FEDERATION OF FREE FARMERS, MELQUIADES BETIOS, CRESENCIANO FERNANDEZ, SANCHO PEREZ AND AGATON POSA, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS, VICTORIAS MILLING COMPANY, I…

Four separate petitions of the respective parties concerned for
the review of the decision of the Court of Appeals in CA-G.R. No. 47298-R,
entitled Federation of Free Farmers, et al. vs. Victorias
Milling Co., Inc., et al. of August
12, 1975.

The appellate court held that notwithstanding the provisions of Section
9, in relation to Section 1 of the Sugar Act of 1952, Republic Act 809,
providing that of any increase in the share of the proceeds of milled sugarcane
and derivatives obtained by the planters from the centrals in any sugar milling
district in the Philippines, 60% of said increase shall correspond to and
should be paid by the planters to their respective laborers, the laborers of
the planters affiliated to the Victorias Milling
District who are members of or represented by the Federation of Free Farmers,
one of herein petitioners, have not been fully paid their share thus provided
by law, corresponding to crop years 1955 to 1974, in spite of clear evidence in
the record showing that the increase of 4% in the share of the Planters, Victorias Milling District, cor­responding to all the years
since the enforcement of the aforementioned Act had already been paid by
petitioner Victorias Milling Co., Inc. to said
planters.  The Court of Appeals further
found that even the shares of the laborers corresponding to crop years
1952-1955, when by operation of the Act, the increase was 10%, had not been
paid.  The appellate court rendered
judgment holding the planters of the district and Victorias
Milling Co., Inc. jointly and severally liable to the said laborers for all
said alleged unpaid amounts.

All the four parties involved, namely, (1) the FEDERATION, (2)
the PLANTERS, as an association and on behalf of all planters in the Victorias district, (3) two
individual planters (SANTOS and TIROL)
as well as (4) the CENTRAL (VICTORIAS) are now before
Us with their respective opposing positions relative to such decision.

In G.R. No. L-41161, the FEDERATION
maintains that (1) the plantation laborers, its member, have not only not been
fully paid the amounts undisputably due them from
crop year 1952­-1953 to November 1, 1955, during which period all the parties
are agreed that Section 1 of Republic Act 809 was fully applicable, but that
(2) in 1956, VICTORIAS and the PLANTERS had entered into an agreement which
they had no legal right to enter into the way they did, (providing for a 64-36
ratio) that is, in a manner that did not con­form with the ratio of sharing
between planters and millers specified in the just mentioned legal provision,
(which correspondingly provides for a 70-30 ratio) the FEDERATION maintaining
that after the enact­ment of Republic Act 809, all planters and millers in all
the sugar milling districts in the Philippines were deprived of the freedom to
stipulate any ratio of sharing of the proceeds of sugarcane milled by the
respective centrals, as well as their derivatives, in any proportion different
from, specially if less for the planters, than that listed in Section 1 of the
Act; and (3) assuming the PLANTERS and VICTORIAS had the legal right to enter into
any such agreement, that the 60% of the increase given to the PLANTERS under
said agree­ment has not been paid up to now to the respective laborers of said
PLANTERS.  In this connection, the
FEDERATION further urges, in this instance, that the Court of Appeals’ decision
is correct in holding that under the law on torts, the PLANTERS and the CENTRAL
are jointly and severally liable for the payment of the amounts thus due them.

In G.R. No. L-41222, the contentions of petitioner VICTORIAS
are:  (1) that the evidence
incontrovertibly shows that it has already paid in full to the PLANTERS their
respective shares in the proceeds of the sugarcane and derivatives milled by
said central from the moment it was legally decided and agreed that it should
do so, (aside, of course, from other issues which albeit related thereto may
need not be resolved here anymore, for reasons hereinunder
to be stated) (2) in its initial petitions in the trial court, the FEDERATION
admitted that the laborers have been given what is due them as far as the
1952-53 to 1954-55 crops are concerned, and (3) that, even if it were true that
the PLANTERS have not paid their laborers the corresponding share provided for
them by law, the facts and circumstances extant in the records do not factually
and legally justify the holding of the Court of Appeals that the Victorias Milling Company, Inc. is jointly and severally
liable to the laborers for what the latter’s respective planters-employers
might have failed or refused to pay their laborers or which said planters might
have otherwise appropriated unto themselves or absconded.  The CENTRAL also posits that the action as
filed below was not founded on torts but on either an obligation created by
contract or by law, under neither of which it could be liable, and moreover,
even if such action might be deemed based on torts, it has already prescribed,
apart from the fact that since the Federation’s pleadings alleged and prayed
for pay­ment of the laborers’ share in 1955-56-1973-74 crop years, the Court of
Appeals had no jurisdiction to render judgment concerning the 1952-53-1954-55
crop years, the latter not having been the subject of the allegations and
prayers of the FEDERATION in its pleadings in the trial court and all evidence
regarding said matters outside of the pleaded issues were properly and
opportunely objected to.

In G.R. No. L-43153, the PLANTERS, aside from asserting (1) their
freedom to stipulate with the CENTRAL such ratio of sharing as they might agree
upon, regardless of the ratios specified in Section 1 of the Sugar Act, (2)
insist that their respective laborers have already been fully paid what is due
them, under the law insofar as the 1952-53 to 1954-55 crop years are concerned,
thereby impliedly if not directly admitting that as provided by law, the
CENTRAL or VICTORIAS had already paid them the increase they had agreed upon
and (3) that, in any event, the milling company should reimburse them whatever
amounts they might be adjudged to pay the laborers.

Lastly, in G.R. No. L-43369, Planters PRIMO SANTOS and ROBERTO H.
TIROL, who are among the planters in the Victorias
District, complain that the decision of the Court of Appeals ignored their plea
of lack of jurisdiction of the trial court over their persons in spite of their
proven claim that they had not been properly served with summons, and that the
portion of said decision holding them jointly and severally liable with
VICTORIAS and the PLANTERS to the latter’s laborers for the amounts here in
question has no factual and legal basis, considering they were not parties to
the pertinent questioned agreements.

I

In its petition, the FEDERATION assigns the following alleged
errors in the decision under review:

“I  – RESPONDENT THE
HONORABLE COURT OF APPEALS erred in not holding that as contended by the
Honorable Secretary of Labor, and, in effect, the Honorable Secretary of
Justice, the phrase ‘written milling agreements’ in the aforequoted
Section 1 of Republic Act No. 809 has exclusive reference to written milling
agreements still existing upon the effectivity of the
law on June 22, 1952, and, not to those executed subsequent to said date

“II  – RESPONDENT THE
HONORABLE COURT OF APPEALS erred in not holding that the purpose and intendment
of Republic Act No. 809 is to exempt from its operation milling districts in
which there were still existing, on June 22, 1952, written milling agreements
between the majority of planters and the millers

“III – RESPONDENT THE HONORABLE COURT OF APPEALS erred in not
holding that as contended by the Honorable Secretary of Labor, and, in effect,
the Honorable Secretary of Justice, the purpose and intendment of Republic Act
No. 809, admittedly patterned after the Rice Share Tenancy Act, is to firmly
fix by law, effect­ive and, therefore, the legal effect June 22, 1952, the
sharing participation among the millers, the planters and the latter’s laborers
in the unrefined sugar produced in districts not exempt, as well as all
by-products and  derivatives thereof,
and, consequently, to prohibit in said districts written milling agreements,
executed subsequent to said date, providing for sharing arrangements different
from or contrary to the schedule fixed under said Sections 1 and 9, and, to
prevent any form of circumvention thereof

“IV – RESPONDENT THE HONORABLE COURT OF APPEALS erred in
holding that in order ‘to safeguard, preserve, and maintain the integrity,
viability, and health of an industry so vital to the entire economy of the
country’ as sugar industry the lawmakers intended to place in the hands of the
millers and the planters the operation of Republic Act No. 809 — i.e. to
enable them to sti­pulate in their written milling agreements executed
subsequent to June 22, 1952 participations those prescribed in Section 1
thereof

“V – RESPONDENT THE HONORABLE COURT OF APPEALS erred in
invoking the ‘Rules and Regulations to Implement Section 9 of Republic Act 809
dated February 23, 1956, as amended on May 4, 1956 (Exhibit GGG) to support its
conclusion that the lawmakers intended to place in the hands of the millers and
the planters the operation of Republic Act No. 809 — i.e. to enable them to
stipulate in their written milling agreements executed subsequent to June 22,
1952 participations different from those prescribed in Section 1 thereof”
(Pp. 44-45, L-41161 Rec., Vol. 1.)

In its brief here, however, it assigns ten alleged errors thus:

“- I –

“RESPONDENT COURT
ERRED IN DISRE­GARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN
EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, AND, IN NOT HOLDING THAT THE
‘WRITTEN MILLING AGREEMENTS’ CONTEMPLATED IN SECTION 1 OF REPUBLIC ACT NO. 809
BY THE FRAMERS THEREOF WERE THOSE LONG-TERM WRITTEN MILLING AGREEMENTS REFERRED
TO IN THE REPORT OF CHIEF JUSTICE MANUEL V. MORAN, MOST, IF NOT ALL, OF WHICH
HAD EXPIRED AS EARLY AS 1951, AND, NOT THOSE WHICH THE MILLERS AND THE PLANTERS
MIGHT EXECUTE SUBSEQUENT TO THE DATE THE ACT WOULD TAKE EFFECT

“- II –

“RESPONDENT COURT
ERRED IN DISREGARDING THE EXPLANATION MADE BY REPRESENTATIVE CARLOS HILADO,
SPONSOR OF HOUSE BILL NO. 1517, AND, IN NOT HOLDING THAT, BY
INSERTING BEFORE THE TEXT OF SECTION 1 OF REPUBLIC ACT NO. 809 THE
PHRASE ‘IN THE ABSENCE OF WRITTEN MILLING AGREEMENTS BETWEEN THE MAJORITY OF
PLANTERS AND THE MILLERS OF SUGARCANE IN ANY MILLING DISTRICT,’ THE FRAMERS OF
SAID LAW INTENDED TO EXEMPT FROM THE OPERATION THEREOF THOSE MILLING DISTRICTS,
IF ANY, WHEREIN THERE WERE STILL EXISTING, ON THE DATE THE LAW WOULD TAKE
EFFECT, THOSE LONG-TERM WRITTEN MILLING AGREEMENTS BETWEEN THE MILLERS AND A
MAJORITY OF THEIR ADHERENT PLANTERS PROVIDING FOR SHARING ARRANGEMENTS; SAID
EXEMPTION BEING MERELY A PRECAUTIONARY MEASURE TO PRECLUDE SAID MILLERS, IF
ANY, FROM CHALLEN­GING THE LAW AS BEING VIOLATIVE OF PARAGRAPH 10, SECTION L,
ARTICLE III OF THE OLD CONSTITUTION

“- III –

“RESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE
HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF
JUSTICE, AND, IN NOT HOLDING THAT IT IS CONTRARY TO THE PURPOSE AND INTENDMENT
OF THE FRAMERS OF REPUBLIC ACT NO. 809 THAT ‘THE OPERATION AND APPLICABILITY OF
THE SUGAR ACT WOULD REST UPON THE AGREEMENT, THE BILATERAL WILL OF THE CENTRAL
AND THE MAJORITY OF THE PLANTERS OR PERHAPS THEIR COLLUSION, TO THE EXCLUSION
OF AND THE DET­RIMENT OF THE LABORERS, WHOM CONGRESS AS A MEASURE OF LAW AND
PUBLIC POLICY CLEARLY INTENDED TO BENEFIT’

“- IV –

“RESPONDENT COURT
ERRED IN NOT HOLDING THAT WHAT THE FRAMERS OF REPUBLIC ACT NO. 809 HAD
CONTEMPLATED IN ORDER ‘TO SAFEGUARD, PRESERVE, AND MAINTAIN THE INTEGRITY,
VIABILITY, AND HEALTH OF AN INDUSTRY SO VITAL TO THE ENTIRE ECONOMY OF THE
COUNTRY’ AS THE SUGAR INDUSTRY WAS TO PROMOTE SOCIAL JUSTICE AND PROTECT THE
PLANTATION LABORERS THEREIN BY DETERMINING AND FIXING THE RESPECTIVE JUST
PARTICIPATIONS IN THE BENEFITS FROM SAID INDUSTRY AMONG THE MILLERS, THE
PLANTERS AND THE PLANTATION LABORERS

“- V –

“RESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE
HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF
JUSTICE, AND, IN NOT HOLDING THAT, EFFECTIVE JUNE 22, 1952 AND THEREAFTER, EVEN
BEYOND CROP MILLING YEAR 1973-1974 AS LONG AS THE ACTUAL PRODUCTION CONTINUES
TO EXCEED ONE MILLION TWO HUNDRED THOUSAND (1,200,000) PICULS, THE SUGAR
PRODUCE IN THE VICTORIAS MILL DISTRICT, AS WELL AS, ALL ITS BY-PRODUCTS AND
DERIVATIVES, SHOULD BE DIVIDED AMONG THE CENTRAL, THE PLANTERS AND THE LABORERS
AS FOLLOWS:  THIRTY (30%) PER CENT FOR
THE CENTRAL, SIXTY-FOUR (64%) PER CENT FOR THE PLANTERS AND SIX (6%) PER CENT
FOR THE LABORERS.

” – VI –

“RESPONDENT COURT
ERRED IN DISREGAR­DING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN
EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, THAT THE ‘AMICABLE
SETTLEMENT-COMPROMISE AGREEMENT’ DATED MARCH
5, 1956 (EXHIBITS XXX THRU XXX-6) IS CONTRARY TO REPUBLIC ACT NO.
809, AND, THEREFORE, NULL AND VOID AB INITIO

” – VII –

“RESPONDENT COURT ERRED IN DISREGAR­DING THE OPINION OF THE
HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF
JUSTICE, THAT THE ‘GENERAL COLLECTIVE SUGAR MILLING CONTRACT’ (EXHI­BITS YYY
THRU YYY-7) AND THE ‘INDIVIDUAL SUGAR MILLING CONTRACTS’ (EXHIBITS SSS THRU
SSS-28 AND ZZZ THRU ZZZ-7), IN SO FAR AS THEY REPRODUCE, CONFIRM AND RATIFY THE
‘AMICABLE SETTLEMENT-COMPROMISE AGREEMENT’ DATED MARCH 5, 1956 (EXHIBITS XXX
THRU XXX-6) AND/OR ARE DERIVED THEREFROM, ARE CONTRARY TO REPUBLIC ACT NO. 809,
AND, THEREFORE, NULL AND VOID AB INITIO

“- VIII –

“RESPONDENT COURT
ERRED IN NOT ORDER­ING THE CENTRAL AND THE PLANTERS, JOINTLY AND SEVERALLY, TO
ACCOUNT AND PAY FOR THE FAIR MARKET VALUE OF THE SIX (6%) PER CENT SHARE OF THE
LABORERS IN THE PROCEEDS OF THE ANNUAL UNREFINED SUGAR PRODUCE AS WELL AS ITS
BY-PRODUCTS AND DERIVATIVES FOR THE PERIOD BEGINNING NOVEMBER 1, 1955, WITH LEGAL INTEREST THEREON
COMMENCING FROM OCTOBER 31, 1956
UNTIL FULLY PAID

“- IX –

“RESPONDENT COURT ERRED IN FAILING TO CONSIDER AND RESOLVE THE
LABORERS’ TWENTY-SEVENTH ASSIGNMENT OF ERROR AND IN NOT IMPOSING UPON THE
CENTRAL AND THE PLANTERS, JOINTLY AND SEVERALLY, THE LIA­BILITY TO PAY THE
LABORERS BY WAY OF EXEM­PLARY DAMAGES, TO SET AN EXAMPLE FOR THE PUBLIC GOOD,
THE SUM EQUIVALENT TO AT LEAST TWENTY (20%) PER CENT OF ALL THE AMOUNTS TO
WHICH THE LABORERS MAY BE ENTITLED

“- X –

“RESPONDENT COURT
ERRED IN REDUCING THE JOINT AND SEVERAL LIABILITY OF THE CENTRAL AND THE PLANTERS
FOR CONTINGENT ATTORNEY’S FEES FROM THE STIPULATED SUM EQUIVALENT TO TWENTY
(20%) PER CENT OF ALL THE AMOUNTS TO WHICH THE LABORERS MAY BE ENTITLED TO A
SUM EQUIVALENT TO TEN (10%) PER CENT THEREOF”

On the other hand, VICTORIAS
presents in its petition the following so-called issues of substance and
grounds for allowance of its petition:

“1.   Considering the
attendant existence of written milling agreements between petitioner Vicmico and the planters, which written milling agreements
were held to be legal and valid by the Court of Appeals, is Republic Act No.
809 applicable in the case at bar?

“2.   In interpreting
the phrase ‘under this Act’ appearing in Section 9 of Republic Act No. 809, as
embracing written milling agreements executed subsequent to the effectivity of said law, did not the Court of Appeals unauthorizedly and unfoundedly indulge in judicial
legislation?

“3.   Assuming arguendo that the phrase ‘under this Act’ includes
subsequently executed written milling contracts providing for increased
participa­tion on the part of the planters in the amount of 4%, on the basis of
which milling contracts the claim of the FFF, et als.
to 60% of said 4% share is founded, did not the Court of Appeals erroneously
hold, said Court acting contrary to law and to the facts and admissions of the
parties, that petitioner Vicmico is jointly and solidarily liable, on the ground of tort, with the planters
for said 60% of 4%?

“4.   May petitioner Vicmico be held jointly and solidarily
liable for tort for 60% of the 4% increased participation of the planters as
provided for the latter under the milling contracts, even in the absence of
allegations or evidence of acts constitut­ing tort and notwithstanding the
admitted fact that petitioner Vicmico has, since
November 1, 1955, regularly delivered to the planters, as required by law and
contract, said 4% increase in participation?

“5.   May respondent
Court of Appeals, on the basis of tort, validly hold petitioner Vicmico jointly and severally liable with the planters (a)
for said 60% of the 4% increase in the plant­ers’ participation notwithstanding
the fact that FFF, et als. did not proceed on the
theory of tort which had long prescribed, as admitted by FFF, et als. but on the basis of contract or obligations created by
law, (b) as well as for alleged causes of action that accrued subsequent to the
filing on November 9, 1962 of the petition of the FFF, et als.,
even in the absence of any supplemental petition or amendment to the pleadings
effected before judgment?

“6.   Did not the Court
of Appeals gravely abuse its discretion, said abuse amounting to lack of
jurisdiction when it awarded the laborers P6,399,105.00, plus interest thereon
at 6%, and P180,769.38, plus interest thereon at 6%, said awards allegedly
representing the share pertaining to the laborers from June 22, 1952 to October
31, 1955, – (a) in the face of the laborers’ admission that they had received
their lawful participation during said period; (b) in the face of any lack of
allegation in the petition concerning any cause of action relative thereto; (c)
in the face of the Court of Appeals’ ruling that the amicable settlement is
legal and valid; and (d) in the face of the undeniable fact that, as per the
very evidence pre­sented by the FFF, et als., Vicmico delivered all the amounts pertaining to the
laborers to the planters, and the laborers actually received said amounts as
demonstrated by Exhibit ’23-Vicmico’?

“7.   The petition of
the FFF, et als. being essentially a suit for
accounting, considering that the amicable settlement and milling agreements are
valid and binding, as held by the Court of Appeals on the basis of facts found
by it, and consider­ing, further, the evidence and admissions of the parties to
the effect that petitioner Vicmico complied with all
of its obligations thereunder, by delivering all of
the increased share to the planters, as required by law and contract, did not
the Court of Appeals manifestly err and grossly abuse its discretion in not
taking the foregoing matters into consideration and nevertheless holding
petitioner Vicmico jointly and severally liable with
the planters?

“8.   In any event, is
Republic Act No. 809, otherwise known as the ‘Sugar Act of 1952’,
constitutional?

“9.   Is the action
filed by the laborers properly brought as a class suit?

“10. Did the Court of Agrarian Relations have jurisdiction
over the subject matter of the laborers’ suit at the time the same was filed on
November 9, 1962?” (Pp. 18-22, Rec., G.R. No. L-41222)

and the
following assignment of errors:

“I

First Assignment of Error

“THE COURT OF APPEALS ERRED IN HOLDING THAT REPUBLIC ACT 809
IS APPLIC­ABLE EVEN IN THE PRESENCE OF WRITTEN MILLING AGREEMENTS BETWEEN THE
CENTRAL AND THE PLANTERS, SINCE THE PROVISIONS OF SAID ACT AS CLEARLY STATED IN
THE STATUTE ITSELF BECOME OPERATIVE ONLY ‘IN THE ABSENCE’ OF WRITTEN MILLING
AGREEMENTS.

“II

Second Assignment of Error

“THE COURT OF APPEALS ERRED IN CONSTRUING THE PHRASE ‘UNDER
THIS ACT’ EMBODIED IN SECTION 9 OF REPUBLIC ACT NO. 809 AS INCLUDING OR
EMBRACING WRITTEN MILLING AGREEMENTS EXECUTED AFTER SAID ACT TOOK EFFECT ON
JUNE 22, 1952, IN VIEW OF THE FACT THAT THE EXPRESS IMPORT OF SAID PHRASE
CLEARLY EXCLUDES WRITTEN MILLING AGREEMENTS AND IN VIEW OF THE CIRCUMSTANCE
THAT THE APPLICABILITY OF SECTION 9 IS DEPENDENT UPON THE ENFORCEMENT OF
SECTION 1 OF THE SAME LAW.

“III

Third Assignment of Error

“THE COURT OF APPEALS ERRED IN HOLDING THAT THE LEGISLATIVE
INTENT AND HISTORY OF REPUBLIC ACT 809 POINT TO NO OTHER CONCLUSION THAN THAT
SECTION 9 OF SAID ACT ALSO EMBRACES WRITTEN MILLING AGREEMENTS, SINCE THE
LEGISLATIVE INTENT AND HISTORY DEMONSTRATE OTHERWISE AND CLEARLY SHOW THAT
SECTION 9 IS NOT AT ALL APPLICABLE DURING PERIODS WHEN MILLING CONTRACTS EXIST
BETWEEN THE CENTRAL AND THE PLANTERS.

“IV

Fourth Assignment of Error

“THE COURT OF APPEALS ERRED IN HOLDING THAT REPUBLIC ACT 809
IS A PIECE OF SOCIAL LEGISLATION THAT UNCONDITIONALLY AND EQUALLY GRANTS
BENEFITS TO LABORERS IN THE SUGAR INDUSTRY. 
SINCE SAID ACT IS DISCRIMINATORY, SAID SELECTIVE OR DISCRIMINATORY
FEATURE BEING MADE MORE MANIFEST BY THE INTERPRETATION OF THE COURT OF APPEALS
AS WELL AS BY THE AMENDED RULES OF THE DEPARTMENT OF LABOR, WHICH AMENDED RULES
ARE NULL AND VOID AS CONTRARY TO LAW.

“V

Fifth Assignment of Error

“ASSUMING ARGUENDO, THAT THE HONORABLE COURT OF APPEALS
CORRECTLY INTERPRETED REPUBLIC ACT 809 AS APPLICABLE EVEN WHEN THE CENTRAL AND
THE PLANTERS HAVE SUBSEQUENTLY EXECUTED WRITTEN MILLING AGREEMENTS, AS IN THE
CASE AT BAR, THE COURT OF APPEALS ERRED IN HOLDING PETITIONER VICMICO JOINTLY
AND SEVERALLY LIABLE WITH THE PLANTERS ON THE BASIS OF TORT FOR 60% OF THE 4%
INCREASED PARTICIPATION OF THE PLANTERS AND FOR AMOUNTS ALLEGEDLY DUE THE
LABORERS FROM JUNE 22, 1952 TO OCTOBER 31, 1955, SAID ERROR BEING EVIDENT IN
VIEW OF THE FACT THAT RESPONDENTS FFF ET ALS. 
DID NOT PROCEED ON THE THEORY OF TORT BUT ON THE THEORY OF CONTRACTS OR
OBLIGATIONS CREATED BY LAW AND IN VIEW OF THE FACT THAT SAID WRITTEN MILLING
AGREEMENTS HAVE NOT PROVIDED FOR ANY SOLIDARY LIABILITY, THE TERMS OF SAID
WRITTEN MILLING AGREEMENTS HAVING, MOREOVER, BEEN FAITHFULLY COMPLIED WITH BY
PETITIONER VICMICO.

“VI

Sixth Assignment of Error

“THERE BEING NO ALLEGATION OR PROOF OF ACTS CONSTITUTING TORT
OR EVEN CONSTITUTING ANY VIOLATION OF THE WRITTEN MILLING CONTRACTS ON THE PART
OF PETITIONER VICMICO IN CONNECTION WITH THE LABORERS’ CLAIM OF 60% OF THE 4%
INCREASED PARTICIPATION OF THE PLANTERS AND THERE BEING, MOREOVER, NO AMENDED
OR SUPPLEMENTAL PLEADINGS FILED BY FFF ET ALS. 
INVOLVING ANY CAUSE OF ACTION BASED ON TORT, THE COURT OF APPEALS ERRED
IN NEVERTHELESS HOLDING PETITIONER VICMICO JOINTLY AND SEVERALLY LIABLE WITH
THE PLANTERS, ON THE BASIS OF TORT.

“VII

Seventh Assignment of Error

“THE COURT OF APPEALS ERRED, IN ANY EVENT, IN NOT HOLDING THAT
ANY ACTION BASED ON TORT HAS LONG PRESCRIBED.

“VIII

Eighth Assignment of Error

“IN ANY EVENT, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE PLANTERS WERE THE AGENTS OF THE LABORERS WHOSE CAUSE OF ACTION, IF ANY, FOR
60% OF THE 4% INCREASED PARTICIPATION OR FOR THOSE AMOUNTS PERTAINING TO THE
PERIOD FROM JUNE 22, 1952 TO OCTOBER 31, 1955, SOLELY LIES AGAINST SAID
PLANTERS AS THEIR AGENTS, IN VIEW OF THE FACT THAT PETITIONER VIC­MICO
FAITHFULLY DELIVERED, AS ADMITTED BY THE PARTIES AND FOUND BY THE HONORABLE
COURT, ALL OF SAID AMOUNTS TO THE PLANTERS WHOSE OBLIGATION, IN TURN, WAS TO
DISTRIBUTE TO THEIR RESPECTIVE LABORERS THE LATTER’S SHARE.

“IX

Ninth Assignment of Error

“WITH REFERENCE TO THE AMOUNT OF P6,399,105.00 AND THE AMOUNT OF
P180,769.38, WHICH ACCRUED IN FAVOR OF THE LABORERS FROM JUNE 22, 1952 TO
OCTOBER 31, 1955 WHEN THERE WAS AS YET NO WRITTEN MILLING AGREEMENT, IN VIEW OF
THE FACT THAT THE LABORERS ADMITTED IN THEIR PETITION THAT THE PLANTERS GAVE
THEM THEIR LAWFUL PARTICIPATION FROM JUNE 22, 1952 TO OCTOBER 31, 1955 AND
THERE BEING, MOREOVER, NO ALLEGATION OF ANY CAUSE OF ACTION RELATIVE THERETO,
THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
HELD PETITIONER VICMICO AND THE PLANTERS JOINTLY AND SEVERALLY LIABLE VIA TORT
FOR SAID AMOUNTS.

“X

Tenth Assignment of Error

“HAVING FOUND THE MILLING AGREEMENT AND THE AMICABLE
SETTLEMENT-COMPROMISE AGREEMENT (ASCA) TO BE VALID, THE COURT OF APPEALS ERRED
IN HOLDING THAT PETITIONER VICMICO AND THE PLANTERS HAD NO AUTHORITY TO
STIPULATE IN SAID ASCA ON THE DISPOSITION OF THE AMOUNTS PERTAINING TO THE
LABORERS FROM JUNE 22, 1952 TO OCTOBER 31, 1955, THE PLANTERS BEING THE
AUTHORIZED AGENTS OF THE LABORERS BY, AMONG OTHERS, HAVING RECEIVED ALL THE
AMOUNTS DUE THEM, HAVING MOREOVER RATIFIED SAID ASCA.

“XI

Eleventh Assignment of Error

“THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LABORERS
DID NOT RECEIVE THE AMOUNT OF P6,399,105.00 AND IN HOLDING, ON THE BASIS OF
TORT, PETITIONER VICMICO, JOINTLY AND SEVERALLY LIABLE WITH THE PLANTERS
THEREFOR, EXHIBIT 23-VICMICO CLEARLY SHOWING ON ITS FACE THAT THE LABORERS
ACTUALLY RECEIVED A TOTAL OF P6,536,741.98 AND THE COURT OF APPEALS HAVING
FOUND THAT ALL AMOUNTS PERTAINING TO THE LABORERS HAD BEEN RECEIVED BY THE
PLANTERS, THE FOREGOING DEMONSTRATING, AMONG OTHERS, THAT PETITIONER VICMICO
CANNOT BE ACCUSED OF ANY TORTIOUS ACT.

“XII

Twelfth Assignment of Error

“THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PETITION
OF FFF, ET ALS. IS ESSENTIALLY AN ACTION FOR ACCOUNTING, SAID ACTION REQUIRING
A PRIOR DETERMINATION OF THE RIGHT TO ACCOUNTING AND THE ACCOUNT­ING ITSELF, A
SEQUENCE THAT HAS NOT BEEN ADHERED TO BY THE COURT OF APPEALS WHEN IT ENTERED A
FINAL JUDGMENT FOR UNDETER­MINED AND SPECIFIC AMOUNTS, NOTWITHSTANDING FFF, ET
ALS.’ ABSENCE OF ANY RIGHT TO ACCOUNT­ING AGAINST PETITIONER VICMICO, THEIR
RIGHT, IF ANY, BEING EXCLUSIVELY AGAINST THE PLANTERS.

“XIII

Thirteenth Assignment of Error

“IN ANY EVENT, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
REPUBLIC ACT 809, OTHER­WISE KNOWN AS THE SUGAR ACT OF 1952, IS
UNCONSTITUTIONAL.

“XIV

Fourteenth Assignment of Error

“THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION OF FFF,
ET ALS. HAS BEEN IMPROPERLY BROUGHT AS A CLASS SUIT.

“XV

Fifteenth Assignment of Error

“THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF
AGRARIAN RELATIONS HAD NO JURISDICTION OVER THE SUBJECT MATTER OF THE SUIT AT
THE TIME THE SAME WAS FILED ON NOVEMBER
9, 1962.

