CENTRAL AZUCARERA DE BAIS, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, DAVID BAROT, ET AL., RESPONDENTS.

Petitioner seeks the review and reversal of the decision of
respondent Court of Appeals, dated March 20, 1989,^[1]
which affirmed in toto the original
decision of the Regional Trial Court of Manila, Branch XX, dated December 28, 1984,
in Civil Case No. 39650, entitled “David Barot,
et al. vs. Central Azucarera de Bais,”
and set aside the partial modification thereof by the same trial court in its
order of May 7, 1985.

The present litigation started thirty-one (31) years ago in the
then Court of First Instance of Manila when private respondents filed a
complaint for a sum of money against petitioner Central Azucarera
de Bais on March
19, 1959.  In their
complaint, private respondents, consisting of David Barot
and one hundred eighty (180) other sugar cane planters in Bais,
Negros Oriental, relied on Section 1 of Republic Act
No. 809, otherwise known as the Sugar Act of 1952, which in part provides that:

“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 percentum 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.

By actual production is meant the total production of the mill for
the crop year immediately preceding.”

The facts as found by the respondent court are as follows:

“As alleged in the complaint, the plaintiffs-appellants were all
sugar cane planters in the
milling district of Bais, Negros
Oriental, who have been milling their sugarcane with appellant Central Azucarera de Bais since 1952, without
any written milling contracts or agreements between plaintiffs-appellants
and defendant-appellant.  Further,
plaintiffs-appellants averred that prior to the enactment of the Sugar Act of
I952 (RA 809) as planters, they only had a 60% share in the sugar produced and
milled with appellant Central while the latter had 40%.  With the enactment of R.A. 809, however, the
percentage of the share of the planters was gradually increased depending upon
the actual sugar production for each crop year and on whether or not the majority of the planters had executed milling agreements with
appellant Central.  Hence, the
plaintiffs-appellants who have been milling their sugarcane with the appellant
Central from 1952-53 to 1958-59, without any written milling contracts
sought to compel the latter to give to
them the increased participation as provided for in R.A. 809 alleging that they
constituted the majority of the sugarcane planters who milled with the
appellant Central during these crop years.

“The defendant-appellant denied in its Answer all the material
allegations in the complaint and averred that the plaintiffs-appellants who
milled with the Central did not constitute the majority of the sugarcane
planters without written milling contracts arguing that it had written milling
contracts with the majority of its planters during the crop years in question,
thus, Sec. 1 of R.A. 809 could not apply. 
Defendant-appellant likewise argued that R.A. 809 was unconstitutional
on the ground that it not only deprived the appellant Central of its properties
without due process of law but it also impaired the obligation of contracts.

“As an affirmative defense, appellant Central averred, among
others, that when the milling agreements executed in 1919 between the Central
and its adherent planters expired in 1949, defendant-appellant and the majority
of the planters in the milling district entered into a new milling contract to
be effective for ten (10) years commencing from 1949.  The new contract provided that the subscribing
planters receive as their share 62% of the unrefined sugar and molasses
resulting from the milling of their cane and they have certain obligations
which are not assumed by the non-subscribing planters.  The contract also provided that the appellant
Central shall not grant to other planters, not signatories thereof, terms and
conditions more advantageous than those provided for in the said contract.  In compliance with the aforesaid restriction,
appellant Central has laid down the policy of granting to the planters who
did not sign the milling agreement, only 60% of the unrefined sugar
produced from their cane.  The
plaintiffs-appellants therefore, who had been continuously delivering their
sugarcane for milling with full knowledge of the aforesaid restrictions imposed
in the contract and without protest, have thereby impliedly, if not expressly
accepted the conditions under which their sugarcane had been milled by the
appellant Central and have thus entered into a valid contract that they cannot
now demand for a bigger participation than that provided for in the said
contract.” (Emphasis in the original text).^[2]

