Planters Product vs Fertiphil Corp.

FACTS:

President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which
provided, among others, for the imposition of a capital recovery component (CRC) on the
domestic sale of all grades of fertilizers which resulted in having Fertiphil paying P 10/bag sold
to the Fertilizer and Perticide Authority (FPA).

FPA remits its collection to Far East Bank and Trust Company who applies to the payment of
corporate debts of Planters Products Inc. (PPI). FPA voluntarily stopped the imposition of the
P10 levy. Fertiphil demanded a refund but PPI refused. Fertiphil filed a complaint for collection
and damages against FPA and PPI with the RTC on the ground that LOI No. 1465 is unjust,
unreasonable oppressive, invalid and unlawful resulting to denial of due process of law.

ISSUE: W/N LOI No. 1465 is an invalid exercise of the power of taxation rather the police power

Held: Yes. Police power and the power of taxation are inherent powers of the state but distinct
and have different tests for validity. Police power is the power of the state to enact the
legislation that may interfere with personal liberty on property in order to promote general
welfare, while the power of taxation is the power to levy taxes as 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.

In this case, it is for purpose of revenue. But it is a robbery for the State to tax the citizen and
use the funds generation for a private purpose. Public purpose does NOT only pertain to those
purpose which are traditionally viewed as essentially governmental function such as building
roads and delivery of basic services, but also includes those purposes designed to promote
social justice. Thus, public money may now be used for the relocation of illegal settlers, low-cost
housing and urban or agrarian reform.