Taada vs Tuvera

136 SCRA 27
FACTS: Invoking the right of the people to be informed on matters of public concern as well
as the principle that laws to be valid and enforceable must be published in the Official
Gazette, petitioners filed for writ of mandamus to compel respondent public officials to
publish and/or cause to publish various presidential decrees, letters of instructions, general
orders, proclamations, executive orders, letters of implementations and administrative
orders.
The Solicitor General, representing the respondents, moved for the dismissal of the case,
contending that petitioners have no legal personality to bring the instant petition.
ISSUE: W.O.N. publication in the Official Gazette is required before any law or statute
becomes valid and enforceable.
HELD: Art. 2 of the Civil Code does not preclude the requirement of publication in the Official
Gazette, even if the law itself provides for the date of its effectivity. The clear object of this
provision is to give the general public adequate notice of the various laws which are to
regulate their actions and conduct as citizens. Without such notice and publication, there
would be no basis for the application of the maxim ignoratia legis nominem excusat. It would
be the height of injustive to punish or otherwise burden a citizen for the transgression of a
law which he had no notice whatsoever, not even a constructive one.
The very first clause of Section 1 of CA 638 reads: there shall be published in the Official
Gazette. The word shall therein imposes upon respondent officials an imperative duty.
That duty must be enforced if the constitutional right of the people to be informed on matter
of public concern is to be given substance and validity.
The publication of presidential issuances of public nature or of general applicability is a
requirement of due process. It is a rule of law that before a person may be bound by law, he
must first be officially and specifically informed of its contents. The Court
 OLYMPIO REVALDO, G.R. No. 170589

The Case
Before this Court is a petition for review by petitioner Olympio Revaldo (petitioner)
seeking to reverse the Decision[1] dated 23 August 2004 of the Court of Appeals in CA-
G.R. CR No. 22031 affirming the Decision[2] dated 5 September 1997 of the Regional
Trial Court, Branch 25, Maasin, Southern Leyte (RTC-Branch 25), in Criminal Case No.
1652, finding petitioner guilty beyond reasonable doubt of illegal possession of lumber
in violation of Section 68[3] of the Revised Forestry Code (Forestry Code).[4]

The Facts
Petitioner was charged with the offense of illegal possession of premium hardwood lumber in
violation of Section 68 of the Forestry Code, in an Information[5] which reads:
That on or about the 17th day of June 1992, in the (M)unicipality of Maasin,
(P)rovince of Southern Leyte, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, with intent of gain, did then and
there willfully, unlawfully and feloniously possess 96.14 board ft. of the following
species of flat lumber:

1. Six (6) pcs. 1x10x7 Molave;

2. One (1) pc. 2x6x6 Molave;
3. Two (2) pcs. 2x4x6 Molave;
4. Two (2) pcs. 1x10x6 Narra;
5. Two (2) pcs. 2x8x7 Bajong;
6. One (1) pc. 1x6x6 Bajong;
7. Four (4) pcs. 1x6x6 Magkalipay; and
8. Three (3) pcs. 1x6x5 Magkalipay;
with a total value of P1,730.52, Philippine Currency, without any legal document
as required under existing forest laws and regulations from proper government
authorities, to the damage and prejudice of the government.
Upon arraignment, petitioner, assisted by counsel, pleaded not guilty. Trial ensued.
The prosecution presented SPO4 Constantino Maceda (Maceda), Sulpicio Saguing (Saguing),
and SPO4 Daniel Paloma Lasala (Lasala) as witnesses.
Maceda, the person in charge of the operations section of the Philippine National Police
(PNP) in Maasin, Southern Leyte, testified that on 18 June 1992, at around 11:00 in the
morning, he went with Chief Alejandro Rojas (Rojas), SPO3 Melquiades Talisic (Talisic) and
SPO3 Nicasio Sunit (Sunit) to the house of petitioner to verify the report of Sunit that
petitioner had in his possession lumber without the necessary documents. They were not
armed with a search warrant on that day. They confiscated 20 pieces of lumber of different
varieties lying around the vicinity of the house of petitioner. Maceda asked petitioner who the
owner of the lumber was and petitioner replied that he owned the lumber. Petitioner stated
that he would use the lumber to repair his house and to make furniture for sale. Maceda also
testified that the lumber were freshly cut. Maceda loaded the lumber on the patrol jeep and
brought them to the police station. For coordination purposes, Maceda informed the office of
the Department of Environment and Natural Resources (DENR) of the confiscated lumber.
The DENR entrusted to the police custody of the lumber.[6]

Saguing, Forester II, CENRO-DENR, Maasin, Southern Leyte, testified that he went to the
office of the PNP in Maasin, Leyte to scale the confiscated lumber which were of different
varieties. The total volume was 96.14 board feet belonging to the first group of hardwood
lumber.[7]
Lasala, Responsible Supply Sergeant, Finance Sergeant and Evidence Custodian, PNP,
Maasin, Southern Leyte, testified that he received the 20 pieces of assorted sizes and
varieties of lumber from the Clerk of Court of the Municipal Trial Court, but only ten pieces
remained because some were damaged due to lack of storage space.[8]

For the defense, petitioner presented Dionisio Candole (Candole), Apolonio Caalim (Caalim),
and himself as witnesses.
Petitioner testified that he is a carpenter specializing in furniture making. He was in his
house working on an ordered divider for a customer in the morning of 18 June 1992 when
policemen arrived and inspected his lumber. Maceda, Sunit and Rojas entered his house while
Talisic stayed outside. Petitioner admitted to the policemen that he had no permit to possess
the lumber because those were only given to him by his uncle Felixberto Bug-os (Bug-os), his
aunt Gliceria Bolo (Bolo), his mother-in-law Cecilia Tenio (Tenio). The seven pieces of
magkalipay lumber were left over from a divider he made for his cousin Jose Epiz. He
explained further that the lumber were intended for the repair of his dilapidated house. [9] The
defense presented Caalim to corroborate the testimony of petitioner.[10]

Defense witness Candole testified that it was Bug-os who hired him to cut a tugas tree on his
land, sawed it into lumber and delivered the same to petitioner who paid for the labor
transporting the sawn lumber. Candole further testified that while they were on their way to
Barangay Combado, Sunit stopped them but allowed the lumber to be brought to the house of
petitioner.[11]
 The Ruling of the Trial Court
The trial court stated that petitioner failed to present Bug-os, Bolo, and Tenio to attest to the
fact that they sought prior DENR permission before cutting the trees and sawing them into
lumber. The trial court further stated that the Forestry Code is a special law where criminal
intent is not necessary. The Secretary of the DENR may issue a Special Private Land Timber
Permit to landowners to cut, gather, collect or remove narra or other premium hardwood
species found in private lands. Transportation of timber or other forest products without
authority or without the legal documents required under forest rules and regulations is
punishable under Section 68 of the Forestry Code. Petitioner did not present any document as
required by law.

The RTC-Branch 25 rendered judgment on 5 September 1997 convicting petitioner of the

offense charged and sentencing him as follows:

WHEREFORE, judgment is rendered finding the accused OLYMPIO REVALDO

GUILTY beyond reasonable doubt of the offense charged and, crediting him with
one mitigating circumstance before applying the Indeterminate Sentence Law
hereby SENTENCES him to an indeterminate imprisonment term of FOUR (4)
YEARS and TWO (2) MONTHS of PRISION CORRECCIONAL as minimum to EIGHT
(8) YEARS and ONE (1) DAY of PRISION MAYOR, as maximum, and to pay the
costs.

The 21 pieces of flat lumber of different varieties, scaled at 96.14 board feet and
valued at P1,730.52 are hereby ordered CONFISCATED and FORFEITED in favor of
the government particularly the CENRO, Maasin, Southern Leyte which shall sell
the same at public auction and the proceeds turned over to the National
Treasury.[12]
Petitioner appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 23 August 2004, the Court of Appeals affirmed the judgment of the trial court. The Court of
Appeals ruled that motive or intention is immaterial for the reason that mere possession of
the lumber without the legal documents gives rise to criminal liability.

Hence, the present petition.

The Courts Ruling

Petitioner contends that the warrantless search and seizure conducted by the police officers
was illegal and thus the items seized should not have been admitted in evidence against him.
Petitioner argues that the police officers were not armed with a search warrant when they
went to his house to verify the report of Sunit that petitioner had in his possession lumber
without the corresponding license. The police officers who conducted the search in the
premises of petitioner acted on the basis only on the verbal order of the Chief of Police. Sunit
had already informed the team of the name of petitioner and the location the day before they
conducted the search. Petitioner argues that, with that information on hand, the police
officers could have easily convinced a judge that there was probable cause to justify the
issuance of a search warrant, but they did not. Because the search was illegal, all items
recovered from petitioner during the illegal search were prohibited from being used as
evidence against him. Petitioner therefore prays for his acquittal.

In its Comment, respondent People of the Philippines (respondent) contends that even
without a search warrant, the personnel of the PNP can seize the forest products cut,
gathered or taken by an offender pursuant to Section 80[13] of the Forestry Code.

There is no question that the police officers went to the house of petitioner because of the
information relayed by Sunit that petitioner had in his possession illegally cut lumber. When
the police officers arrived at the house of petitioner, the lumber were lying around the vicinity
of petitioners house. The lumber were in plain view. Under the plain view doctrine, objects
falling in plain view of an officer who has a right to be in the position to have that view are
subject to seizure and may be presented as evidence. This Court had the opportunity to
summarize the rules governing plain view searches in the case of People v. Doria,[14] to wit:

The plain view doctrine applies when the following requisites concur: (a) the law
enforcement officer in search of the evidence has a prior justification for an
intrusion or is in a position from which he can view a particular area; (b) the
discovery of the evidence in plain view is inadvertent; (c) it is immediately
apparent to the officer that the item he observes may be evidence of a crime,
contraband or otherwise subject to seizure. The law enforcement officer must
lawfully make an initial intrusion or properly be in a position from which he can
particularly view the area. In the course of such lawful intrusion, he came
inadvertently across a piece of evidence incriminating the accused. The object
must be open to eye and hand and its discovery inadvertent.[15]

When asked whether he had the necessary permit to possess the lumber, petitioner failed to
produce one. Petitioner merely replied that the lumber in his possession was intended for the
repair of his house and for his furniture shop. There was thus probable cause for the police
officers to confiscate the lumber. There was, therefore, no necessity for a search warrant.

