Federation of Free Farmers vs. Court of Appeals 107 SCRA 352, September 10, 1981

SUPREME COURT REPORTS ANNOTATED VOLUME 107 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...
352 SUPREME COURT REPORTS ANNOTATED

Federation of Free Farmers vs. Court of Appeals
*
No. L-41161. September 10, 1981.
FEDERATION OF FREE FARMERS, MELQUIADES

BETIOS, CRESENCIANO FERNANDEZ, SANCHO
PEREZ and AGATON POSA, petitioners, vs. THE
HONORABLE COURT OF APPEALS, VICTORIAS
MILLING COMPANY, INC., VICTORIAS MILL DISTRICT
PLANTERS' ASSOCIATION, INC., and ALL
SUGARCANE PLANTERS OF SUGARCANE
PLANTATIONS SITUATED IN THE VICTORIAS
MILLING DISTRICT, WHO HAVE AT ONE TIME OR
ANOTHER, SINCE JUNE 22, 1952, MILLED THEIR
SUGARCANE IN THE MILL OF VICTORIAS MILLING
COMPANY, INC., respondents.
*
No. L-41222. September 10, 1981.
VICTORIAS MILLING COMPANY, INC., petitioner, vs.

THE HONORABLE COURT OF APPEALS, FEDERATION
OF FREE FARMERS, MELQUIADES BETIOS,
CRESENCIANO FERNANDEZ, SANCHO PEREZ and
AGATON POSA, VICTORIAS MILL DISTRICT
PLANTERS' ASSOCIATION, INC., and, ALL
SUGARCANE PLANTERS OF SUGARCANE
PLANTATIONS SITUATED IN THE VICTORIAS
MILLING DISTRICT, respondents.
*
No. L-43153. September 10, 1981.
PLANTERS, VICTORIAS MILL DISTRICT, petitioners, vs.

THE HONORABLE COURT OF APPEALS, FEDERA-
TION OF FREE FARMERS, MELQUIADES BETIOS,
CRESENCIANO FERNANDEZ, SANCHO PEREZ,
AGATON POSA, and VlCTORIAS MILLING COMPANY,
INC., respondents.
*
No. L-43369. September 10, 1981.
PRIMO SANTOS and ROBERTO H. TIROL, petitioners,
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vs.
______________
* EN BANC.
353
VOL. 107, SEPTEMBER 10, 1981 353

THE HONORABLE COURT OF APPEALS, FEDERATION

OF FREE FARMERS, MELQUIADES BETIOS,
CRESENCIANO FERNANDEZ, SANCHO PEREZ,
AGATON POSA, and VICTORIAS MILLING COMPANY,
INC., respondents.
Contracts; Agrarian Law; Statutes; The Sugar Act of 1952

(R.A. 809) was not intended to deprive the mills and planters of the
right to divide the proceeds of milled sugarcane in the proportion
they might agree on without regard to the ratios specified in
Section 1 of that Act.—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.
Agrarian Law; Jurisdiction; Action; The suit filed by the
Federation of Free Farmers is, properly speaking, a class suit.—
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.)
Same; Same; Same; Facts of this case show that the sugar
planters not mentioned by name were represented by a legal
counsel through their Association and, at any rate, their interests
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cannot be better represented than by how their Association has

