G.R. No.

L-50999 March 23, 1990

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,

vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS,
and F.E. ZUELLIG (M), INC., respondents.

Raul E. Espinosa for petitioners.

Lucas Emmanuel B. Canilao for petitioner A. Manuel.

Atienza, Tabora, Del Rosario & Castillo for private respondent.

MEDIALDEA, J.:

This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in
NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v.
F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio
Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal
of petitioners herein and in effect affirmed the decision of the Labor Arbiter ordering private respondent to pay
petitioners separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.)
for every year of service.

The antecedent facts are as follows:

Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor
(Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco,
Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the
company is not suffering from any losses. They alleged further that they are being dismissed because of their
membership in the union. At the last hearing of the case, however, petitioners manifested that they are no
longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the
separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries
of at least P40,000. In addition, they received commissions for every sale they made.

The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of
which petitioners are members, contains the following provision (p. 71, Rollo):

ARTICLE XIV — Retirement Gratuity

Section l(a)-Any employee, who is separated from employment due to old age, sickness,
death or permanent lay-off not due to the fault of said employee shall receive from the
company a retirement gratuity in an amount equivalent to one (1) month's salary per year of
service. One month of salary as used in this paragraph shall be deemed equivalent to
the salary at date of retirement; years of service shall be deemed equivalent to total service
credits, a fraction of at least six months being considered one year, including probationary
employment. (Emphasis supplied)

On the other hand, Article 284 of the Labor Code then prevailing provides:

Art. 284. Reduction of personnel. — The termination of employment of any employee due to
the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and
other similar causes, shall entitle the employee affected thereby to separation pay. In case of
termination due to the installation of labor-saving devices or redundancy, the separation pay
shall be equivalent to one (1) month pay or to at least one (1) month pay for every year of
 service, whichever is higher. In case of retrenchment to prevent losses and other similar
causes, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year. (Emphasis supplied)

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:

xxx

Sec. 9(b). Where the termination of employment is due to retrechment initiated by the
employer to prevent losses or other similar causes, or where the employee suffers from a
disease and his continued employment is prohibited by law or is prejudicial to his health or to
the health of his co-employees, the employee shall be entitled to termination pay equivalent at
least to his one month salary, or to one-half month pay for every year of service, whichever is
higher, a fraction of at least six (6) months being considered as one whole year.

xxx

Sec. 10. Basis of termination pay. — The computation of the termination pay of an employee
as provided herein shall be based on his latest salary rate, unless the same was reduced by
the employer to defeat the intention of the Code, in which case the basis of computation shall
be the rate before its deduction. (Emphasis supplied)

On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo):

RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay

the complainants separation pay equivalent to their one month salary (exclusive of
commissions, allowances, etc.) for every year of service that they have worked with the
company.

SO ORDERED.

The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.

Hence, the present petition.

On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of
Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by
the decision appealed from" since he had "received, to his full and complete satisfaction, his separation pay,"
resolved to dismiss the petition as to him.

The issue is whether or not earned sales commissions and allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay.

The petition is impressed with merit.

Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether
under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be
added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary,
to wit;

(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of employment
for work done or to be done, or for services rendered or to be rendered, and includes the fair
and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other
 facilities customarily furnished by the employer to the employee. 'Fair reasonable value' shall
not include any profit to the employer or to any person affiliated with the employer.

Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include
commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal
terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.

Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for
the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v.
NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation
of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of
her transportation and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et
al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et
al., G.R. No. 78524, January 20, 1989.

We shall concern ourselves now with the issue of whether or not earned sales commission should be included
in the monthly salary of petitioner for the purpose of computation of their separation pay.

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been
repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no
room for interpretation or construction; there is only room for application (Cebu Portland Cement Co. v.
Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals,
G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any
attempt to make it clearer is vain labor and tends only to obscurity. How ever, it may be argued that if We
correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code
and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the
Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):

The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated
as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does
not show any indication that commission is part of salary. We can say that commission by
itself may be considered a wage. This is not something novel for it cannot be gainsaid that
certain types of employees like agents, field personnel and salesmen do not earn any regular
daily, weekly or monthly salaries, but rely mainly on commission earned.

Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules
in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of
the termination pay due to one who is sought to be legally separated from the service is 'his
latest salary rates.

x x x.

Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.

The above terms found in those Articles and the particular Rules were intentionally used to
express the intent of the framers of the law that for purposes of separation pay they mean to
be specifically referring to salary only.

.... Each particular benefit provided in the Code and other Decrees on Labor has its own
pecularities and nuances and should be interpreted in that light. Thus, for a specific provision,
a specific meaning is attached to simplify matters that may arise there from. The general
guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should
be controlling in matters concerning termination pay should be the specific provisions of both
Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict
between the general provision of law and that of a particular- or specific provision, the latter
should prevail.
On its part, the NLRC ruled (p. 110, Rollo):

From the aforequoted provisions of the law and the implementing rules, it could be deduced
that wage is used in its generic sense and obviously refers to the basic wage rate to be
ascertained on a time, task, piece or commission basis or other method of calculating the
same. It does not, however, mean that commission, allowances or analogous income
necessarily forms part of the employee's salary because to do so would lead to anomalies
(sic), if not absurd, construction of the word "salary." For what will prevent the employee from
insisting that emergency living allowance, 13th month pay, overtime, and premium pay, and
other fringe benefits should be added to the computation of their separation pay. This
situation, to our mind, is not the real intent of the Code and its rules.

We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the
Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing
Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary"
means a recompense or consideration made to a person for his pains or industry in another man's business.
Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries
with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for
holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496).
"Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the
etymology of which is the Middle English word "wagen". Both words generally refer to one and the same
meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages"
and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the
same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in
the computation of the separation pay of petitioners, their salary base should include also their earned sales
commissions.

The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners.

We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form
of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the
jobs particularly assigned to them, still these commissions are direct remuneration services rendered which
contributed to the increase of income of Zuellig . Commission is the recompense, compensation or reward of
an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed.,
citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that commission are part of
petitioners' wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic
salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or
salary. We take judicial notice of the fact that some salesman do not received any basic salary but depend on
commissions and allowances or commissions alone, although an employer-employee relationship exists.
Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not form part
of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and
therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd?
This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose
of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the
streets to face the harsh necessities of life.

Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in
computing the separation pay, We held that:

The commissions also claimed by petitioner ('override commission' plus 'net deposit
incentive') are not properly includible in such base figure since such commissions must be
earned by actual market transactions attributable to petitioner.

Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In the computation
thereof, what should be taken into account is the average commissions earned during their last year of
employment.

The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing
regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for
in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of
labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et
al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer.

ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations
Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose
Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said
separation pay.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.

G.R. No. 189600 June 29, 2010

MILAGROS E. AMORES, Petitioner,

vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and EMMANUEL JOEL J.
VILLANUEVA,Respondents.

