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Hawaiian-Philippine Co. is a sugar milling company while Asociacion de Hacenderos de Silay-Saravia, Inc. is a corporation organized to represent sugar cane planters in Negros Occidental. In 1953, both entered into a contract which would include 12 crop (years) until the 1963-1964 crop year. For the 1st 6 years, the sharing would be 63% to 37%, Asociacion getting the higher share. And from the next 5 years it would be 63.5% to 36.5% and in the ’63-’64 crop year it’d be 64% to 36%. In 1961 while the contract between Associacion and Hawaiian was still in force, Asociacion informed Hawaiian that another milling company wants to negotiate with Associacion. Though reluctant, Hawaiian entered into a new negotiation with Asociacion. The latter was pushing for a 70-30 sharing plus the right to purchase Hawaiian in a set time. The 70-30 sharing proposed by Asociacion was allowed by Section 1 of Republic Act No. 809 (An Act To Regulate The Relations Among Persons Engaged In The Sugar Industry) which provides that if the milling district exceeds 1.2M piculs in production, the planters are entitled to 70% of the share. Hawaiian initially disliked the proposal but eventually agreed. Anent the selling price, it agreed to sell the milling company to Asociacion for $14M. The agreement was never materialized, however, since both parties could not agree on the terms of payment.
Eventually, Asociacion entered into a new milling contract with another milling company, the Agricultural Industrial Development Company of Silay-Saravia. As a result, Hawaiian filed a suit in Court questioning the constitutionality of Sec. 1 of RA 809 and other related laws, to wit, Secs 4 and 5 of RA 1825 and Sec 3 of RA 1072 amending Sec 9 of Act 4166. Hawaiian averred that the said laws are violative of the constitutional guarantees against impairment of the freedom of contracts, denial of equal protection of the laws, taking of private property for public use without due process and without just compensation and impairment of vested rights and (2) validity of: aforesaid laws for being violative of treaty commitments previously entered into by the Government of the Republic of the Philippines.
ISSUE: Whether or not there has been a violation of equal protection.
HELD: No. R.A. No. 809 is a social justice and police power measure for the promotion of labor conditions in sugar plantations, hence whatever rational degree of constraint it exerts on freedom of contract and existing contractual obligations is constitutionally permissible. Sec. 1 of R.A. No. 809 does not violate the equal protection clause. There is a standard used by the legislature which is the amount of production in each district. In short, so long as a particular milling district reaches the quota set by the law, it can demand a higher share in the produce (max of 70%) and this does not violate any right of the miller.
RA 1825 and RA 1072 amending Act 4166 covering as they do the same subject, i.e. sugar production, partake of the same nature as RA 809 and for the same reasons as above stated, cannot be considered constitutionally objectionable. Sugar production is one of the great industries of our nation, sugar occupying a leading position among its export products, that it gives employment to thousands of laborers in field and factories, that it is a great source of the state’s wealth, is one of the important sources of foreign exchange needed by our government, and is thus pivotal in the plans of a regime committed to a policy of currency stability. Its promotion, protection and advancement therefore, redounds greatly to the general welfare. Hence it was competent for the legislature to find that the general welfare demanded that the sugar industry should be stabilized in turn, and in the wide field of its police power, the lawmaking body could provide that the distribution of benefits therefrom be readjusted among its components.