G.R. No. L-6435. March 31, 1955
EDUARDO SUAREZ, ET AL., PLAINTIFFS AND APPELLEES, VS. MOUNT ARAYAT SUGAR CO. INC., ET AL., DEFENDANTS, MOUNT ARAYAT SUGAR CO. INC., LA CENTRAL AZUCARERA DE LA CARLOTA AND PAMPAN…
REYES, J.B.L., J.:
alineability of the interest held by the owners of sugar cane plantations and of
sugar mills, or centrals, in the production and marketing allowances (vulgarly
known as “sugar quotas”) fixed under the Philipnine Sugar Limitation Act (No.
4166, as amended) and the various acts of the U. S. Congress limiting the amount
of sugar that may enter the continental United States without payment of duties.
Because of the amount involved, the case was directly appealed to us from the
Court of First Instance of Manila.
The basic facts are not in dispute, and can be reduced to the following:
Plaintiff-appellee Eduardo Suarez owns a sugar cane plantation in Arayat,
Pampanga, that was, by proper milling contract, adhered to the sugar central
owned and operated by the defendant-appellant Mount Arayat Sugar Co. Inc. The
milling contract provided for a division in stated proportions of the
centrifugal sugar and molasses produced by the central from the sugar cane
raised in the plantation.
In 1934 the United States government limited the quantity of duty-free sugar
to be imported from offshore areas, including the Philippines, (Tydings McDuffie
law of March 24, 1934; Agricultural Adjustment Act, [known as Jones Costigan
Act] of 1934, 48 Stat. 672) to the yearly average of the years 1931, 1932 and
1933 and provided that the authorized amounts be allocated between the sugar
producing mills and the planters of sugar cane (an arrangement subsequently
confirmed by the U.S.-Philippine Trade Act of 1946); and the Philippine
Legislature enacted in turn the Philippine Sugar Limitation Act (No. 4166) to
conformably restrict our production of sugar cane and sugar and allocate the
quantity of duty-free sugar among the producers. Under these laws and
regulations issued thereunder (Exec. Orders Nos. 873, 885, 900, 901), the Suarez
plantation was designated as plantation No. 1-302, Arayat Mill District; and
both Suarez and the Mill District were assigned production and marketing
coefficients that resulted in the following production allotment (sugar quota)
for the Suarez plantation:
Export (A sugar) …………………………….. Domestic (B sugar) ……..:…………………. Reserve (C sugar)……………………………
which sugar was shared before the war by Suarez and the Mount Arayat Sugar
Co. Inc. in the proportions fixed by the milling contract.
The sugar mill and facilities of the Mount Arayat Sugar Co. Inc. were
destroyed in December 1941 as a consequence of the Pacific War. As the mill was
not reconstructed and placed in operation notwithstanding the liberation of the
country and return to normalcy; some of the adhered planters decided to transfer
their allotments to other sugar mills and districts.
In April 1949, the Mount Arayat Sugar Company, Inc. sold to Elizalde and Co.
Inc. for the ultimate benefit of appellant, La Carlota Sugar Central, its
“participacion de nuestra Central Arayat en las cuotas azucareras de las
plantaciones detallades en la ad junta Lista” (Exh. G) that included the Suarez
plantation; and the transfer was submitted to and recorded by the defendant
Sugar Quota Administrator, which credited the transferred share coefficients to
plantation No. 22-A-17 of Elizalde & Co. Inc., adhered to La Carlota Sugar
Central. This transfer was made without notice to, nor intervention or assent
of, plaintiff Eduardo Suarez who, on September 13, 1949, sold the sugar quota
allocated to his plantation No. 1-302, for the sum of P774.72, to plaintiff Jose
A. Narciso, a planter” adhered to the Pampanga Sugar Development Co. However,
the latter, as well as the Sugar Quota Administration, declined to admit and
record the transfer unless the consent of the Mount Arayat Sugar Co. Inc., was
first obtained; while the Arayat Sugar Co. refused to agree thereto because of
the previous sale of its share in the plantation’s sugar quota to Elizalde &
Co. Inc.