done in this case; The court below, therefore, acquired jurisdiction
over all the individual sugar planters.—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
354
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.)
Same; Same; Same; Under P.D. 946, Court of Agrarian
Relations are not governed by technical rules.—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.
Same; Appeal; Assignment of errors which covers new matters
not raised in the petition before the trial court could be resolved as
appeal only if evidence thereon were received in the trial court
without objection by the adverse party.—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 nonpayment 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
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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.
Same; Contracts; Victorias, the sugar miller, cannot be held
liable jointly and severally with the sugar planters for proceeds of
sugar mills the planters failed to pay their laborers there being no
privity of contract between the sugar mill and the laborers of the
sugar planters.—We cannot, however, share the Appellate Court’s
355
VOL. 107, SEPTEMBER 10, 1981 355
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.
Same; Same; Same.—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
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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
356
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.
Same; Constitutional Law; Courts; The benevolent policy of
the Constitution and the laws to the laborers will not oblige the
courts to be unjust and unfair to employers.—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
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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.
Same; Actions; Laches; Long inaction of sugar laborers to file
their claim as to proceeds of milled sugar not allegedly paid to
them casts doubts as to the truthfulness of their claims.—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
357
VOL. 107, SEPTEMBER 10, 1981 357
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.
Same; Same; Same; Evidence; Moreover, said specific claim of
P5,185,083.34 (less P 180,679.38 which could not be accounted for)
was not included in the laborers petitions, were admittedly paid
and were proved by evidence as paid already.—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.
Same; Same; Same; Evidence.—In that connection, there
appears no alternative for Us than to rule that as contended by
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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.
Same; Pleadings and Practice; Evidence; Waiver, The Court of
Appeals erred in taking into account in arriving at its conclusion
evidence not covered by the pleadings and whose introduction
below was timely objected to.—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
358
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.
Same; Evidence; The fact that the Rules of Court are of
secondary applicability in agrarian cases does not mean that
Courts of Agrarian Relations are precluded from applying long-
established principles in judicial fact-finding founded on reason,
experience and common sense.—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
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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
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VOL. 107, SEPTEMBER 10, 1981 359
share of the proceeds of 1952–53 to 1954–55 crop years in question,

except for the amount of P180,679.38.
Same; Same; The evidence shows that the P4 million worth of
shares of stock and their accruals were admittedly received already
by the laborers. At least, no evidence was shown to the contrary.—
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
plantersemployers. We reiterate that not a single laborer had
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testified to the contrary. Additionally, Chairman Newton Jison

testified positively to such ef fect.
Same; Same; The Federation or the laborers cannot be said
not to have agreed in the modality of payment prescribed in the
ASCA.—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.
Same; Same; Same.—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
360
consent, even if subsequent to its execution, of the laborers and

the Secretary of Labor. We hold that there was such consent.
Same; Same; Same.—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? 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.
Same; Torts; Neither Victorias nor the Planters is guilty of any
tort and their liability with respect to the claim of laborers of sugar
planters is not joint and several.—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
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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.
Same; Statutes; Damages; Any increase in the share of milled
sugar agreed upon between the miller and the planters should be
deemed an increase under the Sugar Act.—Read literally, there
could
361
VOL. 107, SEPTEMBER 10, 1981 361
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
TalisaySilay, 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
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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.
Same; Attorney’s Fees; The Courts may reduce the contingent
fee of legal counsel.—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.
Same; The sugar planters are exclusively liable to claim of
their plantation sacadas.—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.
362

Fernando, C.J.—
I concur in the result and reserve the right to file a

separate opinion.
Makasiar, J.—
The Court of Appeals should be entirely af firmed.

PETITIONS to review the decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
BARREDO, J.:
Four separate petitions of the respective parties concerned

for the review of the decision of the Court of Appeals in
CAG.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
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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
363
VOL. 107, SEPTEMBER 10, 1981 363

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 members, have not only not
been fully paid the amounts indisputably 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
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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
364

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
plantersemployers 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
13 of 138 8/11/2019, 8:35 PM

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.
365
VOL. 107, SEPTEMBER 10, 1981 365

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.
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
14 of 138 8/11/2019, 8:35 PM

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
pattern 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.
366

“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.)
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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

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
367
VOL. 107, SEPTEMBER 10, 1981 367

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 LONGTERM
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 1, ARTICLE III OF THE OLD
CONSTITUTION
"- III

16 of 138 8/11/2019, 8:35 PM

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
368

"- V

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
BYPRODUCTS 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

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JUSTICE, THAT THE ‘AMICABLE
SETTLEMENTCOMPROMISE 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