DECISION

CARPIO MORALES, J.:

Via this petition for certiorari, Milagros E. Amores (petitioner) challenges the Decision of May 14, 2009 and
Resolution No. 09-130 of August 6, 2009 of the House of Representatives Electoral Tribunal (public
respondent), which respectively dismissed petitioner’s Petition for Quo Warranto questioning the legality of the
assumption of office of Emmanuel Joel J. Villanueva (private respondent) as representative of the party-list
organization Citizens’ Battle Against Corruption (CIBAC) in the House of Representatives, and denied
petitioner’s Motion for Reconsideration.

In her Petition for Quo Warranto1 seeking the ouster of private respondent, petitioner alleged that, among
other things, private respondent assumed office without a formal proclamation issued by the Commission on
Elections (COMELEC); he was disqualified to be a nominee of the youth sector of CIBAC since, at the time of
the filing of his certificates of nomination and acceptance, he was already 31 years old or beyond the age limit
of 30 pursuant to Section 9 of Republic Act (RA) No. 7941, otherwise known as the Party-List System Act; and
his change of affiliation from CIBAC’s youth sector to its overseas Filipino workers and their families sector
was not effected at least six months prior to the May 14, 2007 elections so as to be qualified to represent the
new sector under Section 15 of RA No. 7941.

Not having filed his Answer despite due notice, private respondent was deemed to have entered a general
denial pursuant to public respondent’s Rules.2

As earlier reflected, public respondent, by Decision of May 14, 2009, 3 dismissed petitioner’s Petition for Quo
Warranto, finding that CIBAC was among the party-list organizations which the COMELEC had partially
proclaimed as entitled to at least one seat in the House of Representatives through National Board of
Canvassers (NBC) Resolution No. 07-60 dated July 9, 2007. It also found the petition which was filed on
October 17, 2007 to be out of time, the reglementary period being 10 days from private respondent’s
proclamation.

Respecting the age qualification for youth sectoral nominees under Section 9 of RA No. 7941, public
respondent held that it applied only to those nominated as such during the first three congressional terms after
the ratification of the Constitution or until 1998, unless a sectoral party is thereafter registered exclusively as
representing the youth sector, which CIBAC, a multi-sectoral organization, is not.

In the matter of private respondent’s shift of affiliation from CIBAC’s youth sector to its overseas Filipino
workers and their families sector, public respondent held that Section 15 of RA No. 7941 did not apply as
there was no resultant change in party-list affiliation.

Her Motion for Reconsideration having been denied by Resolution No. 09-130 dated August 6,
2009,4 petitioner filed the present Petition for Certiorari. 5

Petitioner contends that, among other things, public respondent created distinctions in the application of
Sections 9 and 15 of RA No. 7941 that are not found in the subject provisions, fostering interpretations at war
with equal protection of the laws; and NBC Resolution No. 07-60, which was a partial proclamation of winning
party-list organizations, was not enough basis for private respondent to assume office on July 10, 2007,
especially considering that he admitted receiving his own Certificate of Proclamation only on December 13,
2007.
In his Comment,6 private respondent avers in the main that petitioner has not substantiated her claims of
grave abuse of discretion against public respondent; and that he became a member of the overseas Filipinos
and their families sector years before the 2007 elections.

It bears noting that the term of office of party-list representatives elected in the May, 2007 elections will expire
on June 30, 2010. While the petition has, thus, become moot and academic, rendering of a decision on the
merits in this case would still be of practical value.7

The Court adopts the issues framed by public respondent, to wit: (1) whether petitioner’s Petition for Quo
Warranto was dismissible for having been filed unseasonably; and (2) whether Sections 9 and 15 of RA No.
7941 apply to private respondent.

On the first issue, the Court finds that public respondent committed grave abuse of discretion in considering
petitioner’s Petition for Quo Warranto filed out of time. Its counting of the 10-day reglementary period provided
in its Rules8 from the issuance of NBC Resolution No. 07-60 on July 9, 2007 is erroneous.

To be sure, while NBC Resolution No. 07-60 partially proclaimed CIBAC as a winner in the May, 2007
elections, along with other party-list organizations,9 it was by no measure a proclamation of private respondent
himself as required by Section 13 of RA No. 7941.

Section 13. How Party-List Representatives are Chosen. Party-list representatives shall be proclaimed by the
COMELEC based on the list of names submitted by the respective parties, organizations, or coalitions to the
COMELEC according to their ranking in said list.

AT ALL EVENTS, this Court set aside NBC Resolution No. 07-60 in Barangay Association for National
Advancement and Transparency v. COMELEC10 after revisiting the formula for allocation of additional seats to
party-list organizations.

Considering, however, that the records do not disclose the exact date of private respondent’s proclamation,
the Court overlooks the technicality of timeliness and rules on the merits. Alternatively, since petitioner’s
challenge goes into private respondent’s qualifications, it may be filed at anytime during his term.

Qualifications for public office are continuing requirements and must be possessed not only at the time of
appointment or election or assumption of office but during the officer's entire tenure. Once any of the required
qualifications is lost, his title may be seasonably challenged. 11

On the second and more substantial issue, the Court shall first discuss the age requirement for youth sector
nominees under Section 9 of RA No. 7941 reading:

Section 9. Qualifications of Party-List Nominees. No person shall be nominated as party-list representative

unless he is a natural-born citizen of the Philippines, a registered voter, a resident of the Philippines for a
period of not less than one (1)year immediately preceding the day of the election, able to read and write, a
bona fide member of the party or organization which he seeks to represent for at least ninety (90) days
preceding the day of the election, and is at least twenty-five (25) years of age on the day of the election.

In case of a nominee of the youth sector, he must at least be twenty-five (25) but not more than thirty (30)
years of age on the day of the election. Any youth sectoral representative who attains the age of thirty (30)
during his term shall be allowed to continue in office until the expiration of his term. (Emphasis and
underscoring supplied.)

The Court finds no textual support for public respondent’s interpretation that Section 9 applied only to those
nominated during the first three congressional terms after the ratification of the Constitution or until 1998,
unless a sectoral party is thereafter registered exclusively as representing the youth sector.

A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity,
there is no room for construction or interpretation. There is only room for application. 12
As the law states in unequivocal terms that a nominee of the youth sector must at least be twenty-five (25)
but not more than thirty (30) years of age on the day of the election, so it must be that a candidate who is
more than 30 on election day is not qualified to be a youth sector nominee. Since this mandate is contained in
RA No. 7941, the Party-List System Act, it covers ALL youth sector nominees vying for party-list
representative seats.

As petitioner points out, RA No. 7941 was enacted only in March, 1995. There is thus no reason to apply
Section 9 thereof only to youth sector nominees nominated during the first three congressional terms after the
ratification of the Constitution in 1987. Under this interpretation, the last elections where Section 9 applied
were held in May, 1995 or two months after the law was enacted. This is certainly not sound legislative intent,
and could not have been the objective of RA No. 7941.