Thereupon, the plaintiffs-appellees, Eduardo Suarez and Jose A. Narciso,
initiated the present action to obtain resolution of the milling contract
between Suarez and the appellant Mount Arayat Sugar Co., Inc.; to compel the
defendants Administrator of the Sugar Quota Office, Mount Arayat Sugar Co., Inc.
and Pampanga Sugar Development Co., to recognize and record in their books the
sale from Eduardo Suarez to Jose A. Narciso of the entire sugar quota allocated
to his sugar plantation, including the share of the Arayat Sugar Mill; and to
annul the transfer made by Mount Arayat Sugar Co., Inc. to La Carlota Sugar
Central, through Elizalde & Co. Inc., of its share in the allocation of
sugar corresponding to the plantation of appellee Suarez. Plaintiffs-appellees
contend that under section 9 of Act 4166, the sugar quota (production allotment)
of the sugar cane plantation of plaintiff Suarez was an improvement attaching-to
the plantation; and that the Arayat Sugar Central not being in operation, its
sugar cane planters had the right to transfer their entire production allotment
to an operating mill, wihout the consent of the Arayat Sugar Co., Inc.
The Sugar Quota Administrator pleaded that his action in the premises was in
accord with the opinion of the Secretary of Justice dated April 2, 1948,
that—
“* * * a mill company has a right in the production allowance entirely
distinct and separate from that of the plantation owners, and that this right is
not affected by the fact that it is not now in a position to operate, * *
*”.
Wherefore, the plantation owners can not transfer the whole allotment to an
operating mill without the consent of the mill company to which they are
adherent.
The defendants, Pampanga Sugar Development Co. and La Carlota Sugar Central,
likewise pleaded an independent right of the sugar mills to their share in the
sugar quota; that such right does not depend on their performance of the milling
contracts; that the “allotment corresponding to each piece of land”, spoken of
in Section 9, of Act 4166, refers only to the share of the plantation owner, and
that the failure of the sugar mill to operate does not work a forfeiture of its
share in the sugar quotas of the adhered plantations.
The Court of First Instance having upheld the plaintiffs the defendants
(except the Sugar Quota Administrator), appealed to this Court on point of
law.
The issue before us is whether a destroyed and non-operating sugar mill
nevertheless retains its share of the sugar quota allocated to its adherent
plantations and may assign such share to whomsoever it pleases, without
providing for the milling of the sugar cane raised in the adherent plantations;
or whether the planters may transfer the entirety of the quota to another
planter or another mill where their cane can be processed into sugar.
The basic laws regarding the allocation of sugar were the Tydings McDuffie
Act of 1934; the Philippine Sugar Limitation Act, i.e., Act No. 4166 of the
Philippine Legislature; and, after the second world war, the provisions of the
Philippine Trade Act (Bell Act) of 1946.
The Tydings McDuffie Act of 1934 provided in its Sec 6[d] that the amount or
quantity of duty free articles—
“* * * shall be allocated to the producers or manufacturers * * *
proportionately on the basis of their exportation to the U. S. in the preceding
year; except that in the case of unrefined sugars the amount to be exported
annually to the United States free of duty shall be allocated to the sugar
producing mills of the Islands proportionately on the basis of their average
annual production for the calendar years 1931, 1932 and 1933, and the amount of
sugar from each mill which may be so exported shall be allocated in each year
between the mill and the planters on the basis of the proportion to which the
mill and the planters are respectively entitled.”
Pursuant to authority granted by the Agricultural Adjustment Act (48 Stat.
672), the Governor-General caused a master record, called “Sugar Audit”, to be
made of all sugar producing mills and their adherent plantations, with their
1931 to 1933 production and percentage shares in the resulting sugar; while to
conform to the Tydings McDuffie Act, the Philippine Legislature enacted on the
same year Act No. 4166, avowedly in order to “limit the production of sugar cane
and sugar in the Philippine Islands to such amount as would be sufficient to
cover the quota alloted to the Philippine Islands under such laws and the needs
of the local consumptions” plus certain reserves; and “to allot among mill and
plantation owners the quantity of sugar which may be produced and marketed”; and
for this purpose, the Act empowered the executive “to fix and determine by
executive order or proclamation” the total amount of sugar permitted to be
milled within any calendar or crop year” (Sec. 7), or the manufacture whereof
may be permitted in any given year” (Sec. 8). In Section 9, the Act expressly
provided that
“The allotment corresponding to each piece of land untfer the provisions of
this Act shall be deemed to be an improvement attaching to the land entitled
thereto. Such allotments shall be transferable only in accordance with rules and
regulations”.
that the Governor-General was authorized to issue. The second paragraph of
the section reiterated that mill companies and plantation owners might sell,
transfer or assign their allotments in accordance with such rules and
regulations.