During the pendency of the case, upon
motion of herein petitioner central, the trial court suspended the proceedings
in an order dated August 25, 1970, on the ground that the issues in the present
case are similar to the issues presented in the case before the Supreme Court
entitled Asociacion de Agricultores de Talisay-Silay,
Inc., et al. vs Talisay-Silay Milling Co., Inc., et
al., docketed as G.R. No. L-19937. 
Eventually, this Court promulgated judgment in said case on February 19, 1979.^[3]

The court a quo resumed trial of the case and on December 28, 1984, it rendered a
decision in favor of the private respondents finding that the majority of the
planters did not have milling
contracts with the petitioner.  After
determining the private respondents’ increased
participation in the sugar, molasses and bagasse
and the money value thereof, the trial court decreed:

“WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs David Barot and others whose names appear
in the attached list marked Annex ‘A’ and against the defendant Central Azucarera de Bais, ordering the
latter to pay the former the following:

“1.  The increased participation of the plaintiffs
in sugar for the crop years 1952-53 to 1958-59, inclusive, consisting of
19,909.85 piculs, with a money value of P4,290,915.03
as of December 31, 1982 as hereinabove shown;

“2.  The increased participation of plaintiffs in
molasses for the crop years 1952-53 to 1958-59, inclusive, consisting of
2,775.241 tons, with a money value of P995,938.01 as of December 31, 1982 as
hereinabove shown;

“3.  The increased participation of the plaintiffs
in bagasse for the crop years 1952-53 to 1958-59,
inclusive, consisting of 386,114.79 bales, with a money value of P1,259,854.81
as of December 31, 1982 as hereinabove shown;

“4.  Interest at the current rate on the aggregate
totality of plaintiffs’ claim worth P6,546,707.85, starting January 1, 1983,
until such time as the same shall be fully paid;

“5.  25% of the total amount due the plaintiffs as
for (sic) and attorney’s fee; and

“6.  To pay the costs.

“IT IS SO
ORDERED.”^[4]

Petitioner filed on January 20, 1985 a motion for reconsideration
of the aforestated decision, which was granted in
part in an order of May 7,
1985.  The dispositive
portion was modified to read as follows:

“WHEREFORE, premises considered, the motion for
reconsideration is granted in part and the dispositive
portion of the decision dated December 28, 1984 is hereby amended to read as
follows:

“1.  WHEREFORE, judgment is hereby rendered in
favor of the plaintiffs David Barot and others whose
names appear in the attached list marked Annex ‘A’ and against defendant
Central Azucarera de Bais
ordering the former to pay the following:

“1.  The increased participation of the plaintiffs
in sugar for the crop years 1952-53 to 1958-59, inclusive, consisting of
19,909.85 piculs, with a value of P265,223.45;

“2.  The increased participation of the plaintiffs
in molasses for the crop years 1952-53 to 1958-59, inclusive, consisting of
2,775.03 tons, with a value of P59,294.89;

“3.  The increased participation of the plaintiffs
in bagasse for the crop years 1952-53 to 1958-59,
inclusive, consisting of 986.114 bales with a value of P77,222.96;

“4.  10% of the total amount due the plaintiffs as
and for attorney’s fees; and

“5.  To pay the costs.

“All amounts herein ordered to be paid shall bear interest at
12% per annum, the legal rate from the finality of this decision until full
payment.

“SO ORDERED.”^[5]

Petitioner appealed to respondent Court of Appeals the decision dated
December 28, 1984 and the order dated May 7, 1985.  Private respondents likewise appealed from
the order of May 7, 1985 insofar as said order partially modified the trial
court’s decision of December 28, 1984, particularly on the question of interest
and on the ground that said order is contrary to law and the evidence
presented.  Both appeals were docketed as
and adjudicated in CA-G.R. CV No. 07759.