There is likewise no rhyme or reason in public respondent’s ratiocination that after the third congressional
term from the ratification of the Constitution, which expired in 1998, Section 9 of RA No. 7941 would apply
only to sectoral parties registered exclusively as representing the youth sector. This distinction is nowhere
found in the law. Ubi lex non distinguit nec nos distinguire debemus. When the law does not distinguish, we
must not distinguish.13

Respecting Section 15 of RA No. 7941, the Court fails to find even an iota of textual support for public
respondent’s ratiocination that the provision did not apply to private respondent’s shift of affiliation from
CIBAC’s youth sector to its overseas Filipino workers and their families sector as there was no resultant
change in party-list affiliation. Section 15 reads:

Section 15. Change of Affiliation; Effect. Any elected party-list representative who changes his political party
or sectoral affiliation during his term of office shall forfeit his seat: Provided, That if he changes his political
party orsectoral affiliation within six (6) months before an election, he shall not be eligible for nomination as
party-list representative under his new party or organization. (emphasis and underscoring supplied.)

What is clear is that the wording of Section 15 covers changes in both political party and sectoral affiliation.
And the latter may occur within the same party since multi-sectoral party-list organizations are qualified to
participate in the Philippine party-list system. Hence, a nominee who changes his sectoral affiliation within the
same party will only be eligible for nomination under the new sectoral affiliation if the change has been
effected at least six months before the elections. Again, since the statute is clear and free from ambiguity, it
must be given its literal meaning and applied without attempted interpretation. This is the plain meaning rule
or verba legis, as expressed in the maxim index animi sermo or speech is the index of intention. 14

It is, therefore, beyond cavil that Sections 9 and 15 of RA No. 7941 apply to private respondent.

The Court finds that private respondent was not qualified to be a nominee of either the youth sector or the
overseas Filipino workers and their families sector in the May, 2007 elections.

The records disclose that private respondent was already more than 30 years of age in May, 2007, it being
stipulated that he was born in August, 1975.15 Moreover, he did not change his sectoral affiliation at least six
months before May, 2007, public respondent itself having found that he shifted to CIBAC’s overseas Filipino
workers and their families sector only on March 17, 2007.161avvphi1

That private respondent is the first nominee of CIBAC, whose victory was later upheld, is of no moment. A
party-list organization’s ranking of its nominees is a mere indication of preference, their qualifications
according to law are a different matter.

It not being contested, however, that private respondent was eventually proclaimed as a party-list representative of CIBAC and rendered
services as such, he is entitled to keep the compensation and emoluments provided by law for the position until he is properly declared
ineligible to hold the same.17

WHEREFORE, the petition is GRANTED. The Decision dated May 14, 2009 and Resolution No. 09-130 dated August 6, 2009 of the
House of Representatives Electoral Tribunal are SET ASIDE. Emmanuel Joel J. Villanueva is declared ineligible to hold office as a
member of the House of Representatives representing the party-list organization CIBAC.

SO ORDERED.CONCHITA CARPIO MORALESAssociate Justice

G.R. No. 74851 December 9, 1999

RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
INTERMEDIATE APPELLATE COURT AND BF HOMES, INC., respondents.

RESOLUTION

MELO, J.:

On September 14, 1992, the Court passed upon the case at bar and rendered its decision, dismissing the
petition of Rizal Commercial Banking Corporation (RCBC), thereby affirming the decision of the Court of
Appeals which canceled the transfer certificate of title issued in favor of RCBC, and reinstating that of
respondent BF Homes.

This will now resolve petitioner's motion for reconsideration which, although filed in 1992 was not deemed
submitted for resolution until in late 1998. The delay was occasioned by exchange of pleadings, the
submission of supplemental papers, withdrawal and change of lawyers, not to speak of the case having been
passed from one departing to another retiring justice. It was not until May 3, 1999, when the case was re-
raffled to herein ponente, but the record was given to him only sometime in the late October 1999.

By way of review, the pertinent facts as stated in our decision are reproduced herein, to wit:

On September 28, 1984, BF Homes filed a "Petition for Rehabilitation and for Declaration of
Suspension of Payments" (SEC Case No. 002693) with the Securities and Exchange
Commission (SEC).

One of the creditors listed in its inventory of creditors and liabilities was RCBC.

On October 26, 1984, RCBC requested the Provincial Sheriff of Rizal to extra-judicially
foreclose its real estate mortgage on some properties of BF Homes. A notice of extra-judicial
foreclosure sale was issued by the Sheriff on October 29, 1984, scheduled on November 29,
1984, copies furnished both BF Homes (mortgagor) and RCBC (mortgagee).

On motion of BF Homes, the SEC issued on November 28, 1984 in SEC Case No. 002693 a
temporary restraining order (TRO), effective for 20 days, enjoining RCBC and the sheriff from
proceeding with the public auction sale. The sale was rescheduled to January 29, 1985.

On January 25, 1985, the SEC ordered the issuance of a writ of preliminary injunction upon
petitioner's filing of a bond. However, petitioner did not file a bond until January 29, 1985, the
very day of the auction sale, so no writ of preliminary injunction was issued by the SEC.
Presumably, unaware of the filing of the bond, the sheriffs proceeded with the public auction
sale on January 29, 1985, in which RCBC was the highest bidder for the properties auctioned.

On February 5, 1985, BF Homes filed in the SEC a consolidated motion to annul the auction
sale and to cite RCBC and the sheriff for contempt. RCBC opposed the motion

Because of the proceedings in the SEC, the sheriff withheld the delivery to RCBC of a
certificate of sale covering the auctioned properties.

On February 13, 1985, the SEC in Case No. 002693 belatedly issued a writ of preliminary
injunction stopping the auction sale which had been conducted by the sheriff two weeks
earlier.
 On March 13, 1985, despite SEC Case No. 002693, RCBC filed with the Regional Trial Court,
Br. 140, Rizal (CC 10042) an action for mandamus against the provincial sheriff of Rizal and
his deputy to compel them to execute in its favor a certificate of sale of the auctioned
properties.

In answer, the sheriffs alleged that they proceeded with the auction sale on January 29, 1985
because no writ of preliminary injunction had been issued by SEC as of that date, but they
informed the SEC that they would suspend the issuance of a certificate of sale to RCBC.

On March 18, 1985, the SEC appointed a Management Committee for BF Homes.

On RCBC's motion in the mandamus case, the trial court issued on May 8, 1985 a judgment
on the pleadings, the dispositive portion of which states:

WHEREFORE, petitioner's Motion for Judgment on the pleadings is granted

and judgment is hereby rendered ordering respondents to execute and
deliver to petitioner the Certificate of the Auction Sale of January 29, 1985,
involving the properties sold therein, more particularly those described in
Annex "C" of their Answer." (p. 87, Rollo.)

On June 4, 1985, B.F. Homes filed an original complaint with the IAC pursuant to Section 9 of
B.P. 129 praying for the annulment of the judgment, premised on the following:

. . .: (1) even before RCBC asked the sheriff to extra-judicially foreclose its
mortgage on petitioner's properties, the SEC had already assumed exclusive
jurisdiction over those assets, and (2) that there was extrinsic fraud in
procuring the judgment because the petitioner was not impleaded as a party
in the mandamus case, respondent court did not acquire jurisdiction over it,
and it was deprived of its right to be heard. (CA Decision, p. 88, Rollo).