Executive Order No. 873, dated September 30, 1935, required, in case of
voluntary transfers of quotas by the planters, “the consent in writting of the
milling companies affected, except in cases of transfers to other plantations
adherent to the same milling company”.
In 1946, the U.S. Congress enacted the U.S.-Philippine Trade Relations Act
vulgarly known as the Bell Act) which contained in connection with sugar quotas,
the following provisions:
“See. 211. Absolute qtuota on sugars.
* * * * * * *
(d) Allocation of quotas for Unrefined Sugars.—The quota for
unrefined sugars, including that required to manufacture the re fined sugars,
established by this section, shall be allocated annually to the sugar-producing
mills and plantation owners in the Philippines in the calendar year 1940 whose
sugars were exported to the United States during such calendar year, or their
successors in interest, proportionately on the basis of their average annual
production (or in the case of such a successor in interest, the average annual
production of his predecessor in interest) for the calendar years 1931, 1932,
and 1933, and the amount of sugars which may be so exported shall be allocated
in each year between each mill and the plantation owners on the basis of the
proportion of sugars to which each mill and the plantation owners are
respectively entitled, in accordance with any milling agreements between them,
or any extension, modification, or renewal thereof.(e) Allocation of quotas for Refined Sugars.—The quota, for refined
sugars established by this section shall be allocated annually to the
manufacturers of refined sugars in the Philippines in the calendar year 1940
whose refined sugars were exported to the United States- during such, calendar
year, or their successors’ in interest, proportionately on the basis of the
amount of refined sugars produced by each such manufacturer (or in the case of
isuch successor in interest, the amount of refined sugars produced by his
predecessor in interest) which was exported to the United States during the
calendar year 1940.
Sec. 216. Transfers and assignments of quota allotments:
The holder of any allotment under existing law, including his successor in
interest, and the holder of any allotment under any of the quotas established by
sections 211, 212, or 214, may transfer or assign all or any amount of such
allotment on such terms as may be -agreeable to the parties in interest. If,
after the first nine months of any calendar year, the holder of any allotment
for that year, under any of the quotas established by such sections is or will
be unable for any reason to export to the United States all of his allotment, in
time to fulfill the quota for that year, that amount of such allotment which it
is established by sufficient evidence cannot be so exported during the remainder
of the calendar year may be apportioned by the Philippine Government to other
holders of allotments under the same quota, or in such other manner as will
insure the fulfillment of the quota for that year: Provided, That no
transfer or assignment or reallocation under the provisions of this section
shall diminish the allotment to which the holder may be entitled in any
subsequent calendar year.
Under the sugar limitation laws and regulations (specially Executive Order
No. 900 of 1935), the entire quota. of Sugar importable from the Philippines
into the U.S. was proportionately distributed (allotted) among the various mill
districts (each composed of one sugar mill or central and its adhered
plantations) according to the ratio that the average production of each mill
district for 1931-1933 bore to the total Philippine sugar production for the
same period (Executive Order No. 900, sec. 1). This “portion of the quota”
allotted to each mill district was termed “mill district U. S. production
coefficient”; and expressed in tons of sugar, it was called “mill district
production allowance” (sec. 2). Similarly, within the district, each plantation
was given a “plantation owners U. S. production coefficient”, representing the
“portion of the A sugar quota” (Executive Order No. 900, sec. 3) corresponding
to the plantation, in the same ration that the annual quantity of sugar
manufactured from the plantation’s sugar cane bore to the total quantity of
sugar manufactured in the Islands for 1931-1933; and in terms of tons of sugar
the coefficient was called “Plantation owner’s U. S. production allowance” (sec.