“XVI

Sixteenth Assignment of Error

“THE COURT OF APPEALS ACCORDINGLY ERRED IN NOT ABSOLVING
PETITIONER VICMICO FROM ALL OBLIGATIONS (A) FOR 60% OF THE 4% INCREASED
PARTICIPATION OF THE PLANTERS, (B) FOR P6,399,105.00 AND P180,768.38, AND (C)
FOR ATTORNEY’S FEES.” (A to K of VICTORIAS’
Brief)

On its part, as grounds relied upon for the allowance of their
petition, the PLANTERS submit that:

” – A –

“THE COURT OF APPEALS ERRED IN CONCLUDING THAT, WHILE THE
AGREEMENT BETWEEN THE CENTRAL AND THE PLANTERS WITH RESPECT TO THE 64-36
SHARING BASIS IS VALID, YET THERE MUST BE READ INTO IT THE PROVISO THAT 60% OF
THE INCREASE IN THE PARTICIPATION OF THE PLANTERS SHALL PERTAIN TO THE
PLANTATION LABORERS IN ACCORDANCE WITH SECTION 9 OF REPUBLIC ACT NO. 809,
OTHERWISE KNOWN AS THE SUGAR ACT OF 1952.

“- B –

“THE COURT OF APPEALS ERRED IN HOLDING PETITIONER PLANTERS
JOINTLY AND SEVERALLY LIABLE, ON THE BASIS OF TORT WITH CENTRAL NOTWITHSTANDING
THE FACT THAT IT FOUND THE ASCA PERFECTLY VALID AND NOT IN CIRCUMVENTION OF THE
LAW.

“- C –

“THE COURT OF APPEALS ERRED IN FINDING THAT THE P4,000,000.00,
OF THE P5,186,083.34, PERTAINING TO THE SHARE OF THE PLANTATION LABORERS WITHIN
THE VICTORIAS MILL DISTRICT FROM JUNE 22, 1952 TO OCTOBER 31, 1955, WAS NOT
DISTRIBUTED TO THE SAID PLANTATION LABORERS SIMPLY BECAUSE NEITHER THE CENTRAL,
NOR THE PLANTERS NOR THE SPECIAL COMMITTEE PRESENTED EVIDENCE AS TO ITS
DISTRIBUTION.

“- D –

“THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
RESPONDENTS’ PETITION IS NOT PROPER AS A CLASS SUIT.

“- E –

“THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF
AGRARIAN RELATIONS HAD NO JURISDICTION OVER THE SUBJECT MATTER OF THE SUIT AT
THE TIME THE SAME WAS FILED BY THE FFF, ET ALS. ON NOVEMBER 9, 1962.

“- F –

“THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF
AGRARIAN RELATIONS HAD NOT ACQUIRED JURISDICTION OVER THE PERSONS OF THE
PLANTERS WHO WERE SERVED SUMMONS BY PUBLICATION, DUE TO DEFECTIVE SERVICE OF
SUMMONS BY PUBLICATION.” (Pp. 33-34, L-43153 Rec., Vol. I.)

Petitioners Primo Santos and Roberto H. Tirol
formulate their reasons for their petition for review thus:

“1. – The Hon. Court of Appeals failed to resolve a most
important question as to whether or not the lower court had acquired
jurisdiction over the persons of defendants-appellees
Primo Santos and Roberto H. Tirol due to defective
service of summons by publication.

“2. – The Sugar Act of 1952 (Rep. Act No. 809) may be
interpreted as not to preclude freedom of contract between the majority of the
plantation owners and the central; but the law should not later be applied only
in part as to benefit and favor the Central to the great prejudice of both the
plantation owners and the laborers.

“3. – Defendant Primo Santos being a mere LESSEE, not the
owner of ‘Hda. Kana-an’, and NOT having signed any
milling contract with the Victorias Milling Co., he
should not be made jointly and severally liable with the central and the
plantation owners for acts and/or contracts in which he had no part nor inter­vention
whatsoever.

“4. – There is no evidence that the individual planters,
particularly the defendants-movants herein, had any
knowledge of nor intervention in the custody of the sum of P4,000,000 belonging
to the plantation laborers which was supposedly entrusted to a ‘Special
Committee’ of five (5) members; and, therefore, they (the movants)
should not be adjudged jointly and severally liable for the alleged loss of
such amount and its increments.'” (Page 7, L-43369 Rec.)

The foregoing numerous assignments of error supposedly committed
by the Court of Appeals would, if all of them were to be separately considered,
call for a very extended discussion, necessarily making this opinion tediously
long.  But We have repeatedly received
from all the parties motions for early resolution of these cases, which
although relatively new in this Court, were indeed started in the Court of
Agrarian Relations, Bacolod Branch, more than
eighteen (18) years ago.  And,
considering they involve an enormous amount constituting, as it were, another
windfall for the least favored element–the farm laborers–of the once prosperous
sugar industry in Negros Occidental, We will limit
Ourselves to the fundamental and pivotal matters, and thus put finis, as
briefly as possible, to this important controversy together with all hardships
its long pendency has entailed for all the parties
concerned, particularly the laborers.

Anyway, going carefully with detailed attention over the numerous
issues raised in the so-called grounds for allowance alleged by the parties in
their respective petitions, it would be readily noted, that most of them deal
with but a few fundamental issues, some of them, already settled and
determined, as a matter of fact, by this Supreme Court, in its decision in a
related case, that of Asociacion de Agricultores de Talisay-Silay,
Inc. vs. Talisay-Silay Milling Co., Inc., 88 SCRA
294, and its resolution of the motion for reconsideration thereof as reported
in 89 SCRA 311.  Indeed, in its second
motion dated July 8, 1980
for promulgation of decision, the FEDERATION acknowledges expressly that
“the constitutionality of the Sugar Act of 1952 as well as the
construction and interpretation thereof” have been set at rest by Us in said case.  In
the main, therefore, insofar as such basically similar and resolved issues are
concerned, We shall refer to them here already as
settled juridical premises whenever it should be proper to do so in resolving
the issues in these cases.

II

To set them forth briefly, among the issues in these instant
cases, which this Court has already resolved with finality in the Talisay-Silay case are the following:

– A –

That Republic Act 809, as a social legislation founded not only
on police power but more importantly on the social welfare mandates of the
Constitution, is undoubtedly constitutional in all its aspects material and
relevant to the instant cases.  We deem
it would be a fruitless exercise for Us to rediscuss
and belabor that point here.  Indeed, We
find the position of the Court of Appeals thereon to be well studied and
discussed and totally correct, being as they are substantially in line with the
pertinent considerations on the same point expressed in Our Talisay-Silay
decision.

– B –

Aside from upholding the constitutionality of Republic Act 809,
We further ruled in Talisay-Silay that the predicate
or prerequisite of absence of milling agreements for the application of Section
1 of the Act does not refer exclusively to the expiration of the then existing
contracts (those that expired before the approval of the Act) but even to
future failure of centrals and planters to enter into written milling
contracts; that, therefore, there is nothing in the law that excludes the right
of said parties to enter into new contracts, and that in said new contracts,
they could provide for a ratio of sharing different from that stipulated in
Section 1 of the Act, provided, of course, that any increase of their share in
the proceeds of milling that the PLANTERS would get, 60% thereof must be paid
by them to their respective plantation laborers.

Suffice it, therefore, to refer, insofar as said issues are
concerned, to the decision of the Court of Appeals, which We hereby uphold, and
to Our own discourse thereon as well as Our construction of Section 1 thereof
regarding the freedom of the centrals and the planters to agree on how they
would share the proceeds of the milled sugarcane made in Our decision of April
3, 1979 and resolution of February 19, 1979 earlier mentioned above.  Covered here by this adoption by reference and,
therefore deemed resolved in line with Talisay-Silay
are the following assignments of error of the parties hereto, all of which We
have quoted at the outset of this opinion:

A. I to V in the FEDERATION’s brief in
G.R. No. L-41161 in Federation, etc., et al. vs. Court of Appeals, et al.;

B. Nos. 1, 2 and 8 of its so-called questions of substance and
assignment of errors I, II and IX, of VICTORIAS
in G.R. No. L-41222 in Victorias
Milling Co., Inc. vs. Court of Appeals, et al.; and

C. Ground A of the PLANTERS in G.R. No. L-43153 in Planters, Victorias Milling District vs. Court of Appeals, et al.

as well as the corresponding refutations
thereof and counter-assignments of the respective parties relative to the
just-mentioned assignments of error or grounds for allowance, but none of the
points raised by petitioners in Santos and Tirol vs.
Court of Appeals, et al. G.R. No. L-43369.

III

To facilitate understanding of the resolution of these cases, let
it be recalled that, as is more extensively discussed in the portions of the
decision of the Court of Appeals hereinunder to be
quoted, previous to the passage of Republic Act 809 or the Sugar Act of 1952,
almost all over the country, and particularly in the sugar milling districts of
Negros Occidental, the centrals practically dominated
the economic fate of the planters and the laborers of the latter.  The common prevalent ratio of sharing of the
proceeds of the sugarcane milled by said centrals was fixed at 40% for the
centrals and 60% for the planters, both parties dealing with and paying their
respective laborers at rates which were considered subnormal, so much so that
President Manuel Quezon had to appoint a committee
headed by Chief Justice Manuel Moran to investigate the economic and social
conditions in the whole sugar industry. 
As expected, the report recommended more effective measures to ease the
strangle­hold of the centrals over the planters, and more importantly, to
ameliorate the conditions of labor, even to the extent of utilizing police
power steps for the purpose, if needed. 
Hence, the above-mentioned Sugar Act came into being.^[1]

Section 1 thereof provides thus:

“SECTION 1.  In the
absence of written milling agreements between the majority of planters and the
millers of sugar-cane in any milling district in the Philippines, the unrefined
sugar produced in that district from the milling by any sugar central of the
sugar-cane of any sugar-cane planter or plantation owner as well as all
by-products and derivatives thereof, shall be divided between them as follows:

‘Sixty per centum for the planter, and forty per centum for the
central in any milling district the maximum actual production of which is not
more than four hundred thousand piculs:  Provided, That the provisions of this section
shall not apply to sugar centrals with an actual production of less than one
hundred fifty thousand piculs;

‘Sixty-two and one-half per centum for the planter, and
thirty-seven and one-half per centum for the central in any milling district
the maximum actual production of which exceeds four hundred thousand piculs but does not exceed six hundred thousand piculs;

‘Sixty-five per centum for the planter, and thirty-five per centum
for the central in any milling district the maximum actual production of which
exceeds six hundred thousand piculs but does not
exceed nine hundred thousand piculs;

‘Sixty-seven and one-half per centum for the planter, and
thirty-two and one-half per centum for the central in any milling district the
maximum actual production of which exceeds nine hundred thousand piculs but does not exceed one million two hundred thousand
piculs;

‘Seventy per centum for the planter, and thirty per centum for the
central in any milling district the maximum actual production of which exceeds
one million two hundred thousand piculs.”

Complementing the above provision, Section 9 thereof provides for
a 60/40 partition between the planters and laborers (60% for the laborers and
40% for the planters) of any increase that the planters might obtain under the
Act. (Sec. 9 is quoted in the portion of the decision of the Court of Appeals
to be quoted on pages 25 and 26 hereof.)

In the wake of such legislation, litigations were started
questioning the constitutionality thereof, and among such cases was Talisay-Silay which, as already stated, We have already
decided.  To reiterate, in that case, We
did not only uphold the statute’s validity, We also held that the Act was not
intended to deprive the mills and the planters of the right to divide the
proceeds of the milled sugarcane in each district in the proportion they might
agree on, without regard to the ratios specified in Section 1 of the Act,
provided that any increase that the planters might be given, as expected in
consequence of the implicit compulsion of the law, has to be shared by them
with their respective laborers in their plantations, whether owned or leased by
them, in the proportion of 60% for said laborers and 40% only for them.  Nothing in the pleadings and the briefs of
the parties in the instant cases persuades Us to rule otherwise.  In fact, at the request of the FEDERATION, We
already had occasion to go over the main points raised by it here, when they
asked Us to consider in deciding that case their arguments in their brief filed
with the Court of Appeals, copy of which was furnished Us.  The decision of this case must then be
predicated fundamentally on the Talisay-Silay rulings
insofar as they may be pertinent here.

We can now, therefore, proceed to discuss the aspects of the
cases that require disquisition and disposal.

IV

To start with, the PLANTERS, VICTORIAS and SANTOS­-TIROL impugn
the jurisdiction of the Court of Agrarian Relations, 11th Regional District,
Branch I, Bacolod City, in taking cognizance of this
case, with SANTOS and TIROL contending that since this is an action in personam, service to them by publication is invalid,
hence, the trial court did not acquire jurisdiction over their person; even as
VICTORIAS and PLANTERS maintain that not all the planters’ members have been
properly summoned, considering that some of them were served summons only also
by publication.

We are not going to tarry long on these two points of
jurisdiction.  We are sufficiently
convinced that, by and large, Sections 1 and 7 of Republic Act 1267, which
created the Court of Agrarian Relations, providing that:

“SEC. 1.  Creation. –
For the enforcement of all laws and regulations governing the relation of
capital and labor on all agricultural lands under any system of cultivation,
there is hereby created a court of Agrarian Relations, which shall be under the
executive supervision of the Department of Justice.

x        x          x

“SEC. 7.  Jurisdiction
of the Court. – The Court shall have original and exclusive jurisdiction over
the entire Philippines, to consider and investi­gate, decide and settle all
questions, matters, controversies, or disputes involving all those
relationships established by law which determine the varying rights of those
persons in the cultivation and use of agricultural land where one of the
parties works the land; Provided, however, that cases pending in the Court of
Industrial Relations upon approval of the Act which are within the jurisdiction
of the Court of Agrarian Relations, shall be transferred to, and the
proceedings therein continued in, the latter court.”

and which was the law at the time of the
filing of the FEDERATION’s suit on November 10, 1962,
contemplated the transfer from the Court of Industrial Relations, established
under Commonwealth Act No. 3, to the Court of Agrarian Relations of all
controversies of whatever nature involving agricultural laborers, particularly
those referring to the employer-employee relationship with their respective
employers, which naturally include the sugar planters and their plantation
workers.  (Santos
vs. C.I.R., 3 SCRA 759.) Hence, it cannot be said that the trial court, the
Court of Agrarian Relations of Bacolod City, had no
jurisdiction to take cognizance of the vital petition that spawned the instant
cases before Us.

V

Also, considering the number of laborers involved herein, We hold
that it cannot be seriously argued that the trial court erred in holding that
the laborers and/or the FEDERATION had properly initiated their action as a
class suit, it being a matter of common knowledge that “the subject matter
of the controversy (herein) is one of common or general interest to persons —
(so) numerous that it is impracticable to bring them all before the
court,” and after all, it appears that “the parties actually before
(the trial court were) sufficiently numerous and representative, so that all
interests concerned (were) sufficiently protected.” (Sec. 12, Rule 3.)

Anent the plaint of the PLANTERS that since not all the 422
individual planters named respondents in the amended petition filed below were
personally or by proper substitute form of service served with summons, the
court did not acquire jurisdiction over the persons of all the planters
concerned, suffice it to say that the record shows that at the hearing of
December 14, 1967 in the court below, there was the following clarification of
the PLANT­ERS’ appearance:

“ATTY. SOTO:

Attys. Sanicas and Soto appearing for Planters’ Association.

“ATTY. SABIO:

Do I understand that
Attys. Soto, Banzon and Associates represent the
members of the Victorias Mill District Planters’
Association, Inc.?

“ATTY. SOTO:

Those planters who are
respondents in this case as well as planters which (sic) are not duly
represented by counsel, who are not present in court.” (t.s.n. pp. 5-6)

We understand this manifestation to mean that Atty. Soto assumed
representation presumably with due authority of all the planters in the
district.  In any event, the filing of
the FEDERA­TION’s petition must have been well known
or was of public knowledge in the Victorias milling
district and We believe that all the rest of the planters not here mentioned by
name were as much concerned as the latter and may be deemed to have felt that
all of them would eventually have the same fate.  Besides, it is Our impression that the
interests of all the planters concerned cannot be better presented and defended
than by how the PLANTERS have done in these cases before Us now.  In view whereof, We consider it rather
superfluous to cite any authorities for a holding, as We do hold, that the
persons of all the planters in the Victorias Mill
District had been properly placed within the jurisdiction of the trial
court.  (Aguilos
vs. Sepulveda, 53 SCRA 269.)

Moreover, the issues of jurisdiction just discussed may be
considered as resolved by the provisions of the law reorganizing the Courts of
Agrarian Relations, under which technical rules have hardly any force or
applicability, and considering that the acquisition of jurisdiction over the
persons of defendants is an adjective matter, this significant modification of
the procedural rules in the Court of Agrarian Relations from which these cases
originated may be given retroactive effect. 
(See Presidential Decree 946, Sec. 16.)

VI

Coming now to the real meat of the problem before Us, which is
the question of how much money the laborers belonging to the FEDERATION should
be paid by the PLANTERS and/or VICTORIAS, corresponding to all the years from
the passage of Republic Act 809 up to November 1974 (which is the year both
parties seemingly are agreed the factual premises of further controversy among
them came to an end due to shortage of production), it should be helpful for a
deeper insight into the issues between the parties to quote pertinent portions
of the decision of the Court of Appeals. 
According to said court:

“Section 9 of the Sugar Act provides as follows:

‘SECTION 9.  In addition to
the benefits granted by the Minimum Wage Law, the proceeds of any increase in
the participation granted the planters under this Act and above their present
share shall be divided between the planter and his laborer in the plantation in
the following proportion:

‘Sixty per centum of the increased participation for the laborers
and forty per centum for the planters. 
The distribution of the share corresponding to the laborers shall be
made under the supervision of the Department of Labor.

‘The benefits granted to laborers in sugar plantations under this
Act and in the Minimum Wage Law shall not in any way be diminished by such
labor contracts known as ‘by the piece’, ‘by the volume’, ‘by the area’, or by
any other system of ‘pakyaw‘, the Secretary of Labor
being hereby authorized to issue the necessary orders for the enforcement of
this provision.’

“The petition in the lower court alleged that, while pursuant
to Section 9 of the Act, as above quoted, ‘respondents PLANTERS gave to petitioners
LABORERS the latter’s participation in the sugar production as well as in the
by-products and deriva­tives thereof and continued to give the same until
November 1, 1955,’ they ‘ceased to do so until the present’, (par. 10,
petition).  It likewise charged that
‘with evident intent to evade compliance with said Act and to the grave
prejudice of the laborers, some of the respondents PLANTERS and respondent
CENTRAL prepared and executed a General Collective Sugar Milling Contract
sometime in March, 1956’, (par. 11, petition) the substance of which is
discussed, supra.  Appellants
forthwith prayed for a judgment: 
declaring the applicability to the Victorias
Mill District of the sharing participation prescribed by the Act, starting with
the 1955-1956 crop year; ordering Central and/or Planters to pay Appellants’
lawful share in the sugar production beginning the crop year 1955-1956, plus
legal interests thereon; awarding exemplary damages in an amount that the Court
may deem sufficient; and granting attorney’s fees of 20% of whatever amount the
Appellants might be entitled to.

“Denying material allegations of the petition, respondent
Central, in its answer, claims in substance that petitioners did not have any
cause of action against it since it had existing written milling agreements
with respondent Planters, and Republic Act 809 is applic­able only in the
absence of written milling agreements. 
As special defenses, it advanced the propositions that the lower court
had no jurisdiction over the subject-matter of the action at the time of the
filing thereof prior to the effectivity of the Land
Reform Code; that Republic Act 809 is unconstitutional; that appellant
Federation of Free Farmers has no legal authority and capacity to intervene in
the action; and that the action was not proper for a class suit.  It likewise filed a counterclaim for
attorney’s fees in the amount of P20,000.00, alleging that the action
instituted against it was clearly unfounded.

“On their part, respondent Planters, in answers filed singly
or in groups, substantially echoed Central’s defenses, adding, however, that
should judgment be rendered against them, they should be entitled to
reimbursement from Central.

“Assuming jurisdiction over the action, recognizing the
personality of the respondent Federation of Free Farmers, and considering the
case as proper for a class suit, the lower court, after hearing, relying
principally on the interpretation of Section 1 of Republic Act 809 that the law
applies only in the absence of written milling agreements, dismissed the
petition, having found that written milling agreements do exist between
respondent Central and respondent Plant­ers, the dispositive
portion of the decision, dated December 14, 1970, reading as follows:

‘IN VIEW OF THE FOREGOING PREMISES, judgment is hereby rendered
dismissing this case as it is hereby ordered DISMISSED, without pronouncement
as to cost.’

“The matter now before this Court is the appeal taken by the
petitioners from the decision referred to. 
Respondents Central and Planters did not interpose any appeal.

“In their appeal, appellants ventilate twenty-eight
assignments of error (pp. 67 to 77, Appellant’s Brief).  These, however, may be reduced to the
following issues, namely:

“First:  Whether, as
held by the lower court, the existence of written milling agreements between
Central and Planters (Exhibits XXX thru XXX-6; YYY thru YYY-7; and SSS thru
SSS-28 and ZZZ thru ZZZ-7) renders inapplicable the operation of Republic Act
809;

“Second:  Whether, as
appellants’ claim these milling agreements have been entered into in
circumvention of Republic Act 809 and are, for that reason, void ab initio; and

“Third:  Whether,
Central and Planters misappropriated money belonging to appellants amounting to
millions of pesos.

“We find substantial merit in the appeal.  On the basis of the historical facts bearing
upon the case, we find the decision of the lower court in error.

“For, historically, the facts that triggered the enactment of
Republic Act 809 and the case at bar are as follows:

“In 1918, 1919, and 1920, Central and Planters executed
30-year milling agreements under which the former was to receive 40% and the
latter 60% of the proceeds of sugarcane produced and milled in the Victorias Mill District in Negros
Occidental.  As early as the 1930’s,
however, agitations were already made to increase the participation of the
Planters.  Planters sought to justify
their demands upon the claims that there was too great a disparity in profits
in favor of Central and that the increase was necessary to improve the
condition of their plantation laborers.

“The situation in the sugar industry at the time was such that
on February 23, 1938, President Manuel L. Quezon
appointed Chief Justice Moran of the Supreme Court as Special Investigator to
study the ‘alleged inequitable distribution of sugar resulting from the milling
of sugarcane between the centrals and the plantations, with a view to
ameliorating the condition of the planters’ laborers’.  On April
30, 1939, Justice Moran, in his report, verified the disparity and
observed that unless the participation of the planters were
increased, they could not be made to ameliorate the condition of their
plantation laborers.

“Moran’s investigations were followed up by similar ones
conducted by the National Sugar Board created by President Quezon
under Executive Orders Nos. 157 and 168, and the Board’s findings confirmed
those of Justice Moran’s according to its report of August 2, 1939.

“On June 7, 1940,
Commonwealth Act No. 567 took effect. 
Noting the great disparity in the proportion of benefits ‘being received
from the industry by each of its component elements’, it declared it to be a
‘national policy to obtain a readjustment of the benefits derived from the
sugar industry by the component elements thereof–the mill, the land­owner, the
planters of the sugarcane, and the laborers in the factory and the field’.

“The years during World War II may have momentarily stilled
the agitations for the increase, but during the Second Congress of the Republic
the same were resumed with vigor.  Four
bills were filed, three in the House and one in the Senate, all entitled ‘An
Act To Regulate the Relations between Planters and Millers of Sugarcane’.  After a series of amendments, the Senate
version (SB No. 138) was finally sent to President Quirino
who, however, vetoed the same on grounds, among others, that ‘the bill contains
no provisions granting to the laborers a share in the increased participation
of the planters nor does it expressly require the latter to improve the lot of
their laborers’.

“On January 15, 1951,
House Bill No. 1517 (which ultimately became Republic Act No. 809) entitled ‘An
Act To Regulate the Relations Among Persons Engaged in
the Sugar Industry’, was introduced to remedy the presidential objections to
the vetoed SB No. 138.  The remedy
introduced by HB No. 1517 was in the form of its Section 10 (which was amended
later to become Section 9 of Republic Act 809) providing, in essence, that 60%
of any increase in participation granted to planters under the Act ‘above their
present share’ should go to their plantation laborers.

“In the meantime, Planters, on the one hand, and Central, on
the other, were locked in a tug-of-war, the former continuing the demand for
increase, the latter insisting in refusing to grant any.  Mean­while, a new element had entered into
the dimensions of the controversy the Planters now contended that new written
milling agreements should be concluded because their 30-year contracts with
Central had already expired.  Central
countered with the argument that its contracts were still in force although the
30-year period may already have run out, be­cause 6 years had to be excluded
from the computation of the 30-year period for the reason that during 4 of the
6 years, the mills were not in operation because of the Japanese occupation,
and during the last 2 years of the 6, the mills had to be reconstructed and
rehabilitated so that the mills were not in opera­tion either.  As the conflict continued unresolved, with
Central adamant in its position not to offer any increase in Planters’
participation the expiration of the pre­ferential treatment of sugar in the
American market was fast approaching: 
beginning July 4, 1954,
graduated customs duties were going to be taxed on Philippine sugar.  There was therefore, in the language of
Section 1 of the sugar bills deliberated on in Congress on May 9, 1950, a need ‘to insure the maximum
utilization of the benefits of preferential treatment for the Philippine sugar
in the American market for the few remaining years’.

“The need for increasing the planters’ partici­pation, the
approaching expiry date of the preferential treatment of Philippine sugar in
the American market, the impasse between Central and Planters despite the
termination or near termination of their 30-year written milling contracts, and
the need for Congress to step in and pass a sugar law, found expression in the
‘Explanatory Note’ of House Bill No. 1517 introduced on January 15, 1951, thus:

‘The necessity for increasing the share of the planters and the
laborers in the income derived from the sugar industry for its stabilization is
not a new question but an admitted fact even before the outbreak of World War
II.

‘On February 23, 1938, President Quezon
on appointed Justice Manuel V. Moran to make a study of the ‘distribution of
sugar resulting from the milling of sugarcane between the centrals and the
planters with a view to ameliorating the condition of the planters’ laborers’;
and after an exhaustive investiga­tion covering several months, Justice Moran
filed his report on April 30, 1939, recommending the increase in the
participation of sugar planters, even in violation of existing milling
contracts, contending that such a law is constitutional as a valid exercise of
the police power of the state.  The
National Sugar Board created by Executive Orders Nos. 157 and 168, which made
another investigation of the sugar industry, in its report to the President of
the Philippines
on August 2, 1939, confirmed
practically the findings of Justice Moran.

‘Five crop years after liberation find the Philippine sugar
industry still behind its production allotment. 
In the meantime, only three more years of preferential treatment in the
American market remain.

‘Serious as the situation is, it is further aggravated by the fact
that a determined struggle continues between millers and planters.  Most of the milling contracts are due to
expire next year, if they have not already done so.  Recently, a serious crisis faced the industry
when planters of the Victorias-Manapla district with
a quota of 1,711,235.11 piculs declared a sit-down
strike, refusing to mill their canes due to the obstinate refusal of the
central to discuss terms for a new milling contract.  It is feared that with this antecedent, the
disagreement between the millers and planters will lead to more serious
disruption of the industry and ultimately to a complete paralization
of production.  The dispute as to the
ownership of the sugar quota has already reached our Courts.

‘It is therefore believed that national interest requires that
Congress should take immediate steps to save or promote an industry, which is
not only a source of livelihood for many millions of Filipinos but is also one
of our most important dollar producing industries.  Our country can ill afford to waste time in
long-drawn out disagreements and litigations between millers and planters with
only three more years of free American trade under the terms of the Philippine
Trade Act of 1946.

‘The present bill seeks to avoid fatal controversies in the sugar
industry by determining the respective share of millers and sugar-cane planters
in the absence of milling agreements, on the pattern set by the Rice Share
Tenancy Act, the constitu­tionality of which has been already upheld and on the
basis of the declarations of emergency and national interest made in Act No.
4166.  Commonwealth Act No. 567, and
Republic Act No. 279.

‘This bill is also in harmony with the recommendation of the Bell Report
for the improvement of the living condition of the laboring class by providing
higher wages therefor.  This bill does not violate existing milling
agreements between planters and millers of sugar-cane as its provisions are
only applicable in the absence of such milling contracts.’

“Notwithstanding the facts faithfully reflected in the aforequoted ‘Explanatory Note’ to HB 1517, Central and
Planters still had not entered into new written milling contracts, and there
were no pros­pects that such contracts would soon be entered into.  In fact, on June 16, 1952, Planters went to court in Civil Case No.
16815 filed with the Manila Court of First Instance praying that a judgment be
rendered declaring their 30-year written milling agreements with Central terminated.

“Under this air of extreme uncertainty and necessity, Congress
approved HB 1517 to become law as Republic Act 809 on June 22, 1952.

“Under this law, Planters claimed, the Victorias
Mill District fell in the category of districts producing 1,200,000 piculs or more.  By
prescription of its Section 1, Central would have a share of 30% and Planters,
70%.  Since, before June 22, 1952, Planters had a participation of
only 60% while Central had 40%, and since, under their contention, their
30-year milling contracts had already expired, Planters demanded that Central,
pursuant to the new law, give them an increase equivalent to 10% over their
previous 60% participation.

“On July 1, 1952,
however, Central replied to Planters (Exhibit N-14):

‘We refer to your letter of June
25, 1952.

‘We reiterate our opinion that our milling contracts have not yet
expired, and that we are under no obligation to deliver to the planters the
increased participation of 70% provided in the Sugar Act of 1952.

‘On the other hand, there is pending in the Court of First Instance
of Manila (Case No. 16815), the action instituted by you against our Company
for a declaratory judgment as to whether or not our milling contracts have
already expired.

‘In view of the foregoing, we suggest matters be held in abeyance
until final judgment is rendered in the said case No. 16815.’

“Notwithstanding this reply, Central, beginning June 22,
1952, set aside a ‘reserve’ of 10% as a precautionary measure to take care of
Planters’ demand just in case it had to give that 10% increase.  Central, however, did not actually give it to
Planters; it merely set it aside for future disposition, ‘because’, explained
Central’s treasurer-comptroller, ‘apparently there was no milling contract at
that time and the company was afraid to incur liability under Republic Act 809
and therefore the company set aside every year 10%’ (tsn.,
August 14, 1969, p. 6).

“On April 19, 1954,
Central filed an action (Exhibits H to H-12) against Planters in Civil Case No.
22577 asking the Manila Court of First Instance to declare Republic Act 809
unconstitutional.

“In the meantime, on March
19, 1953, the Manila Court of First Instance, in Civil Case No.
16815 brought by Planters (Exhibits F thru F-22) decided that the 30-year
milling contracts had indeed expired in 1951, at the latest, or before June 22, 1952.  On appeal, this decision was affirmed by the
Supreme Court in G.R. No. L-6648 dated July
25, 1955 (Exhibits G-1 thru G-6).

“On December 14,
1955, some 20 months after filing Civil Case No. 22577, Central
filed a motion (Exhibit U) alleging that negotiations were in progress for the
amicable settlement of its differences with Planters.  On February 25, 1956, similar motions
(Exhibit V) were filed by both Central and Planters manifesting to the court
that such negotiations were going on and that there was probability that they
would reach an amicable settlement.

“On March 5, 1956,
Central and Planters executed the controversial ‘Amicable Settlement-Compromise
Agreement’ (Exhibits XXX thru XXX-6).

“On April 23, 1956, Central and Planters filed a manifestation
(Exhibit Y) to the effect that they had already compromised and settled their
differences, but that the execution by the majority of Planters of their new
individual sugar milling contracts had not yet been completed, and that as soon
as this was done, Central would ask for the dismissal of Civil Case No. 22577.

