GO KA TOC SONS & CO., ETC., PLAINTIFF-APPELLEE, VS. RICE AND CORN BOARD, DEFENDANT-APPELLANT.

Plaintiff-appellee Go Ka Toe Sons & Co. is a duly registered
partnership, not wholly owned by Filipinos, engaged since 1958 in the manufacture, processing and marketing of
vegetable oil extracted from corn, rice, copra, soybean, peanuts, fish, and
other vegetable products.

On August 2,
1960, Republic Act 3018
was approved, Section 1 of which
prohibited, among others, partnerships whose capital was not wholly owned by citizens of the Philippines from engaging, directly or indirectly, in the rice and/or
corn industry.  The law was to take effect
on January 1, 1961.  However,
Section 3(a) allowed such partnerships, upon registration with the municipal
treasurer, to continue business until two years from and after January
1, 1961.

“SEC. 3.  All such persons, associations,
partnerships, or corporations that have complied with the requirements provided
in Section two hereof, if they so apply, shall be allowed to continue to engage
in their respective lines of
activity in the rice and/or corn industry only for the purpose of liquidation,
as follows:

“(a) Those engaged in the retail, wholesale, culture,
transportation, handling, distribution or acquisition for the purpose of trade
of rice and/or corn and the by-products thereof shall be allowed to continue to
engage therein for a period of two years from the date of effectivity
of this Act;”

x        x          x          x          x

On November 21, 1960, the newly created Rice and Corn Board^[1]
issued Resolution No. 10, pursuant to Section 6 of the law, defining the term “by-product” used in the law, as
follows:

“By-product shall mean the secondary products resulting from
the process of husking, grinding, milling, and cleaning of palay
and corn, such as, but not limited to ‘binlid‘, ‘darak‘, ‘tahop‘, ‘tiktik’, ‘corn
husk’, ‘corn drips’ and ‘corn meals’.”

And on July 10, 1961, the RICOB issued
Gen. Circular No. 1, as amended,
which defined the term “capital investment” used in Section 3 of Republic Act 3018 which limits
the maximum amount of capital investments of alien persons and entities engaged
in the rice and/or corn industry to the amount stated in their statement made
pursuant to Section 2 of the law.

These two circulars have been duly published and translated into
the local dialect pursuant to Section 6
of Republic Act 3018.

Plaintiff-appellee, having been
required by agents of RICOB to register in accordance with Section 2 of the law
and the latter’s resolution, dated January 3, 1961, ruling that manufacturers
and/or dealers of bijon, noodle, corn starch, gawgaw, rice wine, poultry feeds and other by-products of rice and corn are
covered by the law, filed action in
the Court of First Instance to declare the
said law and RICOB Resolution No. 10, Nov. 21, 1960 and Gen. Circular No. 1, July 10,
1961, as inapplicable to it.  Pending
trial on the merits, the lower court issued the writ of preliminary injunction prayed for.

To abbreviate the proceedings, the parties entered into a
stipulation of facts.  Thereupon, the
lower court rendered judgment (a) declaring Republic Act 3018 not applicable to
plaintiff’s business; (b) declaring null and void RICOB’s
Resolution No. 10, dated November 21, 1960 and General Circular No. 1, as
amended, dated July 10, 1961 in so far as they were and are being made applica­ble to
plaintiff’s business and (c) making and declaring permanent and perpetual the
preliminary writ of injunc­tion
issued in the case.

Not satisfied with the foregoing ruling, defendant RICOB, through
the Solicitor General, has taken the ins­tant appeal to raise questions purely
of law.

Admittedly, plaintiff-appellee has stopped
from engaging in the purchase and sale of rice and/or corn since the lapse of
the two year period from the effectivity of the law. 
It has limited its activities to the trade, processing
and manufacture of corn and rice oil from raw materials consisting of
corn germ proper or embryo (“sungo“) and
“tahup“, as well as from rice husk which it
secures from others who mill rice and corn. 
In the processing and manufacture of corn oil, plaintiff also produces a
residue called “corn meal” or “corn meal germ” which it
sells and trades.  Are these activities
covered by Republic Act 3018?

Section 1 of the law defines “rice and/or corn
industry” as including the handling of distribution, either in
wholesale or retail, and the acquisition for purpose of trade, of the
by-products of rice and corn:

“SECTION 1.  No person who is not a citizen of the Philippines,
or association, part­nership or corporation, the capital or capital stock of
which is not wholly owned by ci­tizens of the Philippines,
shall directly or indirectly engage in the rice and/or corn in­dustry except as provided
in Section three of this Act.