4).
This production allowance was in. turn divided into “plantation owner’s U. S.
marketing coefficient” (and allotments) and “mill U.S. marketing coefficient”
(and allotments) according to their respective percentage share in the sugar
milled (Exec. Order No. 900, sees. 6-9) that pertained to the planter or to the
mill according to contracts or usage.
It can thus be seen that the splitting of the production allowance into
plantation owners’ ‘allotment and mill allotment is a direct consequence of the
division of the resulting sugar between them, according to their respective
contribution (cane and industry) in the production of the article. In principle,
therefore, the quota or production allowance is single and indivisible until the
sugar is actually produced. Hence, where the mill, as in the case at bar, stops
operations, the sugar allotment remains single and entire, and can only be
transferred as one single unit. Any other interpretation would permit the
separation of phases in the processing of sugar cane that the law considers as
an indivisible operation, characterized by the common participation of the
allotees (planter and central). This ultimate indivisibility of the production
allotment or quota is confirmed by Exec. Order No. 873, sec. 3, to the effect
that “lifting” or transfer of allotment from one plantation to another required
the consent of the mill or central, “except in the cases of transfers to other
plantations adherent to the same milling company”, where the substituted cane is
be processed by the same mill.
Our conclusion is not controverted by the transferability of the allotments
provided in the law (sec. 9, Act 4166), because the transferees merely
substitute the transferors in the process of producing the sugar, and in the
same allotment while the transferors cease to take part therein. Thus, section 4
of Ex. O. No. 900 speaks of sugar which may be manufactured by the milling
company from sugar cane “delivered to the mill in substitution for that grown in
the plantation” as coming under the plantation owner’s production allowance;
while the milling contract (sec. 27, Annex A) reserves the mill’s right to have
some other sugar mill substitute it in the work of producing sugar from the
planter’s cane. But there is nothing in the law or the regulations to indicate
that they ever contemplated the individual marketing allotments to be separately
transferable so as to destroy the unity of the production allowance, from which
said marketing allotments were originally derived. Whereiore, it has been ruled
that—
“In order to transfer the (quota) share of the mill, there must be,
therefore, a corresponding transfer of its obligations or duties towards its
planters. In otner words, there must be a novation by the substitution of a new
debtor in piace of the original one. Such novation can not be made, however,
without the consent of the creditors,—namely, the planters (Art. 1205) Civil
Code.In the light of the foregoing, the Cebu Sugar Company should, before elieccmg
any transier, negotiate first with tne plantation owners lor tne purpose of
securing their comornuty thereto.” (Opinion of tne Secretary of Justice, Jan. 8,
1947, Op. No. 14, ser. 1947).
The right to substitute another mill in its stead, reserved to appellant
central in its milling contract (par. 27) refutes the contention of Suarez that
the central’s failure to operate justifies the resolution or cancellation of the
contract, and forfeits its right to any allotment.
There being no reason to split the yearly production allotment into separate
marketing allotments (planters and mill’s where no sugar is being actually
produced nor marketed, as in the case of the Mount Arayat Sugar Co., Inc., the
conclusion must be that the said annual marketing allotment can only be assigned
or transferred in its entirety, and as a unit, by the interested parties
(planter and mill), upon such terms or conditions as said parties and the
transferee or transferees may agree upon. Such annual transfer is subject to the
regulations and approval of the Philippine Sugar Administrator, since the
Government has a vital interest in the maintenance and distribution of the
allotments and in preventing any accumulation of the production and marketing
allowances that may be detrimental to the industry and the country as a
whole.