On March 20, 1989, respondent court promulgated its decision
setting aside the May 7, 1985 order of the trial court and reinstated the
decision dated December 28, 1984.  The
appellate court approved the findings of the court below that the majority of
the planters who milled their sugar cane with petitioner in the crop years
involved did not have written milling contracts.  Likewise, it sustained the ruling that one
hundred per cent (100%) of the computed increased participation of the planters
should be paid to the latter, it being understood that under Section 9 of Republic
Act No. 809 sixty per centum (60%) thereof belongs to the laborers.  It adopted the rule that after paying the
entire amount to the planters, they are in turn “directed to pay 60% of
the increased participation to their laborers under the supervision of the
Ministry (now Department) of Labor.” Respondent court also ordered the
payment of interest at the rate of twelve per cent (12%) per annum, on the
basis of the rates charged by the Philippine National Bank on its regular
loans.

Petitioner takes issue with the decision of the Court of Appeals,
hence this petition wherein it contends that respondent court erred in:

“A.  Granting interest computed on the basis of PNB
lending rates, instead of the legal rate of six per cent;

B.     
Granting interest commencing from
1952 and not from the date plaintiffs’ claim can be considered liquidated;

C.     
Granting an award of attorney’s
fees in favor of private respondents when even the courts were of divergent
views on the issues involved;

D.     
Ruling that majority of the
planters who milled with the petitioner had no written milling agreements,
based on a manner of counting planters not sanctioned by the Talisay Silay case;

E.     
In not directing that sixty per
cent of the award, if any, should be segregated for the benefit of the
planters’ laborers.”^[6]

An initial discussion of the fourth assignment of error is
necessary, it being a threshold issue. 
On this score, petitioner claims that the Court of Appeals erred in
assuming that only those who actually affixed their signatures on the milling
agreements shall be considered contract planters or planters with milling
contracts; and, further, in declaring that the heirs of planters who signed
milling agreements can be counted as planters with milling contracts only if
they have already received their respective shares in their respective
inheritance, otherwise, they shall be counted only as one.

Respondent Court of Appeals, in so holding, explicated as
follows:

“The lower court likewise was correct in observing and
concluding that of the 79 milling contracts presented by the defendant-appellant,
fifteen (15) thereof should be considered only singly and not by the numbers of
the planters which are named in the said contracts.  The reason behind this is that the numerous
signatories are but heirs, legatees or successors-in-interest of a deceased
planter, and which could only be counted as one planter per contract, whose
plantation remained whole as before his death, unsubdivided
among his heirs, legatees or successors-in?interest, and, which in fact,
continues to be reflected in the books of the appellant Central as one
plantation just as it appeared in its records before the death of the original
owner-planter.  In the case of Associacion (sic) de Agricultores
de Talisay-Silay, Inc., et al. versus Talisay Milling Co., Inc., 88 SCRA 294, the heirs or
successors-in-interest of a deceased planter?relative to the
applicability of R.A. 809 (Sugar Act of 1952) was enunciated, along this line
we quote:

“x x x for
the purpose of the application of R.A. 809 to the Talisay-­Silay
Milling District for the crop year 1952-53, the milling contracts, Exh. C-­37, executed by the administrator of the estate of
Esteban de la Rama, should be considered not as
merely the contracts of two planters but as the separate ‘contracts of the
individual successors?in-interest of said estate who have already
received their respective shares in the respective inheritance and who were
actually holding separate and distinct plantation Audit Numbers respectively
and who were actually dealing with the Central independently of each other, as
they were deemed by the Central to be such.’” (As underscored in the
original).^[7]

We find no compelling reason to deviate from said ruling of
respondent court.  From our examination
of petitioner’s allegations, it is easily discernible that this particular
issue is factual.  As petitioner itself
avers, the determination of whether a majority of the planters had milling agreements requires a review of the
evidence presented to substantiate the respective positions of both parties.^[8] Hence, we are constrained to submit to the
well-known procedural rule that findings of fact of the Court of Appeals and
the trial courts are final and conclusive if they are borne out by the records
or supported by the requisite quantum of evidence.^[9] Besides, petitioner failed to show by clear
and convincing proof that the instant case falls under any of the exceptions to
the aforesaid rule on conclusiveness of findings of fact.  We are satisfied that the findings of the
court below are amply supported by the evidence of record.  The finding that the majority of the planters
who milled their sugar cane with petitioner did not have milling contracts was arrived at after scrupulously
examining and evaluating the evidence presented, including the written
agreements produced by the parties in court. 
This is in addition to the fact that petitioner failed to explain and
substantiate its allegation that the majority of the planters had milling
contracts.