“As used in this Act, the term ‘rice and/ or corn industry’
shall mean and include the culture, milling, warehousing, transporting,
exportation, importation, handling the distribution, either in wholesale
or retail, the provisions of Republic Act Numbered Eleven hundred and eighty to
the contrary notwithstanding, or the acquisition for the purpose of trade of
rice (husked or unhusked) or corn and the by-products
thereof:  Provided, That public
utilities duly licensed and registered in accordance with law may transport
corn or rice.” (Emphasis supplied)

Now, “tahup“, “sungo” and “rice husk”, which plain­tiff
acquires from rice and corn millers and from which it manufactures the
vegetable oil and produces the “corn meal” or “corn germ
meal” that it subsequently distributes and sells are clearly by-products of rice/and or corn.^[2]

Although the term “by-product” is not particularly and
specifically stated in the title of Republic Act 3018, its inclusion in the
body of the law is not invalid, as the lower court held, since it is germane to the subject
matter expressed in the title of the law.^[3]

Neither is the statutory inclusion of said term in the definition
of the phrase “rice and/or corn industry” an invalid legislative
usurpation of the court’s function to interpret the laws, as the lower court also ruled.  This definition is part of the law itself.

Finally, the lower court determined the purpose and intention
behind the law, thus:

“x
x x In the opinion
of the Court, it was never the intention of the Legislature in enact­ing
Republic Act No. 3018 to include
in its purpose or scope the
processing of the by-pro­ducts of rice and corn because Filipinos do not depend
for their survival by eating the by-products of rice and corn.  x x x

“Assuming, without admitting, that the law in question really
intended to include in its object the nationalization
not only of the rice and corn industry but also the trade of the by-products just mentioned above, the
business in which the plaintiff has been en­gaged and since December 31, 1962,
as is at present, engaged, the Court is of the opinion that in the trade,
processing, manufacture of corn and rice oil from the raw materials of corn
germ proper or embryo (sungo) and tahup and from rice husk converting the
remaining parts into ‘corn meal’ or ‘corn germ meal’ which is traded and sold
and that it acquired its raw materials from those engaged in mill­ing rice
and/or corn, the said Republic Act No. 3018 does not cover the plaintiff’s busi­ness
activities just mentioned.

“This is a fair and reasonable interpre­tation and application of said
Republic Act No. 3018, because to include in its control, limitation and prohibition
the business of the plaintiff mentioned above, would be not only to render the said law unconstitutional for not
including in its title ‘and the by-products thereof’, but also to unreasonably
stretch out and expand the scope and intention of the law to include in its
context the processing and extracting of oil from rice and corn and the
manufacture of corn meal or corn germ meal and the selling and trading of the
same.

“As a logical result of this interpretation of the law spelled
out by this Court, it must necessarily follow that the Resolution No. 10, Annex
1 and the general circular dated July 10, 1961, quoted under paragraph 3 of the parties’ Stipulation of Facts are hereby declared null and void
in so far as they attempted to include in the scope of said law the defendant’s
business activities described above in which it engaged since December 31,
1962, and in which it has been engaged
partly engaged since its formation in 1959.”

What the court a quo did was to resort to statutory construction.  But this was improper as well as incorrect.  The
law is clear in enunciating the policy that only Fi­lipinos and associations,
partnerships or corporations 100% Filipino can engage even in the trade and
acquisition of the by-products of rice and/or corn.  So the court’s only duty was to apply
the law as it was.^[4]
The purpose of the Act, as expressed in the introductory note of the bill, can
control the language of the law only in case of ambiguity.^[5]
There is none here.  Furthermore, the court
below’s interpretation would render the statute
nugatory and defeat its aims, rather than apply and effectuate its provisions,^[6]
since it struck off the phrase “by-products thereof” from the text of
the law.

Since plaintiff-appellee is covered by
the statute, there is no necessity for an extensive discussion regarding the
validity of Resolution No. 10 of November 21, 1960.  The power and authority of
appellant RICOB to issue such rules and regulations implementing the law,
proceeds from the law itself.^[7]
Said resolution, by enumerating some specific examples of by-products of rice
and/or corn, merely carried out the provisions of law.  And the sole reason why the lower court
invalidated it, was its mistaken stand that the term
“by-product” ought not
to have been made a part of the statute.

The foregoing considerations render moot and academic the
question regarding the validity of General Circular No. 1 of July 10, 1961.

WHEREFORE, the judgment appealed from is reversed and the
writ of injunction issued therein is annulled and set aside.  No costs.

SO ORDERED.

Concepcion, C. J., Reyes, J.B.L., Dizon, Regala, Zaldivar, Sanchez, and
Castro, JJ., concur.

^[1]
Hereinafter referred to as “RICOB”.

^[2]
See RICOB Res. No. 10, Nov. 21, 1960.

^[3]
Sumulong v. COMELEC, 73 Phil. 288; Cordero v.
Cabatuando, L–14542,
Oct. 31, 1962.

^[4]
People v. Garcia, 85 Phil. 651 [Resolution on Motion
to Reconsider]; Tecson v. S.S.S., L-15798, Dec. 29, 1961.

^[5]
82 C.J.S. 621; 50 Am. Jur. 291, 296.

^[6]
50 Am. Jur. 358-364.

^[7]
Sec. 6, Republic Act 3018.