On April 8, 1986, the IAC rendered a decision, setting aside the decision of the trial court,
dismissing the mandamus case and suspending issuance to RCBC of new land titles, "until
the resolution of case by SEC in Case No. 002693," disposing as follows:

WHEREFORE, the judgment dated May 8, 1985 in Civil Case No. 10042 is
hereby annulled and set aside and the case is hereby dismissed. In view of
the admission of respondent Rizal Commercial Banking Corporation that the
sheriff's certificate of sale has been registered on BF Homes' TCT's . . . (here
the TCTs were enumerated) the Register of Deeds for Pasay City is hereby
ordered to suspend the issuance to the mortgagee-purchaser, Rizal
Commercial Banking Corporation, of the owner's copies of the new land titles
replacing them until the matter shall have been resolved by the Securities
and Exchange Commission in SEC Case No. 002693.

On June 18, 1986, RCBC appealed the decision of the then Intermediate Appellate Court (now, back to its old
revered name, the Court of Appeals) to this Court, arguing that:

1. Petitioner did not commit extrinsic fraud in excluding private respondent as

party defendant in Special Civil Case No. 10042 as private respondent was
not indispensable party thereto, its participation not being necessary for the
full resolution of the issues raised in said case.

2. SEC Case No. 2693 cannot be invoked to suspend Special Civil Case No.
10042, and for that matter, the extra-judicial foreclosure of the real estate
mortgage in petitioner's favor, as these do not constitute actions against
private respondent contemplated under Section 6(c) of Presidential Decree
No. 902-A.
 3. Even assuming arguendo that the extra-judicial sale constitute an action
that may be suspended under Section 6(c) of Presidential Decree No. 902-A,
the basis for the suspension thereof did not exist so as to adversely affect the
validity and regularity thereof.

4. The Regional Trial court had jurisdiction to take cognizable of Special Civil
Case No. 10042.

5. The Regional Trial court had jurisdiction over Special Civil Case No.
10042.

(p. 5, Rollo.)

On November 12, 1986, the Court gave due course to the petition. During the pendency of the case, RCBC
brought to the attention of the Court an order issued by the SEC on October 16, 1986 in Case No. 002693,
denying the consolidated Motion to Annul the Auction Sale and to cite RCBC and the Sheriff for Contempt,
and ruling as follows:

WHEREFORE, the petitioner's "Consolidated Motion to Cite Sheriff and Rizal

Commercial Banking Corporation for Contempt and to Annul Proceedings
and Sale," dated February 5, 1985, should be as is, hereby DENIED.

While we cannot direct the Register of Deeds to allow the consolidation of the
titles subject of the Omnibus Motion dated September 18, 1986 filed by the
Rizal Commercial Banking Corporation, and therefore, denies said Motion,
neither can this Commission restrain the said bank and the Register of Deeds
from effecting the said consolidation.

SO ORDERED.

By virtue of the aforesaid order, the Register of Deeds of Pasay City effected the transfer of title over subject
pieces of property to petitioner RCBC, and the issuance of new titles in its name. Thereafter, RCBC presented
a motion for the dismissal of the petition, theorizing that the issuance of said new transfer certificates of title in
its name rendered the petition moot and academic.

In the decision sought to be reconsidered, a greatly divided Court (Justices Gutierrez, Nocon, and Melo
concurred with the ponente, Justice Medialdea; Chief Justice Narvasa, Justices Bidin, Regalado, and
Bellosillo concurred only in the result; while Justice Feliciano dissented and was joined by Justice Padilla,
then Justice, now Chief Justice Davide, and Justice Romero; Justices Griño-Aquino and Campos took no
part) denied petitioner's motion to dismiss, finding basis for nullifying and setting aside the TCTs in the name
of RCBC. Ruling on the merits, the Court upheld the decision of the Intermediate Appellate Court which
dismissed the mandamus case filed by RCBC and suspended the issuance of new titles to RCBC. Setting
aside RCBC's acquisition of title and nullifying the TCTs issued to it, the Court held 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. Foreclosure
shall be disallowed so as not to prejudice other creditors, or cause
discrimination among them. If foreclosure is undertaken despite the fact that
a petition, for rehabilitation has been filed, the certificate of sale shall not be
delivered pending rehabilitation. Likewise, if this has also been done, no
transfer of title shall be effected also, within the period of rehabilitation. The
rationale behind PD 902-A, as amended to effect a feasible and viable
rehabilitation. This cannot be achieved if one creditor is preferred over the
others.

In this connection, the prohibition against foreclosure attaches as soon as a

petition for rehabilitation is filed. Were it otherwise, what is to prevent the
 petitioner from delaying the creation of a Management Committee and in the
meantime dissipate all its assets. The sooner the SEC takes over and
imposes a freeze on all the assets, the better for all concerned.

Then Justice Feliciano (joined by three other Justices), dissented and voted to grant the petition. He opined
that the SEC acted prematurely and without jurisdiction or legal authority in enjoining RCBC and the sheriff
from proceeding with the public auction sale. The dissent maintain that Section 6 (c) of Presidential Decree
902-A is clear and unequivocal that, claims against the corporations, partnerships, or associations shall be
suspended only upon the appointment of a management committee, rehabilitation receiver, board or body.
Thus, in the case under consideration, only upon the appointment of the Management Committee for BF
Homes on March 18, 1985, should the suspension of actions for claims against BF Homes have taken effect
and not earlier.

In support of its motion for reconsideration, RCBC contends:

The restraining order and the writ of preliminary injunction issued by the Securities and
Exchange Commission enjoining the foreclosure sale of the properties of respondent BF
Homes were issued without or in excess of its jurisdiction because it was violative of the clear
provision of Presidential Decree No. 902-A, and are therefore null and void; and

Petitioner, being a mortgage creditor, is entitled to rely solely on its security and to refrain
from joining the unsecured creditors in SEC Case No. 002693, the petition for rehabilitation
filed by private respondent.

We find the motion for reconsideration meritorious.

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. Insofar as petitioner RCBC is concerned, the provisions of Presidential
Decree No. 902-A are not yet applicable and it may still be allowed to assert its preferred status because it
foreclosed on the mortgage prior to the appointment of the management committee on March 18, 1985. The
Court, therefore, grants the motion for reconsideration on this score.

The law on the matter, Paragraph (c), Section 6 of Presidential Decree 902-A, provides:

Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall posses the
following powers:

c) To appoint one or more receivers of the property, real and personal, which is the subject of
the action pending before the Commission in accordance with the pertinent provisions of the
Rules of Court in such other cases whenever necessary to preserve the rights of the parties
litigants to and/or protect the interest of the investing public and creditors; Provided, however,
that the Commission may, in appropriate cases, appoint a rehabilitation receiver of
corporations, partnerships or other associations not supervised or regulated by other
government agencies who shall have, in addition to the powers of a regular receiver under the
provisions of the Rules of Court, such functions and powers as are provided for in the
succeeding paragraph (d) hereof: Provided, finally, That upon appointment of a management
committee rehabilitation receiver, board or body, pursuant to this Decree, all actions for
claims against corporations, partnerships or associations under management or receivership,
pending before any court, tribunal, board or body shall be suspended accordingly. (As
amended by PDs No. 1673, 1758 and by PD No. 1799. Emphasis supplied.)

