G.R. No. L-5416 - Montelibano vs. Bacolod-Murcia Milling Co.

Plaintiffs (Alfredo Montelibano, et al.) are sugar planters, members of the Bacolod-Murcia Planters’ Association, Inc., or assignees thereof.
Defendant is the Bacolod-Murcia Milling Co. (referred to as “the Central”), with whom the planters entered into contracts for the delivery and milling of sugar cane.
Under the contracts, the sugar produced was to be divided in a 60:40 ratio—60% retained by the planter and 40% allocated to the Central.
The Central was responsible for providing planters with periodic information regarding their shares in the sugar, including issuing warehouse receipts (quedans).

At the time of the Japanese occupation of Negros Occidental (May 21, 1942), a total of 664,091.22 piculs of sugar were stored at the Central’s warehouse.

Plaintiffs owned 128,452.24 piculs, the Central owned 284,425.81 piculs, and the remaining sugar belonged to other planters.

On February 10, 1943, under the authority of the Japanese Military Administration, Fidel Henares, president of the Planters’ Association, was designated to manage the sale and disposition of the sugar.

His powers included selling the sugar to the Mitsui Bussan Kaisha, contracting on behalf of the planters, handling receipts, and managing bank transactions with the Bank of Taiwan.

Upon purchase, any previous claims (such as those of the Philippine National Bank or enemy corporations) would be cancelled.
The purchased sugar’s proceeds were credited to accounts used as collateral for old and new crop loans under Farmer Rehabilitation Funds.

The Mitsui Bussan Kaisha promptly notified the Planters’ Association that it was buying all the planters’ sugar, irrespective of the planters’ physical location.

Numerous warehouse orders were issued on various dates in 1943 (February 17; March 6; March 27; April 20; May 17; and May 18) for the release of sugar delivered by the Planters’ Association.
The Central’s share of sugar sales was also recorded (approximately 272,601 piculs by April 21, 1943, reaching 272,801.07 piculs by December 1943) with a remaining balance in storage.
Withdrawals from the Central’s warehouse were made during 1943 and 1944 without clear identification of whether the sugar belonged to the planters or the Central.
As a result of mixing, by the time of the liberation, approximately 150,000 piculs of sugar remained in the warehouse.

This remaining sugar was impounded by the U.S. Enemy Property Custodian but later released upon representation by the parties.

Post-liberation, the majority of planters agreed to a provisional proration of the remaining sugar, allocating 60% to the planters (to be shared in proportion to their pre-occupation deposits) and 40% to the Central.

The proration resulted in the defendant Central receiving 93,663.60 piculs and the plaintiffs 35,405.35 piculs.

Plaintiff Alfredo Montelibano withdrew approximately 12,789 piculs after liberation.

Of this, about 5,115.60 piculs were determined to be part of the defendant Central’s share.
Montelibano received a bill for P45,273.06 based on a price of P8.85 per picul, which he partially paid.

The plaintiffs claimed that the defendant had been fully paid for its share of sugar sold during the occupation, contending that the remaining sugar in the warehouse should belong exclusively to the planters.
In contrast, the defendant argued that by the Japanese Military Administration’s order, all sugar—including that of the planters—was sold through the appointed president, thereby negating any claim that sugar remained in the warehouse.
A counterclaim was filed by the defendant against Montelibano for the value of sugar (5,115.60 piculs) that was allegedly appropriated, with a valuation conflict (a bill at P8.85 per picul by the trial court versus the defendant’s claim at P50.10 per picul).

Who were the legal owners of the sugar remaining in the Central’s warehouse at the time of the liberation?
Given that the sugar stocks of both the plaintiffs and the Central were mixed and withdrawals were not identified by owner, how should the undifferentiated mass of sugar be apportioned?

Is it significant whether the sale of sugar by the Japanese Military Administration was an act of confiscation, requisition, or a voluntary sale?
Does the nature of this act affect the rights of the original owners regarding the sugar remaining in the warehouse?

What constitutes the correct valuation for the sugar taken by Montelibano, given conflicting price rates?
Is the defendant entitled to recover an amount based on a higher valuation than the one determined by the trial court?