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
369
VOL. 107, SEPTEMBER 10, 1981 369

"-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 BYPRODUCTS AND
DERIVATIVES FOR THE PERIOD BEGINNING NOVEMBER 1,
1955, WITH LEGAL INTEREST THEREON COMMENCING
FROM OCTOBER 31, 1956 UNTIL FULLY PAID D
"- 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
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"- 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
370

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
19 of 138 8/11/2019, 8:35 PM

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’?
371
VOL. 107, SEPTEMBER 10, 1981 371

“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
20 of 138 8/11/2019, 8:35 PM

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 assignments 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 MILING AGREEMENTS EXECUTED AFTER SAID
ACT TOOK EFFECT ON JUNE 22, 1952, IN VIEW OF THE
FACT THAT THE EXPRESS IMPORT OF SAID PHRASE
CLEARLY
372

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.
21 of 138 8/11/2019, 8:35 PM

“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

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
373
VOL. 107, SEPTEMBER 10, 1981 373

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
22 of 138 8/11/2019, 8:35 PM

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
374

FACT THAT PETITIONER VICMICO FAITHFULLY

DELIVERED, AS ADMITTED BY THE PARTIES AND FOUND
23 of 138 8/11/2019, 8:35 PM

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
375
VOL. 107, SEPTEMBER 10, 1981 375

P6,399,105.00 AND IN HOLDING, ON THE BASIS OF TORT,
24 of 138 8/11/2019, 8:35 PM

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 ACTION 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
376
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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
377
VOL. 107, SEPTEMBER 10, 1981 377
26 of 138 8/11/2019, 8:35 PM

CENTRAL, NOR THE PLANTERS NOR THE SPECIAL

COMMITTEE PRESENTED EVIDENCE AS TO ITS
DISTRIBUTION.
"—D—

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—

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
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378

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 TalisaySilay, 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
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case. In the
379
VOL. 107, SEPTEMBER 10, 1981 379

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 f ollowing:
—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
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We
380

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. L41222 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

counterassignments of the respective parties relative to the
justmentioned 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
hereunder 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
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were considered subnormal, so much so that President

Manuel Quezon had to appoint a committee headed by
Chief Justice Manuel Moran to investigate the
381
VOL. 107, SEPTEMBER 10, 1981 381

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.
1
Hence, the above-
mentioned Sugar Act came into being.
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 byproducts 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 f if ty 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 ac
_______________
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.
382
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tual 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.
383
VOL. 107, SEPTEMBER 10, 1981 383

We can now, therefore, proceed to discuss the aspects of the

cases that require disquisition and disposal.
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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
384

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
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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.
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 1 understand that Attys. Soto, Banzon and
Associates represent the members of the Victorias Mill
District Planters’ Association, Inc.?
385
VOL. 107, SEPTEMBER 10, 1981 385

“ATTY. SOTO:
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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
386
386 SUPREME COURT REPORTS ANNOTATION

due to shortage of production), it should be helpful for a

deeper insight into the issues between the parties to quote
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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.
387
VOL. 107, SEPTEMBER 10, 1981 387

“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
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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 unf ounded.
“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;
388

“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
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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.’
389
VOL. 107, SEPTEMBER 10, 1981 389

“The years during World War II may have momentarily stilled

and 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
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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’.
390

“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:
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‘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 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.
391
VOL. 107, SEPTEMBER 10, 1981 391

‘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.
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‘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.
392

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
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merely set it aside for future disposition, ‘because’, explained

Central’s treasurercomptroller, ‘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
393
VOL. 107, SEPTEMBER 10, 1981 393

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 Rodriquez, 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
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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 file an
opposition (Exhibits II thru II-3) to the petition for provisional
dismissal.
394

“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
SettlementCompromise 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
‘lndividual 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
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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;
—and—
‘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,
395
VOL. 107, SEPTEMBER 10, 1981 395

(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
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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 PI ANTERS;
‘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
396