Appellants contend that even nonproducing centrals should be allowed to
retain and separately dispose of their marketing quotas because “the only
condition necessary to entitle a (sugar) mil] to a quota (allotment) is that the
mill shall have produced and exported sugar to the United States in 1940”, and
cite in support sec. 211 of the Bell Act and the opinion of Secretary of Justice
Ozaeta, dated April 2, 1948. We disagree. Such contention unwarrantedly assume
that the allocation provided in Section 211 of the 1946 Philippine Trade Act
(Bell Act) is in the nature of a bounty or reward for past services in producing
and exporting sugar to the United States on or befora 1940. We see no reason for
such construction. The reference to 1940 export in Section 211 (d) in our
opinion merely purports to restrict future sugar exports to the Philippine sugar
producers entitled to quotas in 1940, and to exclude those who entered the sugar
production field at a later date. The plain terms of the section indicate that
it was designed to merely continue the original system of allocation between
planters and sugar producing mills initiated in 1934 by the Tydings McDuffie
Act, in recognition of the complementary roles and respective contributions of
planters and processors to the production and manufacture of the sugar. It is to
be observed, that both Acts (Bell and Tydings McDuffie) provides for allocation
of the sugar quota in each year between the mills and the planters,
thereby implying that the allocation could vary from year to year. No such
variability could exist for a mill that had stopped producing sugar, for its
quota could only be determined as of its last year of production.
Upon the other hand, we find no justification for the contention of the
appellee planters, sustained by the Court below, that in the event that a sugar
mill stops operations permanently, then the marketing allotments, both the share
of the plantation and that of the central, should be considered owned by the
planter, being attached to the plantation as an improvement thereof, within the
purview of sec. 9, Act 4166. Neither Executive Order Nos. 497 and 512, issued
prior to the Sugar Limitation Act (Act No. 4166), nor Executive Order No. 873
Series of 1935, issued to implement said Act, appears to have contemplated that
the allotments in their entirety belong to the planter alone.
Under sec. 5 of the Executive Order Nos. 497 and 5124 Series of 1934, the
plantation owner’s allotment was determined by (1) dividing the mill district
allotment among all plantations in the mill district on the basis of their
average production for 1931 to 1933; and “(2) multiplying the quantity so
obtained for each plantation by the plantation share, expressed in
percentage.”
The final provisions of Executive Order No. 873, Series of 1935, lead to the
same conclusion:
“(1) The term ‘plantation-owner’s allotment’ means the quantity of sugar of a
stated class which is a given year may, in the case of A and B sugar be
marketed, and in the case of C sugar be held as a reserve, by the owner and/or
planters of the plantation concerned.”
Plainly “the quantity of sugar * * * which in a given year * * * may be
marketed * * * or held as reserve * * * by the planter concerned” can not refer
to anything more than the planter’s share (of allotment) of the sugar
manufacture by the mill out of the planter’s sugar cane; and in no case includes
the mill’s share of the sugar, nor the marketing rights connected with the
latter.
Whatever interest the planter may claim in the mill’s share of the marketing
allotment must be based on the fact that plantation owners are not usually in a
position to mill tiieir cane and produce sugar therefrom independently of the
centrals, and where a sugar mill or central ceases to operate, the adherent
plantation owners are driven to either (1) stop planting sugar cane or
(2) deliver the cane to another sugar mill for processing into sugar.
Should the nonoperatmg mill (like appellants) be held entitled to retain and
transfer to other entities its full share in the sugar quota allocated to the
adhered plantations, and able to make such transfer independently of the
planters, then the marketing allotment of the latter will be necessarily
reduced, either in amount or in value; for other mills will not usually agree to
process the planter’s cane unless they receive a marketable share in the
resulting sugar, or unless they are otherwise compensated for the processing of
the cane.
To illustrate: Let us suppose that the quota for a given plantation is 100
picuk of exportable (A) sugar, of which 60 piculs correspond to the planter, and
40 piculs to the central. If the latter may retain and transfer its share of 40
piculs to whomever it pleases, even if it ceases to operate, then the planter
would have to mill his cane with another central. But for the same amount of
cane processed, only 60 piculs of the resulting sugar would be marketable under
the law. Ordinarily, the new mill would not agree to process the planter’s cane
unless it could get a certain portion of marketable sugar for its pains. If this
portion must come from and be deducted from the 60 piculs of the planter’s
quota, the planter will receive less than formerly. So that y by discontinuing
operations and forcing the planter to look for another processor, the old mill
to which the planter was originally adhered in effect reduces the planter’s
quota to less than his original share. Hence the planter could rightfully claim
the right to transfer’the old mill’s quota to the new mill.