The seizure of the lumber from petitioner who did not have the required permit to possess the
forest products cut is sanctioned by Section 68 of the Forestry Code which provides:

Sec. 68. Cutting, Gathering and/or Collecting Timber, or Other Forest Products
Without License. Any person who shall cut, gather, collect, remove timber or
other forest products from any forest land, or timber from alienable or disposable
public land, or from private land without any authority, or possess timber or other
forest products without the legal documents as required under existing forest
 laws and regulations, shall be punished with the penalties imposed under
Articles 309 and 310 of the Revised Penal Code: Provided, That in the case of
partnerships, associations, or corporations, the officers who ordered the cutting,
gathering, collection or possession shall be liable, and if such officers are aliens,
they shall, in addition to the penalty, be deported without further proceedings on
the part of the Commission on Immigration and Deportation.

The Court shall further order the confiscation in favor of the government of the
timber or any forest products cut, gathered, collected, removed, or possessed, as
well as the machinery, equipment, implements and tools illegally used in the area
where the timber or forest products are found. (Emphasis supplied)

There are two distinct and separate offenses punished under Section 68 of the Forestry Code,
to wit:

(1) Cutting, gathering, collecting and removing timber or other forest

products from any forest land, or timber from alienable or disposable public
land, or from private land without any authority; and

(2) Possession of timber or other forest products without the legal

documents required under existing forest laws and regulations.[16]

As the Court held in People v. Que,[17] in the first offense, one can raise as a defense the
legality of the acts of cutting, gathering, collecting, or removing timber or other forest
products by presenting the authorization issued by the DENR. In the second offense, however,
it is immaterial whether the cutting, gathering, collecting and removal of the forest products
are legal or not. Mere possession of forest products without the proper documents
consummates the crime. Whether or not the lumber comes from a legal source is immaterial
because the Forestry Code is a special law which considers mere possession of timber or
other forest products without the proper documentation as malum prohibitum.
On whether the police officers had the authority to arrest petitioner, even without a warrant,
Section 80 of the Forestry Code authorizes the forestry officer or employee of the DENR or
any personnel of the PNP to arrest, even without a warrant, any person who has committed or
is committing in his presence any of the offenses defined by the Forestry Code and to seize
and confiscate the tools and equipment used in committing the offense or the forest products
gathered or taken by the offender.Section 80 reads:

Sec. 80. Arrest; Institution of Criminal Actions . - A forest officer or employee of

the Bureau or any personnel of the Philippine Constabulary/Philippine National
Police shall arrest even without warrant any person who has committed or is
committing in his presence any of the offenses defined in this chapter. He shall
also seize and confiscate, in favor of the Government, the tools and equipment
used in committing the offense, and the forest products cut, gathered or taken by
the offender in the process of committing the offense. x x x (Emphasis supplied)
Petitioner was in possession of the lumber without the necessary documents when the police
officers accosted him. In open court, petitioner categorically admitted the possession and
ownership of the confiscated lumber as well as the fact that he did not have any legal
documents therefor and that he merely intended to use the lumber for the repair of his
dilapidated house. Mere possession of forest products without the proper documentation
consummates the crime. Dura lex sed lex. The law may be harsh but that is the law.

On the penalty imposed by the lower courts, we deem it necessary to discuss the matter.
Violation of Section 68 of the Forestry Code is punished as Qualified Theft with the penalties
imposed under Articles 309 and 310 of the Revised Penal Code,[18]thus:

Art. 309. Penalties. - Any person guilty of theft shall be punished by:

1. The penalty of prisin mayor in its minimum and medium periods, if the value of
the thing stolen is more than 12,000 pesos but does not exceed 22,000 pesos;
but if the value of the thing stolen exceeds the latter amount, the penalty shall
be the maximum period of the one prescribed in this paragraph, and one year for
each additional ten thousand pesos, but the total of the penalty which may be
imposed shall not exceed twenty years. In such cases, and in connection with
the accessory penalties which may be imposed and for the purpose of the other
provisions of this Code, the penalty shall be termed prisin mayor or reclusin
temporal, as the case may be.

2. The penalty of prisin correccional in its medium and maximum periods, if the
value of the thing stolen is more than 6,000 pesos but does not exceed 12,000
pesos.

3. The penalty of prisin correccional in its minimum and medium periods, if the
value of the property stolen is more than 200 pesos but does not exceed 6,000
pesos.

4. Arresto mayor in its medium period to prisin correccional in its minimum

period, if the value of the property stolen is over 50 pesos but does not exceed
200 pesos.

5. Arresto mayor to its full extent, if such value is over 5 pesos but does not
exceed 50 pesos.

6. Arresto mayor in its minimum and medium periods, if such value does not
exceed 5 pesos.

7. Arresto menor or a fine not exceeding 200 pesos, if the theft is committed
under the circumstances enumerated in paragraph 3 of the next preceding
article and the value of the thing stolen does not exceed 5 pesos. If such value
exceeds said amount, the provisions of any of the five preceding subdivisions
shall be made applicable.
 8. Arresto menor in its minimum period or a fine not exceeding 50 pesos, when
the value of the thing stolen is not over 5 pesos, and the offender shall have
acted under the impulse of hunger, poverty, or the difficulty of earning a
livelihood for the support of himself or his family.

Art. 310. Qualified theft . - The crime of qualified theft shall be punished by the
penalties next higher by two degrees than those respectively specified in the
next preceding articles, x x x.

The trial court applied Article 309(3), in relation to Article 310 of the Revised Penal Code,
considering that the amount involved was P1,730.52. However, except for the amount stated
in the Information, the prosecution did not present any proof as to the value of the lumber.
What the prosecution presented were the Seizure Receipt [19] and Confiscation
[20]
Receipt stating the number of pieces of lumber, their species, dimensions and volumes,
with no pertinent supporting document. These do not suffice.

As we have held in Merida v. People,[21] to prove the amount of the property taken for fixing
the penalty imposable against the accused under Article 309 of the Revised Penal Code, the
prosecution must present more than a mere uncorroborated estimate of such fact. In the
absence of independent and reliable corroboration of such estimate, the courts may either
apply the minimum penalty under Article 309 or fix the value of the property taken based on
the attendant circumstances of the case.

Accordingly, the prescribed penalty under Article 309(6) of the Revised Penal Code is arresto
mayor in its minimum and medium periods. However, considering that violation of Section 68
of the Forestry Code is punished as qualified theft under Article 310 of the Revised Penal
Code pursuant to the Forestry Code, the prescribed penalty shall be increased by two
degrees,[22] that is, to prision correccional in its medium and maximum periods or two (2)
years, four (4) months and one (1) day to six (6) years. Taking into account the Indeterminate
Sentence Law, the minimum term shall be taken from anywhere within the range of four (4)
months and one (1) day to two (2) years and four (4) months of arresto mayor, which is the
penalty next lower to the prescribed penalty. We find it proper to impose upon petitioner,
under the circumstances obtaining here, the indeterminate penalty of four (4) months and one
(1) day of arresto mayor, as minimum, to two (2) years, four (4) months and one (1) day
of prision correccional, as maximum.

WHEREFORE, we AFFIRM the appealed Decision convicting petitioner for violation of Section
68 (now Section 77) of the Forestry Code, as amended, with MODIFICATION as regards the
penalty in that petitioner Olympio Revaldo is sentenced to suffer the indeterminate penalty
of four (4) months and one (1) day of arresto mayor, as minimum, to two (2) years, four (4)
months and one (1) day of prision correccional, as maximum.
Revaldo v. People of the Philippines
G.R. No. 170589 April 16, 2009

FACTS:
Petitioner was charged with the offense of illegal possession of premium hardwood lumber in
violation of Section 68 of the Forestry Code. That on or about the 17th day of June 1992,
Revaldo, with intent of gain, did then and there willfully, unlawfully and feloniously possess
96.14 board ft. of flat lumber with a total value of P1,730.52, Philippine Currency, without any
legal document as required under existing forest laws and regulations from proper
government authorities, to the damage and prejudice of the government. Upon arraignment,
petitioner, assisted by counsel, pleaded not guilty. Trial ensued. The RTC rendered judgment
on 1997 convicting petitioner of the offense charged, he appealed and the Court of Appeals
ruled that motive or intention is immaterial for the reason that mere possession of the lumber
without the legal documents gives rise to criminal liability. Hence, this petition for certiorari.
Petitioner contends that the warrantless search and seizure conducted by the police officers
was illegal and thus the items seized should not have been admitted in evidence against him.
Petitioner argues that the police officers were not armed with a search warrant when they
went to his house to verify the report that petitioner had in his possession lumber without the
corresponding license

ISSUE:
Whether or not the evidence obtained without search warrant is admissible in court

HELD:
When the police officers arrived at the house of petitioner, the lumber were lying around the
vicinity of petitioners house. The lumber were in plain view. Under the plain view doctrine,
objects falling in "plain view" of an officer who has a right to be in the position to have that
view are subject to seizure and may be presented as evidence. When asked whether he had
the necessary permit to possess the lumber, petitioner failed to produce one. Petitioner
merely replied that the lumber in his possession was intended for the repair of his house and
for his furniture shop. There was thus probable cause for the police officers to confiscate the
lumber. There was, therefore, no necessity for a search warrant. Petitioner was in possession
of the lumber without the necessary documents when the police officers accosted him. In
open court, petitioner categorically admitted the possession and ownership of the
confiscated lumber as well as the fact that he did not have any legal documents therefor and
that he merely intended to use the lumber for the repair of his dilapidated house. Mere
possession of forest products without the proper documentation consummates the
crime. Dura lex sed lex. The law may be harsh but that is the law. Therefore, the appealed
decision convicting petitioner for violation of Section 68 (now Section 77) of the Forestry
Code is affirmed.