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 byproducts 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
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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
397
VOL. 107, SEPTEMBER 10, 1981 397

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 pay-ment to the Party of the Second Part or its
successors of the value thereof of P1,000,000.00 per block. The COMPANY
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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
398

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 liq uidated by
order of the Court of Justice or in the manner provided for
in paragraph (1) (a) (i) then the PLANTERS shall have the
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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.’
399
VOL. 107, SEPTEMBER 10, 1981 399

'(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 d ay 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 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
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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 premises that, per
400

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.” (Italics Ours) Then the Court
proceeded to state the defense 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 assignments 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 laborer’s share in the proceeds of
production after November 1, 1955. Whatever, therefore,
might have been covered by the FEDERATION’s twenty
eight assignments 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 assignments of
errors of appellant Federation.
VII
The appellate court resolved the three issues it enumerated
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as follows:
Regarding the first issue, the Court held:
401
VOL. 107, SEPTEMBER 10, 1981 401

“We agree that millers and planters may indeed enter into written
milling agreements stipulating participations different from those
prescribed in Section of of the Sugar Act. This conclusion is
justified by the language of Section i itself which declares that—
‘ln 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 lay the golden eggs.’
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Particularly when production costs are so
402

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
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resulting from the milling of sugarcane between the centrals and

the plantation’, the study was undertaken with a
403
VOL. 107, SEPTEMBER 10, 1981 403

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
TalisaySilay, 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 af ter
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 p anter under Section 1 of the law (in the
absence of a milling contract) or to
404
52 of 138 8/11/2019, 8:35 PM


the higher participation of the planter under a milling agreement
executed subsequent to June 22, 1952. Thus, provides the ‘Rules
and Regulations’—
‘lncrease 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
TalisaySilay, which We here reaffirm for the purposes of
these cases,
405
VOL. 107, SEPTEMBER 10, 1981 405

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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
TalisaySilay 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 ‘lndividual 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
406

with it, and shall refuse to mill the sugar cane of such planters in
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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 porportions,
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
Planters 64%, provided Central got 36%, which the latter finally
succeeded in 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
407
VOL. 107, SEPTEMBER 10, 1981 407

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
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(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.
408

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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: 3,457,388.90 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
planta-tion 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. Central’s 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.
409
VOL. 107, SEPTEMBER 10, 1981 409

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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 ASC A 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
410

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
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stock and their earnings purchased out of the P4,000,000.00 of

such amount.”
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 part or parties, it would
be best to discuss and dispose of separately the two stages
of sharing and
411
VOL. 107, SEPTEMBER 10, 1981 411

payment in question, namely, (1) that which refers to the

proceeds of the 1952–53 to 1954–55 crop years and (2) that
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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
412

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
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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 respectively 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 planta-
413
VOL. 107, SEPTEMBER 10, 1981 413

tion laborers, should any of their respective

plantersemployers fall 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
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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
ASC A.
—D—
Incidentally, it may be added, the Rules and Relations 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
414

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
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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 ultimately 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 year (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 (2)
and severally or solidarily liable with
the PLANTERS, 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% 7
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
stipula-
_______________
(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.
415
VOL. 107, SEPTEMBER 10, 1981 415

tion 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
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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 ASC A, there
416

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%
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corresponding to said workers, is not only a veritable

nonsequitur 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
said 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.
In this connection, let us hearken first to how the Court
of Appeals made its conclusion 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
417
VOL. 107, SEPTEMBER 10, 1981 417

them which accrued during the period from June 22, 1952, to
October 31, 1955 as their 60% share of Planters 10% increase in
participation totalling, 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,
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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
appellantslaborers 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 JJ JJJ-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:
418

‘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)
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“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 P 1,186,083.34 was delivered, if ever, to
PLANTERS-APPELLANTS-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
appellantslaborers.
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.
419
VOL. 107, SEPTEMBER 10, 1981 419