“On May 2, 1956, three persons, planters themselves (the
spouses Jose V. Coruña and Jesusa
Rodriguez, and Felipe L. Lacson), filed a ‘Motion for
Intervention’ (Exhibits Z thru Z-19) in which they attacked the ‘Amicable
Settlement-Compromise Agreement’ (referred to hereafter as ASCA for
convenience), as a circumvention and violation of Republic Act 809 because it
eliminates the share of the laborers, from November 1, 1955 to October 31,
1974.

“On May 5, 1956, the Secretary of Labor filed a manifestation
(Exhibits AA thru AA-1) adopting the allegations of the three planters’ motion
for intervention, and assailing the ASCA as being contrary to law because it
totally deprives the plantation laborers of the benefits granted them by
Republic Act 809 for the period commencing November 1, 1955 up to the end of
the 1973-1974 crop milling season, and because, with respect to the period
from June 22, 1952 to October 31, 1955, their share is not being disposed of in
accordance  with the provisions of
Republic Act 809.

“On May 28, 1956, another group of 6 laborers filed a motion
(Exhibits BB thru BB-17) with the court, likewise attacking the ASCA as a
‘device by which the petitioner and a majority of the planters seek to
circumvent the provisions of the Sugar Act of 1952, and conniving and
confabulating together thereby denying to labor its just rights granted them by
the said law’.

“On June 4, 1956,
almost three months to the day from the execution of the ASCA on March 5, 1956, Central filed with the
court, in Civil Case No. 22577, a ‘Petition for Provisional Dismissal’ (Exhibit
FF-2).

“On June 8, 1956,
the 3 planters earlier referred to filed an opposition
(Exhibits II thru 11-3) to the petition for provisional dismissal.

“On the same date, June 8, 1956, the Secretary of Labor filed
a similar opposition (Exhibits JJ thru JJ-10), assailing the ASCA sharing of
the sugar between Planters and Central at 64% and 36%, respectively, with
nothing going to the plantation laborers, as being contrary to Section 1 of
Republic Act 809 which had increased Planters’ participation from 60% to 70%,
representing an increase of 10%, and to Section 9 of the Act which grants the
plantation laborers a participation of 60% of such 10% increase.

“On June 22, 1956,
the Manila Court of First Instance denied the motions for intervention and
dismissed Civil Case No. 22577, without prejudice, from which denial and
dismissal (Exhibits KK thru KK-6) the Secretary of Labor, the three planters,
and the six laborers referred to above, took an appeal to the Supreme Court. In G.R. No. L-11218 (Exhibit UU-1), the Supreme Court
dismissed the appeal on November 5,
1956.

“As is readily evident from the foregoing recital of facts,
the major bone of contention between the appellants, on the one hand, and the appellees, on the other, consists in the ‘Amicable
Settlement-Compromise Agreement (Exhibits XXX thru XXX-6, hereafter referred
to as the ASCA for convenience) executed on March 5, 1956 by Central, on
the one hand, and Planters, on the other, and reproduced in substance in the
‘General Collective Sugar Milling Contract’ (Exhibits YYY thru YYY-7) and the ‘Indivi­dual
Sugar Milling Contracts’ (Exhibits SSS thru SSS-28 and ZZZ thru ZZZ-7).  For a deeper insight into the conflicts that
divide the parties to this case, the ASCA is hereunder reproduced in full as
follows:

‘AMICABLE
SETTLEMENT-COMPROMISE AGREEMENT

‘This document, executed by

‘VICTORIAS MILLING
COMPANY, INC., a corporation organized and existing under the laws of the
Philippines, and domiciled in the City of Manila (hereinafter referred to as
the ‘COMPANY’), represented herein by its President, Carlos L. Locsin, of age, Philippine citizen, married, and resident
of the Province of Negros Occidental, as Party of the
First Part;

– a n d –

‘VICENTE F. GUSTILO,
JESUS SUAREZ, SIMON DE PAULA, FERNANDO J. GONZAGA and JOSE GASTON, of age,
Philippine citizens, married, and residents of the Province of Negros Occidental, and duly authorized to execute this
document by the sugarcane planters affiliated with the COMPANY, (hereinafter
referred to as the ‘PLANTERS’) as Party of the Second Part;

‘WITNESSETH:  That

‘WHEREAS, long before the war in 1941 the COMPANY and NORTH NEGROS
SUGAR CO., INC., (a domestic corporation, domiciled in the City of Manila,
whose obligations were assumed by the COMPANY) and several sugarcane planters
in Manapla, Cadiz and Victorias,
Negros Occidental, entered into, and executed, sugar
milling contracts which have already expired;

‘WHEREAS, on June 22, 1952,
Republic Act 809 was passed;

‘WHEREAS, prior to June 22, 1952, the sugar manufactured by the
Party of the First Part from the sugarcane delivered to it by the planters
affiliated with the COMPANY was divided between the COMPANY and the PLANTERS on
a 40-60 basis, respectively, pursuant to the aforementioned sugar milling
contracts;

‘WHEREAS, after the passage of said Republic Act 809 the PLANTERS
made a demand on the COMPANY for a division of the sugar and by-products
manufactured by the COMPANY from sugarcane delivered to it by the PLANTERS from
and after said date, June 22, 1952, on a basis of 70-30, for the PLANTERS and
the COMPANY, respectively, under the provisions of said Republic Act 809;

‘WHEREAS, the COMPANY denied said demand made by the PLANTERS;

‘WHEREAS, the COMPANY has heretofore filed a petition in the Court
of First Instance of Manila for a declaratory judgment declaring Republic Act
809 unconstitutional and invalid, and for other relief, which petition was
opposed by the PLANTERS;

‘WHEREAS, pending the determination of the action or petition
above-mentioned, the COMPANY, as an accounting precautionary measure, has,
since the enactment of Republic Act 809, annually set aside a reserve
corresponding to the disputed TEN PER CENT (10%) increase in participation
demanded by the planters under said Republic Act 809;

‘WHEREAS, the COMPANY and the PLANTERS desire to avoid a prolonged
litigation and amicably settle and compromise their differences, and enter
into, and execute new sugar milling contracts;

‘WHEREAS, a ‘Special Committee’ herein accepted and recognized by
the Party of the First part, has been created by the PLANTERS for the purpose
of effectuating the present amicable settlement and compromise, which ‘Special
Com­mittee’ is composed of the five (5) sugarcane planters hereinabove
mentioned, executing this agreement as ‘Party of the Second Part’;

‘NOW, THEREFORE, the COMPANY and the PLANTERS affiliated with it,
the latter being represented herein by the Party of the Second Part, hereby
agree to amicably settle and compromise, and do hereby amicably settle and
compromise, all their differences, as follows:

‘(1) The PLANTERS shall execute the ‘General Collective Sugar
Milling Contract’ as well as supplemental new individual sugar milling
contracts, effective November 1, 1955, the sugar and by-products manufactured
by the COMPANY from the sugarcane delivered to it by the PLANTERS to be divided
between them, SIXTY-FOUR PER CENT (64%) for the PLANTERS and THIRTY SIX PER
CENT (36%) for the COMPANY;

‘As to the sugar and molasses manufactured by the COMPANY from June
22, 1952 (the date of the passage of Republic Act 809), to October 31, 1955,
(the end of the COMPANY’s fiscal year), the COMPANY
suggested to divide the same on a 65-35 basis, SIXTY-FIVE PER CENT (65%) for
the PLANTERS and THIRTY-FIVE PER CENT (35%) for the COMPANY, as part of a 65-35
milling contract to begin June 16, 1952, and to end with the 1973-1974 crop
milling year, on the same basis of participation.  But as the COMPANY and the PLANTERS failed
to reach an agreement thereon, the COMPANY agrees to reduce its share or
participation to 30, in favor of the PLANTERS, for the said period of June 22,
1952-October 31, 1955, and the PLANTERS, in turn, agree to reduce their share
or participation to 64, in favor of the COMPANY, for the period commenc­ing
November 1, 1955, to the end of the 1973-1974 crop milling season, that is,
October 31, 1974 and the COMPANY, upon all the PLANTERS affiliated with it
executing their new individual milling contracts shall pay them the total value
of the reserve referred to in the seventh ‘WHEREAS’ clause now amounting to
P8,643,472.24, as follows:

‘(a) The Party of the Second Part shall set aside Sixty Per Cent
(60%) of the said sum of P8,643,472.24 as received by them to be held in trust
for the benefit of their laborers that may be entitled thereto because some of
them have already died and their heirs are unknown while a great number of them
are hard to locate and identify, the Party of the Second Part, shall dispose of
the said Sixty Per Cent (60%) of the sum of P8,643,472.24 as received by them;
as follows:

‘(1) The Party of the Second Part shall invest P4,000,000.00 of the
P5,186,083.34, which is Sixty Per Cent (60%) of the said sum of P8,643,472.24,
in 40,000 voting and transferable shares of capital stock of the COMPANY of the
par value of P100.00 per share which shall be issued in four (4) blocks of
10,000 shares per block by the COMPANY to the Party of the Second Part upon effectivity, of this agreement as provided in Clause (2)
hereof, it being understood that the issuance of such shares does not involve
an increase in the present author­ized capitalization of the COMPANY.

‘The above-mentioned 40,000 shares of the capital stock of the
COMPANY will enable the laborers/planters to become part owners of the COMPANY
but if within the period of eighteen (18) months, but not earlier than six (6)
months, from and after date of delivery of the said 40,000 shares by the
COMPANY to the Party of the Second Part, the Party of the Second Part should
desire to have the value of the said 40,000 shares to wit. P4,000.000,00, or
such portions thereof in blocks of 10,000 shares at P1,000,000.00 per block,
paid in cash, the COMPANY will pay in cash to the Party of the Second Part or
its successors the said value of the said 40,000 shares or of such blocks of
10,000 shares per block, as the Party of the Second Part may decide to have
converted into cash; as to such  blocks
of 10,000 shares per block, that the Party of the Second Part may retain, such
shares may be retained by the PLANTERS for their own account upon their payment
to the Party of the Second Part or its suc­cessors of the value thereof of
P1,000,000.00 per block.  The COMPANY
shall have a period of Thirty (30) days after receipt of written request of the
Party of the Second Part within which to make such cash payment of the value of
the shares.

‘The balance of P1,186,083.34 shall be distributed under the
supervision of the Secretary of Labor among the present laborers of the Party
of the Second Part who were already laborers of the PLANTERS during the period
comprised between June 22, 1952 (the date of the passage of Republic Act 809)
and October 31, 1955 (the end of the COMPANY’s fiscal
year);

‘(ii) As to the sum of P3,457,388.90, which is the Forty Per Cent
(40%) of the P8,643,472.24, the Party of the Second Part shall distribute this
amount among the PLANTERS in proportion to the sugar milled for them by the
COMPANY during the aforementioned period of June 22, 1952, to October 31,
1955.’

‘(b) As to the manner of delivery of the cash involved in the
foregoing transaction amounting to P4,643,472.24, a ‘General Collective Sugar
Milling Contract’ has heretofore been prepared for the signature of the
PLANTERS affiliated with the COMPANY signing the said ‘General Collective Sugar
Milling Contract’, the COMPANY shall pay and deliver to the Party of the Second
Part at least fifty per cent (50%) of the said cash balance of P4,643,472.24 or
that portion thereof corresponding to the said majority of the PLANTERS
affiliated with the COMPANY who have already signed the said ‘General
Collective Sugar Milling Contract’, and the remaining fifty per cent (50%) or
remainder thereof will be paid, one half upon the execution of their new
individual sugar milling contracts, and the other half upon the registration
thereof in the Office of the Register of Deeds for the Province of Negros Occidental;

‘(c) It is understood, as part of this settlement agreement, that
the block of the COMPANY’s common shares mentioned in
sub-paragraph (i) and all its earnings shall
constitute a trust fund to be dedicated to the amelioration of the plantation
laborers of the PLANTERS in the Victorias-Manapla-Cadiz
milling district.  Said trust fund shall
be administered by the Party of the Second Part for the benefit of the
PLANTERS’ laborers under the supervision of the Secretary of Labor and in
accordance with the trust laws of the Philippines.  Should the trust fund be liquidated by order
of the Court of Justice or in the manner provided for in paragraph (1) (a) (i) then the PLANTERS shall have the first option from the
trustees, and the COMPANY the second option from the trustees and/or from the
planters themselves, to buy said Victorias Milling
Co., Inc., shares in blocks of 10,000 shares at their value of P1,000,000.00 per block. 
And in case both the Party of the First Part and Party of the Second
Part refuse to exercise their right, then said block of VMC shares may be sold
in the open market.’

‘(2) This agreement will become effective if and when the majority
of the planters affiliated with the Party of the First Part have signed the said
‘General Collective Sugar Milling Contract’.

‘Executed at Victorias,
Negros Occidental, this 5th
day of March, 1957.

‘VICTORIAS MILLING CO., INC.

By:

(Sgd.)  CARLOS L. LOCSIN

CARLOS L. LOCSIN

President

(Party of the First
Part)

(Sgd.)
VICENTE F. GUSTILO

VICENTE F. GUSTILO

(Sgd.)  JESUS SUAREZ

JESUS SUAREZ

(Sgd.)  SIMON DE PAULA

SIMON DE PAULA

(Sgd.)  FERNANDO J. GONZAGA

FERNANDO J. GONZAGA

(Sgd.)  JOSE GASTON

JOSE GASTON

(Party of the
Second Part)’.”

(Decision of CA, pp. 177-198, Rollo of L-
41161)

VII

Before proceeding any further, and in order to place in proper
perspective the matters covered by the numerous assignment of errors presented
by the parties for Our resolution, We believe We must underscore at this point
that as may be readily noted in the portion of the decision under review We
have just quoted, the Court of Appeals summed up the allegations of the
petition (and presumably the amended one) filed with the trial court and stated
unqualifiedly the premise that, per its own petition the Federation admitted
that the laborers’ share in the 1952-53 to 1954-55, “the PLANTERS gave
to petitioners LABORERS the latters‘ participation in
the sugar production as well as in the by-products and derivatives thereof and
continued to give the same until November 1, 1955, etc.” (Underlining
Ours) Then the Court proceeded to state the defenses of the defendants PLAN­TERS
and CENTRAL or VICTORIAS.  And after
quoting the dispositive portion of the trial court’s
judgment, the Court went on to say that appellants (meaning the laborers
represented by the FEDERATION) ventilate twenty-eight assignment of errors
giving rise, in that Court’s view to the three issues it enumerated.  (supra) The point We want to clarify as early
as at this juncture is that it is at once evident that technically, the second
and third issues referred to cannot be deemed to contemplate any question
beyond those raised in the petition, namely, the non-payment of the laborers’
share in the proceeds of production after November 1, 1955.  Whatever, therefore, might have been covered
by the FEDERATION’s twenty eight assignment of errors
in respect to matters before November 1, 1955 were obviously new matter, and
could be resolved by the Appellate Court only if evidence thereon were received
by the trial court without objection of the adverse parties seasonably as if
the same were tried with by agreement of all the parties.

We have to make this early elucidation and setting of the proper
perspective of the issues, because, as will be seen later, one of the decisive
considerations We will dwell on will be whether or not the Appellate Court
legally acquired authority to act on said new matter and/or whether or not it
resolved the issues of fact and law relative thereto in accordance with the
evidence and the law.  Hereunder is how
the Court of Appeals, resolved the three issues that it held came out from the
assignment of errors of appellant Federation.

VII

The appellate court resolved the three issues it enumerated as
follows:

Regarding the first issue, the Court held:

“We agree that millers and planters may indeed enter into
written milling agreements stipulating participations different from those
prescribed in Section 1 of the Sugar Act. 
This conclusion is justified by the language of Section 1 itself which
declares that –

‘In the absence of written milling agreements between the majority
of the planters and the millers of sugarcane in any milling district in the
Philippines, the unrefined sugar produced in that district…. shall be divided
between them.’

in the proportions established
therein.  The phrase ‘in the absence of
clearly indicates that the division of the sugar between the millers and the
planters in accordance with the schedule of participations mentioned, has to be
complied with only during periods when millers and planters are bound by no
written milling agreements, and need not govern the sharing system of the
contracting parties who have entered into such agreements.

“That this is the real intendment of the law can hardly be
shrouded in doubt.  For the law is not
merely social in that it means to uplift the wretched condition of the laborers
in the country’s sugarcane plantations; it is also economic in that the law is
calculated to safeguard, preserve, and maintain the integrity, viability, and
health of an industry so vital to the entire economy of the country.  When the sugar bill (which ultimately became
Republic Act 809) was being debated in Congress in 1950, 1951, and 1952, one of
the urgent reasons advanced by its sponsors in plead­ing for the expeditious
passage of the measure was the fact that in a year or so the preferential
treatment of Philippine sugar in the American market was expiring, and it was
imperative that the situation in the sugar industry be stabilized as quickly as
possible by the passage of the bill in order to take advantage of the remaining
few years of such preferential treatment. 
The provisions of the law authorizing the take-over by the government of
centrals which refuse to mill or of plantations which neglect to plant,
indicate the concern of the industry to the over-all posture of the national
economy.  The respective partici­pations
of the millers and the planters cannot, therefore, be regulated, at all times,
by the same proportions established in Section 1 of the law.  On the contrary, such participations should
be understood as subordinated, at all times, to the superior interests of the
industry as a whole.  No one, least of all
the very people involved in the industry – millers, planters, and laborers –
has a right, so to speak, ‘to kill the goose that lays the golden eggs.’
Particularly when production costs are so high and sales are so low, sacrifice
on the part of everyone is in order.  In
such cases, millers and planters should be able to adjust their respective
participations in response to the economic realities obtaining in the industry,
that is, stipulate in their written milling agree­ments participations lower or
higher than those prescribed in Section 1 of the law.

“Fears may be expressed, as a result of the conclusion we have
reached, that millers and planters may be thrown back into the same situation
that the Sugar Act was passed to remedy–that is, a situation where the weak
planters would be continually demanding an increase in their partici­pation and
the strong millers would persist in refusing to grant the increase, the same
stalemate, in the same impasse that characterized the relations between Central
and Planters before the Act became law and which, in fact, precipitated the
enactment of the law in 1952.  Such
fears, however, may not be seriously enter­tained.  A continuing period of no-contract would
result in a definite disadvantage to the centrals.  Section 1 provides summary increases dictated
by Section 1 would continue to accrue in favor of the planters.  For reasons of sheer self-interest,
therefore, the centrals would thus be compelled to negotiate written contracts
with the planters.

“In such a situation, the planters, understandably would not
be in too great hurry.  If, however, they
must write new contracts with the millers, there is hardly any doubt that,
after enjoying the increases as decreed in Section 1 of the law in the absence
of written milling agreements they would not yield to less in negotiating new
milling agreements with the millers. 
Proof of this is the fact, in the instant case, that
Planters, enjoying a 4% increase in their participation by virtue of Section 1
when they had no milling agreements with Central, did not settle for less when
they finally executed the ASCA with Central on March 5, 1956.

“But we disagree with appellees when
they assert that plantation laborers have no right to any share in any increase
in planters’ participation where such increase is granted not ‘under this Act’
(a phrase used in Section 9 of the law) but by contract, as in the case of the
ASCA of March 5, 1956.  The argument
loses sight of the fact that the Sugar Act of 1952 is, by and large, a piece of
social legislation intended to grant increases in the planters’ participation
for the primary purpose of enabling the planters to improve the lot of their
plantation laborers.  Thus, in 1938, when
President Manuel L. Quezon appointed Chief Justice
Moran to study the ‘alleged inequitable distribution of sugar resulting from
the milling of sugarcane between the centrals and the plantation’, the study
was undertaken with a view to ‘ameliorating the condition of the plan­ters’
laborers’.  When Justice Moran finally
submitted his report on April 30, 1939,
he came up with the conclusion that unless the participation of the planters
was increased, they could not be made to ‘ameliorate the condition of their
plantation laborers.’

The Court then went into an extended discussion of practically
the same considerations discussed by Us in Talisay-Silay, hence We will not quote them anymore.  As We did in Talisay-Silay,
the Court concluded:

“In keeping with this spirit, the Department of Labor has made
a correct interpretation of the scope and extent of the applicability of
Republic Act 809 in respect to the benefits of plantation laborers, in issuing
the ‘Rules and Regulations to Implement Section 9 of Republic Act 809 (Exhibit
GGG), dated February 23, 1956, as amended on May 4, 1956, providing:

‘SECTION 1, The benefits granted to laborers under the Act shall
apply to all laborers of sugar plantations in any milling district wherein the
planters’ share has increased in accordance with the schedule of participations
established in Section 1 of said Act, due either to the absence or expiration
of written milling agreements between the majority of the planters and their
respective millers or under subsequent milling agreements executed after the
date of effectivity of the Act.’

“It is clear from the foregoing provisions of the ‘Rules and
Regulations’, that the benefits to which the plantation laborers are entitled
refer to the increases in planters’ participation granted either under Section
1 of the law (in the absence of written milling agreements on the date said law
became effective, June 22, 1952) or under any subsequent contracts executed
after the date of effectivity of the said Act.

“It is likewise clear that such increase is the difference
determined, as basis, either on the lower participation of the planter under
the last milling contract expired immediately prior to June 22, 1952, or on the
lower participation of the planter under a milling contract which, although
subsisting on that date, expired immediately thereafter, in relation either to
the higher participation of the planter under Section 1 of the law (in the
absence of a milling contract) or to the higher participation of the planter
under a milling agreement executed subsequent to June 22, 1952.  Thus, provides the ‘Rules and Regulations’ –

‘Increase in participation shall mean the difference between the
participation of the planters under Section 1 of the Act or the participation
of the planters in any mil­ling agreement subsequent to the effectivity
of the Act, and the participation of said planters under the milling contract
subsisting at the date of the effectivity of the Act,
or in the absence thereof, under the last milling contract immediately prior to
the enactment of said Act.’

“Consequently, we hold that, since, as the facts of this case
show, under their milling contracts which expired before June 22, 1952,
Planters had a participation of 60%, while Central had 40%, and since, under
the ASCA executed between them on March 5, 1956, but made retroactive to
November 1, 1955, Planters have a participation of 64% while Central has 36%, with
such participations to run and remain in force until October 31, 1974, Planters
enjoy a 4% increase in participation under the said ASCA.  Pursuant to Section 9 of Republic Act 809,
the plantation laborers, or appellants herein, are entitled to a share of 60%
of such 4% increase during the entire period of the 19-year term of the ASCA.

“In the light of all the foregoing, we hold, in disposing of
the first issue herein discussed, that the existence of milling agreements does
not necessarily render Republic Act 809 inapplicable or inoperative as to the
contracting parties but the Act remains applicable and operative in all cases
where the milling agreements, executed subsequent to June 22, 1952, provide any
increase in planters’ participation, as the term ‘increase in participation’ is
defined herein.

“Accordingly, the ASCA and the other derivative sugar milling
contracts are hereby declared modified so as to be caused to be read thereinto a provision granting the plantation laborers, or
the appellants herein, 60% of the 4% increase in planters’ participation
stipulated therein, commencing from November
1, 1955 to October 31,
1974.  They should likewise
be entitled to legal interest for the same period.

As already stated earlier in this opinion, the above ruling of
the Court of Appeals conforms with Our decision in Talisay-Silay, which We here reaffirm for the purposes of
these cases, no new and cogent reasons having been advanced by the FEDERATION
to convince Us to alter Our view.  As We
have earlier indicated, in the latest motions filed by it for early resolution
of these cases, it is quite apparent that the FEDERATION is more or less
resigned to accept Our Talisay-Silay rulings.

– VIII –

Anent the second issue, the Court discoursed thus:

“We shall now take up the second issue under which appellants
claim that the ASCA of March 5, 1956 (Exhibits XXX thru XXX-6), and derivative
contracts, the ‘General Collective Sugar Milling Contract’ (Exhibits YYY thru
YYY-7) and the ‘Individual Sugar Milling Contract’ (Exhibits SSS thru SSS-28
and ZZZ thru ZZZ-7) executed by Central, on the one hand, and Planters, on the
other, have been entered into in circumvention of Republic Act 809 and are, for
that reason, void ab initio.

“In their twelfth assignment of error (appellants’ brief, pp.
265-278), appellants argue that while appellees are
free to enter into written milling agreements subsequent to June 22, 1952, the
intent of Republic Act 809 is that the provisions of such agreements ‘must be
without prejudice to the sharing arrangement laid down in Sections 1 and 9’ of
the law.  In support of this position,
they cite the proceedings on the deliberations of the Senate on House Bill No.
1517 (which ultimately became Republic Act 809) particularly on what became
Section 5 of the law.  In their sixteenth
assignment of error (appellants’ brief, pp. 292-306), appellants charge that
the motive of the appellees in executing the milling
agreements is ‘to have a pretext for evading and circumventing Sections 1 and 9
of Republic 809 and thereby to be able to appropriate with impunity the six
(6%) per cent share’ of appellants in the unrefined sugar and its derivatives.

“We have gone over the arguments of appellants in both
assignments of error but found no evidence of circumvention as appellants have
charged.  Under their twelfth assignment
of error, it is true that Senator Zulueta introduced
an amendment so as to subject the schedule of participations under Section 1 of
the law to decisions by a proposed Board of Arbitration to be appointed by the
President of the Philippines ‘in the event that any central, shall be unable to
arrive at a milling agreement with a majority of the planters affiliated with
it, and shall refuse to mill the sugar cane of such plant­ers in the absence of
such agreement’, and that this amendment was voted down on the ground, strongly
advocated by Senator Tañada, that since the bill already
fixed the ratio of participation between the millers and the planters, it would
be wrong to ‘open it to further inquiry or arbitration.’

“Senator Tañada was correct in
taking such position.  There was no point
to creating a Board of Arbitration to determine the participations of the
millers and the planters which the bill under discus­sion had already fixed as
a congressional determination of the matter. 
But no inference may be drawn from Senator Tañada’s
position that the sharing proportions established under Section 1 of the law
may not be deviated from in contracts executed subsequent to the passage of the
law on June 22, 1952.  Appellees are correct in their view that indeed if it were
the intention of Congress for the millers and planters to observe no other
sharing arrangements than those established under Section 1, there would be
little point, if at all, entering into any written milling agreements which
cannot stipulate other proportions in the sharing arrangements than those
prescribed under Section 1.  In our resolution
of the first issue, we adverted to the fact that Re­public Act 809, although
not a revenue-raising measure, is, in addition to being social, also an
economic piece of legislation.  It bears
repeating in connection with the issue at hand that Congress could not have intended,
by Section 1, to prevent the millers and planters from agreeing to other
sharing proportions, even at the cost of the preservation of the sugar
industry.  We do not believe we need say
more.

“Under their sixteenth assignment of error, appellants cite
the various acts of Central in resorting to maneuvers to get Planters to
execute the ASCA of March 5, 1956,
and the other derivative sugar milling agreements.  Appellants are of the view that they are
entitled to 6% of the sugar proceeds effective June 22, 1952 without contract,
as under Section 1 of the law, or with contract, as under the ASCA, and that
the maneuvers of Central in offering the Planters 64%, provided Central got
36%, which the latter finally succeeded getting the former to agree to under
the ASCA, constitute a circumvention of the law.

“Central’s tactics may not be exactly moral, but they are
standard operating procedure of businesses–using every possible leverage and
device to bring about the best bargain under given circumstances–for
profit.  The contracts, therefore, which
it wrung from Planters are not in circumvention of the law but in legitimate
pursuit of profit–which is the end-all and be-all of business.  That Central, as a result of the ASCA which
appellants claim it (Central) to have ‘engineered’, got 36% and Planters 64%,
while the plantation laborers got nothing, is no reason for considering the
contract a circumvention of the law which does not in the first place impose
upon it any duty or require of it the performance of any obligation to yield any
part of its participation in favor of planters laborers.  In other words, we do not find in Central’s
conduct in the premises anything so odious or so obnoxious as to render the
contracts it has entered into with Planters illegal or repugnant to public policy.  In the course of negotiations, Central acted
under the belief that if it succeeded in writing new written milling
agreements, the agreements could stipulate other proportions in the sharing
system than those established under Section 1 of the law, since in its view,
the law would no longer be applicable the moment such agreements were entered
into.  There is evidence that Planters,
on their part, at first recoiled from Central’s suggestion that the latter was willing
to increase the former’s participation from 60% to
64% provided Planters agreed to give 36% to Central for the duration of the
contract.  The sense of repulsion was
understandable, since, under Central’s suggestion, the 6% which the Planters’
laborers were to enjoy from June 22,
1952 to October 31, 1955,
would all go to Central during the next 19 years, from November 1, 1955 to October 31, 1974. 
But Planters seemed to have little choice as Central appeared to have
all the aces:  from June 22, 1952, it had
started setting aside a ‘reserve’ equivalent to 10% of the annual production,
this being the amount of increase which the Planters had demanded as due to
them under Section 1 of the law. 
Although Central still insisted, even after the passage of the law on
June 22, 1952, that its 30-year milling contracts with Planters had not yet
expired because of its belief that 4 years of Japanese occupation and 2 years
of rehabilitation of the mills during which the mills were not in operation
should be deducted from the 30-year periods of the contracts, it set aside this
‘reserve’ just in case it was finally decided by the courts before which the
issue had been brought by the planters, that its 30-year contracts had indeed
expired as of the date of effectivity of the
law.  As of October
31. 1955, this 
‘reserve’ had accumulated to P8,643,472.24.  Central’s suggestion was that this amount of
‘reserve’ built up during the period from June 22, 1952, to October 31, 1955,
be divided between Planters and the plantation laborers on the proportion of
40% for the former and 60% for the latter, the same proportions prescribed by
Section 9 of Republic Act 809.  With 40%
of the ‘reserve’, Planters would stand to get P3,457,388.90,
while the plantation laborers, with 60% would have P5,186,083.34.  These participations in the ‘reserve’ of 40%
for Planters and 60% for the plantation laborers in the ‘reserve’, would be
equivalent to participations of 4% and 6%, respectively, in the total annual
production within the period from June 22, 1952 to October 31, 1955, Planters’
total participation for the period, therefore, would be 64%.

“Confronted by an acute need for money and these enticements
dangled before them P3,457,388.90 in cash (equivalent to 40% of their
participation in the reserve or to 4% in the total annual production) for the
period June 22, 1952 to October 31, 1955, and a similar total participation of
64% for the next 19 years, that is, from November 1, 1955 to October 31, 1974,
coupled by the speculation perhaps that their 4% increase for the 19 years could
not be touched by the plantation laborers because of the argument that Republic
Act 809 would no longer be applicable once written milling agreements were
entered into, Planters found no better alternative than sign, as they did sign,
on March 5, 1956, the controversial ASCA and subsequently, the other agreements
reproducing the provisions of the ASCA.

