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

Go Ka Toc Sons and Company versus Rice and Corn Board

The Case

This is a petition for review of a decision of the Court of First Instance of Manila which declared Republic Act 3018, the Rice and Corn Industry Nationalization Law, inapplicable to the business of the plaintiff, a partnership not wholly owned by Filipinos engaged in the manufacture of vegetable oil from corn, rice, and other products. The case is significant because it establishes the doctrine that when a statute is clear and unambiguous, the courts must apply it as written and cannot resort to statutory construction to narrow its scope, and that the term "by-products" in the law includes products derived from rice and corn even if not expressly mentioned in the title.

Procedural History

The plaintiff filed an action in the Court of First Instance of Manila to declare Republic Act 3018 and certain resolutions and circulars of the Rice and Corn Board inapplicable to its business. The lower court issued a writ of preliminary injunction. After the parties stipulated on the facts, the lower court rendered judgment declaring the law not applicable to the plaintiff's business, declaring null and void Resolution No. 10 and General Circular No. 1 insofar as they applied to the plaintiff, and making the injunction permanent. The defendant Rice and Corn Board appealed to the Supreme Court, raising questions purely of law.

Facts

The plaintiff, Go Ka Toc Sons and Company, is a 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, prohibiting partnerships whose capital was not wholly owned by Filipinos from engaging in the rice and corn industry, effective January 1, 1961. Section 3 allowed such entities to continue business for two years for liquidation purposes.

The Rice and Corn Board issued Resolution No. 10 on November 21, 1960, defining "by-product" to include secondary products from husking, grinding, milling, and cleaning of palay and corn. On July 10, 1961, it issued General Circular No. 1 defining "capital investment." These were published and translated.

The plaintiff, required to register under the law, filed an action to declare the law and the Board's issuances inapplicable to it. The lower court ruled in its favor, and the Board appealed. The plaintiff had stopped purchasing and selling rice and corn after the two-year period, limiting its activities to processing corn and rice oil from raw materials like corn germ and rice husk, and producing corn meal as a residue.

Issues

• Whether or not Republic Act 3018 applies to the plaintiff's business of processing by-products of rice and corn into vegetable oil and corn meal.
• Whether or not the term "by-products" is validly included in the law despite not being expressly stated in the title.
• Whether or not the lower court properly resorted to statutory construction to determine the law's intent.
• Whether or not Resolution No. 10 of the Rice and Corn Board is valid.

Applicable Provisions

Section 1 of Republic Act 3018 provides:

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.

This provision defines the scope of the law and expressly includes by-products, which is central to determining whether the plaintiff's activities are covered.

Section 3(a) of Republic Act 3018 provides:

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;

This provision grants a temporary period for liquidation but confirms that by-products are within the law's coverage.

Ruling

On the first issue, the Court held that the plaintiff's activities are covered by the law. The Court reasoned that "tahup," "sungo," and "rice husk," which the plaintiff acquires from millers and from which it manufactures vegetable oil and corn meal, are clearly by-products of rice and corn. The law is clear in enunciating the policy that only Filipinos and entities wholly owned by Filipinos can engage in the trade and acquisition of by-products of rice and corn.

On the second issue, the Court held that the inclusion of "by-products" in the body of the law is valid even if not specifically stated in the title, as it is germane to the subject matter expressed in the title.

On the third issue, the Court held that the lower court improperly resorted to statutory construction. The law is clear, and the court's only duty was to apply it as written. 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. There is none here. Furthermore, the lower court's interpretation would render the statute nugatory and defeat its aims, since it struck off the phrase "by-products thereof" from the text of the law.

On the fourth issue, the Court held that since the plaintiff is covered by the statute, there is no necessity for an extensive discussion regarding the validity of Resolution No. 10. The power of the Rice and Corn Board to issue rules and regulations implementing the law proceeds from the law itself. The resolution, by enumerating specific examples of by-products, merely carried out the provisions of law. The lower court invalidated it based on its mistaken stand that the term "by-product" ought not to have been made part of the statute.

Doctrine

The Supreme Court ruled that when a statute is clear and unambiguous, courts must apply it as written and cannot resort to statutory construction to narrow its scope. The term "by-products" in Republic Act 3018 includes products derived from rice and corn, even if not expressly mentioned in the title, as it is germane to the subject matter. The purpose of the law, as expressed in the introductory note of the bill, can control the language of the law only in case of ambiguity. The Court also held that the Rice and Corn Board has the power to issue rules and regulations implementing the law, and such resolutions are valid as they carry out the provisions of law.

Disposition

The judgment appealed from is reversed, and the writ of injunction issued therein is annulled and set aside, with no costs.

Remember This

The single line worth memorizing is that when the law is clear, the court's only duty is to apply it as written, and statutory construction is improper. Examiners like to use this case to test the principle that the title of a law need not enumerate every detail as long as the subject matter is germane, and that administrative rules implementing a law are valid if they carry out its provisions.