“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. of 40,000 shares of stock and their dividend also in stock were
Are you trying to say, Mr. Pfiffner, that the amount 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?
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‘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.
(Italics 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 P 1,186,083.36
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 appellantslaborers. 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
420

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 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
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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’
421
VOL. 107, SEPTEMBER 10, 1981 421

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,
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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-appellantslaborers
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, counsel for 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/
422

(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
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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)
‘ln 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 plaintiffsappellants-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:
423
VOL. 107, SEPTEMBER 10, 1981 423

“On pages 17 et seq. of the Decision of the Court of Appeals,

reference is made to a document known as the ‘Amicable
SettlementCompromise 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
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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
424

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
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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
the ‘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.’ (Italic 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).
425
VOL. 107, SEPTEMBER 10, 1981 425

‘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 byproducts 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, Italic 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
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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:
‘lt 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). (Italic
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).
426

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, Italic 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.
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(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 con-
427
VOL. 107, SEPTEMBER 10, 1981 427

tradictory 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
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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
428

finding is to give evidentiary value to an argument in party’s

reply brief. This is against all rules of evidence required such test
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.
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“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 . . . . .
429
VOL. 107, SEPTEMBER 10, 1981 429

‘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
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‘The distribution of the share corresponding to the laborers

shall be made under the supervision of the Department of
Labor.’ Thus, he testified:
430

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

‘ATTY. HAGAD
‘CROSS EXAMINATION
431
VOL. 107, SEPTEMBER 10, 1981 431

‘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 supplied).
‘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.
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‘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).
‘Again:
432

‘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 Departm ent of Labor.
‘WITNESS:
‘Which are you referring to, Atty. Sabio?
“ATTY. SABIO:
‘Any official of the Department of Labor.
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‘WITNESS:
‘What charge of irregularity?
‘ATTY. SABIO:
‘The distribution of P5,186,083.34.
‘WITNESS:
‘ln 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
voluminuous. For one distribution
433
VOL. 107, SEPTEMBER 10, 1981 433

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 P 1,186,083.36 and this correspond to the
same amount indicated in the Amicable Settlement-
Compromise Agreement you also identified; is that
correct?
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‘A. I do not know exactly it’ 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.
434

‘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
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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;
435
VOL. 107, SEPTEMBER 10, 1981 435

‘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;'
(ITALIC 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—
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This impression of Ours that the Appellate Court’s above

conclusions cannot be said to be sufficiently grounded
gathers added force when 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 OC-
436

TOBER 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
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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.)
437
VOL. 107, SEPTEMBER 10, 1981 437

“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 written
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, VICMlCO 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 VlCMlCO’s
Petition for Certiorari) declared the foregoing amicable
settlementcompromise 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. 23VICMICO 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
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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 byproducts and derivatives thereof
and continued to give the same until November 1,
1955 when they ceased to do so until
438

the present; (Vide Annex A to VlCMlCO’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 VICMlCO’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.)
“lt 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
byproducts 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
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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 (3) 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
439
VOL. 107, SEPTEMBER 10, 1981 439

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 con

trovert their express admission, and any proof
contrary thereto or inconsistent therewith
should have been ignored. (Underlining of
italics supplied)
“It is a fundamental principle that an admission made in a

pleading cannot be controverted by the party making such an
admis sion. 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. ‘lt 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.)
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“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
440

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
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‘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
441
VOL. 107, SEPTEMBER 10, 1981 441

parties to the court for trial and judgment. (Belandres vs. Lopez Sugar
Central Mill Co., Inc., 97 Phil. 100, 103).
‘lt is a fundamental principle that judgments must conform to both the
pleadings 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).
‘lt 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 vs. 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
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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?
442

‘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 plaintiffsappellants 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.
443
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VOL. 107, SEPTEMBER 10, 1981 443

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. She 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 of 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
laborer’s 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.
444
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‘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
‘HHHHHH-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
445
VOL. 107, SEPTEMBER 10, 1981 445
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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.)
446
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“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
447
VOL. 107, SEPTEMBER 10, 1981 447