AN ACT PROVIDING FOR BENEFITS AND PRIVILEGES TO SOLO PARENTS AND THEIR
CHILDREN, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines Congress

assembled:

Section 1. Title. - This Act shall be known as the "Solo Parents' Welfare Act of 2000."

Section 2. Declaration of Policy. - It is the policy of the State to promote the family as the
foundation of the nation, strengthen its solidarity and ensure its total development. Towards
this end, it shall develop a comprehensive program of services for solo parents and their
children to be carried out by the Department of Social Welfare and Development (DSWD), the
Department of Health (DOH), the Department of Education, Culture and Sports (DECS), the
Department of the Interior and Local Government (DILG), the Commission on Higher
Education (CHED), the Technical Education and Skills Development Authority (TESDA), the
National Housing Authority (NHA), the Department of Labor and Employment (DOLE) and other
related government and nongovernment agencies.

Section 3. Definition of Terms. - Whenever used in this Act, the following terms shall mean as
follows:
(a) "Solo parent" - any individual who falls under any of the following categories:

(1) A woman who gives birth as a result of rape and other crimes against chastity
even without a final conviction of the offender: Provided, That the mother keeps
and raises the child;

(2) Parent left solo or alone with the responsibility of parenthood due to death of
spouse;

(3) Parent left solo or alone with the responsibility of parenthood while the
spouse is detained or is serving sentence for a criminal conviction for at least
one (1) year;

(4) Parent left solo or alone with the responsibility of parenthood due to physical
and/or mental incapacity of spouse as certified by a public medical practitioner;

(5) Parent left solo or alone with the responsibility of parenthood due to legal
separation or de facto separation from spouse for at least one (1) year, as long as
he/she is entrusted with the custody of the children;

(6) Parent left solo or alone with the responsibility of parenthood due to
declaration of nullity or annulment of marriage as decreed by a court or by a
church as long as he/she is entrusted with the custody of the children;

(7) Parent left solo or alone with the responsibility of parenthood due to
abandonment of spouse for at least one (1) year;

(8) Unmarried mother/father who has preferred to keep and rear her/his
child/children instead of having others care for them or give them up to a welfare
institution;

(9) Any other person who solely provides parental care and support to a child or
children;

(10) Any family member who assumes the responsibility of head of family as a
result of the death, abandonment, disappearance or prolonged absence of the
parents or solo parent.

A change in the status or circumstance of the parent claiming benefits under

this Act, such that he/she is no longer left alone with the responsibility of
parenthood, shall terminate his/her eligibility for these benefits.

(b) "Children" - refer to those living with and dependent upon the solo parent for
support who are unmarried, unemployed and not more than eighteen (18) years of age,
or even over eighteen (18) years but are incapable of self-support because of mental
and/or physical defect/disability.

(c) "Parental responsibility" - with respect to their minor children shall refer to the
rights and duties of the parents as defined in Article 220 of Executive Order No. 209, as
amended, otherwise known as the "Family Code of the Philippines."
 (d) "Parental leave" - shall mean leave benefits granted to a solo parent to enable
him/her to perform parental duties and responsibilities where physical presence is
required.

(e) "Flexible work schedule" - is the right granted to a solo parent employee to vary
his/her arrival and departure time without affecting the core work hours as defined by
the employer.

Section 4. Criteria for Support. - Any solo parent whose income in the place of domicile falls
below the poverty threshold as set by the National Economic and Development Authority
(NEDA) and subject to the assessment of the DSWD worker in the area shall be eligible for
assistance: Provided, however, That any solo parent whose income is above the poverty
threshold shall enjoy the benefits mentioned in Sections 6, 7 and 8 of this Act.

Section 5. Comprehensive Package of Social Development and Welfare Services. - A

comprehensive package of social development and welfare services for solo parents and
their families will be developed by the DSWD, DOH, DECS, CHED, TESDA, DOLE, NHA and DILG,
in coordination with local government units and a nongovernmental organization with proven
track record in providing services for solo parents.

The DSWD shall coordinate with concerned agencies the implementation of the
comprehensive package of social development and welfare services for solo parents and
their families. The package will initially include:

(a) Livelihood development services which include trainings on livelihood skills, basic
business management, value orientation and the provision of seed capital or job
placement.

(b) Counseling services which include individual, peer group or family counseling. This
will focus on the resolution of personal relationship and role conflicts.

(c) Parent effectiveness services which include the provision and expansion of
knowledge and skills of the solo parent on early childhood development, behavior
management, health care, rights and duties of parents and children.

(d) Critical incidence stress debriefing which includes preventive stress management
strategy designed to assist solo parents in coping with crisis situations and cases of
abuse.

(e) Special projects for individuals in need of protection which include temporary
shelter, counseling, legal assistance, medical care, self-concept or ego-building, crisis
management and spiritual enrichment.

Section 6. Flexible Work Schedule. - The employer shall provide for a flexible working
schedule for solo parents: Provided, That the same shall not affect individual and company
productivity: Provided, further, That any employer may request exemption from the above
requirements from the DOLE on certain meritorious grounds.

Section 7. Work Discrimination. - No employer shall discriminate against any solo parent
employee with respect to terms and conditions of employment on account of his/her status.
Section 8. Parental Leave. - In addition to leave privileges under existing laws, parental leave
of not more than seven (7) working days every year shall be granted to any solo parent
employee who has rendered service of at least one (1) year.

Section 9. Educational Benefits. - The DECS, CHED and TESDA shall provide the following
benefits and privileges:

(1) Scholarship programs for qualified solo parents and their children in institutions of
basic, tertiary and technical/skills education; and

(2) Nonformal education programs appropriate for solo parents and their children.

The DECS, CHED and TESDA shall promulgate rules and regulations for the proper
implementation of this program.

Section 10. Housing Benefits. - Solo parents shall be given allocation in housing projects and
shall be provided with liberal terms of payment on said government low-cost housing projects
in accordance with housing law provisions prioritizing applicants below the poverty line as
declared by the NEDA.

Section 11. Medical Assistance. - The DOH shall develop a comprehensive health care
program for solo parents and their children. The program shall be implemented by the DOH
through their retained hospitals and medical centers and the local government units (LGUs)
through their provincial/district/city/municipal hospitals and rural health units (RHUs).

Section 12. Additional Powers and Functions of the DSWD. The DSWD shall perform the
following additional powers and functions relative to the welfare of solo parents and their
families:

(a) Conduct research necessary to: (1) develop a new body of knowledge on solo
parents; (2) define executive and legislative measures needed to promote and protect
the interest of solo parents and their children; and (3) assess the effectiveness of
programs designed for disadvantaged solo parents and their children;

(b) Coordinate the activities of various governmental and nongovernmental

organizations engaged in promoting and protecting the interests of solo parents and
their children; and

(c) Monitor the implementation of the provisions of this Act and suggest mechanisms
by which such provisions are effectively implemented.

Section 13. Implementing Rules and Regulations. - An interagency committee headed by the
DSWD, in coordination with the DOH, DECS, CHED, TESDA, DOLE, NHA, and DILG is hereby
established which shall formulate, within ninety (90) days upon the effectivity of this Act, the
implementing rules and regulations in consultation with the local government units,
nongovernment organizations and people's organizations.

Section 14. Appropriations. - The amount necessary to carry out the provisions of this Act
shall be included in the budget of concerned government agencies in the General
Appropriations Act of the year following its enactment into law and thereafter.1awphil.net
Section 15. Repealing Clause. - All laws, decrees, executive orders, administrative orders or
parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or
modified accordingly.

Section 16. Separability Clause. - If any provision of this Act is held invalid or
unconstitutional, other provisions not affected thereby shall continue to be in full force and
effect.

Section 17. Effectivity Clause. - This Act shall take effect fifteen (15) days following its
complete publication in the Official Gazette or in at least two (2) newspaper of general
circulation.

Approved.

G.R. No. L-6583 February 16, 1912

RAMON FABIE, ET AL., plaintiffs-appellees,

vs.
THE CITY OF MANILA, defendant-appellant.

CARSON, J.:

Ordinance No. 124 of the city of Manila, enacted September 21, 1909, is an amendment of
section 107 of the Revised Ordinances of the city of Manila, enacted June 13, 1908 relating to
the issuance of permits for the erection of buildings. Section 107 so amended reads as
follows:

SEC. 107. Issuance of permits. When the application plans, and specifications
conform to the requirements of this title and of title eleven hereof, the engineer shall
issue a permit for the erection of the building and shall approve such plans and
specifications in writing: Provided, That the building shall about or face upon a public
street or alley or on a private street or alley which has been officially approved. One
copy of all approved plans and specifications shall be returned to the owner or his
agent and one copy shall be retained by the engineer.

The appellees are the owners in common of a large tract of land which forms a part of the
estate known as the Hacienda de Santa Ana de Sapa and which is inclosed between Calle
Herran of the District of Paco and an estero known as Tripa de Gallina, and lying within the
corporate limits of the city of Manila.
On the 26th day of November, 1909, the plaintiffs and appellees sought to obtain from the city
of Manila a building permit authorizing the construction of a small nipa house upon the
property in question. It was claimed that the purpose of the building was to serve as a guard
house in which watchmen might be stationed in order to prevent the carrying away
of zacate from the premises. The permit was denied by the city authorities on the ground that
the site of the proposed building did not conform to the requirements of section 107 of the
Revised Ordinances of the city of Manila, as amended by Ordinance No. 124, which provides:
"That the building shall abut or face upon a public street or alley or on a private street or
alley which has been officially approved." It is the contention of the appellees herein that this
provision is unconstitutional and in violation of the fundamental rights of the property owners
of the city of Manila as guaranteed by the established laws of these Islands and by the
Constitution of the United States, in that it constitutes an invasion of their property rights
without due process of law. The lower court found in favor of appellees and declared the
ordinance null and void, at least to the extent of the above-cited provision. From this
judgment this appeal has been duly perfected. The only question submitted for the
adjudication on this appeal is the constitutionality of the ordinance, and to this question
alone was direct our attention in this opinion.