It is thus 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 receiver. The holding
that suspension of actions for claims against a corporation under 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.

It bears stressing that the first and fundamental duty of the Court is to apply the law. When the law is clear
and free from any doubt or ambiguity, there is no room for construction or interpretation. As has been our
consistent ruling, where the law speaks in clear and categorical language, there is no occasion for
interpretation; there is only room for application (Cebu Portland Cement Co. vs. Municipality of Naga, 24
SCRA-708 [1968]).

Where the law is clear and unambiguous, it must be taken to mean exactly what it says and
the court has no choice but to see to it that its mandate is obeyed (Chartered Bank
Employees Association vs. Ople, 138 SCRA 273 [1985]; Luzon Surety Co., Inc. vs. De
Garcia, 30 SCRA 111 [1969]; Quijano vs. Development Bank of the Philippines, 35 SCRA 270
[1970]).

Only when the law is ambiguous or of doubtful meaning may the court interpret or construe its true intent.
Ambiguity is a condition of admitting two or more meanings, of being understood in more than one way, or of
referring to two or more things at the same time. A statute is ambiguous if it is admissible of two or more
possible meanings, in which case, the Court is called upon to exercise one of its judicial functions, which is to
interpret the law according to its true intent.

Furthermore, as relevantly pointed out in the dissenting opinion, a petition for rehabilitation does nor always
result in the appointment of a receiver or the creation of a management committee. The SEC has to initially
determine whether such appointment is appropriate and necessary under the circumstances. Under
Paragraph (d), Section 6 of Presidential Decree No. 902-A, certain situations must be shown to exist before a
management committee may be created or appointed, such as;

1. when there is imminent danger of dissipation, loss, wastage or destruction

of assets or other properties; or

2. when there is paralization of business operations of such corporations or

entities which may be prejudicial to the interest of minority stockholders,
parties-litigants or to the general public.

On the other hand, receivers may be appointed whenever:

1. necessary in order to preserve the rights of the parties-litigants; and/or

2. protect the interest of the investing public and creditors. (Section 6 (c),
P.D. 902-A.)

These situations are rather serious in nature, requiring the appointment of a management committee or a
receiver to preserve the existing assets and property of the corporation in order to protect the interests of its
investors and creditors. Thus, in such situations, suspension of actions for claims against a corporation as
provided in Paragraph (c) of Section 6, of Presidential Decree No. 902-A is necessary, and here we borrow
the words of the late Justice Medialdea, "so as not to render the SEC management Committee irrelevant and
inutile and to give it unhampered "rescue efforts" over the distressed firm" (Rollo, p. 265).

Otherwise, when such circumstances are not obtaining or when the SEC finds no such imminent danger of
losing the corporate assets, a management committee or rehabilitation receiver need not be appointed and
suspension of actions for claims may not be ordered by the SEC. When the SEC does not deem it necessary
to appoint a receiver or to create a management committee, it may be assumed, that there are sufficient
assets to sustain the rehabilitation plan and, that the creditors and investors are amply protected.

Petitioner additionally argues in its motion for reconsideration that, being a mortgage creditor, it is entitled to
rely on its security and that it need not join the unsecured creditors in filing their claims before the SEC
appointed receiver. To support its position, petitioner cites the Court's ruling in the case of Philippine
Commercial International Bank vs. Court of Appeals, (172 SCRA 436 [1989]) that an order of suspension of
payments as well as actions for claims applies only to claims of unsecured creditors and cannot extend to
creditors holding a mortgage, pledge, or any lien on the property.

Ordinarily, the Court would refrain from discussing additional matters such as that presented in RCBC's
second ground, and would rather limit itself only to the relevant issues by which the controversy may be
settled with finality.

In view, however, of the significance of such issue, and the conflicting decisions of this Court on the matter,
coupled with the fact that our decision of September 14, 1992, if not clarified, might mislead the Bench and
the Bar, the Court resolved to discuss further.

It may be recalled that in the herein en banc majority opinion (pp. 256-275, Rollo, also published as RCBC vs.
IAC, 213 SCRA 830 [1992]), we held 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. Foreclosure shall be disallowed so as not to prejudice other
creditors, or cause discrimination among them. If foreclosure is undertaken despite the fact
that a petition for rehabilitation has been filed, the certificate of sale shall not be delivered
pending rehabilitation. Likewise, if this has also, been done, no transfer of title shall be
effected also, within the period of rehabilitation. The rationale behind PD 902-A, as amended,
is to effect a feasible and viable rehabilitation. This cannot be achieved if one creditor is
preferred over the others.

In this connection, the prohibition against foreclosure attaches as soon as a petition for
rehabilitation is filed. Were it otherwise, what is to prevent the petitioner from delaying the
creation of a Management Committee and in the meantime dissipate all its assets. The
sooner the SEC takes over and imposes a freeze on all the assets, the better for all
concerned.

The foregoing majority opinion relied upon BF Homes, Inc. vs. Court of Appeals (190 SCRA 262 [1990] — per
Cruz, J.: First Division) where it held that "when a corporation threatened by bankruptcy is taken over by a
receiver, all the creditors should stand on an equal footing. Not anyone of them should be given preference by
paying one or some of them ahead of the others. This is precisely the reason for the suspension of all pending
claims against the corporation under receivership. Instead of creditors vexing the courts with suits against the
distressed firm, they are directed to file their claims with the receiver who is a duly appointed officer of the
SEC (pp. 269-270; emphasis in the original). This ruling is a reiteration of Alemar's Sibal & Sons, Inc. vs. Hon.
Jesus M. Elbinias (pp. 99-100; 186 SCRA 94 [1991] — per Fernan, C.J.: Third Division).

Taking the lead from Alemar's Sibal & Sons, the Court also applied this same ruling in Araneta vs. Court of
Appeals(211 SCRA 390 [1992] — per Nocon, J.: Second Division).

All the foregoing cases departed from the ruling of the Court in the much earlier case of PCIB vs. Court of
Appeals(172 SCRA 436 [1989] — per Medialdea, J.: First Division) where the Court categorically ruled that:

SEC's order for suspension of payments of Philfinance as well as for all actions of claims
against Philfinance could only be applied to claims of unsecured creditors. Such order can not
extend to creditors holding a mortgage, pledge or any lien on the property unless they give up
the property, security or lien in favor of all the creditors of Philfinance . . .