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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 f ollows:
‘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 P 4,000,000
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 AMOUNTS MOREOVER RATIFIED
SAID ASCA.
“The ruling by the Court of Appeals to the ef

fect that the milling agreements and the
448

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
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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
abnoxious 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 (P 3,457,388.90) 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
449
VOL. 107, SEPTEMBER 10, 1981 449

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
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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. 60911916]).
‘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:
‘ln 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
450

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
has the right to rely on the representations of the planters
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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. (Italics 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,
451
VOL. 107, SEPTEMBER 10, 1981 451

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
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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 f or 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.)' [Ten 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).'
452

“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 byproducts 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; Italics Ours)
“XI
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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
453
VOL. 107, SEPTEMBER 10, 1981 453

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
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
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same.’ (Idem., p. 53).
* * *
‘ln 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-appellantslaborers.’ (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
454

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.
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‘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.
455
VOL. 107, SEPTEMBER 10, 1981 455

‘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?
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‘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?
456

‘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
P4,000,000.00t
‘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
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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 Departm ent of Labor.
‘WITNESS:
‘Which are you referring to, Atty. Sabio?
‘ATTY. SABIO:
‘Any official of the Department of Labor.
457
VOL. 107, SEPTEMBER 10, 1981 457

‘WITNESS:
‘What charge of irregularity?
‘ATTY. SABIO:
The distribution of P5,186,083.34.
‘WITNESS:
‘ln 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 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?
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‘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 release 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?
458

‘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?1
‘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 totalling
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
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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?’
459
VOL. 107, SEPTEMBER 10, 1981 459

‘A. Yes, sir, P 180,679.38.' (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

Manila
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
..................................
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4th Distribution 1,100,000.00

.................................
................................. 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
.................................
.................................
5th Distribution 1.142.411.86
................................. P6,536,741.98
460

“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 P 180,679.38
LABORERS PAID BY DlSTRlBUTION:
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?
107 of 138 8/11/2019, 8:35 PM

‘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
461
VOL. 107, SEPTEMBER 10, 1981 461

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.
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L-41222.)
462

—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
(3)
that “the
State shall afford protection to labor." But We have are of
the considered opinion that the secondary force to which
the ordinary rules of procedure and evidence have been
relegated by the af orementioned 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 those who
have less in life, but
_______________
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(3) Section 9, Art. II, Id.
463
VOL. 107, SEPTEMBER 10, 1981 463

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 maybe. 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 P4 M worth of VICTORIAS shares of stock which under
the ASCA was
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464

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 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 P 180,679.38 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 P 1,186.083.34 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. L41222.)
There is no explanation anywhere in the records as to what

happened subsequently to the shortage of P180,679.38, and
465
VOL. 107, SEPTEMBER 10, 1981 465

We, therefore, agree with the Court of Appeals that
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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 nonpayment, 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
466
466 SUPRERME COURT REPORTS ANNOTATED

We are limited only to any 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
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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
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
467
VOL. 107, SEPTEMBER 10, 1981 467

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
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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 that 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 that
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
VICTORlAs 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
468

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
23VICMICO 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
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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
(4)
only in trial courts and not in the Appellate Courts. 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
_______________
(4) Section 5, Rule 10
469
VOL. 107, SEPTEMBER 10, 1981 469

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
115 of 138 8/11/2019, 8:35 PM

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 P 180,679.38. It is Our conclusion
470

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
116 of 138 8/11/2019, 8:35 PM

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 laborers had testified to the contrary. Additionally,
Chairman Newton Jison testified positively to such effect.
471
VOL. 107, SEPTEMBER 10, 1981 471

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
117 of 138 8/11/2019, 8:35 PM

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
472

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 P1,000.00 per block,
paid in cash, the COMPANY will pay in cash to the Party of the
Second Party 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 af ter
receipt of written request of the Party of the Second Part within
118 of 138 8/11/2019, 8:35 PM