“That Planters might not have gotten the better end of the
bargain since, under the ASCA, the 6% that would go to their plantation
laborers for the period from June 22, 1952 to October 31,1955, would go instead
to Central for the next 19 years, from Novem­ber 1, 1955 to October 31, 1974,
is no evidence of circumvention of Republic Act 809.  As we have said in our resolution of the
first issue, the millers and planters may stipulate in their written milling
agreements other sharing proportions than those prescribed in Section 1 of the
law which were so prescribed only in the absence or because of the absence of
written milling agreements.  Centrals’
drive, therefore, to get all the 6% for itself is a perfectly legitimate one,
not a circumvention.”

Again, fundamentally, the above position of the Court of Appeals
is in accord with Talisay-Silay, except for some
apparent incon­sistencies therein, to which We will hereinunder address Ourselves re­garding the conduct of VICTORIAS
in entering into the so-called ASCA. It is quite obvious that the Appellate
Court tried very hard to look for some way of making VICTORIAS somehow liable
for whatever might be due the laborers of the PLANTERS, notwithstanding its
categorical finding and holding that VICTORIAS did nothing more than to obtain
as legitimate a bargain as any sensible businessman or industrialist having an
eye for profit would do.  We see no
legal, equitable nor moral reason for such effort, even as We reaffirm for the
purposes of the instant cases, Our ruling in Talisay-Silay
that under no circumstances should the plantation laborers be deprived of 60%
of whatever increase in share their respective planters-employers had obtained
from the Central, that is, whether by the application of Section 1 of the Act
when there were not enough written contracts, or, under the said contracts upon
there being a majority of them.

After holding that the ASCA is legal and, what is more, not
conceived to circumvent the law, surprisingly, the Court went into a matter not
alleged in the petitions in the trial court. 
It proceeded to go into a disquisition of the effects of the provi­sions
of the ASCA regarding the manner of paying the share of the laborers in the 10%
increase of the PLANTERS’ share from June
22, 1952 to October 31,
1955.  As will be noted in
the earlier quoted provisions of the ASCA, it was stipulated that the PLANTERS
would be paid their 10% increase, 60% of which would pertain to the laborers,
with the condition, however, that instead of the PLANTERS receiving the total
share of the laborers in cash, only a portion would be in cash and the balance
of Four Million (P4M) Pesos would be in the form of certificates of shares of
stock to be issued to the PLANTERS, who formed a Special Committee or Board of
Trustees for the purpose, expressly in trust for the laborers.  The Court condemned such provisions as
entirely beyond the authority of the PLANTERS and VICTORIAS to stipulate just
between them without the express consent or prior assent of the laborers or the
Federation or even the Secretary (now Minister) of Labor, who, under Section 9
of the Act, was supposed to super­vise “the distribution of the share
corresponding to the laborers.” On such premises, the Court concluded:

“In the light of all the foregoing, we hold, in resolution of
the second issue, that, while we do not find appellees
to have circumvented Republic Act 809 in entering into the ASCA and in
stipulating a participation of 64% for Planters and 36% for Central, and for
this reason, declare the ASCA and the other derivative sugar milling contracts
valid, the appellees are jointly and severally liable
for tort in disposing, upon their own accord, and without any authority of the
plantation laborers, of the money of the said laborers in the total amount of
P5,186,083.34, and in thus causing the loss of shares of stock and their
earnings purchased out of the P4,000,000.00 of such amount.”

X

While, as We have said, We are in agreement with the Court of
Appeals in its construction and application of Sections 1 and 9 of Republic Act
809 as discussed above, We cannot, as We will show anon, fully accept its
conclusions as to the pretended liability of the PLANTERS and VICTORIAS for the
amount that the FEDERATION claims the laborers of the PLANTERS have not been
paid as their share of the proceeds of the crop years 1952-1953 to 1954-1955 as
well as those of the crop years 1956-1957 to 1973-1974.  In passing upon, as We have just quoted, the
second issue form­ulated by it to resolve the appeal to it of the Federation,
it held the appellees, the PLANTERS (including Primo
Santos and Benjamin Tirol) and VICTORIAS
“jointly and severally liable for tort in disposing, upon their own
accord, and without any authority of the plantation laborers, of the money of
the said laborers in the total amount of P5,186,083.34 and thus causing the
loss of shares of stock and their earnings purchased out of P4,000,000.00 of
such amount.” Not only that, the Court of Appeals adjudged the PLANTERS
and VICTORIAS also jointly and severally liable for the 2.4% share of the
laborers in the proceeds, which they maintain they have not received, of the
crop years 1956-57 to 1973-74.  In­deed,
in the course of resolving the second issue and in disposing of the third
issue, the Appellate Court found the PLANTERS and VICTORIAS guilty of
misappropriation and conversion of P7,385,950.00
corresponding to the P4M worth of VICTORIAS
shares of stock which under the ASCA was stipulated to be received by the
PLANTERS in trust for the laborers.

Obviously, this particular aspect of these instant cases before Us involve questions both of fact and of law.  To put things in their proper order and to
pin liability for the claim of the laborers on the proper party or parties, it
would be best to discuss and dispose of separately the two stages of sharing
and payment in question, namely, (1) that which refers to the proceeds of the
1952­-53 to 1954-55 crop years and (2) that referring to the proceeds from crop
year 1955-56 to crop year 1973-74.

XI

– A –

We will start with what We feel is the stage that involves
factual and legal issues which may be easily and readily determined, which is
that referring to the proceeds of 1955-56 to 1973-74 crop years.  Under the terms of the ASCA, the ratio of
sharing between the PLANTERS and VICTORIAS during that period was to be 64% of
said proceeds for the former and 36% thereof for the latter.  As this Supreme Court held in Talisay-Silay and as held in the decision of the Court of
Appeals under review, We reiterate, it is indubitable that said proportion of
sharing is legal, the ratios fixed in Section 1 of Republic Act 809
notwithstanding.  Although nothing is
provided in the ASCA as to the share of the laborers in the 4% increase the
PLANTERS were thus given by VICTORIAS, which under Talisay?Silay
and the decision of the Court of Appeals ought to be 2.4%, or 60% of said 4%,
it is admitted on all sides that VICTORIAS religiously gave the PLANTERS their
full increase of 4% annually from crop year 1955-56 to crop year 1973-74
thereby leaving it to the PLANTERS to pay their respective laborers the said
2.4%.

The FEDERATION claims and the Court of Appeals so found that the
laborers were not paid by their respective planters?employers what is
legally due them.  Such being the case,
We cannot but affirm the judgment of the Court of Appeals that the PLANTERS are
liable therefor.

– B –

We cannot, however, share the Appellate Court’s holding that VICTORIAS
is jointly and severally liable with the PLANTERS.  We cannot perceive any factual or legal basis
for such solidary liability.  From the very beginning of the sugar
industry, the centrals have never had any privity of
any kind with the plantation laborers, since they had their own laborers to
take care of.  In other words, both the
centrals and the planters have always been the one dealing with their
respective laborers regarding the terms and condition of their employment,
particularly, as to wages.  Nowhere in
Republic Act 809 can We find anything that creates any
relationship between the laborers of the planters and the centrals.  Under the terms of said Act, the old practice
of the centrals issuing the quedans to the respective
PLANTERS for their share of proceeds of milled sugar per their milling
contracts has not been altered or modified. 
In other words, the language of the Act does not in any manner make the
central the insurer on behalf of the plantation laborers that the latter’s
respect­ive employers-planters would pay them their share.  Had the legislature intended to make the
central as such insurer, We have no doubt that clear
words to such effect would have been used. 
Much less is there in the ASCA any provision making VICTORIAS
responsible in any way for the share due the plantation laborers in the 4%
obtained by the PLANTERS under said agreement.

Section 9 of the Act unequivocally provides that 60% of “the
proceeds of any increase in the participation granted the planters under this
Act and above their present share shall be divided between the planter and
his laborer.” Further, the same provision explicitly mandates that the
”distribution of the share corresponding to the laborers shall be made under
the supervision of the Department of Labor.” Accordingly, the only
obligation of the centrals, like VICTORIAS,
is to give to the respective planters, like the PLANTERS herein, the planters’
share of the proceeds of the milled sugar in the proportion stipulated in the
milling contract which would necessarily include the portion of 60% pertaining
to the laborers.  Once
this has been done, the central is already out of the picture, and thereafter,
the matter of paying the plantation laborers of the respective planters becomes
the exclusively the concern of the planters, the laborers and the Department of
Labor.  Under no principle of law
or equity can We impose on the central – here VICTORIAS
– any liability to the planta­tion laborers, should any of their respective
planters-employers fail to pay their legal share.  After all, since, under the law, it is the
Department of Labor which is the office directly called upon to supervise such
payment, it is but reasonable to maintain that if any blame is to be fixed for
the unfortunate situation of the unpaid laborers, the same should principally
be laid on the planters and secondarily on the Department of Labor, but surely,
never on the central.

– C –

Moreover, when We consider that according to their own petitions,
both original and amended in the court below, the laborers had not been paid
their share since after the 1954-55 crop year, and their original petition was
filed only in November 1962, We feel inclined to believe that if the laborers
were convinced that they had any kind of cause of action against VICTORIAS, it
is quite unexplainable why it took them practically more than six years to file
their suit.  It is just as remarkable
that they did not move even against their very employers, the PLANTERS, during
all that time.  In any event, as We have already stated, We find no legal nor equitable basis
for the pretended joint and several or solidary
liability of VICTORIAS with the
PLANTERS to the laborers.  Its act of
paying the PLANTERS the full 4% increase was not illegal or contrary to law,
for it was in fact in fulfillment of its obligation both under Our Talisay-Silay ruling and the provisions of the ASCA.

– D –

Incidentally, it may be added, the Rules and Regulations to
implement Section 9 of Republic Act 809, “issued by the Secretary of Labor
on February 23, 1956, as amended on May 4, 1956, do provide pertinently that
the laborers’ share in the increase in participation accruing to the planters
shall be included in the quedans covering said
increase issued in the planters’ name with the following notation on the
face of the quedan sixty per centum (60%) share of
laborers in the increase in the participation of planters under Sugar Act of
1952 included.” But absent any iota of evidence indicating that such was
not done, We are under the law supposed to presume that the regulations have
been complied with.  Nowhere in the
Federation’s unusually lengthy and prolific brief is there any indication
otherwise.  And whatever the respective
PLANTERS did after those quedans were issued to them
cannot under any concept of law or equity be imputed
to VICTORIAS or to any imaginable
conni­vance between it and the PLANTERS to prejudice the laborers.  There was nothing that VICTORIAS
could conceivably gain in any such nefarious arrangement to induce it to take
the risk of ultimate being made liable in the manner done by the Court of
Appeals.

– E –

It is indeed noteworthy that whereas, as We shall discuss
presently, with regard to the payment of the laborers’ share in the proceeds of
the 1952-53 to 1954-55 crop years (60% of 6% out of the 10% provided in Section
1 of Republic Act 809), the Court of Appeals rather extensively argued and
discoursed, with, to be sure, seeming or apparent plausibility what
considerations, in its view, ought to make VICTORIAS, jointly and severally or solidarily liable with the PLANTERS,^[2]
hardly did said Court lay down any premise for the following portion of its
judgment now under review:

“3.  Declaring that the
participation of 64% for Planters and 36% for Central commencing from November
1, 1955 to October 31, 1974, as stipulated in these written milling agreements,
is valid, but that there should be deemed written into said agreements a
stipulation providing that 60% of Planters’ 4% increase in participation
belongs to appellants herein for the entire duration of the same period
pursuant to Section 9 of Republic Act 809;

x        x          x          x

“5.  Ordering appellees, jointly and severally, to pay appellants:

(a) The sum equivalent to sixty (60) percent of Planters’ increase
in participation of four (4%) percent, beginning November 1, 1955, and ending
October 31, 1974, inclusive, with interests thereon at the legal rate of 6% per
annum until fully paid:” (Pp. 79-80, Annex A, CENTRAL’s
Brief)

The only statement or finding or holding We can see in such challenged
decision which might be said to refer to the point under discussion is the
following:

“In the light of all the foregoing, we hold, in disposing of
the first issue herein discussed, that the existence of milling agreements does
not neces­sarily render Republic Act 809 inapplicable or inoperative as to the
contracting parties but the Act remains applicable and operative in all cases
where the milling agreements, executed subsequent to June 22, 1952, provide any
increase in planters’ participation, as the term ‘increase in participation’ is
defined herein.

“Accordingly, the ASCA and the other deriva­tive sugar milling
contracts are hereby declared modi­fied so as to be caused to be read thereinto a provision granting the plantation laborers, or
the appellants here­in, 60% of the 4% increase in planters’ participation
stipulated therein, commencing from November
1, 1955 to October 31,
1974.  They should likewise
be entitled to legal interest for the same period.” (Page
49, id.)

Well and good, but the Appellate Court did not say that with such
construction it had made of the Act, (to be sure, in accord with Talisay-Silay) it became the obligation of VICTORIAS to see
to it that the respective laborers of the PLANTERS were duly paid their share
of 2.4% or 10% of the 4% increase the PLANTERS were given.

The foregoing judgment becomes more incomprehensible when it is
recalled that in its minute analysis of the ASCA insofar as the provisions
thereof stipulating a 64%-36% sharing between the PLANTERS and the CENTRAL of
the proceeds of milled sugar during crop years 1955-56 to 1973-74, it found
that in so stipulating such ratio of sharing in said ASCA, there was no
evidence at all that on the part of VICTORIAS–and the PLANTERS, for that matter
of any circumvention, and We can add, even of any intent to circumvent, the
provisions of the Section 1 of the Act, To Our mind, for the Appellate Court to
impose upon VICTORIAS joint and several liability with the PLANTERS, in the
light of its just quoted predicates, for the latter’s failure to pay their
respective laborers the 2.4% corresponding to said workers, is not only a
veritable non-sequitur but an utterly baseless legal conclusion that
cannot be allowed to stand uncorrected. 
Accordingly, it is Our considered opinion, and We so hold, that the
portion of the judgment of the Court of Appeals just quoted should be as it is
hereby REVERSED, and whatever liability there exists in favor of the plantation
laborers should be pinned exclusively on the PLANTERS, their respective
employers. We must add though, that it was the Department of Labor’s
unexplainable inattention, not to say negligence, in performing its own
corresponding obligations under Section 9 of the Act that contributed to a
considerable extent to the sad plight that befell the said laborers.  There was perceptible lack of sufficient
concern and initiative, to say the least, in the Department’s attitude and
actuations in the premises.  It may be
said that its vigilance concerning the rights of labor was unhappily not up to
the expectations of the lawmakers when they approved the Act.

XII

With the matter of the liabilities relative to the share of the
laborers in the proceeds of the 1955-56 to 1973-74 crop years thus Clarified
and determined, We can now pass to what happened to the participation due the
laborers during the 1952-53 to 1954-55 crop years.  Again, this is an inquiry that involves both
issues of fact and of law.

– A –

In this connection, let us hearken first to how the Court of
Appeals made its conclusions of fact in respect to P5,185,083.34 that it found
to be the unpaid share of the laborers before the execution of the ASCA:

“In resolving the third and last issue set forth above, we
have taken note of appellants’ position that Central and Planters are guilty of
‘misappropria­tion’ of the amount of P5,185,083.34 belonging to them which
accrued during the period from June 22, 1952, to October 31, 1955 as their 60%
share of Planters 10% increase in participation totaling, during the same
period, P8, 643,472.24.  What will now be
resolved, therefore, is whether or not appellants have, in fact, received this
amount of P5,185,083.34.

“By way of a short flashback, it is to be recalled that the
laborers’ P5,185,083.34 was, under the ASCA, to be disposed of as follows:  P1,186,083.34 was to be distributed to the
laborers, under the supervision of the Secretary of Labor, and P4,000,000.00
was to be invested in Central’s shares of stock.

“It may be pertinent, at this point, to make a brief reference
to the mechanics of this investment.  As
provided in the ASCA, the P4,000,000.00 of the P5,185,083.34 belonging to the
appellants-laborers was to be invested in 40,000 shares of Central’s capital
stock (with par value of P100.00 per share) redeemable after a period of time
by Central.  This investment was to be
administered by the ‘Special Committee’; designated in the ASCA as representa­tive
of Planters.  On August 13, 1956,
pursuant to the ASCA of March 5, 1956, Central issued the 40,000 shares in four
certificates of 10,000 shares each, in the names of five members of the  ‘Special Committee’ or ‘Board of Trustees‘,
to wit:  Vicente F. Gustilo,
Jesus Suarez, Simon de Paula, Fernando J. and Jose Gaston, in their capacity as
‘trustees’ for appellants-laborers. 
Three of these five having died, Gustilo and
Gaston, with the assistance of legal counsel of Central, filed a petition for
their replacement, with the Court of First Instance of Negros
Occidental (Exhibits JJJJJ-1 thru JJJJJ-3), resulting in the appointment of
three new members:  Ysmael
Reinoso, Newton Jison, and
Enrique Hinlo (Exhibits JJJJJ-7 thru JJJJJ-9).  Gaston and Gustilo
themselves having died, only the three new members could testify during the
hearing of the case in the court below.

“Through subpoenas duces tecum (Exhibits IIIIII, KKKKKK and LLLLLL), each of the
three was commanded:

‘x x x to bring with him the complete
record of the Board of Trustees beginning March 5, 1956, of the sums of
P4,000,000.00 and P1,186,083.34 referred to in the Amicable Settlement
Compromise Agreement dated March 5, 1956, executed between Victorias
Milling Co. , Inc., represented by its President Carlos L. Locsin
and, Vicente F. Gustilo, Jesus Suarez, Simon de
Paula, Fernando.’

“The evidence shows that, except for a small part (P180,679.38)
of the sum of P5,185,083.34, the entire P1,186,083.34 was actually paid to the
laborers.  Thus, testified witness Felipe
de Guia, representative of the Department of Labor in
charge of the distribution:

‘COURT:

‘Q.   Mr.
de Guia, you said that there were some amounts that
were not distributed because some laborers cannot be located; is this the
amount mentioned in this Exh. ’23’, under the words
‘amount of undistributed of windfall’?

‘A.   Yes,
sir, P180,679.38′ (tsn. p.
23, June 18, 1970)

“Appellants themselves, in their
brief, have made the following observations:

‘So, it can be assumed without fear of contradiction that the last
portion of the said amount of P1,186, 083.34 was
delivered, if ever, to PLANTERS­APPELLANTS-LABORERS after February 18, 1957.’ (Appellants’ Brief, p. 326)

“The evidence, however, fails to show that the amount of P4,000,000.00 (invested in Central’s shares of stock pursuant
to the ASCA) and its accruals have ever been received by appellants-laborers.

S. Gonzaga and
Jose Gaston, representing the sugarcane planters affiliated with the Company in
connection with Civil Case No. 22577 of the CFI of Manila.’

Testifying on June 17, 1970, Jison, vice-chairman, said he could not bring the documents
asked of him because Gaston, as chairman of the Board of Trustees, had taken
custody of all the records; that these records remained in Gaston’s custody up
to the time of his death; that since Gaston’s death in 1969, ‘we did not have
any meeting and practically we forgot all about it.  And he has still all the records so I cannot
bring the records requested of me.’  (p.
37, tsn., June 17, 1970).

“Hinlo, secretary to the Board of
Trustees, could not bring any of the documents subpoenaed, either, ‘because I
have resigned already as Secretary of the Board of Trustees in February, 1970,
and the records are all in the hands of the late Jose Gaston.’  (p. 58, tsn., June
18, 1970).

“Reinoso, treasurer of the Board of
Trustees, did not appear at the hearing set for June 18, 1970, but his lawyer manifested that the only
document he, Reinoso, had, was
a copy of the ASCA of March 5, 1956.

“For his part, Pfiffner,
treasurer-comptroller of Central, testified that Central had nothing to do with
the sale of the 40,000 shares in which the P4,000,000.00
was invested; that it was the Board of Trustees, which sold the shares.  Thus:

‘Q.   Are
you trying to say, Mr. Pfiffner, that the amount of
40,000 shares of stock and their dividend also in stock were sold with the
consent only of the Board of Trustees?

‘A.   Yes,
Sir.

‘Q.   x
x x x
And the defendant Victorias Milling Co., Inc., had
nothing to do with it?

‘A.   That
is correct.’ (p. 86, tsn., June 16, 1970).

“Appellees claim that witness Felipe
de Guia, Chief of the Agricultural Wage Section of
the Department of Labor, had testified on the distribution to and receipt by
appellants-laborers of the principal and earnings of the P4,000,000.00 invested
in the 40,000 shares.  This claim,
however, is not borne out by the records; in fact, de Guia
denied any knowledge of the whereabouts of the proceeds of the sale and
earnings of the 40,000 shares of stock. 
(Underlining Ours)

“Testifying on June
18, 1970, as a represent­ative of the Secretary of Labor, witness
de Guia stated: 
that he had no knowledge of the 40,000 share of stock, and that he did
not know about the prices at which the 40,000 shares of stock were sold (p. 14,
tsn., June 18, 1970). 
He further stated that he did not know about the income in dividends
earned by the 40,000 shares of stock (p. 16, tsn.,
June 18, 1970), although he admitted having supervised the first distribution
of the amount of P1,186,083.36 to appellants-laborers
(p. 21, tsn., June 18, 1970).

“It is clear from the evidence that, after Central issued
the 40,000 shares of stock in the names of the five members of the Special
Committee’ or ‘Board of Trustees’ representing, vis-a-vis
Central, both Planters and appellants-laborers, the said ‘Special Committee’ or
‘Board of Trustees’, in its capacity as trustee for appellants-laborers, sold
these 40,000 shares to various buyers, some of the shares going to Central and
some to Planters, and that proceeds of the sales of these shares were received
by the said ‘Special Committee’ or ‘Board of Trustees’ and delivered to
Planters for distribution to  appellants-laborers.  Thus, ‘Special Committee vice-chairman Jison explained:

‘Q.   Would
you like to tell this Honorable Court what happened to the money, whether in
cash, check or in terms of shares of stock which was delivered by the Victorias Milling Co., Inc. to the Board of Trustees?

‘A.   The
stock of shares of the Victorias Milling Co., Inc.
which was delivered to the Board of Trustees was sold and liquidated according
to the Amicable Settlement-Compromise Agreement and in such case, checks were
issued to the respondents planters and also to be delivered to the respective
laborers under the supervision of the Department of Labor.  So far the record is concerned, the
Department of Labor has all the records. 
(pp. 37-38, tsn., June 17, 1970).

Not a shred of evidence, however, has
been introduced into the record to show that the proceeds of the sales of the
40,000 shares of stock and the increments in cash and stock dividends have been
actually delivered to or received by appellants-laborers.  The three surviving members of the ‘Special
Committee’ or ‘Board of Trustees’, namely Messrs. Ismael
Reinoso, Newton Jison, and
Enrique Hinlo, who were supposed to be the guardians
or administrators of the P4,000,000.00 invested in
Central’s 40,000 shares of stock, could not present any document whatsoever
showing or tending to show that the proceeds of the sales were actually
delivered to the Planters concerned and subsequently paid to the laborers.

“Central argues that in the petition of appellants-laborers,
no issue has been raised by the allegations concerning the latter’s 6%
participation from June 22, 1952 to October 31, 1955, amounting to
P5,186,083.34.  Neither, it says, have
appellants-laborers prayed for any relief in connection therewith.  In fact, it goes on to say,
appellants-laborers have admitted receipt of all amounts due them within the
period mentioned, citing paragraphs 8, 9 and 10 of the petition, thereby estopping themselves from raising any issue as to such
amounts in the instant appeal.

“These arguments are more technical than substantial.  It is true enough that the petition does not
categorically state any specific relief desired with respect to the amount of
P5,186,083.34, but it does contain a general prayer ‘for such other relief as
may be just and equitable in the premises’. 
And this general prayer is broad enough ‘to justify extension of a
remedy different from or together with the speci­fic remedy sought’.  (Schenker v. Gemperk, L-16449, Aug. 31, 1962, 5 SCRA 1042). It is also
true that paragraph 10 of the petition states –

‘That pursuant to Sec. 9 of said Act, respondents PLANTERS gave to
petitioners LABORERS the latters‘ lawful
participation in the sugar production as well as in the by­products and
derivatives thereof and continue to give the same until November 1, 1955, when
they ceased to do so until the present:’

but appellants-laborers have explained
that what they meant by the quoted paragraph was that their 6% share had
actually been set aside during the period from June 22, 1952, to October 31,
1955 (p. 1446, Appellants’ Reply Brief), not that the amounts due were
actually delivered to or received by plaintiffs?appellants-laborers.  Besides, no questions were raised during the
trial of this case when the matter of the investment of the P4,000,000.00 was
taken up by counsel of plaintiffs-appellants-laborers.  In fact, counsel of Central agreed that what
happened to the P4,000,000.00 was a proper issue in the case (p. 26, tsn, April 28, 1970). 
Furthermore, when Felipe de Guia, Chief
Agricultural Wage Section, Department of Labor, testified as representative of
the Secretary of Labor, on the matter of distribution of the P1,186,083.34, no
objections were raised either by defendants-appellees.  Again, when counsel for
plaintiffs-appellants-laborers asked witness de Guia
about the records of the distribution of the amounts of P1,186,083.34 and the
P4,000,000.00 and its dividend earnings, counselor Central likewise agreed to
the production of whatever records there were available concerning these amounts
(p. 157, tsn., June 16, 1970).

“But no records whatsoever were produced until the
presentation of the evidence of the parties was closed.

“In effect, what has been established by the evidence is
that the P4,000,000.00 together with its earnings in dividends in the total
amount of P3,385,950.00 (p. 66, tsn., June 16, 1970),
has not been distributed to or received by plaintiffs?appellants-laborers.”
(Pp. 65-74, Appendix A, Victorias‘ Brief)

– B –

In their brief filed with Us, the PLANTERS vehemently dispute
these conclusions and argue thus:

“THIRD ASSIGNMENT OF ERROR

“THAT THE COURT OF APPEALS ERRED IN FINDING AND CONCLUDING
THAT THE SUM OF FOUR MILLION (P4,000,000.00) PESOS OUT OF THE FIVE MILLION ONE
HUNDRED EIGHTY SIX THOUSAND AND EIGHTY THREE & 34/ (P5,186,083.34) PESOS
CONSTITUTING THE 60% SHARE OF THE LABORERS IN THE 10% INCREASE IN PARTICIPATION
OF THE PLANTERS FROM THE CENTRAL UNDER REPUBLIC ACT NO. 809 FROM JUNE 22, 1952
(THE DATE OF THE EFFECTIVITY OF SAID ACT) TO OCTOBER 31, 1955 (THE DAY PREVIOUS
TO NOVEMBER 1, 1955 WHICH IS THE EFFECTIVE DATE OF THE MILLING AGREEMENTS OF
THE PLANTERS AND THE CENTRAL), WAS NOT DISTRIBUTED TO AND RECEIVED BY THE
LABORERS, SUCH FINDINGS BEING BASED ON A MISAPPREHENSION OF THE SPECIFIC ISSUES
INVOLVED IN THE CASE AND GOES BEYOND THE RANGE OF SUCH ISSUES, ASIDE FROM BEING
CONTRARY TO THE ALLEGATIONS OF THE ORIGINAL PETITION.  AS A COROLLARY, THE COURT OF APPEALS ERRED IN
HOLDING THAT THE PLANTERS AND THE CENTRAL ARE JOINTLY AND SOLIDARILY LIABLE
THEREFOR.

“In relation to this assignment of error, the Honorable Court
of Appeals stated thus:

‘x x x if it is further considered, as
shown in our resolution of the third issue, that this amount of P4,000,000.00,
along with its accruals, was never received by the plantation laborers to this
day, the unwisdom of investment, let alone its
illegality, is hardly in doubt.’

(Appendix ‘A’ pp.
75-76).

‘x x x and the fact that the laborers’
P4,000,000.00 worth of shares and their earnings have, without any explanation
from anyone from the Central, from the Planters, or from the Special Committee,
vanished into limbo without the laborers being able to actually receive any
cent of the same.’

(Appendix ‘A’, p. 77)

‘In effect, what has been established by the evidence is that the
P4,000,000.00, together with its earnings in dividends in the total amount of
P3,385,950.00 (pp. 6, tsn., June 16, 1970), has not
been distributed to or received by the plaintiffs-appellants-laborers.’

(Appendix ‘A’, p. 91).

“For the purposes of clarification, let us inquire into the
question as to what P4,000,000.00 does the Court of Appeals refer to:

“On pages 17 et seq. of the Decision of the Court of Appeals,
reference is made to a document known as the ‘Amicable Settlement-Compromise
Agreement’ and referred to by the Court of Appeals for convenience as
ASCA.  This ASCA is quoted in full on
pages 18-24 of the Decision.  (Appendix
‘A’, pp. 25-35).

“In said ASCA, which was executed on 5 March 1956, it was stipulated that from June 22, 1952, when the Sugar Act
took effect, to October 31, 1955,
the parties recognized that said Sugar Act was applicable.  Consequently, the Planters were entitled to a
70-30 sharing basis from the Central, thereby earning a 10% increase in their
previous participation of 60%.  This 10%
increase amounted to P8,643,472.24.

“Of this P8,643,472.24, the Planters
were entitled to 40% thereof or P3,457,388.90 and the laborers were entitled to
60% thereof or to the amount of P5,186,083.34. 
Of this latter amount, it was agreed that P1,186,083.34 was to be
distributed by the Planters to their laborers while the remaining P4,000,000.00
was to be invested by a Special Committee in shares of stock of the Central.

“It is this amount of P4,000,000.00, therefore, that is
involved in the present consideration.

“The Court of Appeals held that this amount was not
distributed to and received by the Laborers.

“We respectfully and humbly submit that this finding and
conclusion of the Court of Appeals has no basis in law and fact, and is
contrary to the law of evidence and to evidence on records.

“Said finding
has no basis in law and in fact.

“Before we proceed, it might be pertinent to inquire into what
is being claimed (their cause of action) by the Laborers in their petition or
complaint.

“A simple perusal of the petition will reveal that the
Laborers are asking for their share under the Sugar Act of 1952, from November 1, 1955 to date.  In other words, there is no claim whatsoever
in the petition for any amount corresponding to the period covered from June 22, 1952 to October 31, 1955.

“Thus, the Laborers in their petition dated November 9, 1962 alleged:

‘That pursuant to Sec. 9 of said act, respondents planters gave
petitioners-laborers the latter’s lawful participation in the sugar production
as well as in the by-products and derivatives thereof and continued to give the
same until November 1, 1955
when they ceased to do so until the present.’

“In consonance with their allegations in said paragraph 10 of
their petition dated November 9, 1962, laborers in paragraphs 1 and 2 of their
prayer, prayed that judgment be rendered:

‘(1) Declaring the applicability of the Victorias
Mill District of the sharing participation prescribed by Republic Act 809 for
every crop year starting with the crop year 1955-56.’