The appellant, the city of Manila, is a duly organized municipal corporation having full power
and authority to enact lawful ordinances for the protection and security of the lives, health
and property of its citizens. Counsel for appellant insists that the ordinance in question is a
valid exercise of the police power of the city, in that its sold purpose and aim is to effect
these ends by affording better sanitary regulations as well as increased facilities for
protection to property from loss by fire.

It is undoubtedly on of the fundamental duties of the city of Manila to make all reasonable
regulations looking to the preservation and security of the general health of the community,
and the protection of life and property from loss or destruction by fire. All such regulations
have their sanction in what is termed the police power. Much difficulty has been experienced
by the courts and text writers in the attempt to define the police power of the state, and to
set forth its precise limitations. In fact it has been said to be, from its very nature incapable
of any exact definition or limitation. Mr. Thompson in his exhaustive treatise on Corporations
summarizes as follows the conclusions of the leading adjudicated cases and authorities
touching this subject. He says:

Its business is to regulate and protect the security of social order, the life and health of
the citizen, the comfort of an existence in thickly populated communities, the
enjoyment of private and social life, and the beneficial use of property.

And again the same author says:

However courts may differ as to the extent and boundaries of this power, and however
difficult it may be of precise definition, there is a general agreement that it extends to
the protection of the lives, health and property of the citizens, and to the preservation
of good order and the public morals. In the absence of any constitutional prohibition, a
legislature may lawfully prevent all things hurtful to the comfort, safety, and welfare of
society though the prohibition invades the right of liberty or property of an individual.
(Thompson on Corporations, 2d ed., vol. 1, sec. 421.)

In the case of U. S. vs. Toribio (15 Phil. Rep., 92) we had occasion to discuss at length the
police powers of the State, and in the opinion in that case will be found a number of
quotations from textbook and judicial authority, developing and exemplifying the principles on
which the exercise of the police powers of the State have been recognized and applied. But
for the purpose of this opinion the foregoing citations from Thompson's treatise on
Corporations sets forth the doctrine quite satisfactorily, and relying on the reasoning of the
opinion in the case of U. S. vs. Toribio (15 Phil. Rep., 92), it is not necessary to enter at this
time into an extended discussion of the principles on which the doctrine rest.

In accord with the rule laid down in the case of Lawton vs. Steele (152 U. S., 132-134), quoted
at some length in the opinion in the case of U. S. vs. Toribio, to justify the State in the
exercise of it police powers on behalf of the public, it must appear;

First, that the interests of the public generally, as distinguished from those of a
particular class, require such interference; and, second, that the means are reasonably
necessary for the accomplishment of the purpose, and not unduly oppressive upon
individuals. The legislature may not, under the guise of protecting the public interest,
arbitrary interfere with private business, or impose unusual and unnecessary
restrictions upon lawful occupations. In other words, is determination as to what is a
proper exercise of its police powers is not conclusive, but is subject to the supervision
of the court.

It is very clear that the ordinance, if it be held to be reasonable, prescribes a rule in the
interest of the public of the city of Manila generally, as distinguished from the interest of
individuals or of a particular class. In determining its validity, therefore, the only questions
which need be considered, are whether its provisions are or are not reasonably necessary for
the accomplishment of its purposes, and whether they are or are not unduly oppressive upon
individuals.

The purpose and object of the ordinance is avowedly and manifestly to protect and secure
the health, lives and property of the citizens of Manila against the ravages of fire and disease.
The provision that denies permits for the construction of buildings within the city limits
unless they "abut or face upon a public street or alley or on a private street or alley which has
been officially approved," is in our opinion reasonably necessary to secure the end in view.

In the first place it prevents the huddling and crowding of buildings in irregular masses on
single or adjoining tracts of land, and secures an air space on at least one side of each new
residence or other building constructed in the city. The menace to the health and safety of
the residents of Manila resulting from the crowding of nipa shakes, and even more substantial
buildings upon small tracts of land is a matter of common knowledge; and in a community,
exposed as this city is to destructive conflagrations and epidemic diseases, a legislative
measures which tends to prevent the repitition of such unfortunate conditions should not be
judicially declared to be unreasonable, in the absence of the most compelling reasons.

In the second place, the provisions of the ordinance in question manifestly promote the
safety and security of the citizens of Manila and of their property against fire and disease,
especially epidemic disease, by securing the easy and unimpeded approach to all new
buildings: First, of fire engines, and other apparatus for fighting fire; second, of ambulances,
refuse wagons, and apparatus used by the sanitary department in caring for the sanitation of
the city; third, of fire and health inspectors generally; of employees of the fire department and
others engaged in fighting fire; and of employees of the Bureau of Health engaged in their
duty as guardians of the sanitary conditions and general health of the city.
There can be no question as to the intent an purpose of the provision of the ordinance under
discussion. It is manifestly intended to subserve the public health and safety of the citizens
of Manila generally and was not conceived in favor of any class or of particular individuals.
Those charged with the public welfare and safety of the city deemed the enactment of the
ordinance necessary to secure these purposes, and it cannot be doubted that if its
enactment was reasonably necessary to that end it was and is a due and proper exercise of
the police power. We are of opinion that the enforcement of its provisions cannot fail to
redound to the public good, and that it should be sustained on the principle that "the welfare
of the people is the highest law" (salus populi suprema est lex). Indeed having in mind the
controlling public necessity which demands the adoption of proper measures to secure the
ends sought to be attained by the enactment of this provisions of the ordinances; and the
large discretion necessarily vested in the legislative authority to determine not only what the
interests of the public require, but what measures are necessary for the protection of such
interest; we are satisfied that we would not be justified in an attempt to restrict or control
the exercise of that discretion even if the "reasonable necessity" for its exercise in the
particular form actually adopted were much less apparent than it is in this case.

That the ordinance is not "unduly oppressive upon individuals" becomes very clear when the
nature and extent of the limitations imposed by its provisions upon the use of private
property are considered with relation to the public interests, the public health and safety,
which the ordinance seeks to secure. Discussing this question in his opinion to the Municipal
Board relative to the validity and constitutionality of this ordinance, the Attorney-General well
said: "Under the ordinance before us rights in private property are not arbitrary regulated. No
person desiring to erect a building is prohibited from doing so. He can, if necessary, lay out a
private street or the city can extend the public street system. The property may thus be
substantially increased in value rather than the reverse, In brief, the owner's right to the
enjoyment of his property is only interfered with in so far as it is necessary to protect the
rights of others."

To this we may add the following citation from the opinion in the case of
Commonwelth vs. Alger (7 Cush., 53, 84) which to our minds well states the principle in this
regard on which the validity of the of the ordinance in question must be sustained:

We think it is a settled principle, growing out of the nature of well ordered civil society,
that every holder of property, however absolute and unqualified may be his title, holds
it under the implied liability that his use of it may be so regulated that it shall not be
injurious to the rights of the community. . . . Rights of property, like all other social and
conventional rights, are subject to such reasonable limitations in their enjoyment as
shall prevent them from being injurious, and to such reasonable restraints and
regulations established by law, as the legislature, under the governing and controlling
power vested in them by the constitution, may think necessary and expedient.

We conclude that the proviso of the ordinance in question directing: "That the building shall
abut or face upon a public street or alley which has been officially approved," is valid, and
that the judgment of the lower court should be reversed, without special condemnation of
costs. So ordered.
G.R. No. L-6583 February 16, 1912
RAMON FABIE, ET AL., plaintiffs-appellees,
vs.
THE CITY OF MANILA, defendant-appellant.
Acting Attorney-General Harvey for appellant.
Sanz & Opisso for appellees.
CARSON, J.:

FACTS:

On September 21, 1909 the City of Manila enacted Ordinance No. 124, which is an
amendedment of section 107 of the Revised Ordinances of the city of Manila, enacted June
13, 1908 relating to the issuance of permits for the erection of buildings. Sec. 107 of the of
the said ordinance provides: "That the building shall abut or face upon a public street or alley
or on a private street or alley which has been officially approved."

Ramon Fabie, et al sought to obtain a building permit authorizing the construction of a small
nipa house upon the their property which forms a part of Hacienda de Santa Ana de Sapa in
the City of Manila. Their application was denied on the ground that the site of the proposed
building did not conform to the requirements of section 107.

The appellees contend that the provision is unconstitutional and in violation of the
fundamental rights of the property owners of the city of Manila as guaranteed by the
established laws of these Islands and by the Constitution of the United States, in that it
constitutes an invasion of their property rights without due process of law. The lower court
ruled in their favor and declared the ordinance null and void, at least to the extent of the
above-cited provision.