But if it can be shown that the new mill would agree not to diminish the
planter’s share of marketable sugar, the planter would have no justifiable claim
to ask that the marketing allotment of the original mill should be transferred
to the new one. In other words, the planter has the right to. keep his quota
share undiminished; but not to enrich himself at the expense of another’s
quota.
If the parties interested in the allotment should fail to agree, for any
reason, and the allotment remain untransferred within the first nine months of
the year, then in our opinion the Government has the right to step in and
reallocate the vacant quota or allotment, in the exercise of the power reserved
to it by sec. 216 of the Philippine Trade (Bell) Act of 1946:
“If after the first nine months of any calendar year, the holder of any
allotment for that year, under any of the quotas established by such sections,
is or will be unable for any reason to export to the United States all of his
allotment, in time to fulfill the quota for that year, that amount of such
allotment which it is established by sufficient evidence cannot be so exported
during the remainder of the calendar year may be apportioned by the Philippine
Government to other holder of allotments under the same quota, or in such other
manner as will insure the fulfillment of the quota for that year:
Provided, That no transfer or assignment or reallocation under the
provisions of this section shall diminish the allotment to which the holder may
be entitled in any subsequent calendar year.”
While on its face applicable only to exports of A sugar, this law establishes
a principle applicable to all classes of sugar in similar situation. The
allocation of quotas under the sugar limitation laws and regulations was
primarily established for public interest, and it is closely linked with the
preservation of markets for our products, the dollar reserve conservation, and
other economic policies in which the State has a paramount interest. The
redistribution of allotments, therefore, can not be viewed as a matter of
exclusively private interest, affecting only sugar centrals and planters, but
one concerning the nation at large. It is but proper therefore, that it should
be entrusted to the State in the interest of the people.
The cessation of operations of a sugar mill or central entail the inability,
not only of the central, but also of its adherent planters, to meet the yearly
quotas, by producing the sugar alloted to them; hence, it is the right of the
Government, through the apposite instrumentality, the Philippines Sugar
Administrator, to reapportion their allotments in such manner as may be required
to insure the fulfillment of the quotas. It is ask that, by its complexity, can
not be considered a proper subject of judicial determination, since it requires
the consideration and balancing of numerous and variable factors with which the
courts can not be expected to cope. Market and crop conditions, capacity of
sugar mills, sugar quota deficiencies or surpluses in each district for each
year and other data, both technical and complex, interlace and counteract each
other to influence the adequate solution to be given. For this evaluation, the
legislative and administrative branches, rather than the courts, are peculiary
fitted and have been entrusted by law with the task. To that purpose, they may
make all necessary investigations and findings, and issue the rules and
regulations required to make a just reapportionment.
In a similar case, the United States Court has said in Secretary of
Agriculture vs. Central Roig Hef. Co., 94 L. Ed. 392:
“It would be a singular intrusion of tile judiciary into tha Legislative
process to extrapolate restrictions upon the formulation of such an economic
policy from those deeply rooted notions of j vi stice which the Due Process
Clause expresses. To fix quotas on
In conclusion, we declare and so hold:
(1) That the Tights to each plantation sugar production allowance, and to the
marketing allotments derived therefrom, constitute an indivisible whole before
the sugar is actually produced thereunder;
(2) That in the absence of sugar actually produced, the allotments are
transferable only as a whole, by common agreement between the parties
interested, planter and sugar mill;
(3) That should the parties interested fail to come into agreement, the
Government through the Sugar Administrator, may, after the first nine months of
the calendar year, redistribute the unfilled allotment for that year among other
quota holders;
(4) That the transfers of allotments by Mount Arayat Sugar Co. to EHzalde
& Co., and by Eduardo Suarez to Jose Narciso, of the allotments
corresponding to plantation No. 1-302, Arayat Mill District, not being made by
common consent of Suarez and the sugar company, are invalid and inoperative;
(5) That no action lies to compel the Pampanga Sugar Development Co. and the
Philippine Sugar Administrator to record the aforesaid transfers;
(6) That in the absence of transfer by common agreement, the allotments
involved are subject to reallocation by the Sugar Administrator under sec. 216
of the Philippine Trade Act of 1946.