‘(2) Ordering respondent planters and/or respondent Central to
account for and petitioners laborers’ lawful share in the sugar produce, as
well as the by­-products and derivatives thereof, for every crop year from the
crop year 1955-56, in accordance with Rep. Act No. 809, plus legal interests
thereon computed on the basis of the average market price during the month in
which the sugar was sold;

(See Annex ‘C’ of the Petitioner’s Petition)

“Said admission of the laborers in paragraph 10 of their
petition dated November 9, 1962 and in their prayer, to the effect that they
have already received their lawful participation in the sugar production as
well as in the by-products and derivatives thereof from 1952 until November 1,
1955 was again reiterated in their ‘consolidated opposition to the motion to
dismiss’, dated February 28, 1963, when they argued and we quote:

‘To recapitulate, inasmuch as the present action is not merely for
the recovery of money, but is primarily brought for the enforcement of Republic
Act No. 809 and the declaration of its applicability to the respondents for the
crop year starting with the crop year 1955-56, we respectfully submit
that this Honorable Court has jurisdiction over the subject matter of the
present action.’ (See Annex ‘C’ of respondents’ Petition for Review on Certiorari
by respondent Victorias Milling Co., Inc.’ (Italics
supplied).

“Said allegation in paragraph 10 of the laborers petition
dated November 9, 1962 as well as in paragraphs 1 and 2 of the prayer were
again reproduced verbatim in their amended petition dated March 6, 1964, (See
Annex C-1, Central’s petition for review on certiorari).

“The Honorable Court of Appeals itself found also as a fact
that:

‘x x x it is also true that paragraph 10
of the petition states –

‘That pursuant to Sec. 9 of said Act, respondents PLANTERS gave to
petitioners laborers the latters‘ lawful
participation in the sugar production as well as in the by-products and
derivatives thereof and continued to give the same until November 1, 1955,
when they ceased to do so until the present;

(Appendix ‘A’, p. 89, Italics supplied)

“From the foregoing, it is obvious that the share pertaining
to the laborers covering the period from October 31, 1952 to June 22, 1955 was
never made an issue in the case at bar.

“Since the share pertaining to the laborers was never made an
issue in the case at bar for the simple reason that the Laborers have expressly
admitted in their pleadings the receipt of their entire share covering from
October 31, 1932 to June 22, 1955, therefore, the Court of Appeals, in holding
the planters jointly and solidarily liable with the
central for P6,399,105.00 plus 6% interest per annum and P180,768.38 plus 6%
per annum all representing the laborers’ share pertaining to said period, gravely
abused its discretion said abuse of discretion amounting to lack of
jurisdiction.

“It is a well settled principle in procedure that courts of
justice have no jurisdiction or power to decide question not in issue (Limtoco vs. Go Fay, 80 Phil. 166-176).

“Thus in the following cases this court held:

‘It is a fundamental principle that judgments must conform to both
the pleadings and the proof, and must in accordance with theory of the action
upon which the pleadings were framed and the case was tried; that a party
can no more succeed upon a case proved, but, not alleged than upon one alleged
but not proved. (Ramon vs. Ortuzar, 89 Phil. 730,
742).  (Italics supplied)

‘A judgment going outside the issues and purporting to adjudicate
something upon which the parties were not heard, is not merely irregular, but
extrajudicial and invalid.’ (Salvante vs. Cruz, 88
Phil. 236, 244; Lazo vs. Republic Surety &
Insurance Co., Inc., 31 SCRA 329, 334).

‘The actuation of the trial court was not legally permissible,
especially because the theory on which it proceeded involved factual
considerations neither touched upon in the pleadings nor made the subject of
evidence at the trial.  Rule 6, Section
1, is quite explicit in providing that ‘pleadings are the written allegations
of the parties of their respective claims and defenses submitted to the court
for trial and judgment.’ This rule has been consistently applied and adhered to
by the courts.

‘Moreover, to award damages in favor of petitioner Miguel Tolentino, Sr., and against herein private respondents would
violate the cardinal rule that a judgment must conform to and be supported by
both the pleadings and the proofs, and should be in accordance with the theory
of the action on which the pleadings were framed and the case was tried (Secundum allegata et probata.’ Republic vs. de los Angeles,
41 SCRA 422, 450, Italics supplied).

“Said findings is
contrary to the law on evidence.

“As previously shown, the Laborers have expressly admitted in
their pleadings the receipt of their entire share covering the period from Octo­ber
31, 1952 to June 22, 1955, or all of the P5,186,083.00.

“What then is the legal effect of said admission by the
Laborers.

Section 2, Rule 129 of the Rules of Court provides:

‘Judicial admissions. – Admissions made by the parties in their
pleadings, or in the course of the trial or other proceedings do not
require proof and cannot be contradicted unless previously shown to have
been made through palpable mistake.

(Italics supplied)

“In relation to the foregoing rule, this Honorable Court in
the following cases held:

‘Soriano is bound by his own petition and
by the adjudication of his claim made in consonance with his prayer.  A party can not trifle with a court’s
decision or order which he himself sought with full awareness of his rights
under the premises, by taking it or leaving it at pleasure.  The allegations, statements or admissions
contained in a pleading are conclusive as against the pleader.  A party cannot subsequently take a position
contradictory to, or inconsistent with, his pleadings, (Mc Daniel vs. Apacible, 44 Phil., 448; 49 C.J. 128-134).  Specifically, he is not allowed to ask his
money back when the peso value is good, and later say he wants to keep the land
when the peso purchasing power is down. 
‘Cunanan vs. Amparo,
et al., 45 Off. Gaz., 3796, (The Revised Rules of
Court by Francisco (Evidence, p. 66).

‘An admission in a pleading may be made by an express
acknowledgment of some fact or facts set forth in the pleading of the opposite
party, or by a failure to deny or otherwise controvert the truth of such fact
or facts.  Thus, facts alleged in the
complaint are deemed admissions of the plaintiff and binding upon him.  Facts alleged in the answer are deemed
admissions of the defendant and binding upon him.  And facts stipulated in an agreement of facts
are deemed admissions of both parties and binding upon them.  Facts stated in a motion are deemed
admissions of the movant and binding upon him.  The allegations, statements or admissions in
a pleading are conclusive as against the pleader who cannot subsequently take a
position contradictory to, or inconsistent with his pleadings.’ (Cunanan vs. Amparo, 45 O.G. 3796)
The Revised Rules of Court, Evidence, Francisco, p. 66).

‘An admission may occur in the complaint as well as in the
answer.  Thus where a com­plaint alleged
the amount of the account to be $541.90, and that there was a balance due,
after deducting all payments, of $175.75, it was held that the plaintiff
admitted the payment of $366.15, and that the defendant was not precluded from
insisting upon this admission by disputing the correctness of the items of the
account.  (White vs. Smith, 46 N.Y. 418.)

‘The defendant’s allegation in his answer that the plaintiff still
owes him after deducting the value of the goods alleged to have been taken by
the defendant from the plaintiff, if, interpreted in conjunction with the
defendant’s counterclaim for the balance resulting, after deducting the price
of said goods, is an express admission of the existence of the obligation for
the value of said goods.  (Jurika vs. Castillo, 36 Off. Gaz.,
476.)

“Notwithstanding that the law on evidence so declares that
such an admission does not require proof and cannot be contradicted, the Court
of Appeals still gave credence to respondent Laborers’ explanation in their
Reply Brief.  (Appendix ‘A’, pp. 89-90),
which is not evidence at all.  To sustain
this finding is to give evidentiary value to an argument in party’s reply
brief.  This is against all rules of evidence
requiring such tests as to admissibility, competency, relevancy, and mate­riality
and which can only be accomplished during the trial proper.

“The Honorable Court of Appeals, in futile effort to justify
its ruling that the share pertaining to labor covering the period from June 22,
1952 to October 31, 1955 was not distributed to the laborers despite the
admission made by the laborers in their pleadings that they have already
received their share covering said period, argued that respondents laborers have
explained that what they meant by the quoted paragraph was that their 60% had
actually been set aside during the period from June 22, 1952 to October 31,
1955, (page 1446, appellants’ Reply Brief), not that the amounts due were
actually delivered to or received by plaintiff appellants laborers.  (Appendix ‘A’, pp. 89-90)

“But it should be noted that this contention of the Laborers
was raised for the first time only in their Reply Brief long after the trial of
the case.  In other words, it was a second
thought of the Laborers brought about in their Reply Brief, thus amounting to
change in theory and a deprivation of the right of the Planters to be apprised
of the real issue for their defense.

“Although it may be true, that under Section 2, Rule 129 of
the Rules of Court by way of exception the Court may in its reasonable
discretion relieve the party from the effects of his admission, yet the same
can be had only upon proper showing that said admis­sion was made thru palpable
mistake.  In the instant case the
admission made by the respondent-laborers found in paragraph 10 of their
petition as well as paragraphs 1 and 2 of their prayer was never shown to have
been made thru palpable mistake.

“Reading of the
explanation of respondent-laborers as appearing in page 1446 of their reply
brief relied upon by the Court of Appeals reveals that the allegations
in paragraph 10 of their peti­tion dated November 9, 1962 as well as the amended petition dated March 6, 1964 was never made thru palpable mistake.

“What was explained by respondents-laborers in page 1446 of
their reply brief was the meaning of said paragraph 10.  According to the respondent-laborers what
they meant by their allegation in paragraph 10 . . . . .

‘that pursuant to Sec. 9 of said act,
respondent-planters gave petitioners-laborers the latter’s lawful participation
in the sugar production as well as in the by-products and derivatives thereof
and continued to give the same until November 1, 1955 when they ceased to do so
until the present’ . . . . .

is that . . .

‘the 60% of plaintiff-appellant-laborers in the annual 10% increase
participation of the defendant appellees planters had
in fact been set aside pursuant to Section 9 of Republic Act 809 for the
duration of the period beginning June 22, 1952 and ending October 31, 1955.’

“Since said admissions were never withdrawn, modified or
explained or shown to have been made thru palpable mistake, therefore, Laborers
were never relieved of the effects of their admission which under the rule on
evidence is conclusive upon them.

“Suffice it to state their admission in paragraph 10 of their
petition being conclusive as against them which they cannot thereafter
contradict (Cunanan v. Amparo,
Supra) established the fact that they already received their share under
the Sugar Act of 1952 up to November 1, 1955 and against this fact no argument
can prevail.

CONTRA FACTUM NON VALET
ARGUMENTUM.

“That the record is replete with
evidence showing that the share of the laborers were distributed to them.

“Not only is there an admission by the Laborers of their
receipt of the participation granted them by the Sugar Act up to November 1,
1955, but the record is replete with evidence showing that there was a
distribution of this amount of P4,000,000.00 and its accruals, from year to
year from a witness presented by the Laborers themselves.

“Mr. Felipe de Guia, Chief of
Agriculture wage Section of the Department of Labor, a witness for the laborers
testified that they made a distribution, or supervised the distribution of the
participation of labor covering the period from June 22, 1952 to October 31,
1955, pursuant to the provision of Section 9, paragraph 2 of the Sugar Act that
‘The distribution of the share corresponding to the laborers shall be made
under the supervision of the Department of Labor.’ Thus, he testified:

‘x x x

‘Q.   Mr.
Guia, what steps, if you know the Department of Labor
has taken. I withdraw the question.

‘Q.   As
Chief of the Agricultural Wages Section under the Department of Labor, do you
know what steps your section of the Department of Labor has taken to implement
Section 9 of RA 809, otherwise, known as Sugar Act of 1952, with the Victorias Milling District, Negros
Occidental?

‘A.   Yes,
sir, we have distributed also the supposed share of the laborers amounting to
6,717,360.00.

‘COURT

‘Q.   When
was that distribution made?

‘A.   It
was made in the year 1955.

Proceed.

‘ATTY. SABIO

‘Q.   This
distribution covered the period from June 22, 1952 to what period?

‘A.   To
October 31, 1955.

‘Q.   Will
you kindly tell the Court the basis of the distribution of the amount
distributed?

‘A.   As
I understand, this amount was the partici­pation due to the laborers working in
that mil­ling district, from June 22,
1952 up to October 31,
1955.

‘COURT

‘Q.   June
22 of what year?

‘A.   June 22, 1952 to October 31, 1955.

Proceed.

‘ATTY. SABIO

‘Q.   Under
what law that is due to them?

‘A.   RA
809, otherwise, known as Sugar Act of 1952.

‘Q.   By
the way, Mr. Guia, what section or Division of the
Department of Labor is embodied the implementation of RA 809?

‘A.   The
Agricultural Wage Section of which I am the Chief.

‘ATTY. HAGAD

‘CROSS EXAMINATION

‘Q.   How
was this amount of P9,612,421.36 distributed?

‘A.   The
original amount which is supposed to be distributed is P5,186,083.36; but on
account of converting the 4,000 shares of the laborers’ shares of the stock, it
was distributed continuously year to year. 
The dividends amounted to more than 1,000,000.00, which is added to this
amount.  It was based practically on the
10% increase participation due to the planters of the Victorias
Milling District, wherein 60% of the 10% increase participation represented the
said amount which was distributed among the laborers of the Victorias Milling District.

‘Q.   So,
P5,186,083.36 was 60% of 10% was the increase
participation of the planters within the Victorias
Milling District, for the period from June
22, 1952 to October 31,
1955; is that right?

‘A.   Yes, sir.

(t.s.n.,
pp. 17-21, December 15, 1967)
Lorenzo C. Caraig; Italics underlined).

‘x       x          x

‘ATTY. SABIO

‘Q.   Do
you have in your possession the record on how this amount of P1,186,083.34
marked as Exhibits ‘XXX’ thru ‘XXX-6’?

‘A.   Yes,
sir.

‘Q.   Would
you be able to bring that next time?

‘A.   I
think so.

‘Q.   Would
you be able or do you have in your possession a record showing how the amount
of P4,000,000.00 marked as Exhibit ‘XXX-10’ was disposed of?

‘A.   Not
with the P4,000,000.00 because the distribution of this amount was made
in five releases as per what is stated in the statement as presented here.

‘Q.   At
any rate, my question is:  Do you have
in your possession the record of the distribution of the P4,000,000.00?

‘A.   Yes,
sir.

(t.s.n.,
pp. 143-144, June 16, 1970,
L. Caraig: 
Italics underlined).

‘Again:

‘COURT:

‘What is the purpose now
of Atty. Sabio in presenting those records?

‘ATTY. SABIO:

‘We will show that not
only a portion of the amount of P5,186,083.34, including of course the
earnings, was distributed that properly belong to the laborers.

‘COURT:

‘Why not find out from
Mr. de Guia the record about the distribution how
much was distributed?

‘WITNESS:

‘Atty. Sabio, I just want to clarify your statement — the
distribution I personally handled, I want that to be corrected.  If you will allow me, sir, if Mr. Bascug can recall that in our distribution from the first
to the fourth I think each and everyone of them even their members could really
testify to the effect that the distribution was orderly undertaken.  I just want to put that on record.  There should be no insinuations, with due
tolerance, being the supervisor of the distribution.

‘ATTY. SABIO:

‘We do not make any
insinuation.  We only want the
record.  In the interest of all concerned
and in the interest of justice, if the records will be brought here we hope
that the records are not irregular and we believe if they are regular no
responsibility would be incurred by any official of the Department of Labor.

‘WITNESS:

‘Which are you referring
to, Atty. Sabio?

‘ATTY. SABIO:

‘Any official of the
Department of Labor.

‘WITNESS:

‘What charge of
irregularity?

‘ATTY. SABIO:

‘The distribution of
P5,186,083.34.

‘WITNESS:

‘In order to facilitate
all those records in bringing here, can I request Atty. Sabio
any personnel that can accompany me. 
Because the records are so voluminous. 
For one distribution of one planter there are no less than 28 pages and there
are five distributions.  So I am
requesting Atty. Sabio to give me an assistant to
come as well as bring the records and I am willing to bring all those records
because I have nothing to hide.  It is
also shown that there are those laborers who were not able to receive and it
stated in the undistributed amount.’

(t.s.n.,
pp. 151-154, June 16, 1970,
V. Salvarino, Italics supplied).

“On cross examination, this witness
further testified thus:

‘Atty. Hagad

‘Q.   My
question Mr. de Guia, is this, the figures referred
to in Exh. 23-Victorias Milling Co., Inc. came from
the records of your office, is that correct?

‘A.   Yes,
sir.

‘Q.   Exh. 23 mentioned first, second and up to the
fifth distribution.  What do you mean
by this?

‘A.   There
are distributions undertaken in the Victorias Milling
Co., Inc.  The first distribution was
stated here is in accord­ance with the number that is corresponding to the
amount distributed or released for distribution among the laborers of the Victorias Milling Co., Inc.

‘Q.   By
the first distribution, you are referring to the Amicable Settlement-Compromise
Agreement the amount of P1,186, 083.36 and this correspond to the same amount
indicated in the Amicable Settlement-Compromise Agreement you also identified;
is that correct?

‘A.   I
do not know exactly if this figure stated there is correct but I have to check
whether it tallies with it.

‘Q.   Which
figures is reflected in Exh. XXX and Exh. XXX-9?

‘A.   There
is difference of 2 centavos.

‘Q.   These
other distributions that you made, were those also done under your supervision
beginning from the second up to the fifth distribution?

‘A.   (Correction,
please).  I was not the one who made the
distribution; I was only concerned on the first distribution which was
supervised.

‘Q.   As
first of the team of supervisors, you supervised the actual delivery of the
money to the laborers; is that correct?

‘A.   Yes,
sir.’

(t.s.n.,
pp. 20-22, June
18, 1970; Lorenzo Caraig).

“Silence of Central, Planters and
Special Committee

“According to this Honorable Court, because there was no
‘explanation from anyone from the Central, from the Planters or from the
Special Committee.’  (Appendix ‘A’, p.
77) as to the distribution of this amount of P4,000,000.00 then the conclusion
is that the said amount was never distributed to the plantation laborers.  This conclusion is entirely lacking in
basis.  For it has been established in
the preceding paragraphs that according to law (Section 2, Rule 129, Rules of
Court), such an admitted fact does not require proof.  If so, what was there to be proved by the
Planters, the Central or the Special Committee as to the distribution of the
said P4,000,000.00 when there is no dispute as to this fact, the same being
admitted in the pleadings.

“Not only did this Honorable Court err in finding that the
P4,000,000.00 was not distributed to the plantation laborers, but it also fell
into error when it held that it could order Planters and Central to pay the
said amount to the Laborers even something they did not ask specifically under
the general prayer, especially so because such a relief is inconsistent with
the admission of the respondent laborers that they were already given their
share corresponding to the period from June 22, 1952 to October 31, 1955.  While it may be true that a general prayer is
probably broad enough ‘to justify extension of a remedy different from or
together with specific remedy sought’ a general prayer is no longer broad
enough to justify extension of a remedy which is INCONSISTENT with the specific
allegation in the petition as in the case at bar.  The case of Schenker
vs. Gemperk, L-16449, Aug. 31, 1962, 5 SCRA 1042 relied upon by the Court of
Appeal cannot, therefore, be made applicable to the case at bar, for the facts
in said case are far different from the one at bar.  In the aforecited
case, the remedy extended is merely different from or together with the
specific prayer sought; in the case at bar, the remedy extended is INCONSISTENT
with the specific allegation and cause of action of respondent laborers’
petition.

“The cause of action of the respondent laborers is only for
their alleged share from November 1,
1955 and is further bolstered by paragraph 1 of their prayer
reading thus:

‘Declaring the applicability of the Victorias
Mill District of the sharing participation prescribed by Republic Act 809 for
every crop year starting with the crop year 1955-56;’

(ITALICS
SUPPLIED)

“With respect to the investment of the P4,000,000.00 in 40,000
shares of stock of the Victorias Milling Co., Inc.,
no prejudice was really caused to the plantation laborers because these shares
of stock remained their property.  It was
never claimed by the PLANTERS or by the Special Committee as theirs.  It was only held in trust for them by the
Board of Trustees.  (Art. 1448, New Civil
Code).  This was not only a wise
investment; it also earned a good return, for on the principal of
P4,000,000.00, its stock and cash dividends amounted to about P3,385,950.00 (p.
50, Decision).” (Pp. 69-97, PLANTERS’ Brief.)

We have carefully scrutinized the foregoing arguments, supported
as they are by the pleadings on record as well as unexpur­gated and
unquestioned parts of the transcript of the stenographic notes of the testimony
of the FEDERATION’s principal witness, Mr. de Guia, in the light of the pertinent conclusions of the
Court of Appeals, and at this point, We are already apprehensive that said
conclusions can be said to be supported by such substantial evidence as would
preclude this Court from accepting them as unreviewable
by this Court under the general limitation of this Supreme Court in regard to
findings of fact of the Court of Appeals.

– C –

This impression of Ours that the Appellate Court’s above
conclusions cannot be said to be sufficiently grounded gathers added force then
the following able discussion of the same apparent misapprehension of the
evidence by the Appellate Court in the brief of VICTORIAS’ ninth to eleventh
(IX to XI) assignments of error in its brief with Us is taken into account:

“Ninth Assignment of Error

“WITH REFERENCE TO THE AMOUNT OF P6,399,105.00 AND THE AMOUNT
OF P180,769.38, WHICH ACCRUED IN FAVOR OF THE LABORERS FROM JUNE 22, 1952 TO
OCTOBER 31, 1955 WHEN THERE WAS AS YET NO WRITTEN MILLING AGREEMENT, IN VIEW OF
THE FACT THAT THE LABORERS ADMITTED IN THEIR PETITION THAT THE PLANTERS GAVE
THEM THEIR LAWFUL PARTICIPATION FROM JUNE 22, 1952 TO OCTOBER 31, 1955 AND
THERE BEING, MOREOVER, NO ALLEGATION OF ANY CAUSE OF ACTION RELATIVE THERETO,
THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
HELD PETITIONER VICMICO AND THE PLANTERS JOINTLY AND SEVERALLY LIABLE VIA TORT
FOR SAID AMOUNTS.

“Aside from adjudging petitioner VICMICO and the planters
jointly and severally liable for the money equivalent of 60% of the 4%
increased participation of the planters from November 1, 1955 to October 31,
1974, which amount would run to tens of millions of pesos, a judgment that, as
previously discussed, finds no basis in law and in fact, the Court of Appeals
likewise adjudged petitioner VICMICO and the planters jointly and severally
liable for tort for P6,399,105.00 and for P180,769.38, which sums pertained to
the amounts that accrued in favor of the laborers from June 22, 1952 to October
31, 1955, during which period there was no milling agreement.

“The Court of Appeals, in attempted justification of its
aforesaid ruling, stated that while FFF et als.
admitted in paragraph 10 of their petition that the ‘planters gave to
petitioners-laborers the latter’s lawful participation in the sugar pro­duction
as well as in the by-products or derivatives thereof and continued giving the
same until November 1, 1955’ (Par. 10, Petition of FFF et als.),
the FFF et als. in their
brief filed before the Court of Appeals, ‘explained that what they meant x x x was that their 6% share had
actually been set aside during the period from June 22, 1952 to October
31, 1955,’ (Decision, p. 61). 
The Court of Appeals further stated that counsel for petitioner VICMICO
allegedly agreed ‘that what happened to the P4 Million was a proper issue in
this case’ (ibid., p. 62) and that the general prayer of FFF et als. ‘for such other relief as may
be just and equitable under the premises is broad enough to justify extension
of a remedy not specifically sought’ (ibid., p. 61).

“Petitioner VICMICO respectfully
submits that the justification advanced by the Court of Appeals is untenable as
we shall hereunder discuss and as shown by the fact that the laborers did actually
receive said amounts (Vide Exh. 23–VICMICO or Annex I
of VICMICO’s Petition for Certiorari), as
discussed at length in the Tenth Assignment of Error.)

“The FFF et als.
did not allege any cause of action in their petition concerning their share from
June 22, 1952 to October 31, 1955, during the period when there was as yet no
writ-ten milling agreement; as a matter of fact, FFF et als.
expressly admitted receipt of their lawful participation pertaining to said
period.  (Italics supplied.)

“As previously noted, VICMICO and
the planters did not have any written milling contract from June 22, 1952, when
Republic Act 809 took effect, until October 31, 1955, the last day prior to the
written milling agreements’ having become effective.  The amounts pertaining to the planters’
laborers representing 60% of the planters’ increased participation, pursuant to
the sharing proportion prescribed in Section 1 of Republic Act 809, were
expressly provided for in the amicable settlement-compromise agreement (ASCA) executed
between the central and the planters.

“The Court of Appeals, in its Decision (Annex Q to VICMICO’s Petition for Certiorari) declared the
foregoing amicable settlement-compromise agreement or ASCA to be valid and
legal and not violative of Republic Act 809.  (Vide, Annex Q, p. 43) Pursuant to the
amicable settlement-compromise agreement, the entire share of the planters’
laborers was eventually delivered and distributed to them, the distribution
having amounted to a grand total of P6,536,741.98, involving 474,811 laborers
in five (5) distributions.  (Vide Exh. 23-VICMICO or Annex I hereof).  FFF et als. expressly admit­ted receipt of all amounts pertaining to the
laborers during the period June 22,
1952 to October 31, 1955.  Thus the petition of FFF et als.,
reads in part:

‘8.  That on June 22, 1952,
Republic Act No. 809 otherwise known as the Sugar Act of 1952, was enacted the
pertinent provisions of which are as follows:

‘* * *.

‘9.  That at the time that
the said Act went into effect, a majority of sugarcane planters of the Victorias Mill District had no milling agreements with
respondents CENTRAL.

’10. That pursuant to Sec. 9 of said Act, respondent PLANTERS gave
to petitioners LABORERS the latter’s lawful participation in the sugar
production as well as in the by-products and derivatives thereof and continued
to give the same until November 1, 1955 when they ceased to do so until the
present;’ Vide Annex A to VICMICO’s Petition for
Certiorari.)

“In view of the foregoing express admissions of FFF et als., herein petitioner VICMICO stated in its answer to the
petition that the ‘windfall bonuses, if any, given by the adherent planters to
their plan­tation laborers was the consequence of the terms of the amicable
settlement-compromise agreement arrived at between respondent central and its
adhe­rent planters within the district in relation to a then pending court case
between them.’ (Vide, par. 7 of Annex E to VICMICO’s
Petition for Certiorari.) On the part of the planters, they averred that
‘the windfall bonuses that respondent planters herein gave to their plantation
laborers x x x are legal
and valid and were the result or consequence of the terms and conditions of the
amicable settlement arrived at between the respondent central and its adherent
planters within the district x x x’. (Vide Annex ‘G’
to VICMICO’s Petition for Certiorari.)

“It is obvious that FFF et als. did
not allege any cause of action with reference to those amounts which accrued in
favor of the laborers from June 22, 1952 to October 31, 1955 as they, in fact,
ad­mitted that the planters gave to petitioners laborers the latter’s lawful
participation in the sugar production as well as in the by-products or
derivatives thereof and continued to give the same until November 1, 1955.’
That FFF et als. did not allege any cause of action
relative thereto is evident, the essential elements constituting a cause of
action not being present.  There is a
cause of action only if certain essential elements are alleged in the
petition.  We quote:

‘A cause of action is an act or omission of one party in violation
of the legal right of the others.  Its
essential elements are, namely:  (1) the
existence of a legal right in the plaintiff, (2) a correlative legal duty in
the defendant, and an act or omission of the defendant in viola­tion of
plaintiff’s right with consequential injury or damage to the plaintiff for
which he may maintain an action for the recovery of damages or other
appropriate relief.’ (Mathay vs. Consolidated Bank
& Trust Co., 58 SCRA 559.)

“While FFF et als.
alleged that the laborers had the legal right to a certain percentage share of
the sugar produced from June 22, 1952 to October 31, 1955, they did not allege
any correlative duty on the part of petitioner VICMICO to deliver those shares
to the laborers, as said laborers, in fact, expressly admitted that the
planters, who had that exclusive correlative duty under Section 9 of Republic
Act 809 had already delivered to the laborers the latter’s lawful participa­tion.  Moreover, insofar as any amounts due the
laborers during the period when there was no milling contract are concerned,
the petition of FFF et als. did not allege any act or
omission whatsoever, on the part of petitioner VICMICO or on the part of the
planters in violation of the laborer’s rights. 
There having been no allegation whatsoever of
such a cause of action, the Court of Appeals acted with grave abuse of
discretion in nevertheless adjudging petitioner VICMICO jointly and severally
liable with the planters for the amounts pertaining to the laborers during the
period June 22, 1952 to October 31, 1955.

“FFF et als. could not be permitted to controvert their express
admission, and any proof contrary thereto or inconsistent therewith should
have  been ignored.  (italics supplied)

“It is a fundamental principle that an admission made in a
pleading cannot be controverted by the party making
such an admission.  We quote:

‘Our decisions from Irlanda v. Pitargue, announced in a 1912 decision, to De Borja v. Vda. de Borja, promulgated in 1972, speak to that effect.  ‘It is a familiar doctrine,’ according to
Justice J.B.L. Reyes in Joe’s Radio & Electrical Supply v. Alto Electronics
Corp., ‘that an admission made in the pleadings cannot be controverted
by the party making such admission and are conclusive as to him, and that all
proofs submitted by him contrary thereto or inconsistent therewith, should be
ignored, whether objection is interposed by the party or not * * *’ (Santiago
vs. De los Santos, 61 SCRA 146, 149.)

“The explanation given by FFF et als.
to the effect that what they meant by the word ‘gave’ is that the laborers’
share during the period was merely set aside for said laborers is not only a
belated and forced explanation advanced only at the time FFF et als., filed their reply brief with the Court of Appeals
under date of April 30, 1972, or almost ten years from the date said parties
filed their petition on or about November 9, 1962, but is also contrary to the
ordinary and generally under­stood meaning of the word ‘gave’.  The matter is rather substantial in the sense
that it involves an amount representing millions of pesos which has not been
treated as a cause of action in the petition of FFF et als.,
nor has it been specifically mentioned in their prayer.  What was required of the FFF was that they
amend their petition, with prior leave of court, so that petitioner VICMICO, as
well as the planters could have directly met the issue.  This procedural requirement not having been
complied with by the FFF et als. and
the Court of Appeals having proceeded to decide the case on certain issues not
raised by the parties, said Court of Appeals acted with grave abuse of
discretion.  (Evangelista vs. Alto Surety
and Insurance Co., Inc., 103 Phil. 401).

“The Court of Appeals moreover contends (Vide Annex Q to VICMICO’s Petition for Certiorari, p. 61) that while
the petition of the FFF et als., did not specifically
pray for recovery of the amounts pertaining to the period from June 22, 1952 to
October 31, 1955, their general prayer ‘for such other relief as may be just
and equitable in the premises’ is broad enough to justify extensions of a
remedy different from the specific amounts sought.  While the phrase ‘for such other relief as
may be just and equitable in the premises’ may embrace all other reliefs not specifically prayed for, only those reliefs which are alleged or supported by the allegations
in the petition or the complaint can validly be adjudged.  In the absence of any such allegation, as in
the case at bar, no relief other than that justified by the allegations and
proof may be awar­ded.  We quote:

‘Moreover, to award damages in favor of petitioner Miguel Tolentino, Sr., and against herein private respondents
would violate the cardinal rule that a judgment must conform to and be supported
by both the pleadings and the proofs, and should be in accordance with the
theory of the action on which the pleadings were framed and the case was tried
(secundum allegata et probata).’ (Republic vs. De los Angeles,
41 SCRA 422, 450).

x x x x x

‘The actuation of the trial court was not legally permissible,
especially because the theory on which it proceeded involved factual
considerations neither touched upon in the pleadings nor made the subject of
evidence at the trial.  Rule 6, Section
1, is quite explicit in providing that ‘pleadings are written allegations of
the parties of their respective claims and defenses submitted to the court for
trial and judgment.’ This rule has been consistently applied and adhered to by
the courts.