ISSUE: WON the Sec. 107 of the amended Ordinance No. 124 is constitutional. That is if the
requirement set by the City Council of Manila is a valid exercise of it police powers on behalf
of the public

HELD:
The court held that purpose and object of the ordinance is avowedly and manifestly to
protect and secure the health, lives and property of the citizens of Manila against the ravages
of fire and disease. The provision that denies permits for the construction of buildings within
the city limits unless they "abut or face upon a public street or alley or on a private street or
alley which has been officially approved," is in our opinion reasonably necessary to secure
the end in view.
There can be no question as to the intent and purpose of the provision of the ordinance under
discussion. It is manifestly intended to subserve the public health and safety of the citizens
of Manila generally and was not conceived in favor of any class or of particular individuals.
Those charged with the public welfare and safety of the city deemed the enactment of the
ordinance necessary to secure these purposes, and it cannot be doubted that if its
enactment was reasonably necessary to that end it was and is a due and proper exercise of
the police power.
The court opined that that the enforcement of its provisions cannot fail to redound to the
public good, and that it should be sustained on the principle that "the welfare of the people is
the highest law" (salus populi suprema est lex).
We conclude that the proviso of the ordinance in question directing: "That the building shall
abut or face upon a public street or alley which has been officially approved," is valid, and
that the judgment of the lower court should be reversed, without special condemnation of
costs

G.R. No. 71479 October 18, 1990

MELLON BANK, N.A., petitioner,

vs.
HON. CELSO L. MAGSINO, in his capacity as Presiding Judge of Branch CLIX of the Regional
Trial Court at Pasig; MELCHOR JAVIER, JR., VICTORIA JAVIER; HEIRS OF HONORIO
POBLADOR, JR., namely: Elsa Alunan Poblador, Honorio Poblador III, Rafael Poblador, Manuel
Poblador, Ma. Regina Poblador, Ma. Concepcion Poblador & Ma. Dolores Poblador; F.C.
HAGEDORN & CO., INC.; DOMINGO JHOCSON, JR.; JOSE MARQUEZ; ROBERTO GARINO;
ELNOR INVESTMENT CO., INC.; PARAMOUNT FINANCE CORPORATION; RAFAEL CABALLERO;
and TRI-ARC INVESTMENT and MANAGEMENT CO., INC. respondents.

FERNAN, C.J.:

The issue in the instant special civil action of certiorari is whether or not, by virtue of the
principle of election of remedies, an action filed in California, U.S.A., to recover real property
located therein and to constitute a constructive trust on said property precludes the filing in
our jurisdiction of an action to recover the purchase price of said real property.

On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First National
Bank of Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the Prudential
Bank. Accordingly, the First National Bank requested the petitioner, Mellon Bank, to effect the
transfer. Unfortunately the wire sent by Mellon Bank to Manufacturers Hanover Bank, a
correspondent of Prudential Bank, indicated the amount transferred as "US$1,000,000.00"
instead of US$1,000.00. Hence Manufacturers Hanover Bank transferred one million dollars
less bank charges of $6.30 to the Prudential Bank for the account of Victoria Javier.

On June 3, 1977, Javier opened a new dollar account (No. 343) in the Prudential Bank and
deposited $999,943.70. Immediately their, Victoria Javier and her husband, Melchor Javier,
Jr., made withdrawals from the account, deposited them in several banks only to withdraw
them later in an apparent plan to conceal, "launder" and dissipate the erroneously sent
amount.

On June 14, 1977, Javier withdrew $475,000 from account No. 343 and converted it into eight
cashier's checks made out to the following: (a) F.C. Hagedorn & Co., Inc., two cheeks for the
total amount of P1,000,000; (b) Elnor Investment Co., Inc., two checks for P1,000,000; (c)
Paramount Finance Corporation, two checks for P1,000,000; and (d) M. Javier, Jr., two checks
for P496,000. The first six checks were delivered to Jose Marquez and Honorio Poblador, Jr.

It appears that Melchor Javier, Jr. had requested Jose Marquez, a realtor, to look for
properties for sale in the United States. Marquez offered a 160-acre lot in the Mojave desert
in California City which was owned by Honorio Poblador, Jr. Javier, without having seen the
property, agreed to buy it for P3,236,800 (US$437,405) although it was actually appraised at
around $38,500. Consequently, as Poblador's agent, Marquez executed in Makati a deed of
absolute sale in favor of the Javiers and had the document notarized in Manila before an
associate of Poblador. Marquez executed another deed of sale indicating receipt of the
purchase price and sent the deed to the Kern County Registrar in California for registration.

Inasmuch as Poblador had requested that the purchase price should not be paid directly to
him, the payment of P3,000,000 was coursed through Elnor Investment Co., Inc., allegedly
Poblador's personal holding company; Paramount Finance, allegedly headed by Poblador's
brother, and F.C. Hagedorn, allegedly a stock brokerage with extensive dealings with
Poblador. The payment was made through the aforementioned six cashier's checks while the
balance of P236,000 was paid in cash by Javier who did not even ask for a receipt.

The two checks totalling P1,000,000 was delivered by Poblador to F.C. Hagedorn with specific
instructions to purchase Atlas, SMC and Philex shares. The four checks for P2,000,000 with
Elnor Investment and Paramount Finance as payees were delivered to the latter to purchase
"bearer" notes.

Meanwhile, in July, 1977, Mellon Bank filed a complaint docketed as No. 148056 in the
Superior Court of California, County of Kern, against Melchor Javier, Jane Doe Javier, Honorio
Poblador, Jrn, and Does I through V. In its first amended complaint to impose constructive
trust dated July 14, 1977, 1 Mellon Bank alleged that it had mistakenly and inadvertently
cause the transfer of the sum of $999,000.00 to Jane Doe Javier; that it believes that the
defendants had withdrawn said funds; that "the defendants and each of them have used a
portion of said funds to purchase real property located in Kern County, California"; and that
because of defendants' knowledge of Mellon Bank's mistake and inadvertence and their use
of the funds to purchase the property, they and "each of them are involuntary or constructive
trustees of the real property and of any profits therefrom, with a duty to convey the same to
plaintiff forthwith." It prayed that the defendants and each of them be declared as holders of
the property in trust for the plaintiff; that defendants be compelled to transfer legal title and
possession of the property to the plaintiff; that defendants be made to pay the costs of the
suit, and that other reliefs be granted them.

On July 29, 1977, Mellon Bank also filed in the Court of First Instance of Rizal, Branch X, a
complaint against the Javier spouses, Honorio Poblador, Jr., Domingo L. Jhocson, Jr., Jose
Marquez, Roberto Gario, Elnor Investment Co., Inc., F.C. Hagedorn & Co., Inc. and Paramount
Finance Corporation. After its amendment, Rafael Caballero and Tri-Arc Investment &
Management Company, Inc. were also named defendants. 2

The amended and supplemental complaint alleged the facts set forth above and added that
Roberto Gario, chief accountant of Prudential Bank, and who was the reference of Mrs.
Ventosa's dollar remittances to Victoria Javier, immediately informed the Javiers of the
receipt of US$1,000,000.00; that knowing the financial circumstances of Mrs. Ventosa and
the fact that a mistake had been committed, the Javiers, with undue haste, took unlawful
advantage of the mistake, withdrew the whole amount and transferred the same to a "343
dollar account"; that, aided and abetted by Poblador and Domingo L. Jhocson, the Javiers
"compounded and completed the conversion" of the funds by withdrawing from the account
dollars or pesos equivalent to US $975,000; that by force of law, the Javiers had been
constituted trustees of an implied trust for the benefit of Mellon Bank with a clear duty to
return to said bank the moneys mistakenly paid to them; that, upon request of Mellon Bank
and Manufacturers Hanover Bank, Prudential Bank informed the Javiers of the erroneous
transmittal of one million dollars first orally and later by letter-demand; that conferences
between the representatives of the Javiers, led by Jhocson and Poblador, in the latter's
capacity as legal and financial counsel, and representatives of Mellon Bank, proved futile as
the Javiers claimed that most of the moneys had been irretrievably spent; that the Javiers
could only return the amount if the Mellon Bank should agree to make an absolute quitclaim
and waiver of future rights against them, and that in a scheme to conceal and dissipate the
funds, through the active participation of Jose Marquez, the Javiers bought the California
property of Poblador.

It further alleged that trust fund moneys totalling P3,000,000.00 were made payable to
Hagedorn Paramount and Elnor; that Hagedorn on instructions of Poblador, purchased shares
of stock at a stock exchange for P1,000,000.00 but later, it hastily sold said shares at a loss
of approximately P150,000.00 to the prejudice of the plaintiff; that proceeds of the sale were
deposited by Hagedorn in the name of Poblador and/or the law office of Poblador, Nazareno,
Azada, Tomacruz and Paredes; that dividends declared on the shares were delivered by
Hagedorn to Caballero after the complaint had been filed and thereafter, Caballero deposited
the dividends in his personal account; that after receiving the P1,000,000.00 trust money,
Paramount issued promissory notes upon maturity of which Paramount released the amount
to unknown persons; that Elnor also invested P1,000,000.00 in Paramount for which the latter
also issued promissory notes; that after the filing of the complaint, counsel for plaintiff
requested Paramount not to release the amount after maturity; that in evident bad faith, Elnor
transferred the non-negotiable Paramount promissory notes to Tri-Arc. that when the notes
matured, Paramount delivered the proceeds of P1,000,000.00 to Tri-Arc; that Poblador knew
or should have known that the attorney's fees he received from the Javiers came from the
trust funds; and that despite formal demands even after the filing of the complaint, the
defendants refused to return the trust funds which they continued concealing and
dissipating.

It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and Gario be ordered to account for
and pay jointly and severally unto the plaintiff US$999,000.00 plus increments, additions,
fruits and interests earned by the funds from receipt thereof until fully paid; (b) the other
defendants be ordered to account for and pay unto the plaintiff jointly and severally with the
Javiers to the extent of the amounts which each of them may have received directly or
indirectly from the US$999,000.00 plus increments, additions, fruits and interests; (c)
Marquez be held jointly and severally liable with Poblador for the amount received by the
latter for the sale of the 160-acre lot in California City; and (d) defendants be likewise held
liable jointly and severally for attomey's fees and litigation expenses plus exemplary
damages.