(p. 440. Emphasis supplied)

Thus, in BPI vs. Court of Appeals (229 SCRA 223 [1994] — per Bellosilio, J.: First Division) the Court explicitly
stared that ". . . the doctrine in the PCIB Case has since been abrogated. In Alemar's Sibal & Sons v.
Elbinias, BF Homes, Inc. v. Court of Appeals, Araneta v. Court of Appeals and RCBC v. Court of Appeals, we
already ruled that whenever a distressed corporation asks SEC for rehabilitation and suspension of payments,
preferred creditors may no longer assert such preference, but shall stand on equal footing with other
creditors . . ." (pp. 227-228).
It may be stressed, however, that of all the cases cited by Justice Bellosillo in BPI, which abandoned the
Court's ruling in PCIB, only the present case satisfies the constitutional requirement that "no doctrine or
principle of law laid down by the court in a decision rendered en banc or in division may be modified or
reversed except by the court sitting en banc" (Sec 4, Article VIII, 1987 Constitution). The rest were division
decisions.

It behooves the Court, therefore, to settle the issue in this present resolution once and for all, and for the
guidance of the Bench and the Bar, the following rules of thumb shall are laid down:

1. All claims against corporations, partnerships, or associations that are pending before any court, tribunal, or
board, without distinction as to whether or not a creditor is secured or unsecured, shall be suspended effective
upon the appointment of a management committee, rehabilitation receiver, board, or body in accordance
which the provisions of Presidential Decree No. 902-A.

2. Secured creditors retain their preference over unsecured creditors, but enforcement of such preference is
equally suspended upon the appointment of a management committee, rehabilitation receiver, board, or body.
In the event that the assets of the corporation, partnership, or association are finally liquidated, however,
secured and preferred credits under the applicable provisions of the Civil Code will definitely have preference
over unsecured ones.

In other words, once a management committee, rehabilitation receiver, board or body is appointed pursuant to
P.D. 902-A, all actions for claims against a distressed corporation pending before any court, tribunal, board or
body shall be suspended accordingly.

This suspension shall not prejudice or render ineffective the status of a secured creditor as compared totally
unsecured creditor P.D. 902-A does not state anything to this effect. 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 of doing so. (This will be in
consonance with Alemar's BF Homes, Araneta, and RCBC insofar as enforcing liens by preferred creditors
are concerned.)

However, 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
(still maintaining PCIB ruling), subject only to the provisions of the Civil Code on Concurrence and
Preferences of Credit (our ruling in State Investment House, Inc. vs. Court of Appeals, 277 SCRA 209 [1997]).

The Majority ruling in our 1992 decision that preferred creditors of distressed corporations shall, in a way,
stand an equal footing with all other creditors, must be read and understood in the light of the foregoing
rulings. All claims of both a secured or unsecured creditors, without distinction on this score, are suspended
once a management committee is appointed. Secured creditors, in the meantime, shall not be allowed to
assert such preference before the Securities and Exchange Commission. It may be stressed, however, that
this shall only take effect upon the appointment of a management committee, rehabilitation receiver, board, or
body, as opined in the dissent.

In fine, the Court grants the motion for reconsideration for the cogent reason that suspension of actions for
claims commences only from the time a management committee or receiver is appointed by the SEC.
Petitioner RCBC, therefore, could have rightfully, as it did, move for the extrajudicial foreclosure of its
mortgage on October 26, 1984 because a management committee was not appointed by the SEC until March
18, 1985.

WHEREFORE, petitioner's motion for reconsideration is hereby GRANTED. The decision, dated September
14, 1992 is vacated, the decision of Intermediate Appellate Court in AC-G.R. No. SP-06313 REVERSED and
SET ASIDE, and the judgment of the Regional Trial Court National Capital Judicial Region, Branch 140, in
Civil Case No. 10042 REINSTATED.

SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Quisumbing, Purisima, Pardo, Buena, Gonzaga-
Reyes, Ynares-Santiago and De Leon, Jr., JJ., concur.

Panganiban, J., please see separate (concuring) opinion.

Separate Opinions

PANGANIBAN, J., separate opinion;

The issue as to when suspension of payments takes effect upon a petition of a distressed corporation is a
contentious one. The ponencia in the case under consideration, Rizal Commercial Banking Corporation
(RCBC) v. Immediate Appellate Court, 1 has ruled that "the prohibition against foreclosure attaches as soon
as a petition for rehabilitation is filed. Were it otherwise, what is to prevent the [creditors] from delaying the
creation of the Management Committee and in the meantime [seizing] all [the debtor's] assets. The sooner the
SEC takes over and imposes a freeze on all the assets, the better for all concerned." 2

Suspension Takes Effect Only Upon

Constitution of Management Committee

A Dissent debunking the quoted ruling was written by the esteemed Justice Florentino P. Feliciano as follows:

I understand the above quoted portion of the ponencia to be saying that suspension of actions
for claims against the corporation which applies for rehabilitation takes effect as soon as the
application or a petition for rehabilitation is filed with the SEC.

I would point out with respect, that the actual language used in Section 6 (c) and (d) of P.D.
No. 902-A, as amended, does not support the position taken in the ponencia. The pertinent
provision of Section 6 (c) is as follows:

Sec. 6. In order to effectively exercise such jurisdiction, the commission shall

possess the following powers:

xxx xxx xxx

c) To appoint one or more receivers of the property, real and personal, which
is the subject of the action pending before the Commission in accordance
with the pertinent provisions of the Rules of Court in such cases whenever
necessary to preserve the rights of the parties-litigants to and/or protect the
interest of the investing public and creditors; Provided, however, That the
Commission may, in appropriate cases, appoint a rehabilitation receiver of
corporations, partnerships or other associations not supervised or regulated
by other government agencies who shall have, in addition to the powers of a
regular receiver under the provisions of the Rules of Court, such functions
and powers as are provided for in the succeeding paragraph (d)
hereof; Provided, further, that the Commission may appoint a rehabilitation
receiver of corporations, partnerships or other associations supervised or
regulated by other government agencies, such as banks and insurance
companies, upon request of the government agency concerned; Provided,
finally, that upon appointment of a management committee, rehabilitation
receiver, board or body pursuant to this Decree, all actions for claims against
corporations, partnerships or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended
accordingly.

It should be pointed out that the appointment of a management committee or a rehabilitation

receiver is not ordinarily effected immediately upon the filing of an application for suspension
 of payments and for rehabilitation. The reason is that the SEC must first determine whether
the jurisdictional requirements for the appointment of a management committee are present.
There are at least two (2) sets of requirements: (a) the requirements in respect of the petition
for declaration of suspension of payments; and (b) the requirements concerning the petition
for creation and appointment of a management committee.

xxx xxx xxx

As already noted, SEC took just about six (6) months after the filing of the petition of B.F.
Homes to decide to create and appoint a management committee. Only upon such
appointment of the management committee did the proviso in Section 6 (c) which decrees
suspension of actions for claims against the petitioning corporation take effect.