‘The subject matter of any given case is determined x x x by the nature and character
of the pleadings submitted by the parties to the court for trial and
judgment.  (Belandres
vs. Lopez Sugar Central Mill Co., Inc., 97 Phil. 100, 103).

‘It is a fundamental principle that judgments must conform to both
the leadings and the proof, and must be in accordance with the theory of the
action upon which the pleadings were framed and the case was tried; that party
can no more succeed upon a case proved, but not alleged, than upon one alleged
but not proved.  (Ramon v. Ortuzar, 89 Phil. 730, 742).

‘It is a well-known principle in procedure that courts of justice
have no jurisdiction or power to decide a question not in issue. (Lim Toco vs. Go Fay, 80 Phil. 166).

‘A judgment going outside the issues and purporting to adjudicate
something upon which the parties were not heard, is not merely irregular, but
extrajudicial and invalid.  (Salvante v. Cruz, 88 Phil. 236, 244).’ [Lazo
vs. Republic Surety & Insurance Co., Inc. 31 SCRA 329, 334.]

“Plaintiffs-appellants FFF et als. sought to bring up matters
concerning the share of the laborers from June 22, 1952 to October 31, 1955 not by way of
recovery thereof, as FFF et als., in fact, admitted
receipt of everything due, but merely by way of pursuing their theory that the
amicable settle­ment-compromise agreement is allegedly null and void.  (Italics supplied)

“When counsel for plaintiffs-appellants propounded questions
to Mr. de Guia concerning the al­leged disagreement
of the Department of Labor concerning the procedure adopted in the disposition
of the shares of the laborers, Atty. Ditching, a planter, as counsel for
himself and his wife, objected thereto on the ground that, as per paragraph 10
of their petition, plaintiffs-appellants admitted receipt of all of the shares
up to October 31, 1955.

‘Q    You
stated that your Department disagreed with the procedure adopted by the Victorias Milling Co., Inc. and its planters in the
disposition of the amount of money due the laborers under Republic Act 809; and
you also mentioned that you have document in your possession of the objection
of your Department to such procedure; is that right?

‘ATTY DITCHING:

‘We object to that because
there is no necessity of bringing that point because the petition itself
admitted that the petitioners received their participation.  It is here in paragraph 10 of the petition.

‘COURT:

‘I believe the objection
is tenable because the supposed participation of the laborers from the 40-60
sharing which was later on increased to 60-40 according to that amicable
settlement.

‘ATTY. SABIO:

‘This amicable
settlement, Your Honor, we are trying to impugn it.’ (t.s.n. pp. 64-66, December 15, 1967).

“When counsel for plaintiffs-appellants FFF et
als. was reminded that, pursuant to his petition, FFF
et als. had admitted receipt of what was due them
prior to November 1, 1955 and that said counsel could not introduce evidence
which would contradict said admission unless the petition would first be
amended, counsel for plaintiffs-appellants stated that he was not amending his
petition, as his purpose was only to pursue his theory that the mil­ling
contracts were null and void.  We quote:

‘ATTY. TIROL:

‘I think we are trying
this case and not to impugn that document, whereas compañero
stated that there is an allegation in the petition that prior to November 1, 1955, the plant­ers have
complied with the law . . . that is your pleading.  Are you going to amend your petition?

‘ATTY. SABIO:

‘We are not but
paragraph 11 of the petition states: ’11. 
That with evident intent to evade compliance of said Act and to the
grave pre­judice of the laborers, some of respondents PLANTERS and respondent
CENTRAL prepared and executed a General Collective Sugar Milling Contract
sometime in March, 1956; and, that adherence thereto, even as late as April 29,
1960, was made to retroact to November 1, 1955;’ This contract which we are
trying to impugn was not presented to court.

‘ATTY. HILADO, JR.

‘We doubt very much if
counsel for the plaintiffs can give us reason why this amicable settlement was
not presented by the parties in court. 
In that case then, granting that he can so prove his allegation, because
the Victorias Milling Co., Inc. under Par. 10 of the
petition, states that up to October 31, 1955, the laborers received their
lawful participation under RA 809.  This
milling contract was executed but that was after October, 1955 already.  S0he cannot go against his allegation.

‘COURT:

‘Let us go to the
question now so the ruling could be issued.

‘ATTY. SABIO:

‘My question is the
matter of document presented by the witness was not asked by me but by Atty. Hilado, Jr. So the document was mentioned by the witness.

‘ATTY. HILADO, JR.

‘The Rules of Court says
that, agreement the parties could not be contradicted.

‘ATTY. SABIO:

‘We disagree on the
qualification of the fact.

‘COURT:

‘Let us go to the
question now.  Proceed.

‘ATTY. SABIO:

‘Q.   You
stated during the cross examination by Atty Hilado, Jr.  That you
have a document in your possession to show that your office disagreed with the
procedure in the disposition of the money due to the laborers’ share which was
made by the Central and the planters; where is that document now?

‘ATTY. DITCHING:

‘Objection.  In the pleading, par. 10 of the petition, the
petitioners admitted that they have received their lawful share up to November,
1955

‘COURT:

‘That is not denied.

‘ATTY. DITCHING:

‘The petitioners admitted
that in par. 10 of petition, they have received their lawful share up to November 1, 1955; so that question is
immaterial.

‘COURT:

‘The question asked is,
with reference only to the procedure of the Department of Labor.

‘ATTY. HILADO, JR.

‘Are they not in a
position to ascertain all their allegations in the petition?

‘COURT:

‘The position of counsel
for the plaintiff is that, he is trying to find out his procedure that is being
followed.  Let the witness answer.

‘A.   Witness
is showing a certain document which for purposes of identification has been
marked as Exhibit ‘HHH-HHH-5’ for the plaintiffs.  It is a Memorandum addressed to the Hon.
Secretary of Labor by Mr. Ruben F. Santos of the Wage Board Division.

‘COURT:

‘Q.   Why
did your Department object to such arrangement of the planters and Victorias Milling Co., Inc. referring to the disposition of
increase participation?

‘A.   The
only objection of our Department as stated in the memorandum, is the conversion
of P4,000,000.00 into shares of stock.

‘Q.   So
your objection is in the conversion into share of stock of certain amount of
dividend; is that it?

‘A.   Yes,
Sir, the memorandum in our office speaks for it’ (t.s.n.,
pp. 67-72, December 15, 1967).

“It is obvious that plaintiffs-appellants were not seeking
recovery of what pertained to them from June 22, 1952 to October 31, 1955, not
only because they admitted receipt of their shares corresponding to said
period, but also because Mr. de Guia likewise
affirmed the laborers’ receipt of the corresponding share.  While, according to Mr. de Guia, the Department of Labor disagreed merely with
reference to the initial conversion of the P4 Million into VICMICO shares, said
VICMICO shares were subsequently converted into cash and, ultimately,
distributed to the laborers who interposed no disagreements or objection
thereto.  Mr. de Guia
testified:

‘Q.   Is
it not a fact that those shares of stock were sold and proceeds of your
distribution as indicated in your report was up to the 5th distribution made by
your office?

‘A.   Yes,
Sir.

‘Q.   And
as a matter of fact, with the sale of shares of stock, you realized that not
only the original amount of investment which correspond to the part of 60% for
the laborers but by more than million dividend; is that right?

‘A.   Yes,
Sir.

‘Q.   Is
it not a fact that the reason why after October 31, 1955 your office did not distribute the
windfall or bonuses because there had been milling contracts that were signed
by the management and the planters in the milling district?

‘A.   Yes,
Sir.

‘Q.   Was
there a report of your office with reference to the 5th distribution of
payments of money?

‘A.   Yes,
Sir.

‘Q.   Who
gave the money?

‘A.   The
planters.’ (t.s.n. pp.
35-36, December 15, 1967.)

x x
x x x

‘Q.   And
there was no disagreement on that matter, correct?

‘A.   Yes,
Sir.

‘Q.   And
there was no complaint from the laborers after the participation; is that
correct?

‘A.   There
was none.

‘Q.   So
that this distribution was accepted by all, including the laborers who were the
participants in this distribution; correct?

‘A.   There
was none.

‘Q.   So
that this distribution was accepted by all, including the laborers who were the
participants in this distribution; correct?

‘A.   That
is only within the period that is covered by the distribution.’ (t.s.n., p. 53, December 15, 1967.)

“As a matter of fact, when Mr. de Guia
testified that one planter did not allegedly distribute the share corresponding
to his own laborers, Atty. Ditching, as counsel for himself and his wife, moved
to strike out the answer of the witness on the ground that the laborers, in
their petition, admitted having received all of their shares, and the trial
court granted the motion.  We quote from
the transcript:

‘Q.   Of
the 400 planters adhered to the Victorias Milling
District, only one planter has not distributed the corresponding participation
of the laborers; is that right?

‘A.   Yes,
Sir.

‘ATTY. DITCHING:

‘I move for the striking
out of the answer of the witness, it is admitted by the petitioners themselves
in par. 10 of the petition filed with this court on November 9, 1962, which says: ’10.  That pursuant to Sec. 9 of said Act,
respondents PLANTERS gave to petitioners LABORERS the latter’s lawful
participation in the sugar production as well as in the by-products and
derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until
the present.’ So regarding the distribution, I object to that because there was
already an answer.  I move to strike out
with respect to the answer because it will affect us.

‘COURT:

‘Strike out that from
the record regarding that one planter has not distributed the participation of
the laborers.  It is enough that the
Department of Labor have that in the record.’ (t.s.n. pp. 48-50, December 16, 1967).

“The contention of the Court of Appeals that ‘counsel for
central agreed that whatever happened to the P4,000,000 was a proper issue in
this case’ (Annex Q, p. 62) finds no justification.  While counsel for VICMICO made the foregoing
remark in the course of an exchange of manifestations with counsel for FFF et als., said remark should be taken in the context in which
it was uttered.  Counsel for FFF et als. was requesting for records concerning the P4,000,000
invested in VICMICO shares of stock, and counsel for VICMICO insisted that
counsel for FFF et. als. specify
the documents being asked for (tsn, pp. 7 to 32, April 28, 1970).  It should be noted moreover that counsel for
VICMICO objected to the presentation of evidence concerning the existence of
any alleged fraud because ‘there is no allegation to the effect that complaint
and that should not be brought in the rebuttal because that is improper.’ (tsn, pp. 14-15, April 28, 1970).

“Moreover, the said statement of counsel of VICMICO was meant
merely to emphasize what VICMICO alleged in Par. 7 of its answer to the
petition, which Par. 7 reads as follows:

‘7. – That, being the mill company, respondent Central does not
have sufficient information so as to be able to admit or deny the truth of the
allegations of paragraph 10 of the petition; and it here further states that
the wind-fall bonuses, if any, given by the adherent planters to their
plantation laborers was the consequence of the terms of the amicable settlement
arrived at between the respondent Central and its adherent planters within the
district in relation to the pending court case between them.’ (Vide, Annex E,
Par. 7 thereof, Peti­tion for Certiorari of Vicmico)

“If there was any issue at all with reference to the
P4,000,000 investment in VICMICO shares, it was not an issue in relation to any
cause of action filed by FFF et als. to recover the
proceeds thereof, as FFF et als. never made such an
allegation and even expressly admitted receipt of said amount.

“X

Tenth Assignment of Error

HAVING FOUND THE MILLING AGREEMENT AND THE AMICABLE
SETTLEMENT-COMPROMISE AGREEMENT (ASCA) TO BE VALID, THE COURT OF APPEALS ERRED
IN HOLDING THAT PETITIONER VICMICO AND THE PLANTERS HAD NO AUTHORITY TO
STIPULATE IN SAID ASCA ON THE DISPOSITION OF THE AMOUNTS PERTAINING TO THE
LABORERS FROM JUNE 22, 1952 TO OCTOBER 31, 1955, THE PLANTERS BEING THE
AUTHORIZED AGENTS OF THE LA­BORERS BY, AMONG OTHERS, HAVING RE­CEIVED ALL THE
AMOUNTS DUE THEM, HAVING MOREOVER RATIFIED SAID ASCA.

“The ruling by the Court of Appeals
to the effect that the milling agreements and the ASCA are valid renders
legally untenable its conclusion that the parties thereto had no authority to
provide for the disposition of the amounts pertaining to the laborers from June 22, 1952 to October 31, 1955.  (Italics supplied)

“The Court of Appeals, after a review of the records, ‘found
no evidence of circumvention’ in the execution of the milling agreements and of
the ASCA ‘as appellants (FFF, et als.)
charged.’ (De­cision, p. 41, Annex ‘Q’ to Vicmico’s
Petition for Certiorari).  It
added that the ‘contracts, there­fore, which it (Vicmico)
wrung from Planters are not in circumvention of the law but in legitimate
pursuit of profit – which is the end-all and be-all of business.  That Central (Vicmico),
as a result of the ASCA which appellants (FFF, et als.)
claim it (Central) to have ‘engineered’ got 36% and Planters 64% while the
plantation laborers got nothing, is no reason for considering the contracts a
circumvention of the law which does not in the first place interpose upon it
any duty or require of it the performance of any obligation to yield any part
of its participation in favor of planters laborers.  In other words, we do not find in Central’s
conduct anything so odious or so obnoxious as to render the contracts it has
entered into with Planters illegal or repugnant to public policy.’ (Ibid., p. 43).  The
Court of Appeals, thus, declared ‘the ASCA and the other derivative sugar
milling contracts valid.’ (Ibid., p. 54.)

‘Notwithstanding its finding and conclusion that the ASCA and its
derivative sugar milling contracts were valid, the Court of Appeals stated that
the Central and the Planters had no authority to provide in the ASCA for the
disposition of the amounts pertaining to the laborers from June 22, 1952 to October 31, 1955. 
Thus, the Court of Appeals ruled in part:

‘Central and Planters could stipulate whatever they might wish upon
the share (P3,457,388.90) of Planters in the ‘reserve’
– how or when such share would be paid to the latter.  After all, they were the only contracting
parties in the ASCA.  But it was
absolutely beyond the power and competence of either Central or planters or both
Central and Planters to stipulate upon the share (P5,186,083.34) of the plantation
laborers in the ‘reserve’.  As though the
share of the plantation laborers were their own property, however, both Central
and Planters, on March 5, 1956,
sat down in judgment upon the question of its disposition.  On that date, therefore, they both decided,
in the ASCA, on how the laborers’ share was to be disposed of P4,000,000.00 was
to be invested in shares of capital stock of Central, the balance of
P1,186,083.34 to be distributed among the plantation laborers ‘under the
supervision of the Secretary of Labor”. 
(Decision, pp. 48­-49; Vide, Annex ‘Q’ to Vicmico’s
Petition for Certiorari.)

“The foregoing conclusion of the Court of Appeals is legally
inconsistent with its finding and ruling that the ASCA was legal and
valid.  A ruling that a contract is valid
presupposes that all the essential elements of a contract are present,
namely:  (1) consent of the contracting
parties; (2) object certain which is the subject matter of the contract; and
(3) cause of the obligation which is established.  (Art. 1318, Civil Code).  Consent presupposes legal capacity, that is,
that the Planters who entered into said ASCA on behalf of their laborers had
been authorized by the latter.  (Tolentino, Civil Code of the Philippines, p. 407 [1956];
cf. Tolentino v. Paraiso,
34 Phil. 609 [1916]).

“In any event, the planters were
the authorized agents of the respective laborers, and Vicmico
had the right to rely on that authority. 
(Italics supplied)

Section 9 of Republic Act 809 reads:

‘In addition to the benefits granted by the Minimum Wage Law, the
proceeds of any increase in the participation granted the planters under this
Act and above their present share shall be divided between the planter and his
laborer in the plantation in the following proportion:

‘Sixty per centum of the increased participation for the laborers
and forty per centum for the planters. 
The distribution of the share corresponding to the laborers shall be
made under the supervision of the Department of Labor.

‘The benefits granted to laborers in sugar plantations under this
Act and in the Minimum Wage Law shall not in any way be diminished by such
labor contracts known as ‘by the piece’, ‘by the volume’, ‘by the area’, or by
any other system of ‘pakyaw‘, the Secretary of Labor
being hereby authorized to issue the necessary orders for the enforcement of
this provision.’

“The above provision has constituted the planters the agents
of their respective laborers with reference to any share to which they may be
entitled from the increased participation of the planters granted under the
Act.  It is an agency created by law
(Art. 1317, Civil Code).  Accordingly,
when the planters entered into the ASCA with the Central, they did so, insofar
as the share of their laborers was concerned, as agents of their laborers and
no authority was necessary from the laborers because the planters had, by law,
a right to represent them.

“Moreover, the planters are the employers of their respective
laborers; they speak for their laborers in matters involving whatever
percentage share the laborers would be entitled to from the increased
participation of the planters granted under Republic Act 809.  These laborers were so numerous (cf. Exh. 23-Vicmico) that only the respective planters who,
under the law, are obliged to prepare their payrolls, knew who they were.  Hence, Vicmico had
the right to rely on the representations of the planters relative to their
laborers.

“Moreover, the laborers ratified
the ASCA by their silence for six (6) years and by their enjoyment of the
benefits accruing therefrom.  (Underlining supplied)

“From November 5,
1956 when this Honorable Court dismissed the appeal of the laborers
in G.R. No. L-11218 up to November 9, 1962 when the petition of FFF, et als. was
filed with the trial court, about six (6) years had elapsed.  Within that long period, the laborers never
questioned the validity of the ASCA on the ground that the Central and the
Planters had no authority to provide for the manner of pre­servation and
distribution of their share correspond­ing to the period from June 22, 1952 to
October 31, 1955 when there was as yet no written milling contract in the Victorias-Manapla-Cadiz mill district.  They never, within such period, filed any
action to nullify the ASCA for lack of consent on their part, notwithstanding
their knowledge thereof, some of the laborers having intervened in Civil Case
No. 22577 (Exh. ‘H’) and in G.R.
No. L-11218, where the question of validity of the
ASCA and of the milling agreement was in issue (Exhs.
‘VV’, ‘VV-1’, ‘VV-2’).

Article 1317 of the Civil Code reads:

‘* * *.  No one may contract
in the name of another without being authorized by the latter, or unless he has
by law a right to represent him.

‘A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on
whose behalf it has been executed, before it is revoked by the other
contracting party.’

“By their silence for six (6) years, notwithstanding their
knowledge of the ASCA, the laborers are deemed to have ratified the
contract.  We quote:

‘Nor has Concepcion directly impugned the
validity of the obligation contracted by her mother in her behalf and therefore
it may be taken for granted that she has by her silence ratified the obligation
to pay, jointly with her mother and brothers, the sum her father owed when he
died.  (Art. 1313, Civil Code.)’ (Fabie v. Yulo, 24 Phil. 240, 247
[1913], emphasis supplied.)

* * *

‘* * *.  On the contrary, the
case comes squarely within the purview of the provisions of the Civil Code
under the subject of Nullity of Contracts which pertain to ratification.  Codal article 1309
provides: ‘The action of nullity is extinguished from the moment the contract
may have been validly ratified.’ Article 1311 following provides: ‘Ratification
may be either express or implied.  It
shall be deemed that there is an implied ratification when a person entitled to
avail himself of any ground for the annulment of the contract should, with
knowledge of its existence and after it has ceased, do anything which
necessarily implies an intention to waive such right.’ Finally comes article
1313 which provides: ‘Ratification purges the contract of all defects to which
it may have been subject as from the moment it was entered into’.  It results, therefore, that after a contract
is validly ratified, no action to annul the same can be maintained based upon
defects relating to its original validity. 
(Gutierrez Hermanos vs. Orense
[1914], 28 Phil. 571; Vales vs. Villa [1916], 35 Phil. 769.)’ [Tan Ah Chan and Kwong Kam Koon
vs. Gonzales, No. 28595, October 11,
1928.]

“Article 1313 of the Old Civil Code
cited by the Supreme Court in the Fabie v. Yulo case quoted above corres­ponds to Article 1396 of the
New Civil Code, which reads:

‘Art. 1396.  Ratification
cleanses the contract from all its defects from the moment it was constituted
(Art. 1313).’

“When FFF, et als. did file on
November 9, 1962 a petition with the trial court, they also did not question
the authority of the Central or the Planters to provide, in the ASCA, the
manner in which their share from June 22, 1952 to October 31, 1955 would be
held and distributed.  In fact, they
expressly admitted that the planters gave them their corresponding
participation.  We quote paragraph 10 of
their petition:

‘That pursuant to Sec. 9 of said Act, respondents PLANTERS gave
petitioners LABORERS the latters‘ lawful
participation in the sugar production as well as in the by products and derivatives
thereof and continued to give the same until November 1, 1955 when they ceased
to do so until the present; * * *.’ (Annex ‘A’, Vicmico’s
Petition).

“Moreover, the laborers received
the benefits of the ASCA when their share was distributed to them (Exh. 23-Vicmico; see also Eleventh Assignment of Error,
infra.) Their receipt of such benefits amounted to a ratification of the
authority of the planters to represent them in the ASCA.  (Zamboanga
Transportation Co. v. Bachrach Motor Co., 52 Phil.
244; Ibañez v. Rodriguez, 47 Phil. 554; Tacalinar v. Corro 34, Phil. 889;
underlining Ours)

“XI

Eleventh Assignment of Error

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LABORERS DID NOT RECEIVE
THE AMOUNT OF P6,399,105.00 AND IN HOLDING, ON THE BASIS OF TORT, PETITIONER
VICMICO, JOINTLY AND SEVERALLY LIABLE WITH THE PLANTERS THEREFOR, EXHIBIT 23­-VICMICO
CLEARLY SHOWING ON ITS FACE THAT THE LABORERS ACTUALLY RECEIVED A TOTAL OF
P6,536,741.98 AND THE COURT OF APPEALS HAVING FOUND THAT ALL AMOUNTS PERTAINING
TO THE LABORERS HAD BEEN RECEIVED BY THE PLANTERS.  THE FOREGOING DEMONS­TRATING, AMONG OTHERS,
THAT PETITIONER VICMICO CANNOT BE ACCUSED OF ANY TORTIOUS ACT.

“The
conclusion of the Court of Appeals to the effect that the laborers received
only P1,186,083.34 and not the whole amount of P6,399,105.00 has no basis in
fact, the evidence as testified to by a representative of the Labor Department
being to the contrary.

“Notwithstanding the express admission in the petition of FFF,
et als., to the effect that the ‘Planters gave
petitioners (FFF, et als.) the latter’s lawful
participation in the sugar production and derivatives thereof and continued to
give the same until November 1, 1955, when they ceased to do so until the
present’ (Par. 10, Petition of FFF, et als., filed
with the trial court, Vide Annex ‘A’ to Vicmico’s
Petition for Certiorari), which fact, having been admitted, requires no
proof and cannot be contradicted (Rule 129, Sec. 2, Rules of Court; Sta. Ana v.
Maliwat, 24 SCRA 1018), the Court of Appeals made the
following unfounded statements:

‘x x x if it is further considered, as
shown in our resolution of the third issue, that this amount of P4,000,000.00,
along with its accruals, was never received by the plantation laborers to this
day, the unwisdom of the investment, let alone, its
illegality, is hardly in doubt.’ (p. 52, Decision, Annex ‘Q’ to Vicmico’s Petition for Certiorari).

*  *  *

‘x x x and the fact that the laborers’ P4,000,000.00
worth of shares and their earnings have, without any explanation from anyone
from the Central, from the Planters, or from the Special Committee, vanished
into limbo without the laborers being able to actually receive any cent of the
same.’ (Idem., p. 53).

*  *  *

‘In effect, what has been established by the evidence is that the
P4,000,000.00, together with its earnings in dividends in the total amount of
P3,385,950.00 (p. 6, tsn., June 16, 1970), has not
been distributed to or received by plaintiffs-appellants-laborers.’ (Idem., p.
62).

*  *  *

‘The evidence shows that, except for a small part (P180,679.38) of
the sum of P5,185,083.34, the entire P1,186,083.34 was actually paid to the
laborers. x x x.’ 
(Idem, p. 55; Annex ‘Q’ to Vicmico’s Petition
for Certiorari).

*  *  *

‘Not a shred of evidence, however, has been introduced into the
record to show that the proceeds of the sales of the 40,000 shares of stock and
the increments in cash and stock dividends have been actually delivered to or
received by appellants-laborers.  x x x.’ (Annex ‘Q’ to Vicmico’s
Petition for Certiorari, p. 60).

“None of the foregoing statements finds any basis in fact and
the Court of Appeals’ unwarranted conclusions constitute a grave abuse of
discretion tantamount to an excess of jurisdiction.  (Duran v. Court of Appeals, L-39758, May 7,
1976).  Mr. Felipe de Guia
testified lengthily on the point, but the Court of Appeals apparently was
oblivious of his testimony which established distri­butions of over
P6,000,000.00 in favor of the laborers. 
We quote the testimony of Mr. de Guia:

‘Q.   Mr.
Guia, what steps, if you know the Department of Labor
has taken . . . I withdraw the question.

‘Q.   As
Chief of the Agricultural Wages Section under the Department of Labor, do you
know what steps your section of the Department of Labor has taken to implement
Section 9 of RA 809, otherwise, known as Sugar Act of 1952, with the Victorias Milling District, Negros
Occidental?

‘A.   Yes,
sir, we have distributed also the supposed share of the laborers
amounting to P6,717,360.00.  (Italics
supplied).

‘COURT:

‘Q.   When was that
distribution made?

‘A.   It was made in the year
1955.

Proceed.

‘ATTY. SABIO:

‘Q.   This distribution
covered the period from June
22, 1952 to what period?

‘A.   To October 31, 1955.

‘Q.   Will you kindly tell the
Court the basis of the distribution of the amount distributed?

‘A.   As I understand, this
amount was the participation due to the laborers working in that milling
district, from June 22, 1952
up to October 31, 1955.  (Italics supplied).

‘COURT:

‘Q.   June
22 of what year?

‘A.   June 22, 1952 to October 31, 1955.  Proceed.

‘ATTY. SABIO:

‘Q.   Under
what law that is due to them?

‘A.   RA
809, otherwise known as Sugar Act of 1952.

‘Q.   By
the way, Mr. Guia, what Section or Division of the
Department of Labor is embodied the implementation of RA 809?

‘A.   The
Agricultural Wage Section of which I am the Chief.

‘ATTY. HAGAD:

‘CROSS EXAMINATION:

‘Q.   How
was this amount of P9,612,421.36 distributed?

‘A.   The
original amount which is supposed to be distributed is P5,186,083.36; but on
account of converting the 4,000 shares of the laborers’ share of stock, it
was distributed continuously year to year. 
The dividends amounted to more than P1,000,000.00 which is added to this
amount.  It was based practically on the
10% increase participation due to the planters of the Victorias
Milling District, wherein 60% represent this said amount; otherwise, 60% of the
10% increase participation represented the said amount which was distributed
among the laborers of the Victorias Milling District.

‘Q.   So,
P5,186,183.36 was 60% of 10% was the increase
participation of the planters within the Victorias
Milling District, for the period from June
22, 1952 to October 31,
1955; is that right?

‘A.   Yes, sir.’ (T.s.n.,
pp. 17-21, December 15, 1967, Lorenzo C. Caraig;
italics supplied).

‘x x x x

‘ATTY. SABIO:

‘Q.   Do
you have in your possession the record on how this amount of P1,186,083.34
marked as Exhibits ‘XXX’ thru ‘XXX-6’?

‘A.   Yes,
sir.

‘Q.   Would
you be able to bring that next time?

‘A.   I
think so.

‘Q.   Would
you be able or do you have in your possession a record showing how this amount
of P4,000,000.00 marked as Exhibit ‘XXX-10’ was disposed of?

‘A.   Not
with the P4,000,000.00 because the distribution of this amount was made in
five releases as per what is stated in the statement as presented here.

‘Q.   At
any rate, my question is:  Do you have in
your possession the record of the distribution of the P4,000,000.00?

‘A.   Yes,
sir.’ (t.s.n. pp.
143-144, June 16, 1970, L. Caraig; italics supplied).

*  *  *

‘COURT:

‘What is the purpose now
of Atty. Sabio in presenting those records?

‘ATTY. SABIO:

‘We will show that not
only a portion of the amount of P5,186,083.34, including of course the
earnings, was distributed that properly belong to the laborers.

‘COURT:

‘Why not find out from
Mr. de Guia the record about the distribution how
much was distributed?

‘WITNESS:

‘Atty. Sabio, I just want to clarify your statement — the
distribution I personally handled, I want that to be corrected.  If you will allow me, sir, if Mr. Bascug can recall that in our distribution from the first
to the fourth I think each and everyone of them even their members could really
testify to the effect that the distribution was orderly undertaken.  I just want to put that on record.  There should be no insinuations, with due
tolerance, being the supervisor of the distribution.

‘ATTY. SABIO:

‘We do not make any
insinuation.  We only want the
record.  In the interest of all concerned
and in the interest of justice, if the records will be brought here we hope
that the records are not irregular and we believe if they are regular no
responsibility would be incurred by any official of the Department of Labor.

‘WITNESS:

‘Which are you referring
to, Atty. Sabio?

‘ATTY.
SABIO:

‘Any official of the Department of Labor.

‘WITNESS:

‘What charge of irregularity?

‘ATTY.
SABIO:

‘The distribution of P5,186,083.34.

‘WITNESS:

‘In order to facilitate
all those records in bringing here, can I request Atty. Sabio
any personnel that can accompany me. 
Because the records are so voluminous. 
For one distribution of one planter there are no less than 28 pages and there
are five distributions.  So I am
requesting Atty. Sabio to give me an assistant to
come as well as bring the records and I am willing to bring all those records
because I have nothing to hide.  It is
also shown that there are those laborer who were not able to receive and it is
stated in the undistributed amount.’  (t.s.n., pp. 151-154, June 16, 1970, V. Salvarino, italics supplied).

“On cross examination, this witness further testified thus:

‘ATTY. HAGAD:

‘Q.   My
question Mr. De Guia is this, the figures referred to
in Exh. 23-Victorias Milling Co., Inc. came from the
records of your office, is that correct?

‘A.   Yes,
sir.

‘Q.   Exh. 23 mentioned first, second and up to the
fifth distribution.  What do you mean
by this?

‘A.   There
are distributions undertaken in the Victorias Milling
Co., Inc.  The first distribution as
stated here is in accordance with the number that is corresponding to the
amount distributed or released for distribution among the laborers of the Victorias Milling Co., Inc.