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
473
VOL. 107, SEPTEMBER 10, 1981 473

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.’
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"(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 has 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 extrajudicially 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 accor
474

ding 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)." (VICT ORlAS' 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,
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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 P4 M 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
475
VOL. 107, SEPTEMBER 10, 1981 475

that he had in his possession the record of the distribution

of the P4 M, 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 P4 M 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(5)business world, hence Our authority to
modify the same. 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
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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
_______________
(5) Luna vs. Linatoc, 74 Phil. 15.
476

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 inG. R. No. L-6648 on July 25, 1955, in
another suit, Civil Case No. 22577, also in the Court of
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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 pre-
477
VOL. 107, SEPTEMBER 10, 1981 477

judicial 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(6)reservation on its part or on that of the
Secretary of Labor? 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
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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
_______________
(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.
478

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
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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 be 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,
479
VOL. 107, SEPTEMBER 10, 1981 479

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
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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 relations 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
480

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,
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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
481
VOL. 107, SEPTEMBER 10, 1981 481

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 re-enforce 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:
“‘ln order that liability under Article 2176 of the Civil Code will
arise the following requisites must exist: (a) There must be
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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
482

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.”
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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
483
VOL. 107, SEPTEMBER 10, 1981 483

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”.
(Italics supplied) 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
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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
484

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
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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 peti-
485
VOL. 107, SEPTEMBER 10, 1981 485

tions 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
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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.
486

—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
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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.''
487
VOL. 107, SEPTEMBER 10, 1981 487

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 signed 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
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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.
488

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 into 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
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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%.
489
VOL. 107, SEPTEMBER 10, 1981 489

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 assignments of errors are hereby
held to be untenable.
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JUDGMENT
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
490

thirty (30) days from the finality of this decision, the yearly
amount thus determined to bear the corresponding legal (7)
interests up to the date of payment to the LABORERS;
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 (8)
of the latter’s share in the 1952–53 to
1954–55 crop years, 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.
_______________
(7) The rates of interest should correspondingly be increased in
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accordance with the prevailing legal rate of each crop year.

(8) Computed on the basis of the shares 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.
491
VOL. 107, SEPTEMBER 10, 1981 491

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.
Teehankee, J., did not take part.
Makasiar, J., the Court of Appeals should be
entirely affirmed.
Aquino, J., did not take part.
Judgment affirmed with modification.
Notes.—There is symbolic delivery of sugar upon

delivery to the vendee of the delivery orders which would
authorize the vendee to withdraw sugar from the
warehouse. (Lim Yhi Luya vs. Court of Appeals, 99 SCRA
668).
The provision of Section 12 of the Transitory Provisions
of the 1973 Constitution cannot be interpreted as having
made valid, government contracts otherwise legally
defective. (Cadwallader us. Abeleda, 98 SCRA 123).
Mere extension of payment does not result in a novation.
(Tible vs. Aquino, 65 SCRA 207). Parties who voluntarily
entered into a compromise agreement expressly prohibited
or declared void by law cannot withdraw recall or render
ineffective acts already done in the performance of the past
in the illegal bargain. (De Raquiza us. Castellvi, 11 SCRA
88).
There is no unjust enrichment in the application of the
current rate of exchange obtaining at the time of
procurement of the goods in Japan. (Liras Textile Mills vs.
Reparations Commission, 79 SCRA 675).
Circumstances which show that the Philippine National
Bank acted unreasonably in raising the price of the lease of
492
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Gonzales vs. Government Service Insurance System
sugar quota allotment from P2.80 to P3.00 per picul.

