GR L 19824 25; (July, 1966) (Digest)
G.R. Nos. L-19824, L-19825 and L-19826; July 9, 1966
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. BACOLOD-MURCIA MILLING CO., INC., MA-AO SUGAR CENTRAL CO., INC., and TALISAY-SILAY MILLING COMPANY, defendants-appellants.
FACTS
This is a joint appeal by three sugar centrals from a decision of the Court of First Instance of Manila finding them liable for unpaid special assessments under Section 15 of Republic Act No. 632 , the charter of the Philippine Sugar Institute (Philsugin). The law levied a tax of ten centavos per picul of sugar for five years beginning crop year 1951-1952, to constitute a “Sugar Research and Stabilization Fund.” The appellants had paid portions of their assessments but left substantial unpaid balances. They refused to continue payments because the Philsugin used the fund to acquire and operate the Insular Sugar Refinery, which incurred tremendous financial losses. The appellants contended that the levy was a special assessment, the proceeds of which could only be used for the specific benefit of the contributing sugar planters and centrals, and that the misapplication of the fund to a losing venture released them from their obligation and entitled them to a refund.
ISSUE
Whether the appellants are liable to pay the unpaid special assessments under Republic Act No. 632 , despite the alleged misapplication of the fund to the purchase and operation of a loss-incurring sugar refinery.
RULING
Yes, the appellants are liable. The Supreme Court affirmed the lower court’s decision. The levy for the Philsugin Fund is not merely a special assessment or a tax, but an exercise of the police power for the general welfare of the entire country. The acquisition and operation of the refinery were authorized under the law’s specific powers to conduct research in all phases of the sugar industry and to purchase equipment for the manufacture of sugar. The operation, even if financially unsuccessful, provided experiential gains and research benefits to the entire industry. The decision to purchase was made by a board where the sugar industry was represented, and the fund’s transactions were subject to government audit and review. The unilateral refusal to pay is not permitted, as the obligation arises from a sovereign power aimed at public benefit.