‘Q.   By
first distribution, you are referring to the Amicable Settlement-Compromise
Agreement the amount of P1,186,083.36 and this correspond to the same amount
indicated in the Amicable Settlement-Compromise Agreement you also identified;
is that correct?

‘A.   I
do not know exactly if this figure stated there is correct but I have to check
whether it tallies with it.

‘Q.   Which
figure is reflected in Exh. XXX and Exh. XXX-9?

‘A.   There
is a difference of 2 centavos.

‘Q.   These
other distributions that you made, were those also done under your super­vision
beginning from the second up to the fifth distribution?

‘A.   (Correction,
please).  I was not the one who made the
distribution; I was only concerned on the first distribution which was
supervised.

‘Q.   As
first of the team of supervisors, you supervised the actual delivery of the
money to laborers; is that correct?

‘A.   Yes,
sir.’ (T.s.n., pp. 20-22, June 18, 1970; Lorenzo Caraig).

“The above testimony of Mr. de Guia
clearly demonstrates that the laborers received their entire share
corresponding to the period from June
22, 1952 to October 31,
1955 when there was as yet no written milling contract between the
Central and the Planters.

“Exh.
23-Vicmico which summarizes the amounts received by the laborers totaling
P6,536,741.98 (except for the sum of P180,679.38) having been relied upon in
part by the Court of Appeals when it required payment of P180,679.38 to the
laborers, the whole contents thereof deserve full credit, namely, that the
laborers received the total amount of P6,536,741.98.  (Italics supplied).

“The Court of Appeals, quoting the testimony of Mr. Felipe de Guia, stated in part:

‘The evidence shows that, except for a small part (P180,679.38) of
the sum of P5,185,083.34, the entire P1,186,083.34 was actually paid to the
laborers.  Thus, testified witness Felipe
de Guia, representative of the Department of Labor in
charge of the distribution:

‘COURT:

‘Q.   Mr.
de Guia, you said that there were some amounts that
were not distributed because some laborers cannot be located; is this the
amount mentioned in this ‘Exhibit 23’, under the words ‘amount of undistributed
or windfall?’

‘A.   Yes,
sir, P180,679.38.’ (T.s.n., p. 28, June 18, 1970;
Annex ‘Q’ to Vicmico’s Petition for Certiorari,
p. 55).

“Apparently giving full credit to the foregoing testimony of
Mr. de Guia, the Court of Appeals, in the dispositive part of the decision, ordered the Central and
the Planters, jointly and severally, to pay the laborers ‘(1) the sum of
P180,679.38, not distributed to appellants, with interests thereon at 6% per
annum commencing from February 19, 1957, until fully paid’.  (Decision, pp. 68-69; Annex ‘Q’ to Vicmico’s Petition for Certiorari).  But Exh. ’23’ which
was the basis of Mr. de Guia’s testimony to the
effect that there was an undistributed amount of P180,679.38 (t.s.n., p. 28, June 18, 1970) clearly shows that
P6,536,741.98 was distributed in favor of the laborers, with only P180,679.38
remaining undistributed.  Exh. ’23’ reads:

‘Republic of the Philippines

Department of
Labor

BUREAU OF LABOR
STANDARDS

M a n i l a

Statement of Windfall Distributions of the

Victorias Milling Districts

Victorias, Negros
Occidental

As of June 30, 1967

AMOUNT RELEASED FOR DISTRIBUTION:

1st Distribution	. . . . . . . . . . . . . . .	P1,186,083.36
2nd Distribution	. . . . . . . . . . . . . . .	1,841,338.00
3rd Distribution	. . . . . . . . . . . . . . .	1,390,000.00
4th Distribution	. . . . . . . . . . . . . . .	1,100,000.00
5th Distribution	. . . . . . . . . . . . . . .	1,200,000.00	P6,717,421.36

AMOUNT PAID BY DISTRIBUTOR:

1st Distribution	. . . . . . . . . . . . . . .	P1,162,040.79
2nd Distribution	. . . . . . . . . . . . . . .	1,815,326.40
3rd Distribution	. . . . . . . . . . . . . . .	1,357,067.88
4th Distribution	. . . . . . . . . . . . . . .	1,059,895.05
5th Distribution	. . . . . . . . . . . . . . .	1,142,411.86	P6,536,741.98

“AMOUNT OF UNDISTRIBUTED WINDFALLS
BY DISTRIBUTION:

1st Distribution	. . . . . . . . . . . . . . .	P 24,042.57
2nd Distribution	. . . . . . . . . . . . . . .	26,011.60
3rd Distribution	. . . . . . . . . . . . . . .	32,932.12
4th Distribution	. . . . . . . . . . . . . . .	40,104.95
5th Distribution	. . . . . . . . . . . . . . .	57,588.14	P180,679.38

LABORERS PAID BY DISTRIBUTION:

1st Distribution	. . . . . . . . . . . . . . .	96,229
2nd Distribution	. . . . . . . . . . . . . . .	97,170
3rd Distribution	. . . . . . . . . . . . . . .	95,411
4th Distribution	. . . . . . . . . . . . . . .	93,747
5th Distribution	. . . . . . . . . . . . . . .	92,254	474, 811

Respectfully
submitted:

(Sgd.)
ROM J. MALACON

“Explaining the distribution appearing in Exhibit ’23’, Mr. de
Guia testified:

‘Q.   As
first of the team of supervisors, you supervised the actual delivery of the
money to the laborers; is that correct?

‘A.   Yes,
sir.

‘Q.   In
other words, you went to the haciendas and gathered all the laborers and gave
the corresponding amount to the laborers; is that correct?

‘A.   Yes,
sir.

‘Q.   And
before that distribution, your supervisor inquired if all those payrolls are
prepared by the respective planters concerned; is it not?

‘A.   Yes,
sir.

‘Q.   And
your obligation is to check the payrolls regarding the names of the laborers
and the amount indicated in the payrolls; is that correct?

‘A.   Not
necessarily check the individual names appearing on the payrolls but also
verify whether the amount released to be distributed tally with the amount
appearing on the payrolls.

‘Q.   What
about the actual payment of the amount to the laborers, were you present there?

‘A.   Yes,
sir.

‘Q.   So
that, in all those distributions reflected in this Exhibit ’23’ – Victorias Milling Company, Inc. either you or the member of
your team or any representative of the laborer see to it that the money is
delivered to the laborers concerned; is that correct?

‘A.   Yes,
sir, that is the duty of the supervisor to see to it that the corresponding
amount is actually received by the laborers.

‘Q.   And
you keep that record in the course of the distributions; is that correct?

‘A.   Yes,
sir.

‘Q.   If
I correctly get, there would be about 20,000 payrolls of the planters in the
haciendas; is that correct?

‘A.   I
can say that there are some planters who have 15 to 50 sheets of payrolls of
the haciendas; so you can just imagine the number of payrolls of the
haciendas.’ (T.s.n., pp. 22-­25, June 18, 1970).

“Since the Court of Appeals relied upon the foregoing Exhibit
’23’ in its finding that the sum of P180,679.38 had not been distributed, that
exhibit should not have been segregated in parts with the Court having chosen
that portion which afforded advantage to the laborers and disregard the other
parts which were to the advantage of the Central and the Planters. (cf. inter
alia, Orient Insurance Co. vs. Revilla, 54 Phil. 919, where it was held that when a party
introduces in evidence part of the privileged document, he cannot remove the
seal of confidentiality as makes for his advantage and insist that it is
privileged as to so much as makes for the advantage of his adversary).  The whole contents of Exhibit ’23’ should
therefore be given full weight and credit, namely that P6,536,741.98 had been
actually distributed in favor of the laborers. 
(VICTORIAS‘ Brief, pp. 286-336, G.R. No. L-41222.)

– D –

True it is, as already stated earlier, that in petitions for
review of decisions of the Court of Appeals, well and long settled it is that
We are as a rule bound by its findings or conclusions of fact.  In the instant cases, however, after
carefully considering its ratiocination and bases in finding that the share of
the laborers in the proceeds of the 1952-53 to 1954-55 crop years, and after
mature study of and searching deliberation on the arguments and authorities
very comprehensively advanced and cited in the briefs of the PLANTERS and
VICTORIAS in the portions thereof extensively quoted above, We find Ourselves
sufficiently convinced that the clear and unequivo­cal admission of such
payment in the FEDERATION’s original and amended
petitions in the trial court, if it cannot be deemed strictly binding upon it,
is a significant persuasive factor We have to count with in deciding the
particular issue of fact now under discussion. 
In Our opinion, there is hardly anything in the FEDERATION’s
main and reply briefs cogent enough to convince Us contrariwise.

We wish to make it clear that in connection with said issue, We
have not overlooked the laudable principles and guidelines that inform both
Republic Act 1257, the charter of the agrarian courts, and Presidential Decree
946, both of which prod the courts to be as liberal as possible in disposing of
labor cases and to be ever mindful of the constitutional precept on the
promotion of social justice, (Sec. 6, Art. II, Philippine Constitution of 1973)
and of the rather emphatic injunction in the constitution that “the State
shall afford protection to labor.”^[3]
But We are of the considered opinion that the secondary force to which the ordinary
rules of procedure and evidence have been relegated by the aforementioned
agrarian court laws do not oblige Us to be unjust and unfair to employers.  After all, in the eyes of all fair-minded
men, injustice to the more affluent and fortunate sectors of society cannot be
less condemnable and reprehensible, and should be avoided as much as injustice
to labor and the poor.  It is divinely
compassionate no doubt to afford more in law to those who have less in life,
but clear injustice to anyone amounts definitely to injustice to everyone, and
all hopes for judicial redress for wrongdoings would vanish, if the even hand
of law, justice and equity were to be made to favor anyone or any group or
level of society, whoever they may be. 
It is verily not an exagge­ration to assert that in a sense, courts that
uphold and afford real justice can hold back and even repel the forces of
malcontent and subversion more effectively and without loss of lives and blood
and without destruction or devastation than the best equipped regiments of
soldiers of the army.  Justice, in its
real and deepest essence, more than statute law must always prevail, and the
courts are inexorably expected to do justice to every men at all times.  This Supreme Court yields to no one in that
respect.  That is its sacred duty and its
sworn pledge that will remain unbroken ruat
caelum.

– E –

Thus, while We are in agreement with the Court of Appeals in its
construction and application of Sections 1 and 9 of Republic Act 809 as
discussed above, We cannot agree with its conclusions regarding the pretended
liability of the PLANTERS and VICTORIAS for the amount that the FEDERATION
claims the laborers of the PLANTERS have not been paid as their share of the
proceeds of the crop years 1952-53 to 1954-55. 
In resolving in the manner We have quoted, the second issue formulated
by it relative to the appeal to it of the FEDERATION, it holds the appellees, the PLANTERS, including petitioners herein Primo
Santos and Benjamin Tirol, and VICTORIAS
“jointly and severally liable for tort in disposing, upon their own
accord, and without any authority of the plantation laborers, of the money of
the said laborers in the total amount of P5,186,083.34 and thus causing the
loss of shares of stock and their earnings purchased out of P4,000,000.00 of
such amount.” Indeed, in the course of resolving the second issue and in
disposing of the third issue, the Appellate Court found the PLANTERS and
VICTORIAS guilty of misappropriation and conversion of the P5,186,083.34 plus
the accrual thereof, corresponding to P4M worth of VICTORIAS shares of stock
which under the ASCA was stipulated to be received by the PLANTERS in trust for
the laborers.

Again, this aspect of these instant cases before Us involve
questions both of fact and of law.

– F –

At this juncture, and referring first to the issues of fact, let
it be clear that We find from the record and as found by the Court of Appeals,
of the cash portion of P5,185,083.34 corresponding to the laborers pursuant to
the ASCA, namely, P1,185,083.34, what actually the laborers received under the
supervision of the representative of the Secretary (now Ministry) of Labor, was
short only by P180,679.38 per the testimony of Mr. Felipe de Guia, the representative of the Department of Labor:

“The evidence shows that, except for a small part
(P180,679.38) of the sum of P5,185,083.34, the entire P1,186,083.34 was
actually paid to the laborers.  Thus,
testified witness Felipe de Guia, representative of
the Department of Labor in charge of the distribution:

‘COURT:

‘Q.   Mr.
de Guia, you said that there were some amounts that
were not distributed because some laborers cannot be located; is this the
amount mentioned in this Exh. ’23’, under the words
‘amount of undistributed or windfall’?

‘A.   Yes,
sir, P180,679.38′ (tsn. p.
28, June 18, 1970)

“Appellants themselves, in their
brief, have made the following observations:

‘So, it can be assumed without fear of contradiction that the last
portion of the said amount of P1,186,083.34 was
delivered, if ever, to PLANTERS-APPELLANTS­-LABORERS after February 18, 1957.’ (Appellants’
Brief, p. 326)” (VICTORIAS‘ Brief, pp. 65-66, Appendix ‘A’, G.R. No. L-41222.)

There is no explanation anywhere in the
records as to what happened subsequently to the shortage of P180,679.38, and We, therefore, agree with the Court of Appeals
that judgment should be rendered for the payment thereof, there being no
dispute that the said amount has not been received by the laborers.

– G –

We find it difficult, however, to subscribe to the finding of the
Court of Appeals that the greater portion of the P5,185,083.34 in cash and in
shares of stock of VICTORIAS was not received by the laborers and was instead malversed and misappropriated by the PLANTERS and
VICTORIAS.

To start with, We have to state again that the petition that
initiated the instant cases before Us was filed only under date of November 9,
1962 with the Court of Agrarian Relations in Bacolod
City, that is to say, more than six years after the execution of the ASCA on
March 5, 1956 and the subsequent payment and transfer of shares pursuant
thereto had been factually accomplished. 
The inaction of the laborers for such a long space of time cannot but
cast shadows of doubt as to the truthfulness of their claim, considering
particularly the hugeness of the amount involved, which anyone aggrieved would
lose no time to move to recover, specially if one takes into account the value
of the Philippine peso during said period.

Second, and indeed rather importantly, the said initial petition
made no reference whatsoever to the now pretended non-­payment, but, on the
contrary, as well shown and argued by the PLANTERS and VICTORIAS in the
portions of their respective briefs We have quoted above, such payment was not
only admitted in said petition as well as in the amended one filed in March,
1964, both of which referred exclusively to the laborers’ share in the 1955-56
to 1973-74 crop years but even in the prayer portions thereof.  What is more, as will be presently discussed,
the payment in question appears proven by the evidence both oral and
documentary submitted to the trial court.

Of course, We must say again, as a general rule, in petitions for
review of decisions of the Court of Appeals, this Supreme Court is bound by the
findings of fact of that Court and that We are limited only to an inquiry as to
whether or not its decision predica­ted on its factual conclusions is in
accordance with law.  In these cases at
bar, however, the factual matter of whether or not the laborers had already
been paid their share corresponding to the 1952-53 to 1954-55 crop years is
being laid before Us inextricably intertwined with a question of law arising
from the indisputable fact that in the initial pleadings below what is manifest
is not only that there is an express admission in paragraph 10 of the petition
of the laborers “that pursuant to Section 9 of said Act (R.A. 809),
respondent planters gave petitioners-laborers the latter’s lawful participation
in the sugar production as well as in the by-products and derivatives thereof
and continued to give the same until November 1, 1955 when they ceased to do so
until the present” but even in the prayer thereof, the FEDERATION confined
the remedy it asked for to the payment of the laborers’ share in the proceeds of
the crop years after 1954-55 and up to 1973-74. 
We cannot conceive of a more emphatic and unequivocal words to convey
the admission of the payment here in question.

We are now asked to rule on the legal effect of such admis­sion
in the light of the other circumstances extant in the record.

In that connection, there appears no alternative for Us than to
rule that as contended by the PLANTERS and VICTORIAS, under the law, even if
liberally applied, such admission should be considered as having some persuasive
force, unless it was made through palpable mistake or misapprehension of the
relevant circumstances.  And what makes
such admission more credible is the fact that not one single laborer was
presented at the trial to deny that he had received his due share.

The Court of Appeals has attempted to extricate the laborers from
their lamentable predicament by accepting the explanation of counsel for the
FEDERATION that what the above?quoted paragraph actually was intended to mean
was that VICTORIAS had only reserved the corresponding amount in the
liquidation of the share of the planters in the proceeds during that
period.  Quite misleadingly, to be sure,
the FEDERATION argues in its brief that they could not have made such a factual
admission since at the time their petition was prepared and filed, the money
was still with the central.  How false
such a pretension is can be readily perceived by merely recalling that the
FEDERATION filed its initial petition below in November of 1962, whereas the
record shows indisputably that the payments and transfer of shares had already
been made more than five years before. 
And as regards the rather naive acceptance by the Court of Appeals of
the explana­tion of the FEDERATION, We hold that it was legally improper to do
so, it appearing that such explanation was made, according to the brief of the
PLANTERS, very much belatedly, only in the FEDERATION’s
reply brief in that court at page 1446 thereof, without any hint as to why it
was not made earlier in the trial court, where it appears the FEDERATION had
even filed an amended petition in 1964. 
Besides, there was no allegation of mistake; all that was done was to
unconvincingly attribute a different subjective meaning to a word that is clear
and unmistakable in itself, by explaining that what the pleader wished to
convey by the word given was that the corresponding amount due the laborers had
already been placed in reserve by the central.

The Court of Appeals further tried to sustain the Federation by
citing Section 5 of Rule 10 of the Rules of Court authorizing the courts to
decide cases on the basis of evidence on matters not alleged in the
pleadings.  In the first place, the cited
rule applies only when the evidence on which the court would rely is presented
without objection of the adverse party, since they would then correspond to
issues “tried by express and implied consent of the parties.” Here,
however, the record shows that the PLANTERS and VICTORIAS vehemently objected
to any evidence touching on the 1952-53 to 1954-55 crop years, precisely
because of the explicit admissions contained in the plaintiff FEDERATION’s petition. 
This is not, however, to ignore that nevertheless, the record shows that
somehow both parties did present evidence touching on such payment.  But judging from what such evidence consisted
of, as reproduced in all the briefs before Us, We are fully satisfied that the
findings and conclusions of fact of the Court of Appeals on the point at issue
do not square with such evidence.  To
cite just one example, the tes­timony of the principal witness of the
Federation, Atty. de Guia is more indicative of the
complete and full payment in question than otherwise.  For another instance, the ruling of the Court
of Appeals that Exhibit 23-VICMICO is inadmissible because it is merely
secondary evidence is, in Our view, erroneous, considering not only that the
trial court was informed by Mr. de Guia himself that
the original documents are so voluminous as to make it imprac­ticable to take
them to the court, but also that it was precisely on the basis of said exhibit
that that court made the finding of a shortage of P180,679.38 in the cash
payment, not to mention the obvious fact that the same witness actually made
continuous reference to said exhibit while he was explaining the distribution
of the full amount due the laborers.  The
contention of the Federation that said exhibit is a worthless piece of paper is
an exaggeration that cannot hold water. 
In fact, no one pretends it is a mere fabrication, being part of the
records of the Department of Labor.  Of
course, it is possible, as Mr. de Guia claimed, that
he did not know of the actual issuance, sale and proceeds of sale of the 40,000
shares of stock, but the fact remains that it was he himself who referred to
said documents with notable degree of certainty, at the start, and it was only
later in his testimony that he disclaimed personal knowledge of the truth of
its contents.

Thirdly, insofar as the joining of issues in regard to the point
under discussion, by the PLANTERS and VICTORIAS, on the one hand, with the
FEDERATION, on the other, in their briefs filed with the Court of Appeals, it
is understandable that the PLANTERS and VICTORIAS had no alternative than to do
so as a matter of defense, even as they maintained all the time it was not a
proper issue and was beyond the jurisdiction of the Court of Appeals to
consider.  Moreover, it is quite obvious
that the cited provision is by its very nature and context applicable only in
trial courts and not in the Appellate Courts.^[4]
What is more, it bears repeating, there was actually no allegation of mistake
here; all that was done by the FEDERATION was to unconvincingly attribute to
the word “give” another meaning convenient and suitable to its
purposes, casting aside the obvious fact that said word is clear and
unmistakable in itself.  Moreover, it
appears that said purported explanation was made only in its reply brief, by
way of argument unsupported by any scintilla of relevant evidence presented in
the court below.

Perhaps, We may emphasize again that We are not unaware that We
are dealing with a review of a decision of the Court of Appeals in an appeal
from a case which originated in the Court of Agrarian Relations in Bacolod City and that, there­fore, We are not supposed to
adhere strictly to the tenets regard­ing evidence of the Rules of Court, but
must be guided as liberally as possible in favor of the laborers in searching
for the true facts upon which their claim is based, having in view Republic Act
1257 and Presidential Decree 946 and more imperatively, the constitutional
provisions on social justice and protection to labor.  But, as can be seen, it is indeed in the
light of these principles that We have scrutinized the reasoning and
argumentation of the Appellate Court.  We
reiterate, at this point, that observing the Rules of Court only secondarily
per mandate of Republic Act 1267 and Presidential Decree No. 946 does not, in
Our considered opinion, preclude the Courts of Agrarian Relations and the
Appellate Courts, from applying long established principles in judicial fact
finding that are founded on reason and the common sense and experience of
mankind.  Admissions, specially if
express, have always been universally considered by all authorized triers of facts as evidence of the highest order.  To obviate their effect as such, there must
be potent and cogent considerations that are as equally convincing to the mind
as the compulsive persuasiveness of a man’s statement or declaration against
his own interest.  In the cases at bar,
We are satisfied, We regret to say, that the FEDERATION has failed to provide
Us with any­thing but pleas for emotional sympathy to enable this Court to pay
little heed to or much less ignore the persuasive force of its written formal
admission that their members have already been given and “continue to
be given” their due legal share of the proceeds of 1952-53 to 1954-55 crop
years in question, except for the amount of P180,679.38.  It is Our conclusion from such admission and
the evidence supporting the same, and more particularly from the absence of
contrary evidence duly presented by the FEDERATION at the trial, that the truth
is what said admission expressly declares.

– H –

With the matter of the cash payment thus resolved, We may now turn Our eyes to the Four Million (P4M) Pesos
worth of shares of stock of VICTORIAS
which, under the terms of the ASCA, were stipulated to be issued to the
PLANTERS or their authorized Special Committee or Board of Trustees in trust
for the benefit of the laborers.  In
regard to this matter, there are, as We view the situation, two controversial
issues to be settled, namely, first, whether or not, it was proper for the
PLANTERS and VICTORIAS to provide for such manner of payment to the laborers
instead of in cash, and, second, disregarding the matter of such alleged
impropriety, whether or not said shares or the proceeds thereof were received
by the laborers.

For obvious reasons, We have to deal
with the second issue ahead of the other. 
And in this respect, suffice it to say that the question of whether or
not the proceeds of the VICTORIAS shares of stock corresponding to them under
the ASCA had been actually received by them from their respective planters has
already been resolved by Us above not only as necessarily in­cluded in the
binding force of the admission of the FEDERATION in its original petition and
amended petitions below but as proven by overwhelming evidence overlooked
apparently by the Court of Appeals.  To
be clearer, contrary to the finding of the Court of Appeals, We hereby hold
that the proceeds of all the P4M worth of VICTORIAS shares corresponding to the
laborers under the ASCA were not only received in the form of shares by the
PLANTERS from VICTORIAS but that the proceeds of the sale thereof by the Board
of Trustees, together with their accruals, were actually received by the
laborers from their respective planters-employers.  We reiterate that not a single laborer had
testified to the contrary.  Additionally,
Chairman Newton Jison testified positively to such
effect.

With the foregoing conclusion, it is hardly of any consequence
for Us to discuss what the Court of Appeals, breathing, as it were, with
evident indignation and a stirring sense of reprobation, condemned to be an
unauthorized and improper act of the PLANTERS and VICTORIAS of planning, so to
speak, and agreeing just between the two of them how the share of the laborers
of 6% of the proceeds from 1952 to 1955 should be paid.  Inferentially, if not directly, the Appellate
Court found that the payment partly in cash and partly in shares of stock could
have been done and should have been done only upon consultation with and with
the consent or assent of the laborers either thru the FEDERATION or any of
their authorized representative.  We can
admit that indeed that would have been most ideal to do.  Actually, however, what happened was not
exactly that way.  Just the same, We
shall proceed to show that the laborers were never at the short end of the bargain.

The pertinent portions of the ASCA read as follows:

“‘(a)   The Party of the
Second Part shall set aside Sixty Per Cent (60%) of the said sum of
P8,643,472.24 as received by them to be held in trust for the benefit of their
laborers that may be entitled thereto because some of them have already died
and their heirs are unknown while a great number of them are hard to locate and
identify, the Party of the Second Part, shall dispose of the said Sixty Per
Cent (60%) of the sum of P8,643,472.24 as received by them, as follows:

“‘(1)   The Party of the
Second Part shall invest P4,000,000.00 of the P5,186,083.34, which is Sixty Per
Cent (60%) of the said sum of P8,643,472.24, in 40,000 voting and transferable
shares of capital stock of the COMPANY of the par value of P100.00 per share
which shall be issued in four (4) blocks of 10,000 shares per block-by the
COMPANY to the Party of the Second Part upon effectivity,
of this agreement as provided in Clause (2) hereof, it being understood that
the issuance of such shares does not involve an increase in the present
authorized capitalization of the COMPANY.

“‘The above-mentioned 40,000 shares of the capital stock of
the COMPANY will enable the laborers/planters to become part owners of the
COMPANY but if within the period of eighteen (18) months, but not earlier than
six (6) months, from and after date of delivery of the said 40,000 shares by
the COMPANY to the Party of the Second Part, the Party of the Second Part
should desire to have the value of the said 40,000 shares to wit,
P4,000,000.00, or such portions thereof in blocks of 10,000 shares at
P1,000,000.00 per block, paid in cash, the COMPANY will pay in cash to the
Party of the Second Part or its successors the said value of the said 40,000
shares or of such blocks of 10,000 shares per block, as the Party of the Second
Part may decide to have converted into cash; as to such blocks of 10,000 shares
per block, that the Party of the Second Part may decide within the period above
stipulated to retain, such shares may be retained by the PLANTERS for their own
account upon their payment to the Party of the Second Part or its successors of
the value thereof of P1,000,000.00 per block. 
The COMPANY shall have a period of Thirty (30) days after receipt of
written request of the Party of the Second Part within which to make such cash
payment of the value of the shares.

“The balance of P1,186,083.34 shall be distributed under the
supervision of the Secretary of Labor among the present laborers of the Party
of the Second Part who were already laborers of the PLANTERS during the period
comprised between June 22, 1952 (the date of the passage of Republic Act 809)
and October 31, 1955 (the end of the COMPANY’s fiscal
year);

‘(ii) As to the sum of P3,457,388.90, which is the Forty Per Cent
(40%) of the P8,643,472.24, the Party of the Second Part shall distribute this
amount among the PLANTERS in proportion to the sugar milled for them by the
COMPANY during the aforementioned period of June 22, 1952, to Octo­ber 31,
1955.’

‘(b) As to the manner of delivery of the cash involved in the
foregoing transaction amounting to P4,643,472.24, a ‘General Collective Sugar
Milling Contract’ has heretofore been prepared for the signature of the
PLANTERS affiliated with the COMPANY signing the said ‘General Collective Sugar
Milling Contract’, the COMPANY shall pay and deliver to the Party of the Second
Part at least fifty per cent (50%) of the said cash balance of P4,643,472.24 or
that portion thereof correspond­ing to the said majority of the PLANTERS
affiliated with the COMPANY who have already signed the said ‘General
Collective Sugar Milling Contract’, and the remaining fifty per cent (50%) or
remain­der thereof will be paid, one half upon the execution of their new
individual sugar milling contracts, and the other half upon the registration
thereof in the Office of the Register of Deeds for the Province of Negros Occidental;

‘(c) It is understood, as part of this settlement agreement, that
the block of the COMPANY’s common shares mentioned in
sub-paragraph (i) and all its earnings shall
constitute a trust fund to be dedicated to the amelioration of the plantation
laborers of the PLANTERS in the Victorias Manapla-Cadiz milling district.  Said trust fund shall be administered by the
Party of the Second Part for the benefit of the PLANTERS’ laborers under the
supervision of the Secretary of Labor and in accordance with the trust laws of
the Philippines.  Should the trust fund be liquidated by order
of the Court of Justice or in the manner provided for in paragraph (1) (a) (i) then the PLANTERS shall have the first option from the
trustees, and the COMPANY the second option from the trustees and/or from the
planters themselves, to buy said Victorias Milling
Co., Inc., shares in blocks of 10,000 shares at their value of P1,000,000.00 per block. 
And in case both the Party of the First Part and Party of the Second
Part refuse to exercise their right, then said block of VMC shares may be sold
in the open market.’

“(2) This agreement will become effective if and when the
majority of the planters affiliated with the Party of the First Part have
signed the said ‘General Collective Sugar Milling Contract’.

‘Executed at Victorias,
Negros Occidental, this 5th
day of March, 1957.” (VICTORIAS‘
Brief, pp. 26-30, Appendix A, G.R. No. L-41222.)

Thus, it is unmistakably clear that as far as VICTORIAS
was concerned, it agreed to give to the PLANTERS the 10% it had precisely
reserved for that purpose in order to comply with the mandate of the law in the
event its challenge against its constitutionality should fail.  And as it happened, it opted soon enough not
to continue pressing that challenge by extra judicially entering into a
settlement with the PLANTERS.  And as
regards the actual implementation of the portion of the agreement regarding the
share of the laborers, apart from the admission of the FEDERATION, oft repeated
earlier; relative to the actual receipt by its members of their legal share of
1952 to 1955 crop years, We might relevantly point out that Chairman Jison testified without contradiction thus:

“Q.  Would
you like to tell this Honorable Court what happened to the money, whether in
cash, check or in terms of shares of stock which was delivered by the Victorias Milling Co., Inc. to the Board of Trustees?

“A.   The
stock of shares of the Victorias Milling Co., Inc.
which was delivered to the Board of Trustees was sold and liquidated accord­ing
to the Amicable Settlement-Compromise Agreement and in such case, checks were
issued to the respondents planters and also to be delivered to the respective
laborers under the supervision of the Department of Labor.  So far the record is concerned, the
Department of Labor has all the records. 
(pp. 37-38, tsn., June 17, 1970).”
(VICTORIAS Brief, Appendix A, p.
71, G.R. No. L-41222.)

These, in addition to the testimony to
the same effect of Mr. de Guia of the Department (now
Ministry) of Labor lengthily quoted above as parts of the portions of the
briefs of the PLANTERS and VICTORIAS.  We
say, to the same effect, because it is Our definite impression that read as a
whole, and evaluated together with Exhibit 23-VICMICO, that testimony, albeit
rather vague, confusing and at some places evasive, proved sufficiently that
what were due the laborers in cash and in shares of stock (or the proceeds of
the sale thereof) had been fully settled under the supervision of Mr. de Guia and his men not later than 1956 or 1957 in five phases
of distribution.  True it is that Exhibit
23-VICMICO was declared inadmissible as secondary evidence by the Court of
Appeals, but what is even more legally accurate is that such ruling is
erroneous, if only because said exhibit was precisely used by Mr. de Guia as basis for his testimony, and he explained that the
pertinent records supporting the same were so voluminous that it would be
impractical to take them to the court.

