Case Digest: Virgilio Gaston, et al. v. Republic Planters Bank, et al.

G.R. No. L-77194 - March 15, 1988

Issue:

The legal issue in this decision revolves around the nature of the stabilization fees
collected from sugar producers, planters, and millers under P.D. No. 388. Specifically, the
court had to determine whether these fees constituted funds held in trust for the benefit
of the sugar industry stakeholders or whether they were considered public funds.
Additionally, the court addressed the question of ownership of shares of stock in
Republic Planters Bank, which were purchased using the stabilization fees.

WON the stabilization fees collected for sugar producers, planters, and millers under PD
388 is a form of taxation.

Parties:

 Petitioners: Virgilio Gaston, Hortencia Starke, Romeo Guanzon, Oscar Villanueva,

Jose Abello, Remo Ramos, Carolina Lopez, Jesus Isasi, Manuel Lacson, Javier
Lacson, Tito Tagarao, Eduardo Suatengco, Augusto Llamas, Rodolfo Siason,
Pacifico Maghari, Jr., Jose Jamandre, Aurelio Gamboa, and others
 Respondents: Republic Planters Bank (RPB), Philippine Sugar Commission
(PHILSUCOM), Sugar Regulatory Administration (SRA), Angel H. Severino, Jr.,
Glicerio Javellana, Gloria P. de la Paz, Joey P. de la Paz, and National Federation of
Sugarcane Planters (NFSP)

Decision Rendered by: Melecio-Herrera, J.

Nature of the Case: The case involves a petition for a Writ of Mandamus filed by sugar
producers, sugarcane planters, and millers, seeking the implementation of the
privatization of Republic Planters Bank (RPB)

Factual Background:

 Petitioners are sugar industry stakeholders representing numerous other

producers, planters, and millers.
 PHILSUCOM, formerly tasked with regulating the sugar industry, was superseded
by SRA under Executive Order No. 18.
  PHILSUCOM was mandated to continue as a juridical entity for three more years
to settle its affairs, including the disposal of its property and distribution of
assets.
 Stabilization fees collected from sugar producers were used to subscribe to
shares of RPB.
 Petitioners argue that the shares belong to them as the true beneficial owners.

Court Ruling:

1. Trust Creation: While Section 7 of P.D. No. 388 mentions the administration of
stabilization fees "in trust" by PHILSUCOM, no resulting trust in favor of sugar
producers can be inferred as the intent of the parties is not reasonably
ascertainable from the statute itself.
2. Ownership of Shares: The investment in RPB shares using stabilization fees did
not establish ownership by sugar producers. No trust agreement clarified the
ownership, and PHILSUCOM's successor, SRA, did not approve any agreement
recognizing sugar producers as beneficial owners.
3. Nature of Stabilization Fees: Stabilization fees collected constitute government
funds and are considered a special fund, not held in trust for sugar producers
exclusively.
4. Public Interest: The utilization of stabilization funds for the benefit of the sugar
industry as a whole, including stabilization of the market, aligns with the public
interest and the economic importance of the sugar industry.
5. Writ of Mandamus Denied: The petition for a Writ of Mandamus is dismissed,
ruling that the stabilization funds and shares of stock do not belong exclusively
to sugar producers.

Conclusion: The court denied the petition, ruling that the stabilization funds and shares
of stock subscribed using those funds do not belong exclusively to sugar producers. The
court emphasized the public interest in utilizing the funds for the benefit of the sugar
industry as a whole.

Ruling:

The Supreme Court ruled that the nature of stabilization fees collected from sugar
producers, planters, and millers under P.D. No. 388, focusing on whether these fees
constituted trust funds for the benefit of the sugar industry or public funds.
The Court examined the language and intent of P.D. No. 388, which established a
Stabilization Fund administered by the Philippine Sugar Commission (PHILSUCOM) for
the purpose of financing the growth and development of the sugar industry. While the
statute mentioned that the stabilization fees collected "shall be administered in trust by
the Commission," the Court concluded that no resulting trust in favor of sugar
producers, millers, and planters could be established based solely on the language of
the law.

The Court reasoned that the stabilization fees, although collected from sugar industry
stakeholders, were in the nature of a tax imposed by the State to promote the sugar
industry's stability. The funds collected were considered public funds, akin to a special
fund established for a specific public purpose. As such, the revenues were subject to
regulation by the government and were not intended for purely private purposes or
exclusive benefit.

Furthermore, the Court noted that the stabilization fees were deposited in the Philippine
National Bank, emphasizing their character as public funds. While the funds were used
to purchase shares of stock in Republic Planters Bank, the Court concluded that this did
not convert the funds into a trust for the benefit of sugar producers, planters, and
millers.

Ultimately, the Court denied the petition for a Writ of Mandamus, ruling that the
stabilization fees collected under P.D. No. 388 were public funds intended for the
benefit of the entire sugar industry, rather than private individuals.