# 66

REPUBLIC FLOUR MILLS INC. VS. THE COMMISSIONER OF CUSTOMS and

THE COURTOF TAX APPEALS, G.R. No. L-28463, May 31, 1971

Facts:
From December 1963 to July 1964, Republic Flour Mills (petitioner)
exported Pollard and/or bran which was loaded from lighters alongside
vessels engaged in foreign trade while anchored near the breakwater. The
Commissioner of Customs and The Court of Tax Appeals(respondent)
assessed the petitioner by way of wharfage dues on the said exportations
in the sum of P7,948.00, which assessment was paid by petitioner under protest in
this case Republic Flour Mills, Inc. would want the Court to
interpret the words products of the Philippines found in Section 2802 of
the Tariff and Custom Code, as excluding bran (ipa) and pollard (darak) on
the ground that, coming as they do from wheat grain which is imported in
the Philippines, they are merely waste from the production of
flour. Another main argument of the petitioner is that no government
or private wharves or government facilities were utilized in exporting such
products. In that way, it would not be liable at all for the wharfage dues assessed
under such section by respondent Commission of Customs.

On the other hand, the stand of respondent Commissioner of

C u s t o ms wa s t h a t petitioner was liable for wharfage dues upon receipt
or discharge of the exported goods by a vessel engaged in foreign
trade regardless of the non-use of government-owned or private
wharves. Respondent Court of Tax Appeals sustained the action taken by
the Commissioner of Customs under the appropriate provision of the Tariff and
Customs Code.

Issue:
Whether or not such collection of wharfage dues was in accordance with law

Ruling/Held:
As stated in the Section 2802 of the Tariff and Custom Code, "There shall
be levied, collected and paid on all articles imported or brought into the Philippines,
and on products of the Philippines exported from the Philippines, a charge of
two pesos per gross metric ton as a
feef o r wh a r f a g e . " A p p e a r s t o b e q u i t e p r e c i s e . S e c t i o n 2 8 0 2
r e f e r s t o wh a t i s i mp o r t e d a n d exported. The objective of this act must be
carried out. Even if there is doubt to the meaning of the language employed, the
interpretation should not be at war with the end sought to be attained. If petitioner
were to prevail, subsequent pleas motivated by the same desire to be
excludedfromt h e o p e r a t i o n o f t h e T a r i f f a n d Cu s t o ms Co d e wo u
l d l i k e wi s e b e e n t i t l e d t o s ym p a t h e t i c consideration. It
was desirable then that the gates to such efforts at unjustified restriction
of the coverage of the Act are kept closed. Otherwise, the end
result would be not respect for, but defiance of, a clear legislative mandate.
The decision of respondent Court of Tax Appeals of November 27, 1967 is
affirmed with costs against petitioner

#67

RCBC vs. IAC G.R. No. 74851, December 9, 1999

Facts:

On September 28, 1984, BF Homes filed a Petition for Rehabilitation and for
Declaration of Suspension of Payments with the SEC.

RCBC, one of the creditors listed in BF Homes inventory of creditors and

liabilities, on October 26, 1984, requested the Provincial Sheriff of Rizal to
extra-judicially foreclose its real estate mortgage on some properties of BF
Homes. BF Homes opposed the auction sale and the SEC ordered the issuance
of a writ of preliminary injunction upon petitioners filing of a bond. Presumably
unaware of the filing of the bond on the very day of the auction sale, the sheriff
proceeded with the public auction sale in which RCBC was the highest bidder for
the properties auctioned. But because of the proceedings in the SEC, the sheriff
withheld the delivery to RCBC of the certificate of sale covering the auctioned
properties.
On March 13, 1985, despite the SEC case, RCBC filed with RTC an action for
mandamus against the provincial sheriff of Rizal to compel him to execute in its
favor a certificate of sale of the auctioned properties.
On March 18, 1985, the SEC appointed a Management Committee for BF
Homes.

Consequently, the trial court granted RCBCs motion for judgment on the
pleading ordering respondents to execute and deliver to petitioner the
Certificate of Auction Sale.

On appeal, the SC affirmed CAs decision (setting aside RTCs decision

dismissing the mandamus case and suspending issuance to RCBC of new land
titles until the resolution of the SEC case) ruling that whenever a distressed
corporation asks the SEC for rehabilitation and suspension of payments,
preferred creditors may no longer assert such preference but stand on equal
footing with other creditors. Hence, this Motion for Reconsideration.

Issue:

When should the suspension of actions for claims against BF Homes take effect?

Held :
The issue of whether or not preferred creditors of distressed corporations stand
on equal footing with all other creditors gains relevance and materiality only
upon the appointment of a management committee, rehabilitation receiver,
board or body.

Upon cursory reading of Section 6, par (c) of PD 902-A, it is adequately clear

that suspension of claims against a corporation under rehabilitation is counted
or figured up only upon the appointment of a management committee or a
rehabilitation takes effect as soon as the application or a petition for
rehabilitation is filed with the SEC may to some, be more logical and wise but
unfortunately, such is incongruent with the clear language of the law. To insist
on such ruling, no matter how practical and noble would be to encroach upon
legislative prerogative to define the wisdom of the law --- plainly judicial
legislation.

Once a management committee, rehabilitation receiver, board or body is

appointed pursuant to PD 902-A, all actions for claims against a distressed
corporation pending before any court, tribunal, board or body shall be
suspended accordingly; Suspension shall not prejudice or render ineffective the
status of a secured creditor as compared to a totally unsecured creditor. What it
merely provides is that all actions for claims against the corporation,
partnership or association shall be suspended. This should give the receiver a
chance to rehabilitate the corporation if there should still be a possibility for
doing so. In the event that rehabilitation is no longer feasible and claims against
the distressed corporation would eventually have to be settled, the secured
creditors shall enjoy preference over the unsecured creditors subject only to the
provisions of the Civil Code on Concurrence and Preferences of Credit.