It is only then that the SEC determines that the circumstances warranting, under the statute,
the appointment of a management committee do exist, i.e., that there is "imminent danger of
dissipation, loss, wastage or destruction of assets — or paralization of business operations —
which [would] be prejudicial to the interest of minority stockholders, parties litigant or the
general public." Only when such circumstances have been determined to exist is there
justification for suspending actions for claims against the corporation so placed under SEC
management. The authority of the SEC to suspend or freeze the judicial enforcement of
claims against a corporation is an extraordinary authority, most especially where credits
secured by specific liens on property, like real estate mortgages, are involved; such authority
cannot lightly be assumed to have arisen simply because the corporation on its own initiative
goes to the SEC and there seeks shelter from its lawful creditors. 3

The foregoing Dissent found jural expression in a later case, Barotac Sugar Mills, Inc. v. Court of
Appeals, 4 penned by then Associate, now Chief Justice Hilario G. Davide Jr.:

The appointment of a management committee or rehabilitation receiver may only take place
after the filing with the SEC of an appropriate petition for suspension of payments. This is
clear from a reading of sub-paragraph (d) of Section 5 and sub-paragraph (d) of Section 6
P.D. No. 902-A, as amended by P.D. Nos. 1653 and 1758 . . . .

xxx xxx xxx

The conclusion then is inevitable that pursuant to the underscored proviso in sub-paragraph
(c) of the aforementioned Section 6, taken together with sub-paragraph (d) of Section 6, a
court action is ipso jure suspended only upon the appointment of a management committee
or a rehabilitation receiver.

As a member of the then First Division which promulgated Barotac, I concurred in the aforequoted ruling. To
repeat, Barotac and Justice Feliciano's Dissent are clearly supported by Section 6, paragraph (c) of
presidential Decree 902-A. It is basic in statutory construction that in the absence of doubt or ambiguity, there
is no necessity for construction or interpretation of the law, as in this case. Where the law speaks in clear and
categorical language, there is no room for interpretation. There is only room for application. 5

SEC Retains Power to

Issue Injunctive Relief

Left unsaid in RCBC, Barotac and even in the present Resolution, however, is the existence of two competing economic
interests in the determination of the issue. On the one hand, there is the creditor; on the other, the corporation and its
stockholders. Under the RCBC ponencia of Justice Medialdea, an unscrupulous company can seek shelter in a petition for
suspension of payments in order to evade or at least unfairly delay the payment of just obligations. This course of action
would clearly prejudice its creditors, who would be barred from judicially enforcing their rightful claims, simply because a
petition for suspension has been filed. Indeed, to paraphrase Justice Medialdea, what is to prevent the debtor from
delaying the creation of the management committee, in the meantime dissipating all its assets?
On the other hand, if the bare ruling of Barotac were to be applied strictly, a distressed company would be exposed to
grave danger that may precipitate its untimely demise, the very evil sought to be avoided by a suspension of payments.
Notably, the appointment of a management committee takes place only after several months, even years, from submission
of the petition. The appointment entails hearings and the submission of documentary evidence to determine whether the
requisites for suspension of payments have been met. By the time a management committee or receiver is appointed,
creditors, upon knowledge of the application for suspension of payments, will have feasted on the distressed corporation.

Money lenders will demand satisfaction of their credits by precipitately foreclosing on their mortgages. Particularly
vulnerable are liquid assets which can be attached and rendered useless. Payrolls will be frozen and suppliers will lose
faith in the company. Verily, the distressed company's credit standing would be zero-rated. Indeed, after the vultures'
feast, the remaining corporate carcass can no longer be resurrected into a viable enterprise. When this happens, there will
be no more company left to rehabilitate, thus rendering ineffectual the very law which was enacted precisely to effect such
rehabilitation. In the business world, bridge liquidity and credit are sometimes even more important than profits.

The prudent way to avoid the disastrous consequence of a strict application of said law is to call attention to the power of
the SEC to issue injunctive reliefs. Herein movant (RCBC) raises the issue of the validity of the restraining order and the
writ of preliminary injunction later issued by the Securities and Exchange Commission (SEC) prior to the appointment of
the management committee. It contends that the issuance of the injunctive reliefs effectively results, the suspension of
actions against the petitioning distressed corporation.

Movant is thus saying that the SEC has no jurisdiction to issue injunctive reliefs in favor of the distressed corporation
petitioning for suspension of payments prior to the appointment of a management committee I disagree.

Sec. 5(d) of PD 902-A clearly enumerates the cases over which the SEC has original and exclusive jurisdiction to hear
and decide:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:

xxx xxx xxx

d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of

payments in cases where the corporation, partnership or association possesses sufficient property to
cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in
cases where the corporation, partnership or association has no sufficient assets to cover its liabilities,
but is under the management of a Rehabilitation Receiver or Management Committee created pursuant
to this Decree.

Sec. 6 (a) of said Decree goes on further to say:

Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following
powers:

a) To issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which
it has jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall apply;

xxx xxx xxx

Thus, it is obvious from the above-quoted provisions that the SEC acquires jurisdiction over the distressed companies
upon the submission of a petition for suspension of payments. And when the legal requirements are complied with, it has
the authority to issue injunctive reliefs for the effective exercise of its jurisdiction. I would like to emphasize that this power
to issue restraining orders or preliminary injunctions, upon the prayer of the petitioning corporation, may be the only buffer
that could save a company from being feasted on by any vulture-creditor prior to the appointment of a management
committee or a rehabilitation receiver.

WHEREFORE, I vote to GRANT the Motion for Reconsideration, subject to the caveat that the Securities and Exchange
Commission, in meritorious cases, may issue injunctive reliefs.

G.R. No. L-23607 May 23, 1967

GO KA TOC SONS and CO., ETC., plaintiff-appellee,
vs.
RICE AND CORN BOARD, defendant-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General A. A. Torres, Solicitor C. S. Gaddi
and Atty. A. J. Gustilo for defendant-appellant.
Antonio C. Sanchez and Vicente Cabahug for plaintiff appellee.

BENGZON, J.P., J.:

Plaintiff-appellee Go Ka Toc Sons & Co. is a duly registered partnership, not wholly owned by Filipinos,
engaged since 1958 in the manufacture, processing and marketing of vegetable oil extracted from corn, rice,
copra, soybean, peanuts, fish, and other vegetable products. 1äwphï1.ñët

On August 2, 1960, Republic Act 3018 was approved, Section 1 of which prohibited, among others,
partnerships whose capital was not wholly owned by citizens of the Philippines from engaging, directly or
indirectly, in the rice and/or corn industry. The law was to take effect on January 1, 1951. However, Section 3
(a) allowed such partnerships, upon registration with the municipal treasurer, to continue business until two
years from and after January 1, 1961.

SEC. 3. All such persons, associations, partnerships or corporations that have complied with the
requirements provided in Section two hereof, if they so apply, shall be allowed to continue to engage
in their respective lines of activity in the rice and to and/or corn industry only for the purpose of
liquidation, as follows:

(a) Those engaged in the retail, wholesale, culture, transporting, handling, distribution or acquisition
for the purpose of trade of rice and/or corn and the by-products thereof shall be allowed to continue to
engage therein for a period of two years from the date of effectivity of this Act;

xxx xxx xxx

On November 21, 1960, the newly created Rice and Corn Board1 issued Resolution No. 10, pursuant to
Section 6 of the law, defining the term "by product" used in the law, as follows:

By-product shall mean the secondary products resulting from the process of husking, grinding, milling,
and cleaning of palay and corn, such as, but not limited to "binlid," "darak," "tanop," "tiktik," "corn
husk," "corn drips," and "corn meals."