In due course, the defendants filed their answers and hearing of the case ensued. In his
testimony, Jose Marquez stated that Prudential Bank and Trust Company checks Nos. 2530
and 2531 in the respective amounts of P100,000 and P900,000 payable to F. C. Hagedorn were
delivered to him by Melchor Javier, Jr. as partial consideration for the sale of Poblador's
property in California. After receiving the checks, Hagedorn purchased shares of Atlas
Mining, Philex, Marcopper and San Miguel Corporation for Account No. 3000, which, according
to Fred Hagedorn belonged to the law office of Poblador. 3

F.C. Hagedorn & Co., Inc. then sold the shares for P874,490.75 as evidenced by HSBC check
No. 339736 for P400,000 and HSBC check No. 339737 for P474,490.75 payable to "cash".
Mellon Bank traced these checks to Account 2825-1 of the Philippine Veterans Bank in the
name of Cipriano Azada, Poblador's law partner and counsel to the Javiers. 4

An employee of the Philippine Veterans Bank thereafter introduced the specimen signature
cards for Account No. 2825-1 thereby confirming Azada's ownership of the account.
Defendants objected to this testimony on the grounds of Azada's absence, the confidentiality
of the bank account, and the best evidence rule. The court overruled the objection. Another
employee of the Philippine Veterans Bank then presented the ledger card for Account No.
2825-1, a check deposit slip and a daily report of returned items. The defendants objected but
they were again overruled by the court.

Mellon Bank then subpoenaed Erlinda Baylosis of the Philippine Veterans Bank to show that
Azada deposited HSBC checks No. 339736 and 339737 amounting to P874,490.75 in his
personal current account with said bank. It also subpoenaed Pilologo Red, Jr. of Hongkong &
Shanghai Banking Corporation to prove that said amount was returned by Azada to Hagedorn.

The testimonies of these witnesses were objected to by the defense on the grounds of res
inter alios acta, immateriality, irrelevancy and confidentiality. To resolve the matter, the court
ordered the parties to submit memoranda. The defendants' objections were also discussed at
the hearing on July 13, 1982. For the first time, Poblador's counsel raised the matter of
"election of remedies." 5

At the July 20, 1982 hearing, the lower court, then presided by Judge Eficio Acosta,
conditionally allowed the testimonies of Baylosis and Red. Baylosis afffirmed that Azada
deposited checks Nos. 339736 and 339737 in the total amount of P874,490.75 in his personal
account with the Philippine Veterans Bank but almost simultaneously, Azada issued his PVB
check for the same amount in favor of Hagedorn Consequently, Azada's check initially
bounced. For his part, Red testified that Azada's check for P874,490.75 was received by the
Hongkong & Shanghai Banking Corporation and credited to the account of Hagedorn .

The defendants then moved to strike off the testimonies of Baylosis and Red from the record.
Defendant Paramount Finance Corporation, which is not a party to the California case,
thereafter filed its memorandum raising the matter of "election of remedies". It averred that
inasmuch as the Mellon Bank had filed in California an action to impose constructive trust on
the California property and to recover the same, Mellon Bank can no longer try to regain the
purchase price of the same property through Civil Case No. 26899. The other defendants
adopted Paramount's stand.

After Mellon Bank filed its reply to the memorandum of Paramount, on September 10, 1982,
Judge Acosta issued a resolution ordering that the testimonies of Baylosis and Red and the
documents they testified on, which were conditionally allowed, be stricken from the
records. 6 Judge Acosta explained:

After a judicious evaluation of the arguments of the parties the Court is of the
view that in cases where money held in trust was diverted by the trustee, under
the "rule of trust pursuit" the beneficiary "may elect whether to accept the trust
estate in its new form or hold the trustee responsible for it in its original
condition" (Lathrop vs. Hampton, 31 Cal. 17; Zodos vs. Marefalos 48 Idaho 291;
Bahle vs. Hasselbrach 64 NW Eq. 334, 51 Sections 508-76 Am Jur. 2d p. 475), and
that "an election to pursue one remedy waives and bars pursuit of any
inconsistent remedy"(76 Am Jur. 2d S253). The instant complaint among others
is for the recovery of the purchase price of the Kern property as held in trust for
the plaintiff while in the California case the plaintiff maintains that the Kern
property is held in trust for the plaintiff, which positions are inconsistent with
each other. Neither can the plaintiff now abandon his complaint for the recovery
of the Kern property and pursue his complaint for the recovery of the purchase
price of said property for "if he has first sought to follow the res, the plaintiff
cannot thereafter hold the trustee personally responsible" and "when once there
has been an election to do one of two things, you cannot retract it and do the
other thing. The election once made is finally made." (Fowler vs. Bowvery
Savings Bank 113 N.Y. 450, 21 N.E. 172, 4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280,
23, Abb. N. Cos. 133065 C. J. p. 980 Note 32).

The fact that the California case has been stayed pending determination of the
instant case only means that should this case be dismissed, the California case
can proceed to its final determination.

Furthermore, when the plaintiff filed the California case for the transfer of legal
title and possession of the Kern property to the plaintiff it in effect ratified the
transaction for "by taking the proceeds or product of a wrongful transfer of trust
property or funds, the beneficiary ratifies the transaction" (Board of
Commissioner vs. Strawn [CA6 Ohio] 157 F. 49, 76 Am Jur. 2d Section 253).
Consequently the purchase price of the California property received by
defendant Poblador from Javier is no longer the proper subject matter of
litigation and the movement and disposition of the purchase price is therefore
within the scope of the absolutely confidential nature of bank deposits as
provided by Sec. 2, R.A. 1405 as amended by PD No. 1792.
Mellon Bank moved for reconsideration, alleging that said order prevented the presentation of
evidence on the purchase price of the California property; that the California case cannot be
considered a waiver of the pursuit of the purchase price as even if said case was filed fifteen
days prior to the filing of the original complaint in this case, except for the Javiers, no other
defendants raised in their answers the affirmative defense of the filing of the California case;
that after the amendment of the complaint, none of the defendants raised the matter of
"election of remedies" in their answers; that realizing this procedural error, Paramount sought
the amendment of its answer to reflect the "defence" of "election of remedies"; that,
disregarding its previous orders allowing evidence and testimonies on Account No. 2825-1,
the court made a turnabout and ruled that the testimonies on said account were irrelevant
and confidential under Republic Act No. 1405; that Philippine law and jurisprudence does not
require the election of remedies for they favor availment of all remedies; that even United
States jurisprudence frowns upon election of remedies if it will lead to an inequitable result;
that, as held by this Court in Radiowealth vs. Javier, 7 there can be no binding election of
remedies before the decision on the merits is had; that until Mellon Bank gets full recovery of
the trust moneys, any contention of election of remedy is premature, and that, the purchase
price being the subject of litigation, inquiring into its movement, including its deposit in
banks, is allowed under Republic Act No. 1405.

Defendants filed their respective comments and oppositions to the motion for
reconsideration. In its reply, the Mellon Bank presented proof to the effect that in the
California case, defendants filed motions to stake out the cross-complaint of Mellon Bank, for
summary judgment and to stay or dismiss the action on the ground of inconvenient forum but
the first two motions and the motion to dismiss were denied "without prejudice to renew
upon determination of the Philippine action." The motion to stay proceedings was "granted
until determination of the Philippine action." 8

On October 28, 1983, the lower court, through Judge Acosta, denied the motion for
reconsideration and ordered the continuation of the hearing (Rollo, p. 182). The plaintiff filed
a motion for the reconsideration of both the September 10, 1982 and October 28, 1983 orders.
After the parties had filed comments, opposition and reply, the court, through Judge Celso L.
Magsino, denied Mellon Bank's second motion for reconsideration on the ground that it was
"prescribed by the 1983 Interim Rules of Court" in an order dated July 9, 1985. 9

The court ruled that the determination of the relevancy of the testimonies of Baylosis and
Red was "premised directly and principally" on whether or not Mellon Bank could still recover
the purchase price of the California property notwithstanding the filing of the case in
California to recover title and possession of the said property. After quoting the resolution of
September 10, 1982, the Court ruled that it was a "final order or a definitive judgment with
respect to the claim of plaintiff for the recovery" of the purchase price of the California
property. It stated:

The adjudication in the Order of September 10, 1982 and the Order of October 28,
1983, which has the effect of declaring that plaintiff has no cause of action
against the defendants for the recovery of the proceeds of the sale of Kern
property in the amount of Three Million Three Hundred Fifty Thousand Pesos
(P3,500,000.00 [sic]) for having filed a complaint for the recovery of the Kern
property in the Superior Court of California, County of Kern is a final and
definitive disposition of the claim of the plaintiff to recover in the instant action
the proceeds of sale of said property against the defendants. The issue of
"election of remedy" by the plaintiff was lengthily and thoroughly discussed and
 argued by the parties before the rendition of the resolution of September 10,
1982, and in the motion for reconsideration and oppositions thereto before its
resolution in the Order of October 28, 1983. Such issue is a substantive one as it
refers to the existence of plaintiffs cause of action to recover the proceeds of
the sale of the Kern property in this action, and that issue was presented to the
Court as if a motion to dismiss or a preliminary hearing of an affirmative defense
on the ground that plaintiff has no cause of action, and was resolved against
plaintiff in the Order of September 10, 1982, after a full hearing of all the
parties. Said Order of September 10, 1982 has the effect of putting an end to the
controversy between the parties as to the right of plaintiff to claim or recover the
proceeds of the sale of the Kern property from the defendants. It is therefore an
adjudication upon the merits. 10

Hence, Mellon Bank filed the instant petition for certiorari claiming that the resolution of
September 10, 1982 and the orders of October 28, 1983 and July 9, 1985 are void for being
unlawful and oppressive exercises of legal authority, subversive of the fair administration of
justice, and in excess of jurisdiction. The petition is founded on its allegations that: (a) the
resolution of September 10, 1982 is interlocutory as it does not dispose of Civil Case No.
26899 completely: (b) the evidence stricken from the records is relevant on the basis of the
allegations of the amended and supplemental complaint, and (c) the doctrine of election of
remedies, which has long been declared obsolete in the United States, is not applicable in
this case.