Wherefore, the judgment appealed from is reversed and the complaint
dismissed. Without costs. So ordered.
Paras, C.J., Pablo, Montemayor, Reyes, A., Jugo, Labrador and
Concepcion, JJ., concur.
CONCURRING OPINION
BAUTISTA ANGELO, J., concurring and dissenting:
According to the majority opinion, “the splitting of the production allowance
into plantation owner’s allotment and mill allotment is a direct consequence of
the division of the resulting sugar between them, according to their respective
contribution (cane and industry), in the production of the article” and,
therefore, as a matter of principle, “the quota or production allowance is
single and indivisible until the sugar is actually produced. Hence where the
mill, as in the case at bar, stops operations, the sugar allotment remains
single and entire, and can only be transferred as one single unit.” The majority
opinion reaches the conclusion that “said marketing allotment can only be
assigned or transferred in its entirety, and as a unit, by the interested
parties (planter and mill), upon such terms or conditions as said parties and
the transferee or transferees may agree upon.” As a consequence, the majority
opinion declares that the transfer by Mount Arayat Sugar Co. of its quota of
marketing allotment to Elizalde & Co., not having been made with the consent
of the planter Eduardo Suarez, is invalid and inoperative.
While I agree to the theory that while a sugar mill is in operation the quota
or production allowance is single and indivisible within the scheme of the sugar
limitation law implanted in the Philippines, I cannot set my mind at rest on the
proposition that when the mill stops the marketing allotment can only be
transferred as one single unit or in its entirety, or can only be effected upon
such terms or conditions as planter and mill may agree. Otherwise, none can make
the transfer with the result that the Government may then have the right to
intervene and redistribute the whole quota allotment among oher quota holders in
the manner provided for in Section 216 of the Philippine Trade of 1946. The
above proposition not only ignores the basic policy concerning the mode of
allocating to mills and plantation owners the quantity of sugar that may be
produced in the Philippines under the sugar limitation law but disregards the
express provision contained in the law concerning the transfer ability of the
marketing allotment corresponding to both mills and planters.
The basic policy concerning the allocation of the sugar quota to millers and
planters is found in Section 3 of Commonwealth Act No. 416G which’ approved to
implement the Tydings-McDuffie Law. Said policy is “to allot among mills and
plantation owners the quantity of sugar which may be produced and marketed
for direct consumption or held for reserve in the Philippine Islands, and, to
make such allocation in such a way as to offset and ameliorate hardships and
inequalities that may result from allotments made under the laws of the United
States”, which is reiterated in Section 6 wherein it is enjoined that the
allotment shall be made “among the sugar plantation owners, sugar mills, and
refining plants entitled thereto under the laws and regulations governing the
same.” It should also be noted that such policy is but a reflection of the
express provisions of the Tydings-McDuffie Law which, in so far as may be
pertinent, provides that “the amount of sugar from each mill may be so exported
shall be allocated in each year between the mill and the planters on
the basis of the proportion to which the mill and the planters are respectively
entitled.” Then again, after the liberation, the Philippine Trade Act of 1946
was approved wherein, with regard to unrefined sugar, it was provided that “the
amount of sugar which may be so exported shall be allocated in each year between
each mill and the plantation owners on the basis of the proportion of
sugar to which each mill and the plantation owners are respectively
entitled,”
It is clear from the above recital of the different provisions concerning the
allocation of unrefined sugar that may be exported to the United States that the
quotas as thus allocated belong not only to the plantation owners but likewise
to the sugar mills concerned. And this is undoubtedly due to the fact that the
sugar industry is the work both of the planters and sugar mills or the product
of their cooperative efforts and individual investment. If the sugar quotas
belong respectively to the mills and the planters to the extent of the amount
allocated to them, why can they not assign or transfer them when their
partnership or common venture has ceased to exist? Why cannot the mill transfer
its allotment to another mill where it may be of use to the industry when it can
no longer continue its operation for a cause beyond its control? Why declare its
forfeiture to the Government for reallocation when neither the law nor
regulation decrees such forfeiture? To hold that when a central or a sugar mill
stops operation, even if the cause is force majeure, its market allotment should
be subject to re-allocation by the Government would be tantamount to declaring
its forfeiture which is not only unfair and unjust but not sanctioned by any law
or regulation.