Incidentally, We are persuaded it cannot be said that the
FEDERATION or the laborers did not agree to the modality of payment provided
for in the ASCA.  If at all they muttered
against it, it was only belatedly during the trial, that is, after they had
already received the cash portion therein provided.

Indeed, We cannot share the view implicit in the decision of the
Court of Appeals that the principal witness regarding the same, Mr. Felipe de Guia, the representative of the Secretary of Labor, under
whose supervision, Section 9 of the Act requires the payments to the laborers
to be made, was not duly aware of the medium provided in said ASCA that P4M of
the share due the laborers would not be paid in cash but would be invested in
the form of 40,000 shares of VICTORIAS. 
As may be noted from the Appellate Court’s decision, the transcript of
the stenographic notes of Mr. de Guia’s testimony
evidences that he had in his possession the record of the distribution of the
P4M, although the said court held such assertion not to be the best
evidence.  Whether such ruling is correct
or not, it refers only to the actual distribution of the cash and the shares of
stock or the proceeds of the sale thereof, but the fact that P4M were to be
paid in shares appears indubitably proven. 
We are thus of the considered opinion that the findings of fact of the
Court of Appeals inconsistent with Our observations herein do not accord with
conventional knowledge of men and the general experience of the business world,
hence Our authority to modify the same.^[5]
It is to Us but natural to assume that said witness, Mr. de Guia,
knew or ought to have known of such medium of settling the laborers’ claim
because it is to be presumed that in the regularity of the performances of his
duties to supervise the payment to the laborers, on behalf of the Secretary of
Labor, he had read and did know the pertinent contents of the ASCA before
supervising any payment at all to the laborers. 
He admitted that of P1,186,083.34 due in cash to the laborers, the
latter were actually paid under his supervision, the said amount minus
P180,679.38.  We cannot suppose that he
undertook that task without inquiring into the whys and wherefores thereof,
that is to say, the reasons and details related to the amount being then
paid.  How could it have been possible
for him to have supervised the payment of any amount to the laborers without
determining first whether such payment was in full or not or in faithful
compliance with Section 9 of the Republic Act 809?  We have no doubt he must have been told about
or even shown the ASCA, which was the basis for the payment.  If it were otherwise, it was his inescapable
duty to inquire.  We presume, by mandate
of the law, that he had complied with that duty.  More, it is highly improbable that the
FEDERATION did not know that what was due its members was P5,186,083.34.  In truth, there is nothing before Us showing
that the FEDERATION objected at all to the manner of payment provided in the
ASCA when the time for implementation came. 
As far as the records before Us indicate, the laborers received under
Mr. de Guia’s supervision P1,186,083.34 (minus
P180,679.38) without a word of complaint from anyone, either the FEDERATION or
the SECRETARY.  We are, therefore, not
disposed to find that the mode of payment agreed upon in the ASCA was without
the conformity or consent, even if subsequent to its execution, of the laborers
and the Secretary of Labor.  We hold that
there was such consent.

In this connection, it should be recalled that after Civil Case
No. 16815 of the Court of First Instance of Manila, wherein it was held that
all the contracts being insisted upon by VICTORIAS as still existent had
already expired on June 22, 1952, which decision was affirmed by this Supreme
Court in G.R. No. L-6648 on July 25, 1955, in another suit, Civil Case No.
22577, also in the Court of First Instance of Manila, wherein the
constitutionality of Republic Act 809 was impugned by VICTORIAS, the validity
of ASCA itself was put to question when VICTORIAS and the PLANTERS submitted to
the court their manifestation on April 23, 1956 that they had come to an
extrajudicial settlement effective upon the signing of the General Collective
Sugar Contract (Exhibits YYY and YYY-7), which was ultimately signed by
majority of the PLANTERS on or before May 31, 1956.  The challenge was made not only by some
individual planters, like the Coruñas, Lacson, Chapa, Valencia, et al., but more importantly also
by the Secretary of Labor.  However, the
intervention of these challengers was not allowed by the court, and on November 5, 1956, We
issued a resolution in G.R. No. L-11218 dismissing a petition
against such denial.

So, while it is true that the ASCA was questioned as being violative of Section 1 of the Sugar Act of 1952, the
challenge was in relation alone to the contention of the FEDERATION, the
SECRETARY OF LABOR and some planters that the ratio of sharing provided for in
Section 1 of the Act is unalterable by contract.  Insofar as the manner in which the payment of
what is due to the laborers was concerned, that is, that stipulated in the
ASCA, We are impressed convincingly that the same must have appeared
satisfactory to all the parties concerned. 
Indeed, if the FEDERATION had felt that the mode or medium of payment
stipulated in the ASCA was prejudicial or in any way inimical to the interests
of its members, why was the cash payment of P1.8 M plus accepted without, as
far as We can see from the records, any qualification or reservation on its
part or on that of the Secretary of Labor?^[6]
On the contrary, what We note is that the transfer to the PLANTERS of 40,000
shares of VICTORIAS in trust for the laborers could have been viewed by the
laborers with alacrity, not only because of the attractively high increment it
was supposed to earn for them, but, what is more, the laborers would become
thereby co-owners of the mill.

It is to Us of little, nay insignificant, moment who conceived or
“engineered” the plan, whether VICTORIAS or any other party and what
motivated the same.  What cannot be
denied is that under normal standards, no one can perceive therein any
prejudice or risk to the pecuniary interests of the laborers.  To speak of it, therefore, as approximating something
immoral or improper, even illegal, for VICTORIAS to agree to it, as the
Appellate Court did, is to miscomprehend entirely its concept, which under the
circumstances then prevailing appeared to be the most practical and feasible
way of meeting the situation for the convenience and benefit of the laborers
themselves, the PLANTERS and VICTORIAS.

– I –

Having arrived at the conclusion that of the cash portion
stipulated in the ASCA plus the proceeds of the sale of the 40,000 shares of
VICTORIAS stock had already been “given” to use the word of the
FEDERATION itself in its pleadings below, long before the case in the trial
court was initiated, only P180,679.38 of the claim of the laborers pertaining
to the 1952-53 to 1954-55 crop years remain unpaid, We shall now dwell on the
curious and strange holding of the Court of Appeals that VICMICO and the
PLANTERS are jointly and solidarily liable to the
laborers for the payment of their claims, but only insofar as said P180,679.38
are concerned.

Referring to the FEDERATION’s position
in this respect, that is, the joint and solidary
liability of the PLANTERS and VICTORIAS vis-a-vis the
1952 to 1955 phase of these cases, We must say that the same looks more like a
dragnet intended to catch both the PLANTERS and VICTORIAS one way or
another.  After having admitted in its
initial pleadings with an express assertion that the laborers concerned had
already been “given” what is due them for the period in question, at
the trial, its claim bulged to over P7 M for the 1952-1955 period, albeit it
came out from the evidence that of such claim only P180,679.38 had not been
paid.  (According to Mr. de Guia, the corresponding laborers could not be located.  Under the law, however, in such an instance
the money due the lost laborers goes to a designated government fund for the
general amelioration of labor and labor conditions in the whole country.)
Actually, We might reiterate, said initial pleadings of the Federation made no
reference at all to the crop years 1952-53 to 1954-55, but was confined itself
to the claim that from 1955-56 crop year to 1973-74, the laborers were not
being paid what is due them under the law, which they insisted then was 6% of
the 10% increase due the PLANTERS.  In
other words, the FEDERATION based its original claim on the theory of
obligation created by law, but, of course, in reference only to the 1956 to
1974 crop years – nothing of 1952-53 to 1954-55.

However, as may be gleaned from the decision of the Court of
Appeals, in that Court, the FEDERATION shifted to another pose.  It claimed, contrary to its admission in its
original and amended petition in the trial court, that the laborers had not
been actually fully paid what is due them for 1952 to 1955, and notwith­standing
their receipt or acceptance, without any protest or qualification of the cash
portion (which turned out to be short by P180,679.38) provided in the ASCA, it
assailed, rather belatedly, the legality and propriety of that agreement’s
provision to the effect that P4 M due them would be paid in 40,000 shares of
stock to be entrusted to a Special Committee or Board of Trustees composed of
five planters, and what is more, it contended vehemently that the laborers had
not received any of said shares or any portion of the proceeds of the sale
thereof.  As to the legal aspect of such
belated claim, its basis became no longer an obligation created by law but a
liability imposed according to it by Articles 20 and 21 of the Civil Code.  But it must have also relied on torts, for in
its decision, the Court of Appeals found “the Central (VICTORIAS and
PLANTERS jointly and severally liable for tort” while citing in another
portion of its decision also Articles 20 and 21 of the Civil Code.

We must confess We are perplexed by such evident confusion of the
pertinent juridical concepts in civil law in such postures of the Court of
Appeals and the FEDERATION.  The only
legal provision that could impute joint and several or solidarity to the
PLANTERS and VICTORIAS is Article 2194 of the Civil Code which reads:

“ART. 2194.  The
responsibility of two or more persons who are liable for a quasi-delict is solidary.”

Since in this jurisdiction torts is generally equated with the quasi-delict or culpa aquiliana
or extra-contractual defined and elucidated in Chapter 2, Title XVII,
comprising of Articles 2176 to 2194 of the Civil Code, it must have been for
this reason, that without mentioning the codal
provisions just referred to, and trying to play safe, as it were, with its
reference to torts in general, the Court of Appeals made its holding under
discussion.  Surprisingly, however, it
later on cited Articles 20 and 21 of the Civil Code, thereby implying that its
reference to torts might be in relation to these two later articles under
Chapter 2 on Human Relations of Chapter I of the Code.

We do not hesitate to hold as We hereby hold that such a
confusion of simple and well-known civil law concepts is unfortunate, to say
the least.  There is an obvious mix-up of
the several sources of obligation under existing laws, and one is left
uncertain whether what is being relied on is only one of them or a combination
of them or all of them together, which would naturally be a veritable juridical
and legal abnormality.  For the benefit
of everyone concerned, We shall make a brief analysis of each of them that have
been directly or indirectly referred to by the Court of Appeals or the
FEDERATION.

In regard to the FEDERATION’s initial
contention about obligation created by law, undoubtedly, it had in mind
Sections 1 and 9 of Republic Act 809. 
But since in such initial pleading, the subject matter and cause of
action referred to crop years 1955-56 to 1973-74, the FEDERATION is correct in
sustaining that the laborers are entitled to a 60% share in the increase given
to the PLANTERS by the CENTRAL. Its only misconception in such posture is that
it assumed that the ratios in Section 1 of the Act have to be followed even if
there were a majority of planters with written contracts with VICTORIAS.  Under Talisay-Silay
and the decision of the Court of Appeals, that position is untenable. However,
the laborers are nevertheless entitled to 2.4% out of the 4% increase that
pertained to the PLANTERS under the ASCA. Accordingly, the PLANTERS are liable
to their respective laborers for the 2.4% that indisputably they have not paid
since 1955 to 1974.  Obviously, that is
an obligation created by law.

But arising as it does from Republic Act 809, the relevant
question that arises is whether such liability of the PLANTERS is joint and
several or solidary. 
After mature deliberation, considering the peculiar facts of these cases
wherein it appears that the PLANTERS always acted in concert with one another
or as a single unit, We hold that the PLANTERS as an association, if it is, or
all the planters in the Victorias sugar milling
district, whether members or not of such possible association, and this
includes petitioners Santos, as a lessee planter, and Tirol,
are jointly and severally liable for the whole amount due all the laborers
involved in these cases.  As regards the
pretended liability of VICTORIAS
in this respect, We have already disposed of that
matter earlier above.

Coming now to the matter of torts, the FEDERATION cites from
Judge C. P. Caguioa’s Comments and Cases on Civil
Law, Vol. I, 1967 ed. to evidently give the impression that Article 20 of the
Civil Code has adopted or imported into Our jurisdiction the so-called
Anglo-American concept of torts which adds malice to the fault or negligence
contemplated in the quasi-delict or culpa aquiliana or extra-contractual of our Civil
Code.  Such citation, We regret to say,
does not reenforce at all the stand of the
laborers.  Truth to tell, with all due
respect to the opinion of Judge Caguioa, a known
civilian, Article 20 does not contem­plate malice per se.  The article reads thus:

“ART. 20.  Every person
who, contrary to law, wilfully or negligently causes
damage to another, shall indemnify the latter for the same.”

This article creates a new source of obligation in addition to culpa
aquiliana. 
While Article 2176 mentions only fault or negligence, as can be seen,
the above-quoted article requires that the person to be held liable must have
acted “contrary to law” in “wilfully
or negligently caus(ing)
damage to another.” If We are to believe the
following citation in VICTORIAS
brief:

“In order that liability under Article 2176 of the Civil Code
will arise the following requisites must exist: 
(a) There must be damage or prejudice which must be proven by the party
claiming it; (b) There must be an unlawful act or omission amounting to fault
or negligence; and (c) There must be a direct causal connection between the
damage or prejudice and the act or omission.’ (12 Manresa, 640-641; Taylor v. Manila
Electric Co., 16 Phil. 8; Jarencio, Torts and
Damages, 1968 Edition, p. 25).” (Page 222).

even under culpa
aquiliana, “there must be an unlawful act or
omission” for any liability to attach.

It is thus clear from the foregoing brief discussion of the
juridical concepts of torts, culpa aquiliana
and Article 20 of the Civil Code that neither the PLANTERS, and much less
VICTORIAS, appears to be guilty of tort in any sense.  Accordingly, the holding of the Court of
Appeals that “the Central and PLANTERS are liable in tort” to the
laborers of the former has no factual nor legal basis.  In consequence, it necessarily follows that
the joint and several liability imposed by the Court of Appeals upon VICTORIAS
must be, as it is hereby, held to be erroneous and uncalled for, factually, as
shown earlier in Our discussion of the relationship between the laborers of the
PLANTERS and VICTORIAS, and legally, in the light of what We have just
explained is the only correct legal basis of the laborers’ claim, namely, an
obligation arising from law.  To
reiterate, the law, that is, Republic Act 809, does not impose upon the
centrals, whether expressly or impliedly, any joint and several liability with
the planters for the share which the Act apportions for the laborers of the
planters, since it is the responsibility exclusively of the planters to pay
their laborers after they have been given by the central what is due them.  In other words, the inherent nature of the
obligation of the planters, that of paying their own laborers, has never been
from the inception of the sugar industry up to the present, solidary
with the Centrals.  Article 1207 of the
Civil Code provides in this respect thus:

“ART. 1207.  The
concurrence of two or more creditors or two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand, or
that each one of the latter is bound to render, entire compliance with the prestation.  There is
a solidary liability only when the obligation
expressly so states, or when the law or the nature of the obligation requires
solidarity.”

In these premises, We
cannot see how VICTORIAS may be
held jointly and severally liable with the PLANTERS, contrary to what has been
held by the Court of Appeals.

XIII

The foregoing sufficiently resolve, the first eight (I to VIII)
of the ten (10) assignment of errors of the FEDERATION.  We shall now tackle the remaining two of
them.

– A –

In its Assignment of Error IX, the FEDERATION ascribes to the
Court of Appeals the alleged error of not holding VICTORIAS and the PLANTERS
jointly and severally liable for exemplary damages for the losses that the
laborers have suffered because they were not paid their share of the 1952-53 to
1954-55 crop years production.  Needless
to say, as a consequence of Our holding that by their own admission and the
evidence misapprehended, in Our view, by the Court of Appeals, all the amounts
due them for said period have already been paid, except P180,679.38, We can per­ceive
no legal reason why such claim for exemplary damages should be awarded.  With particular reference to the P180,679.38
left unpaid in 1955, FEDERATION’s own witness de Guia explained that the laborers to which the same
correspond could not be located.  In the
light of such explanation, it would be unfair to even think of exemplary
damages for the non-payment thereof.

– B –

As to the matter of the non-payment by the PLANTERS of the 2.4%
due their laborers, a little clarification may be called for.  We feel that the legal provision mandating
such payment may indeed not be readily understood by or comprehensible to
everyone in the same sense it was construed by this Court in Talisay-Silay and by the Court of Appeals in its subject
decision.  For, it is undeniable that
Section 9 of Republic Act 809 uses the words “any increase in
participation granted the planters under this Act“.  (Underlining Ours) Read literally, there
could be a little shade of plausibility in the posture of VICTORIAS and
PLANTERS that only any increase as a result of the application of Section 1 of
the Act is contemplated in its Section 9, and not an increase by virtue of a
written milling contract executed after the effectivity
of the Act, even if those who do so might constitute the majority of the
planters in the district.  But, as We
postulated in Talisay-Silay, any increase given to
the planters by any central after the passage of the Act cannot be viewed in
any way than that which has been induced or forced to be done on account of the
compulsive effect of the various related provisions of the Act.  Virtually, therefore, any such increase
should be deemed as an “increase – – – under this Act”, since it is a
result of its operation.  Understandably,
since it is only because of this Court’s construction of the Act rather liberally,
to be sure, in favor of labor, We cannot say that, in the words of Article 2233
of the Civil Code, the laborers here are entitled to recover exemplary damages
“as a matter of right.” We must consider that per Article 2234,
“the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of whether or
not exemplary damages should be awarded.” In the instant cases, all
relevant circumstances considered, We fail to see Our way clear to granting any
kind of moral, temperate or compensatory damages to the laborers, and We are
not doing so.  In fact and in law, We
have no basis to go that far.  Thus, it
is pointless to speak of exemplary damages here.

– C –

Lastly, the FEDERATION complains that the Court of Appeals erred
in reducing to 10% the 20% attorney’s contingent fees stipulated in the
laborers’ contract with their counsel. 
(Page 307, Laborers’ Brief) Every material point discussed in the brief
taken into account, We share the conclusion of the Appellate Court that the
said ten (10%) per centum award of attorney’s fees is just and adequate.

XIV

Insofar as VICTORIAS’
petition is concerned, there are only three assignments of error (VII, VIII and
XII) that may not be said to be squarely resolved in the above opinion.

– A –

VICTORIAS vehemently
maintains in its Assignment of Errors No. VII that nowhere in the course of the
proceedings below, starting from the allegations of both the original and
amended petition of the FEDERATION through the evidence it presented without
opportune and appropriate objection, may there be traced any theory having the
semblance of reliance on the law on torts, whether in the concept of culpa aquiliana or under Articles 20 and 21 of the Civil
Code, the alleged Anglo-Saxon version, per Judge Caguioa,
supra, or, any other variant thereof. 
According to VICTORIAS,
the alternative bases percept­ible in the FEDERATION’s
petitions which ultimately led to the instant cases before Us
now were either an obligation arising from law (Republic Act 809) or one that
is contractual, the latter being somewhat vague to Us, since it is in fact
premised on the alleged invalidity of the provisions of the ASCA.  And here, it is the position of VICTORIAS
that assuming the cause of action of the FEDERATION could still be legally convertible
in the appellate stage of the proceedings, either in the Court of Appeals or
here, to one of “torts”, We should dismiss the FEDERATION’s
petition, the same having been filed in November 1962 or more than four (4)
years after the alleged cause of action arose in 1955 or 1956, citing Article
1146 (2) of the Civil Code.

With the view We have taken of the whole controversy as discussed
in the above opinion, We deem it unnecessary to pass on such seventh assignment
of error of VICTORIAS regarding prescription of an action on torts, whether We
look at it in relation to the 1952-53 to 1954-55 crop years controversy or in
connection with the 2.4% claim of the laborers for crop years 1956 to 1974.

– B –

It is VICTORIAS’
posture in its assignment of error No. XII that the
real nature of the action of the laborers in these cases is one for accounting,
hence, as a preliminary matter, We should first
determine whether or not they are entitled to such accounting.  Stated otherwise, it looks to Us that VICTORIAS’
claim is that it is premature yet at this stage of the controversy to deal with
any sums of money or amounts due the laborers, there being no showing extant in
the record that such entitlement exists. 
Again, We hold We do not have to spend more ink
and paper to deal with such contention. 
Either it is quite clear that the FEDERATION has sufficiently
established the predicate for accounting insofar as the PLANTERS are concerned
or We consider it superfluous to make any ruling as to
the point in question for the purposes of these cases, since the ultimate
result of Our above opinion would virtually not be different anyway.

– C –

There is one point raised by VICTORIAS
which although generally covered somehow in the above opinion, deserves special
mention and discussion.  The central
maintains that in the interrelation among the planters, the plantation laborers
and the miller, it has always been the practice and actually a legal axiom that
the central, on the one hand, and the planter, on the other, whether the latter
be a landowner or lessee or one who just factually plants and delivers his
harvest for milling to the central of the corresponding district under any
other arrangement with the landowner concerned, are the only ones who enter
into contractual relations with each other, and in all the contracts between
them, since the sugar industry began, nothing whatsoever has been provided with
respect to the laborers, either of the miller or the planters, except, in any
event, precisely to make it clear that neither of them would have anything to
do with the terms and conditions of each other’s workers or laborers.  We have stated earlier and We
reiterate Our view that there is nothing in Republic Act No. 809 that alters
such a long standing factual and juridical situation.

However, it cannot be denied that under Republic Act 809, for the
first time, outside of enacting the Minimum Wage, Law and expressly extending
fringe benefits, like cost-of-living allowances, bonuses, etc. to the workers
in the sugar industry not only in the farms but also in the mills, the
government has never fixed the manner in which the planters should share the
proceeds of milled sugarcane with their respective plantation laborers.  And notably, in Section 9 of the Act, the
Congress made it abundantly specific that what the provision contemplates in
the partition between the planters, on the one hand, and their respective
plantation laborers, on the other, is of “any increase in the
participation granted the planters under this Act and above their present
share,” which the provision explicitly mandates “shall be divided
between the planter and his laborer in the plantation (and that) (T)he (said)
distribution of the share corresponding to the laborers shall be made under the
supervision of the Department of Labor.”

Such being the case, VICTORIAS suggests the proposition that,
therefore, if somehow the Act creates any link at all between the plantation
laborers and the central, Section 9 itself makes the planter the agent of his
laborers in such relationship and speaks for them and is responsible to them as
their principal.  When, therefore, the
PLANTERS entered into and signe the ASCA, they did so
not only for themselves but for and on behalf of their principal, the laborers,
in respect to all matters concerning the latter.  Consequently, VICTORIAS
argues that the plantation laborers are bound by the terms and conditions of
the ASCA as parties thereto, represented by their agent, the PLANTERS.

There may be something in such pose, but rather than go into the
intricacies and complications that evidently would need to be elucidated and
resolved in relation thereto, but which anyway would be inconsequential as far
as the basic views of these cases expressed in Our above opinion are concerned,
We prefer to deal with VICTORIAS’ argument under discussion on some other
appropriate occasion when its resolution should become indispensable.  After all, in the cases at bar, it is already
altogether clear, as We have discussed in Our above opinion, that whatever the
plantation laborers are claiming is due them must be the exclusive
responsibility and liability of the PLANTERS jointly and severally among
themselves, to the complete exclusion of VICTORIAS.

XV

All of the assignments of errors of the PLANTERS (I to VI) in
their brief with Us have been resolved in Our opinion above.  There is, however, something they mentioned
in their prayer that We might just as well clear up and dispose of.  The PLANTERS pray that they should not be
made liable to their respective laborers for any of the claims herein involved
because they have not “engineered nor pocketed that which allegedly belong
to the laborers as a result of the ASCA, for they (the PLANTERS) got only what
they are entitled to under Republic Act 809”, and elsewhere, they suggest
that should they be found somehow liable, VICTORIAS should be adjudged to
reimburse them therefor.

We shall not concern Ourselves about the “engineering”
that brought forth the ASCA.  The Court
of Appeals discussed that matter in detail in its decision now under review,
and its factual conclusions relative thereto, whether right or wrong, cannot,
to Our mind be of pivotal influence in the ultimate resolution of these
cases.  In a sense, what circumstances go
in the process of formulating contracts between the sugar centrals and the
planters are matters of public knowledge among all those duly informed about
and concerned with the sugar industry, and We must assume that whatever comes
out of their bargaining cannot be but their voluntary and mutual agreements,
even if, in this connection, it is but fair to admit that by force of the
inherent nature of the indispensability of the centrals as the last factor of
production of the saleable milled sugar, its superior position is an economic
reality everyone must accept.  The Court
of Appeals realisti­cally considered the matter as something that is not
illegal (and not exactly immoral), much less in contravention or circumvention
of the Sugar Act, but dictated by the legitimate exercise of all individuals to
make a profitable bargain.  Emphatically,
it must be said though, that the PLANTERS were not entirely helpless, for as We
see the scenario that may be flashed out of Republic Act 809, all that the
PLANTERS had to do was to refuse to sign any contract with VICTORIAS, in which
event, the government, thru a receiver, would have run the mill and the
PLANTERS could have gotten the 10% increase provided in Section 1.  If they signed, as they did, a contract, the
ASCA, providing for a 36-64% partition, We can only deduce ineluctably that
such was a better option for them under the circumstances.  And since, everyone is presumed to know the
law, for ignorance thereof “excuses no one from compliance therewith”,
and the courts, after all, are not guardians of parties, sui
juris, who might get the shorter end at
bargaining tables, We have no alternative but to conclude that when they signed
the ASCA, the PLANTERS were well aware that of the 4% increase granted therein
to them, 60% had to be paid by them to their respective laborers.  Thus, when they plead that what they got
under the ASCA was only what they are entitled to under the Act, they must not
be understood as referring to the whole 4% but only to 1.6%.

Let it be plainly understood, in this connection, that under Our Talisay-Silay ruling, the laborers are entitled to no more
than 60% of any increase in any increase in participation their respective
planters-employers might be granted. 
Beyond that, whatever goes to the PLANTERS and to VICTORIAS,
for that matter, are theirs as a matter of law and right.  To speak of “pocketing” by anyone
of somebody else’s rightful and lawful share is somehow malicious and entirely
unwarranted.

From the facts extant in the record, and applying the law
thereto, it is the conclusion of this Court that the PLANTERS are inescapably
liable to their respective laborers in the amounts and manner hereinabove set
forth.  They should know better than to
place the blame on anyone else.  Their
respective laborers have been deprived long enough of what is legally and
rightfully theirs.  It is unimaginable
how said laborers could have had better lives and living conditions, worthy of
their work, had the PLANTERS been more socially-minded and humanely concerned
about the welfare of those that have made them the “sugar lords”
during better times in Negros Occidental.  To make things clearer, the claim for
reimbursement by the PLANTERS is hereby overruled.

XVI

The petition of planters Primo Santos and Roberto Tirol requires no separate discussion.  Their claims that the trial court had no
jurisdiction over their persons and that they should not be held liable for
obligations under a contract they have not signed deserve scant consideration.  In fact, those points are already properly
dealt with in the above opinion, hence all their assignment of errors are
hereby held to be untenable.

J U D G M E N
T

Accordingly, the Court AFFIRMS the judgment of the Court of
Appeals holding that the LABORERS are entitled to the payment of 60% of the 4%
increase paid by VICTORIAS to the PLANTERS every crop year, from crop year
1955-56 to crop year 1973-74, the exact amount thereof in pesos to be
determined by the trial court after a hearing to be held within thirty (30)
days from the finality of this decision, the yearly amount thus determined to
bear the corresponding legal interests up to the date of payment to the
LABORERS;^[7]
the PLANTERS, including appellants Primo Santos and Roberto Tirol,
are sentenced to pay the said LABORERS the amount to be so determined, under
the supervision of the Ministry of Labor. 
In addition, the said PLANTERS shall also pay to the LABORERS, the sum
of P180,679.38, the balance unpaid of the latter’s share in the 1952-53 to
1954-55 crop years,^[8]
also with the same rates of interest and under the same supervision.

The judgment of the Court of Appeals is hereby modified by
eliminating the joint and several or solidary
liability of VICTORIAS with the
PLANTERS for the above amounts, the said liability being solely and exclusively
of the PLANTERS.  Moreover, contrary to
the finding of the Court of Appeals, the Court finds and holds that per their
own admission in their complaint and the extant evidence, the laborers had
already been paid their share in the 1952-53 to 1954-55 crop years, except for
the P180,679.38 aforementioned.  In all other respects, the judgment of the
Court of Appeals is AFFIRMED insofar as the liability of the
PLANTERS to their laborers are concerned.  And We hold that said liability is joint and
several among all the planters in the Victorias
District from 1952 to 1973, provided that in the execution of this judgment,
the primary and priority recourse should be against the members of the Special
Committee or Board of Trustees and secondly, the PLANTERS, as an association,
before they (the planters) are proceeded against individually.

Costs against the PLANTERS also in the same character of
liability just set forth as to their principal liability.

Concepcion, Jr., Fernandez, Guerrero,
Abad Santos, De Castro, and
Melencio-Herrera, JJ., concur.

Fernando, C.J., concurs in the
result and reserves the right to file a separate opinion.

Makasiar, J., the Court of Appeals should be entirely affirmed.

Teehankee and Aquino, JJ., did not take part.

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^[1]
An initial attempt to pass a law referring only to the relationship between the
centrals and the planters was thwarted by a veto by President Quirino on the ground of unconstitutionality.  Subsequently, as it was finally passed and
allowed to be a law without the President’s signature, the Act contained
provisions of social character in favor of labor, which in the Talisay-Silay case We upheld as
justified and warranted not only by police power but by the more pervasive
mandate of the social justice provisions of the Constitution.

^[2]
In respect to the 1952-53 to 1954-55 crop years, the Court of Appeals directly
imputed connivance to the PLANTERS and VICTORIAS seemingly because, in its
opinion, “the payment of P4 M in shares of stock instead of in cash was
prejudicial (or at least resulted in prejudice or loss) to the laborers. But as
regards the 1955-56 to 1973-74 crop years, the ASCA contained no provision
other than what Talisay-Silay and the Court of
Appeals held to be legal, namely, for VICTORIAS
to share the proceeds of production during said period with the PLANTERS on a
36-64% basis.

^[3] Section 9, Art. II, Id.

^[4]
Section 5, Rule 10

^[5]
Luna vs. Linatoc, 74 Phil. 15.

^[6]
Somewhere in the brief of the laborers, there is an indication that earlier,
the Secretary of Labor voiced his objection to the part payment in shares of
stock, but such objection paled into insignificance when no protest was made by
him, when pursuant to the ASCA, the actual payment of the cash portion and the
issuance of 40,000 shares were actually made. In fact, there is convincing
evidence in the record that the payment was made under the direct supervision
of his authorized representative, not only of the stipulated cash portion but
even of the proceeds of the sales of the 40,000 shares of stock.

^[7]
The rates of interest should correspondingly be increased in accordance with
the prevailing legal rate of each crop year.

^[8]
Computed on the basis of the share of the LABORERS’ share of 6% in the 1952-53
to 1954-55 crop years, it may be estimated that with the 2.4% corresponding to
them for the crop years 1955-56 to 1973-74, under this judgment, the LABORERS
should receive a total amount in the neighborhood of Thirty Million (P30 M)
Pesos. This estimate is subject to the amount to be determined by the trial
court.