Against this factual setting, the applicability of Section 1 of
Republic Act No. 809 and the entitlement of the private respondents to the increased participation are
unquestionable.  Parenthetically, this
increased participation should be given in their entirety to the planters.  We cannot accept petitioner’s insistence that
the sixty per centum (60%) share of the laborers provided under Section 9 of
Republic Act No. 809 should be paid directly to them.  Said provision
states:

“SEC. 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 planters.  The
distribution of the share corresponding to the laborers shall be made under the
supervision of the Department of Labor.”

x x
x

Nothing in the quoted provision can be said to indicate that
direct payment to the laborers is required. 
In fact, under Section 1 of the law, the increased participation clearly
pertains to the planters.  This
construction of Republic Act No. 809 was applied in the case of Ernesto,
et al. vs. The Court of Appeals,
et al.,^[10]
where the planters, after receipt of the increased participation, were in turn
ordered to pay their respective laborers sixty per centum (60%) of such
difference as will be paid to them by the central, and the then Minister of
Labor was directed to supervise the corresponding payments to the
laborers.  The correctness of this
procedure is evident since the planters are in a better position to distribute
the proportionate shares in the increased participation to their respective
laborers.  The planters are correctly
assumed to know the amounts to be paid to each of their laborers by simply
examining their company records.

We are, however, of the considered opinion that respondent court
erred in awarding interest on the basis of the lending rates imposed by the
Philippine National Bank.  Such an award
is bereft of statutory and jurisprudential basis.  In the present case, the proper interest rate
to be imposed should be the legal rate of six per cent (6%) per annum provided
for in Article 2209 of the Civil Code. 
This express provision of the law cannot be disregarded, since it
categorically declares that “(i)f the obligation
consists in the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the
payment of interest agreed upon, and in the absence of stipulation, the legal
interest, which is six per cent per annum.”

The rate of interest should not be twelve per cent (12%) as
provided in the May 7, 1985
order of the trial court.  It is well
settled that the rate of interest of twelve per cent (12%) under Central Bank
Circular No. 416 is applicable only to loans or renewals thereof or forbearance
of money, goods, or credits or judgments in connection therewith.  Any other judgment, as in the present case,
is not covered thereby.^[11]

Neither may equity be validly invoked nor aptly relied upon in
this case.  Equity is available only in
the absence of law and not as its replacement. 
Equity is justice outside legality, which simply means that it cannot
supplant, although it may, as it often happens, supplement the law.^[12]
Thus, liberal interpretation in favor of private respondents is not in point
because no such interpretation is, in fact, necessary.  The law is clear that it is the legal interest
that shall be paid and an unwarranted deviation therefrom
would entail judicial legislation. 
Obviously, this objectionable result is anathema to our deeply rooted
doctrine of separation of powers.

The rule is that interest is due from the moment there is delay
on the part of the obligor to perform his obligation, that is, from the time it
was judicially or extrajudicially demanded.^[13]
Nonetheless, under Article 2213 of the Civil Code, “(i)nterest cannot be recovered upon unliquidated
claims or damages, except when the demand can be established with reasonable
certainty.” Unliquidated damages or claims, it
is said, are those which are not or cannot be known until definitely
ascertained, assessed and determined by the courts after presentation of proof.^[14]

In the case at bar, however we hold that the claim of private
respondents is for a definite sum of money. 
What they are claiming are specific percentages definitely provided
under the law.  It is merely a matter of
mathematically computing the exact money value thereof, inasmuch as the annual
sugar production and the amount of molasses and bagasse,
derived from the production during the crop years involved, are undisputed and
are in fact based on the records
of petitioner.  Irremissibly, therefore,
the claim cannot be considered unliquidated.  But even assuming ex gratia argumenti that
it is unliquidated, the same will nevertheless fall under the exception in Article 2213
because the demand therefor can be established with
reasonable certainty.  Thus, in the absence of the law expressly
declaring that demand is not
necessary, the interest must be computed from the time of extrajudicial demand
which, as held by respondent court in this case, was established to have been
made in 1952 to comply with Republic Act No. 809^[15]
which was enacted in that year.