On the other hand, such interpretation would seem to run counter to what
Commonwealth Act No. 4166 provides concerning transferability of market
allotments. A cursory reading of Section of said Act would show that “such
allotments shall be transferable only in accordance with such rules and
regulations as may be issued by the United States Sugar Authority” (now Sugar
Quota Office), and that “mill companies and plantation owners may sell, transfer
or assign their allotments received under the terms of this Act only in
accordanee with such rules and regulations as may be issued by the United States
Sugar Authority in the. Philippine Islands”, which means that either the mill or
the planter may sell its or his respective allotment, one regardless .of the
consent of the other, provided that the sale be made in accordance with the
rules and regulations adopted for the purpose.
There is no doubt that the Sugar Quota Office has on hand appropriate rules
and regulations concerning the matter and as a matter of fact it is in pursuance
of said rules and regulations that the transfer made by the Mount Arayat Sugar
Co. of its allotment to Elizalde & Co. has been allowed and approved by said
Office. It is for this reason. that I find unwarranted the conclusion reached in
the opinion of the majority to the effect that the marketing allotments given by
law to the mills and planters should be considered as a unit and cannot be
transferred except with the consent of both parties even if the relationship has
already terminated.
The opinion herein expressed is in line with the interpretation placed on the
law concerning allocation of sugar quotas to the mills and planters and the
transferability thereof from one mill district to another or from one planter to
another by the office called upon to implement the law—the Sugar Quota
Office—which interpretation should be given weight and judicial sanction if we
are to accord, as we must, due regard for the principle of comity that should
exist between the three branches of our Government.
“This official ruling of the executive officials is now entitled to
consideration by the courts. Courts will and should respect the contemporaneous
construction placed upon a statute by the executive officers whose duty it is to
enforce it, and unless such interpretation is clearly erroneous will ordinarily
be controlled thereby. (In re Allen (1903), 2 Phil., 630, following Pennoyer
vs. McConnaughy (1890), 140 U. S., 363, Government of Philippine
Islands Ex. Rel. Municipality of Cardona vs. Municipality of Binangonan
(1916), 34 Phil., 518.” (Molina vs. Rafferty, 37 Phil., 545, 555)“At the same time, the contemporaneous construction of the law by two
departments of the Government—one the legislative branch responsible for its
enactment, and the other the executive branch responsible for its
enforcement—while not controlling on the Judiciary, is entitled to our
respectful consideration. For the orderly and harmonious interpretation and
advancement of the law, the courts should, when possible, keep step with the
other departments.” (Yra vs. Abiio, 52 Phil., 380, 384.)“And it is a rule repeatedly followed by this court that the construction
placed upon a law at a time by the officials in charge of enforcing it should be
respected.” (Guanio vs. Fernandez, 55 Phil., 814,
819.)
This view also finds support in the opinion of the Secretary of Justice on a
similar question which, under the same principle of comity, should be given due
weight and cannot be lightly brushed aside. The pertinent portion of the opinion
of the Secretary follows:
“The conclusion is inescapable that a mill company has a right in the
production allowance distinct and separate from that of the plantation owners,
and that this right is not affected by the fact that it is not now in a position
to operate. It follows that the production allotment does not belong entirely to
the plantation owners, and that they cannot transfer the whole allotment to an
operation mill district without the consent of the mill company to which they
are adherent.” (R. A. p. 372)
I therefore, disagree with the opinion of the majority to the effect that the
transfer made by the Mount Arayat Sugar Co. of its allotment to Elizalde &
Co. having been made without the consent of its planters, is invalid and
inoperative. It is valid for it received the approval of the Sugar Quota Office.
In all other respects I agree, particularly with regard to the finding that when
a sugar mill stops operations a planter does not acquire the share of the quota
of the mill but only retains his own, and, therefore, it is the only share he
can transfer with the approval of the Sugar Quota Office.
Bengzon, J., concurs.
Judgment reversed.