With the exception of the Javiers, all the respondents filed their respective comments on the
petition. Having failed to file said comment, the Javiers' counsel of record, Azada, Tomacruz
& Cacanindin, 11 was required to show cause why disciplinary action should not be taken
against it. And, having also failed to show cause, it was fined P300.

In his motion for reconsideration of the resolution imposing said fine, Cipriano Azada alleged
that in Civil Case No. 26899, the Javiers were indeed represented by the law firm of Poblador,
Azada, Tomacruz & Cacanindin but he was never the lawyer of the Javiers' in his personal
capacity; that after the death of Honorio Poblador, Jr., he had withdrawn from the
partnership; that he is the counsel of the Administratrix of the Estate of Honorio Poblador, Jr.
for which he had filed a comment, and that should the Court still require him to file comment
for the Javiers despite the lack of client-lawyer relationship, he would adopt the comment he
had filed for the said Administratrix. 12

In its effort to locate the Javiers so that their side could be heard, we required the petitioner
to furnish us with the Javiers' address as well as the name and address of their counsel. 13 In
compliance therewith, counsel for petitioner manifested that the Javiers had two known
addresses in San Juan, Metro Manila and in Sampaloc, Manila; that since their conviction in
Crim. Case No. CCC-VII 2369-P.C. of the Pasig Regional Trial Court, the Javiers had gone into
hiding and warrants for their arrest still remain unserved; 14 that the Javiers' counsel of
record in Civil Case No. 26899 is Atty. Cipriano Azada; that the same counsel appeared for the
Javiers in Criminal Case No. 39851 of the Pasig Regional Trial Court which is a tax evasion
case filed by the Republic of the Philippines, and that during the hearings of the civil and tax
evasion cases against the Javiers, Atty. Cipriano Azada, Jr. represented them. 15

Inasmuch as copies of the resolution requiring comment on the petition and the petition itself
addressed to Melchor Javier were returned with the notations "moved" and "deceased", the
Court required that said copies be sent to Mrs. Javier herself and that petitioner should
inform the Court of the veracity of Javier's death. 16 A copy of the resolution addressed to
Mrs. Javier was returned also with the notation "deceased." 17

Counsel for petitioner accordingly informed the Court that he learned that the Javiers had
fled the country and that he had no way of verifying whether Melchor Javier had indeed
died. 18

In view of these circumstances, the Javiers' comment on the petition shall be dispensed with
as the Court deems the pleadings filed by the parties sufficient bases for resolving this case.
The Javiers shall be served copies of this decision in accordance with Section 6, Rule 13 of
the Rules of Court by delivering said copies to the clerk of court of the lower court, with proof
of failure of both personal service and service by mail.

We hold that the lower court gravely abused its discretion in ruling that the resolution of
September 10, 1982 is a "final and definitive disposition" of petitioner's claim for the
purchase price of the Kern property. The resolution is interlocutory and means no more than
what it states in its dispositive portion-the testimonies of Baylosis and Red and the
documents they testified on, should be stricken from the record.

That the resolution discusses the common-law principle of election of remedies, a subject
matter which shall be dealt with later, is beside the point. It is interlocutory because the
issue resolved therein is merely the admissibility of the plaintiff's evidence. 19 As such, it
does not dispose of the case completely but leaves something more to be done upon its
merits. 20 There are things left undone in Civil Case No. 26899 after the issuance of the
September 10, 1982 resolution not only because of its explicit dispositive portion but also due
to the fact that even until now, the case is still pending and being heard. 21

Furthermore, the lower court's holding in its July 9, 1985 order that petitioner's second
motion for reconsideration is proscribed by the 1983 Interim Rules of Court which disallows
such motion on a final order or judgment, should be rectified. As explained above, the
resolution of September 10, 1982 is not a final one. It also contains conclusions on procedural
matters which, if left unchecked, would prejudice petitioner's substantive rights.

In effect, therefore, the July 9, 1985 order is a shortcut disposition of Civil Case No. 26899 in
total disregard of petitioner's right to a thorough ventilation of its claims. By putting a
premium on procedural technicalities over the resolution of the merits of the case, the lower
court rode roughshod over the basic judicial tenet that litigations should, as much as
possible, be decided on their merits and not on technicalities. 22 The trial court's patent grave
abuse of discretion therefore forces us to exercise supervisory authority to correct its errors
notwithstanding the fact that ordinarily, this Court would not entertain a petition for
certiorari questioning the legality and validity of an interlocutory order. 23

Respondents' principal objection to the testimonies of Baylosis and Red is their alleged
irrelevance to the issues raised in Civil Case No. 26899. The fallacy of this objection comes to
fore upon a scrutiny of the complaint. Petitioner's theory therein is that after the Javiers had
maliciously appropriated unto themselves $999,000, the other private respondents conspired
and participated in the concealment and dissipation of said amount. The testimonies of
Baylosis and Red are therefore needed to establish the scheme to hide the erroneously sent
amount.
Private respondents' protestations that to allow the questioned testimonies to remain on
record would be in violation of the provisions of Republic Act No. 1405 on the secrecy of bank
deposits, is unfounded. Section 2 of said law allows the disclosure of bank deposits in cases
where the money deposited is the subject matter of the litigation. 24Inasmuch as Civil Case
No. 26899 is aimed at recovering the amount converted by the Javiers for their own benefit,
necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to
whatever is concealed by being held or recorded in the name of persons other than the one
responsible for the illegal acquisition. 25

We view respondents' reliance on the procedural principle of election of remedies as part of

their ploy to terminate Civil Case No. 26899 prematurely. With the exception of the Javiers,
respondents failed to raise it as a defense in their answers and therefore, by virtue of Section
2, Rule 9 of the Rules of Court, such defense is deemed waived. 26Notwithstanding its lengthy
and thorough discussion during the hearing and in pleadings subsequent to the answers, the
issue of election of remedies has not, contrary to the lower court's assertion, been elevated
to a "substantive one." Having been waived as a defense, it cannot be treated as if it has
been raised in a motion to dismiss based on the nonexistence of a cause of action.

Moreover, granting that the defense was properly raised, it is inapplicable in this case. In its
broad sense, election of remedies refers to the choice by a party to an action of one of two or
more coexisting remedial rights, where several such rights arise out of the same facts, but
the term has been generally limited to a choice by a party between inconsistent remedial
rights, the assertion of one being necessarily repugnant to, or a repudiation of, the other. In
its technical and more restricted sense, election of remedies is the adoption of one of two or
more coexisting remedies, with the effect of precluding a resort to the others. 27

As a technical rule of procedure, the purpose of the doctrine of election of remedies is not to
prevent recourse to any remedy, but to prevent double redress for a single wrong. 28 It is
regarded as an application of the law of estoppel, upon the theory that a party cannot, in the
assertion of his right occupy inconsistent positions which form the basis of his respective
remedies. However, when a certain state of facts under the law entitles a party to alternative
remedies, both founded upon the Identical state of facts, these remedies are not considered
inconsistent remedies. In such case, the invocation of one remedy is not an election which
will bar the other, unless the suit upon the remedy first invoked shall reach the stage of final
adjudication or unless by the invocation of the remedy first sought to be enforced, the
plaintiff shall have gained an advantage thereby or caused detriment or change of situation to
the other. 29 It must be pointed out that ordinarily, election of remedies is not made until the
judicial proceedings has gone to judgment on the merits. 30

Consonant with these rulings, this Court, through Justice J.B.L. Reyes, opined that while
some American authorities hold that the mere initiation of proceedings constitutes a binding
choice of remedies that precludes pursuit of alternative courses, the better rule is that no
binding election occurs before a decision on the merits is had or a detriment to the other
party supervenes. 31 This is because the principle of election of remedies is discordant with
the modern procedural concepts embodied in the Code of Civil Procedure which Permits a
party to seek inconsistent remedies in his claim for relief without being required to elect
between them at the pleading stage of the litigation. 32

It should be noted that the remedies pursued in the California case and in Civil Case No.
26899 are not exactly repugnant or inconsistent with each other. If ever, they are merely
alternative in view of the inclusion of parties in the latter case who are not named
defendants in the former. The causes of action, although they all stem from the erroneous
transmittal of dollars, are distinct as shown by the complaints lengthily set out above. The
bar of an election of remedies does not apply to the assertion of distinct causes of action
against different persons arising out of independent transactions. 33

As correctly pointed out by the petitioner, the doctrine of election of remedies is not favored
in the United States for being harsh. 34 Its application with regard to two cases filed in two
different jurisdictions is also circumscribed by jurisprudence on abatement of suits. Thus,
in Brooks Erection Co. v. William R. Montgomery & Associates, Inc., 35 it is held:

The pendency of an action in the courts of one state or country is not a bar to
the institution of another action between the same parties and for the same
cause of action in a court of another state or country, nor is it the duty of the
court in which the latter action is brought to stay the same pending a
determination of the earlier action, even though the court in which the earlier
action is brought has jurisdiction sufficient to dispose of the entire controversy.
Nevertheless, sometimes stated as a matter of comity not of right, it is usual for
the court in which the later action is brought to stay proceedings under such
circumstances until the earlier action is determined.

However, in view of the fact that the California court wherein the case for recovery of the
Kern property was first filed against the Javiers had stayed proceedings therein until after
the termination of Civil Case No. 26899, the court below can do no less than expedite the
disposition of said case.

We cannot dispose of this case without condemning in the strongest terms possible the acts
of chicanery so apparent from the records. The respective liabilities of the respondents are
still being determined by the court below. We must warn, however, against the use of
technicalities and obstructive tactics to delay a just settlement of this case. The taking
advantage of the petitioner's mistake to gain sudden and undeserved wealth is marked by
circumstances so brazen and shocking that any further delay will reflect poorly on the kind of
justice our courts dispense. The possible involvement of lawyers in this sorry scheme stamps
a black mark on the legal profession. The Integrated Bar of the Philippines (IBP) must be
made aware of the ostensible participation, if not instigation, in the spiriting away of the
missing funds. The IBP must take the proper action at the appropriate time against all
lawyers involved in any misdeeds arising from this case.