On the matter of attorney’s fees, it is an accepted doctrine that
the award thereof as an item of damages is the exception rather than the rule, and
counsel’s fees are not to be awarded every time a party wins a suit.  The power of the court to award attorney’s
fees under Article 2208 of the Civil Code demands factual, legal and equitable
justification, without which the award is a
conclusion without a premise, its basis being improperly left to
speculation and conjecture.  In all
events, the court must explicitly state in the text of the decision, and not
only in the decretal portion thereof, the legal
reason for the award of attorney’s fees.^[16]

It is undeniable and evident that both the respondent appellate
court and the trial court completely violated the aforestated
doctrinal rule.  In awarding attorney’s
fees as damages, no justification therefor is
advanced either in the decision of the trial court or of respondent appellate
court which affirmed the former.  Even
for this reason alone, the award must be deleted and any advertence we would
make herein to petitioner’s
alleged bad faith or good faith, as discussed in the exchanges of the parties
but disregarded in the aforesaid decisions of both lower courts, would be
unnecessary and pointless.

WHEREFORE, the judgment of respondent Court of
Appeals is hereby AFFIRMED, subject
to the MODIFICATION reducing the
interest awarded to private respondents to six per cent (6%) per annum to
commence in 1952, and deleting the award of attorney’s fees.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, and Sarmiento,
JJ., concur.

Paras, J., no part.

*
Pursuant to the Court’s resolution dated July 24, 1989, on September 20, 1989
counsel for private respondents submitted a list containing the names of said
private respondents with their respective addresses and in the case of those
who are already deceased, the names of their heirs and their respective
addresses (Rollo, 124-­144), a copy of which
list is appended to this decision as Annex “A” hereof.

^[1]
Penned by Bonifacio A. Cacdac,
Jr., J., with the concurrence of Rodolfo A. Nocon,
P. J., and Gloria C. Paras, J.; Rollo, 32.

^[2]
Rollo, 33-34.

^[3]
88 SCRA 294 (1979).

^[4]
Ibid., 35-36.

^[5]
Ibid., 36-37.

^[6]
Ibid., 14.

^[7]
Ibid., 40-41.

^[8]
Ibid., 22.

^[9]
Tiongco vs. De la Merced, et al., 58 SCRA 89
(1974); Korean Airlines Co., Ltd. vs. Hon. Court of Appeals, et al., 154
SCRA 211 (1987).

^[10] 116 SCRA 755 (1982).

^[11]
Reformina, et al. vs. Tomol,
Jr., etc., et al., 139 SCRA 260 (1985); Philippine Rabbit Bus Lines, Inc. vs.
Cruz, etc., et al., 143 SCRA 158 (1986); Florendo vs. Ruiz, et al., 170
SCRA 461 (1989).

^[12]
Aguila, et al. vs. Court of First Instance
of Batangas, etc., et al, 160 SCRA 352 (1988).

^[13]
Article 1169, Civil Code.

^[14]
See Rivera vs. Matute, 98 Phil. 516 (1956).

^[15]
Rollo, 43.

^[16]
Mirasol vs. De la Cruz, etc., et al., 84 SCRA
337 (1978); Abrogar, et al. vs. Intermediate
Appellate Court, et al., 157 SCRA 57 (1988); Stronghold Insurance Co., Inc. vs.
Hon. Court of Appeals, et al., G.R. No. 83376, May 29, 1989.