Supreme Court voids Marcos order on fertilizer levy

The Supreme Court has voided a presidential fiat to rehabilitate an ailing fertilizers firm, Planters Products, Inc. (PPI). In a 33-page decision penned by Associate Justice Ruben T. Reyes, the third division declared as unconstitutional President Ferdinand E. Marcos’s Letter of Instruction (LOI) 1465 for its "undue advantage [given] to a private corporation." By virtue of his lawmaking powers, Mr. Marcos issued LOI 1465 on June 3, 1985 as a capital recovery component on the domestic sale of all fertilizers. The government, through the Fertilizer Pesticide Authority (FPA), collected a P10 levy for every fertilizer bag sold to the domestic market to make Planters Products financially viable. According to its Web site, Planters Products was established in 1963 as a multinational corporation called Esso Standard Fertilizer and Agricultural Chemical Company. In 1970, it was renamed Planters Products when it was purchased by the Sugar Producers Cooperative Marketing Association. The site recalled that the company was instrumental in the Marcos regime’s Masagana 99 rice-planting program, and supplied 70% of the nation’s fertilizer requirement. PPI’s board was then composed of government appointees: the Agriculture secretary, central bank governor, Finance secretary, Philippine National Bank president, Trade secretary and two private sector representatives. There has since been a question as to whether the company was private or government-owned. The company’s Web site, and the Top 7000 Corporations of the Philippine Business Profiles and Perspectives, Inc. as of 2006, do not indicate the current officers. Under LOI 1465, another private firm, Fertiphil Corp., remitted a total levy of P6.7 million to the Far East Bank and Trust Company. It demanded a refund after the dictator was ousted in 1986. The high court decision also ordered PPI to refund Fertiphil’s P6.7 million. In 1986, the FPA stopped the collection of the levy, and there was no record whether collections were continued thereafter since LOI 1465 was not recalled. When PPI refused to acknowledge Fertiphil’s claims, the company filed a case with the Makati Regional Trial Court and claimed that the state has the right to enforce LOI 1465 by virtue of its police powers. The Makati court, and later the Court of Appeals, ruled that LOI 1465 was baseless. In affirming the lower courts, the high court said: "We find it utterly repulsive that a tax law would expressly name a private company as the ultimate beneficiary of the taxes to be levied from the public. This is a clear case of crony capitalism." Even if the government has the power to tax, it does not follow that laws created are constitutional. "Taxes... cannot be used... for the exclusive benefit of private persons," the high court noted. "Worse, the liability of Fertiphil and other domestic sellers of fertilizer to pay the levy is made indefinite. They are required to continuously pay the levy until adequate capital is raised for Planters Products," it added. — Ira P. Pedrasa, BusinessWorld