(Philippine National Bank vs. Court of Appeals, 83 SCRA
237.)
Philippine National Bank as assignee of lease of sugar
quota allotment, should show that degree of care,
precaution, and vigilance which circumstances demand in
approving or disapproving a lease of sugar quota, otherwise
it will be liable for damages on account of tort. (Philippine
National Bank vs. Court of Appeals, 83 SCRA 237.)
The system of reallocation under Section 8-A of the
Sugar Limitation Law (Act No. 4166 as amended by
Republic Act No. 1072), is a means by which the sugar
quota for any given year may be fixed. (Talisay-Silay
Milling Co., Inc. vs. Bunuan, 12 SCRA 733; Talisay-Silay
Milling Co., Inc., us. Bunuan, 14 SCRA 671.)
The vendors of sugar quotas are duly-bound under their
contracts of sale to do everything requisite and necessary
for the registration of the transfer of said quotas to the
vendee in the books and records of the sugar central
concerned. (De Miraflores us. Hilado, 13 SCRA 398.)
Where the miller obstinately and culpably refuses to mill
the cane of’ the planters, the former should be deemed to
have waived its rights to the entire plantations’ quota for
the following reasons; the splitting of the production
allowance between planters and millers “is a direct
consequence to the division of the resulting sugar between
them, according to their respective contribution (cane and
industry) in the production of the article” (Philippine
Milling Company vs. Llobregat, 18 SCRA 546.)
——o0o——
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Federation of Free Farmers vs. Court of Appeals 107 SCRA 352, September 10, 1981

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SUPREME COURT REPORTS ANNOTATED VOLUME 107 file:///D:/My Documents/Law School Ebooks/Obligation and Contract/...

352 SUPREME COURT REPORTS ANNOTATED

FEDERATION OF FREE FARMERS, MELQUIADES

VICTORIAS MILLING COMPANY, INC., petitioner, vs.

PLANTERS, VICTORIAS MILL DISTRICT, petitioners, vs.

PRIMO SANTOS and ROBERTO H. TIROL, petitioners,

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VOL. 107, SEPTEMBER 10, 1981 353

THE HONORABLE COURT OF APPEALS, FEDERATION

Contracts; Agrarian Law; Statutes; The Sugar Act of 1952

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cannot be better represented than by how their Association has

354 SUPREME COURT REPORTS ANNOTATED

Federation of Free Farmers vs. Court of Appeals

public knowledge in the Victorias milling district and We believe

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received by the trial court without objection of the adverse parties

VOL. 107, SEPTEMBER 10, 1981 355

Federation of Free Farmers vs. Court of Appeals

holding that VICTORIAS is jointly and severally liable with the

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necessarily include the portion of 60% pertaining to the laborers.

356 SUPREME COURT REPORTS ANNOTATED

Federation of Free Farmers vs. Court of Appeals

unfortunate situation of the unpaid laborers, the same should

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subversion more effectively and without loss of lives and blood

VOL. 107, SEPTEMBER 10, 1981 357

Federation of Free Farmers vs. Court of Appeals

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the PLANTERS and VICTORIAS, under the law, even if liberally

358 SUPREME COURT REPORTS ANNOTATED

Federation of Free Farmers vs. Court of Appeals

the parties.” Here, however, the record shows that the

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imperatively, the constitutional provisions on social justice and

VOL. 107, SEPTEMBER 10, 1981 359

Federation of Free Farmers vs. Court of Appeals

share of the proceeds of 1952–53 to 1954–55 crop years in question,

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testified to the contrary. Additionally, Chairman Newton Jison

360 SUPREME COURT REPORTS ANNOTATED

Federation of Free Farmers vs. Court of Appeals

consent, even if subsequent to its execution, of the laborers and

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that “the Central and PLANTERS are liable in tort” to the

VOL. 107, SEPTEMBER 10, 1981 361

Federation of Free Farmers vs. Court of Appeals

be a little shade of plausibility in the posture of VICTORIAS and

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instant cases, all relevant circumstances considered, We fail to see

362 SUPREME COURT REPORTS ANNOTATED

I concur in the result and reserve the right to file a

The Court of Appeals should be entirely af firmed.

Four separate petitions of the respective parties concerned

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in any sugar milling district in the Philippines, 60% of said

VOL. 107, SEPTEMBER 10, 1981 363

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