Case Digest (G.R. No. 199990)
Facts:
Planters Products, Inc. (PPI) and Fertiphil Corporation are Philippine corporations engaged in importing and distributing fertilizers. On June 3, 1985, President Marcos issued Letter of Instruction No. 1465 (LOI 1465) imposing a Capital Recovery Component (CRC) of ₱10 per fertilizer bag on all domestic sales until PPI achieved financial viability. Pursuant to the LOI, Fertiphil paid ₱6,689,144 to the Fertilizer and Pesticide Authority (FPA) between July 8, 1985 and January 24, 1986; the FPA remitted these collections to PPI’s depositary bank. After the 1986 EDSA Revolution, the FPA ceased collecting the CRC. When PPI refused Fertiphil’s demand for a refund, Fertiphil filed a complaint for collection and damages with the Makati Regional Trial Court (RTC), challenging LOI 1465 as unjust, unreasonable, oppressive, and violative of due process because it exclusively benefited a private enterprise. On November 20, 1991, the RTC held the CRC an invalid tax for private benefit and ordeCase Digest (G.R. No. 199990)
Facts:
- Parties and LOI No. 1465
- Planters Products, Inc. (PPI) and Fertiphil Corporation are Philippine corporations importing and distributing fertilizers and agrochemicals.
- On June 3, 1985, President Marcos issued Letter of Instruction (LOI) No. 1465 imposing a capital recovery component (CRC) of ₱10 per bag on all domestic fertilizer sales “until adequate capital is raised to make PPI viable.”
- Collection and Remittance
- Fertiphil paid ₱6,689,144 to the Fertilizer and Pesticide Authority (FPA) between July 8, 1985 and January 24, 1986.
- FPA remitted these collections to Far East Bank and Trust Company, the depository bank of PPI.
- Post-EDSA Developments and Demand for Refund
- After the 1986 Edsa Revolution, FPA ceased the levy. Fertiphil then demanded refund from PPI, which refused.
- Fertiphil filed a complaint for collection and damages against FPA and PPI in the Makati RTC, challenging LOI 1465 as unjust, oppressive, and unconstitutional.
- Proceedings Below
- RTC (1991) declared LOI 1465 unconstitutional as a private-purpose tax, ordered PPI to refund ₱6,698,144 plus 12% interest, attorney’s fees (₱100,000) and costs.
- CA (2003) affirmed the RTC decision but deleted attorney’s fees award; held that (a) the constitutionality issue was the lis mota of the collection suit, and (b) LOI 1465 violated public-purpose and equal-protection principles even if justified under police power.
Issues:
- Whether Fertiphil had locus standi and whether LOI 1465’s constitutionality can be collaterally attacked in a collection suit.
- Whether LOI 1465 is a valid exercise of taxation or police power for public purpose, including purported benefit to a farmers’ foundation.
- Whether funds collected under LOI 1465 became government funds under the doctrine of operative fact prior to invalidation.
- Whether the principle against unjust enrichment applies to require refund of levies paid under LOI 1465.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)