ihugot mo te  :)

PLANTERS PRODUCTS INC. vs. FERTIPHIL CORP.

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.