And on July 10, 1961, the RICOB issued Gen. Circular No. 1, as amended, which defined the term "capital
investment" used in Section 3 of Republic Act 3018 which limits the maximum amount of capital investments
of alien persons and entities engaged in the rice and/or corn industry to the amount stated in their statement
made pursuant to Section 2 of the law.

These two circulars have been duly published and translated into the local dialect pursuant to Section 6 of
Republic Act 3018.

Plaintiff-appellee, having been required by agents of RICOB to register in accordance with Section 2 of the
law and the latter's resolution, dated January 3, 1961, ruling that manufacturers and/or dealers of bijon,
noodle, corn starch, gawgaw, rice wine, poultry feeds and other by products of rice and corn are covered by
the law, filed action in the Court of First Instance to declare the said law and RICOB Resolution No. 10, Nov.
21, 1960 and Gen. Circular No. 1, July 10, 1961, as inapplicable to it. Pending trial on the merits, the lower
court issued the writ of preliminary injunction prayed for.

To abbreviate the proceedings, the parties entered into a stipulation of facts. Thereupon, the lower court
rendered judgment (a) declaring Republic Act 3018 not applicable to plaintiff's business; (b) declaring null and
void RICOB's Resolution No. 10, dated November 21, 1960 and General Circular No. 10, as amended, dated
July 10, 1961 in so far as they were and are being made applicable to plaintiff's business and (c) making and
declaring permanent and perpetual the preliminary writ of injunction issued in the case.

Not satisfied with the foregoing ruling, defendant RICOB, through the Solicitor General has taken the instant
appeal to raise questions purely of law.

Admittedly, plaintiff-appellee has stopped from engaging in the purchase and sale of rice and/or corn since the
lapse of the two-year period from the effectivity of the law. It has limited its activities to
the trade, processing and manufacture of corn and rice oil from raw materials consisting of corn germ proper
or embryo ("sungo") and "tahup," as well as from rice husk it secures from others who mill rice and corn. In the
processing and manufacture of coin oil, plaintiff also produces a residue called "corn meal" or "corn meal
germ" which it sells and trades. Are these activities covered by Republic Act 3018?

Section 1 of the law defines "rice and/or corn industry" as including the handling of distribution, either in
wholesale or retail, and the acquisition for purpose of trade, of the by-products of rice and corn.

SECTION 1. No person who is not a citizen of the Philippines, or association, partnership or

Corporation, the capital or capital stock of which is now wholly owned by citizens of the Philippines,
shall directly or indirectly engage in the rice and/or corn industry except as provided in Section three
of this Act.

As used in this Act, the term rice "and/or corn industry" shall mean and include the culture, milling,
warehousing, transporting, exportation, importation, handling the distribution, either in wholesale or
retail, the provisions of Republic Act Numbered Eleven hundred and eighty to the contrary
notwithstanding, or the acquisition for the purpose of trade of rice (husked or unhusked) or corn
and the by-products thereof: Provided, That public utilities duly licensed and registered in accordance
with law may transport corn or rice. (Emphasis supplied).

Now, "tahup," "sungo" and "rice husk," which plaintiffs acquires from rice and corn millers and from which it
manufactures the vegetable oil and produces the "corn meal" or "corn germ meal" that it subsequently
distributes and sells are clearly by-products of rice and/or corn.2

Although the term "by-product" is not particularly and by specifically stated in the title of Republic Act 3018, its
inclusion in the body of the law is not invalid, as the lower court held, since it is germane to the subject matter
expressed in the title of the law.3

Neither is the statutory inclusion of said term in the definition of the phrases "rice and/or corn industry" an
invalid legislative usurpation of the court's function to interpret the laws, as the lower court also ruled. This
definition is part of the law itself.

Finally, the lower court determined the purpose and intention behind the law, thus:

x x x In the opinion of the Court, it was never the intention of the Legislature in enacting Republic Act
No. 3018 to include in its purpose or scope the processing of the by-products of rice and corn
because Filipinos do not depend for their survival by eating the by-products of rice and corn. . . . .

Assuming, without admitting, that the law in question really intended to include in its object the
nationalization not only of the rice and corn industry but also the trade of the by-products just
mentioned above, the business in which the plaintiff has been engaged and since December 31,
1962, as is at present, engaged, the Court is of the opinion that in the trade, processing, manufacture
of corn and rice oil from the raw materials of corn germ proper or embryo (sungo) and tahup and from
rice husk converting the remaining parts into "corn meal" or "corn germ meal" which is traded and sold
and that it acquired its raw materials from those engaged milling rice and/or corn. the said Republic
Act No. 3018 does not cover the plaintiff's business activities just mentioned.

This is a fair and reasonable interpretation and application of said Republic Act No. 3018, because to
include in its control, limitation and prohibition the business of the plaintiff mentioned above, would be
not only to render the said law unconstitutional for not including in its title "and the by-products
 thereof," but also to unreasonably stretch out and expand the scope and intention of the law to include
in its context the processing and extracting of oil from rice and corn and the manufacture of corn meal
or corn germ meal and the selling and trading of the same.

As a logical result of this interpretation of the law spelled out by this Court, it must necessarily follow
that the Resolution No. 10, Annex 1 and the general circular dated July 10, 1961, quoted under
paragraph 3 of the parties' Stipulation of Facts are hereby declared null and void in so far as they
attempted to include in the scope of said law the defendant's business activities described above in
which it engaged since December 31, 1962, and in which it has been engaged partly engaged since
its formation in 1959.

What the court a quo did was to resort to statutory construction. But this was improper as well as incorrect.
The law is clear in enunciating the policy that only Filipinos and associations, partnerships or corporations
100% Filipino can engage even in the trade and acquisition of the by-products of rice and/or corn. So the
court's only duty was to apply the law as it was.4 The purpose of the Act, as expressed in the introductory note
of the bill, can control the language of the law only in case of ambiguity. 5 There is none here. Furthermore, the
court below's interpretation would render the statute nugatory and defeat its aims, rather than apply and
effectuate its provisions,6 since it struck off the phrase "by-products thereof" from the text of the law.

Since plaintiff-appellee is covered by the statute, there is no necessity for an extensive discussion regarding
the validity of Resolution No. 10 of November 21, 1960. The power and authority of appellant RICOB to issue
such rules and regulations implementing the law, proceeds from the law itself. 7 Said resolution, by
enumerating some specific examples of by-products of rice and/,or corn, merely carried out the provisions of
law. And the sole reason why the lower court invalidated it, was its mistaken stand that the term "by-
product" ought not to have been made a part of the statute.

The foregoing considerations render moot and academic the question regarding the validity of General
Circular No. 1 on July 10, 1961.

Wherefore, the judgment appealed from is reversed and the writ of injunction issued therein is annulled and
set aside. No costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Zaldivar and Castro JJ., concur.
Makalintal, J., took no part.