WHEREFORE, the resolution of September 10, 1982 and the orders of October 28, 1982 and
July 9, 1985 are hereby annulled. The lower court is ordered to proceed with dispatch in the
disposition of Civil case No. 26899, considering that thirteen (13) years have gone by since
the original erroneous remittance.

Service of this decision on the Javier spouses shall be in accordance with Section 6, Rule 13
of the Rules of Court. A copy of this decision shall be served on the Integrated Bar of the
Philippines.

The decision is immediately executory. Costs against private respondents.

G.R. No. 71479 October 18, 1990
Section 2 of said law allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. Inasmuch as Civil Case No. 26899 is aimed
at recovering the amount converted by the Javiers for their own benefit, necessarily, an
inquiry into the whereabouts of the illegally acquired amount extends to whatever is
concealed by being held or recorded in the name of persons other than the one responsible
for the illegal acquisition.
Facts: On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First
National Bank of Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the
Prudential Bank. Accordingly, the First National Bank requested the petitioner, Mellon Bank,
to effect the transfer. Unfortunately the wire sent by Mellon Bank to Manufacturers Hanover
Bank, a correspondent of Prudential Bank, indicated the amount transferred as
US$1,000,000.00 instead of US$1,000.00. Hence Manufacturers Hanover Bank transferred
one million dollars less bank charges of $6.30 to the Prudential Bank for the account of
Victoria Javier.

Javier withdrew $475,000 from account No. 343 and converted it into eight cashiers checks
made out to the following: (a) F.C. Hagedorn & Co., Inc., two cheeks for the total amount of
P1,000,000; (b) Elnor Investment Co., Inc., two checks for P1,000,000; (c) Paramount Finance
Corporation, two checks for P1,000,000; and (d) M. Javier, Jr., two checks for P496,000. Javier
also brought several properties in the United States including the one of his lawyer, Poblador.

Mellon Bank filed a complaint docketed as No. 148056 in the Superior Court of California,
County of Kern, against Melchor Javier, Jane Doe Javier, Honorio Poblador, Jrn, and Does I
through V. In its first amended complaint to impose constructive trust. The testimonies of
these witnesses were objected to by the defense on the grounds of res inter alios acta,
immateriality, irrelevancy and confidentiality due to RA 1405. The Javier spouses also
contend that inasmuch as the Mellon Bank had filed in California an action to impose
constructive trust on the California property and to recover the same.

Issue:1) Whether or not an account deposit which is relevant and material to the resolution of
the case may be covered under R.A. No. 1405.

2) Whether or not the principle of election of remedies bars recovery of Mellon Bank

Held:
1) Whether or not an account deposit which is relevant and material to the resolution of the
case may be covered under R.A. No. 1405.

Yes. Section 2 of said law allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. 24 Inasmuch as Civil Case No. 26899 is
aimed at recovering the amount converted by the Javiers for their own benefit, necessarily,
an inquiry into the whereabouts of the illegally acquired amount extends to whatever is
concealed by being held or recorded in the name of persons other than the one responsible
for the illegal acquisition.

2) Whether or not the principle of election of remedies bars recovery of Mellon Bank
The spouses Javiers reliance on the procedural principle of election of remedies as part of
their ploy to terminate Civil Case No. 26899 prematurely. With the exception of the Javiers,
respondents failed to raise it as a defense in their answers and therefore, by virtue of Section
2, Rule 9 of the Rules of Court, such defense is deemed waived. 26 Notwithstanding its
lengthy and thorough discussion during the hearing and in pleadings subsequent to the
answers, the issue of election of remedies has not, contrary to the lower courts assertion,
been elevated to a substantive one. Having been waived as a defense, it cannot be treated
as if it has been raised in a motion to dismiss based on the nonexistence of a cause of action.

Moreover, granting that the defense was properly raised, it is inapplicable in this case. In its
broad sense, election of remedies refers to the choice by a party to an action of one of two or
more coexisting remedial rights, where several such rights arise out of the same facts, but
the term has been generally limited to a choice by a party between inconsistent remedial
rights, the assertion of one being necessarily repugnant to, or a repudiation of, the other. In
its technical and more restricted sense, election of remedies is the adoption of one of two or
more coexisting remedies, with the effect of precluding a resort to the others.

REPUBLIC ACT No. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING

INSTITUTION AND PROVIDING PENALTY THEREFOR.

Section 1. It is hereby declared to be the policy of the Government to give encouragement to

the people to deposit their money in banking institutions and to discourage private hoarding
so that the same may be properly utilized by banks in authorized loans to assist in the
economic development of the country.

Section 2. 1 All deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the Philippines, its
political subdivisions and its instrumentalities, are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of the depositor, or in
cases of impeachment, or upon order of a competent court in cases of bribery or dereliction
of duty of public officials, or in cases where the money deposited or invested is the subject
matter of the litigation.

Section 3. It shall be unlawful for any official or employee of a banking institution to disclose
to any person other than those mentioned in Section two hereof any information concerning
said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations
which are inconsistent with the provisions of this Act are hereby repealed.

Section 5. Any violation of this law will subject offender upon conviction, to an imprisonment
of not more than five years or a fine of not more than twenty thousand pesos or both, in the
discretion of the court.

Section 6. This Act shall take effect upon its approval.

Approved: September 9, 1955

Footnote

1
This Section and Section 3 were both amended by PD No. 1792 issued January 16,
1981, PD 1792 was expressly repealed by Sec 135 of R.A. No. 7653, approved June 14,
1993. The original sections 2 and 3 of R.A. No.1405 are hereby reproduced for
reference, as follows; "Sec 2 All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by the Government
of the Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may not be examined, inquired
or looked into by any person, government official, bureau or office, except upon written
per-mission of the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials. or in cases where the
money deposited or invested is the subject matter of the litigation," "Sec. 3. It shall be
unlawful for any official or employee of a banking institution to disclose to any person
other than those mentioned in Section two hereof any information concerning said
deposits."

JUDITH YU, G.R. No. 170979

DECISION
BRION, J.:

We resolve the petition for prohibition filed by petitioner Judith Yu to enjoin respondent Judge
Rosa Samson-Tatad of the Regional Trial Court ( RTC), Branch 105, Quezon City, from taking
further proceedings in Criminal Case No. Q-01-105698, entitled People of the Philippines v.
Judith Yu, et al.[1]

The Factual Antecedents

The facts of the case, gathered from the parties pleadings, are briefly summarized
below.
Based on the complaint of Spouses Sergio and Cristina Casaclang, an information for
estafa against the petitioner was filed with the RTC.
In a May 26, 2005 decision, the RTC convicted the petitioner as charged. It imposed on
her a penalty of three (3) months of imprisonment ( arresto mayor), a fine of P3,800,000.00
with subsidiary imprisonment, and the payment of an indemnity to the Spouses Casaclang in
the same amount as the fine.[2]
Fourteen (14) days later, or on June 9, 2005, the petitioner filed a motion for new trial
with the RTC, alleging that she discovered new and material evidence that would exculpate
her of the crime for which she was convicted.[3]
In an October 17, 2005 order, respondent Judge denied the petitioners motion for new
trial for lack of merit.[4]
On November 16, 2005, the petitioner filed a notice of appeal with the RTC, alleging
that pursuant to our ruling in Neypes v. Court of Appeals,[5] she had a fresh period of 15 days
from November 3, 2005, the receipt of the denial of her motion for new trial, or up to
November 18, 2005, within which to file a notice of appeal.[6]
On November 24, 2005, the respondent Judge ordered the petitioner to submit a copy
of Neypes for his guidance.[7]
On December 8, 2005, the prosecution filed a motion to dismiss the appeal for being
filed 10 days late, arguing that Neypes is inapplicable to appeals in criminal cases.[8]
On January 4, 2006, the prosecution filed a motion for execution of the decision. [9]
On January 20, 2006, the RTC considered the twin motions submitted for resolution.
On January 26, 2006, the petitioner filed the present petition for prohibition with prayer
for the issuance of a temporary restraining order and a writ of preliminary injunction to enjoin
the RTC from acting on the prosecutions motions to dismiss the appeal and for the execution
of the decision.[10]
The Petition
The petitioner argues that the RTC lost jurisdiction to act on the prosecutions motions
when she filed her notice of appeal within the 15-day reglementary period provided by the
Rules of Court, applying the fresh period rule enunciated in Neypes.
The Case for the Respondents
The respondent People of the Philippines, through the Office of the Solicitor General
(OSG), filed a manifestation in lieu of comment, stating that Neypes applies to criminal
actions since the evident intention of the fresh period rule was to set a uniform appeal period
provided in the Rules.[11]
In view of the OSGs manifestation, we required the Spouses Casaclang to comment on
the petition.[12]
In their comment, the Spouses Casaclang aver that the petitioner cannot seek refuge
in Neypes to extend the fresh period rule to criminal cases because Neypes involved a civil
case, and the pronouncement of standardization of the appeal periods in the Rules referred to
the interpretation of the appeal periods in civil cases, i.e., Rules 40, 41, 42 and 45, of the
1997 Rules of Civil Procedure among others; nowhere in Neypes was the period to appeal in
criminal cases, Section 6 of Rule 122 of the Revised Rules of Criminal Procedure, mentioned.
[13]

Issue
 The core issue boils down to whether the fresh period rule enunciated
in Neypes applies to appeals in criminal cases.
The Courts Ruling
We find merit in the petition.
The right to appeal is not a constitutional, natural or inherent right it is a statutory
privilege and of statutory origin and, therefore, available only if granted or as provided by
statutes. It may be exercised only in the manner prescribed by the provisions of the law.
[14]
The period to appeal is specifically governed by Section 39 of Batas Pambansa Blg. 129
(BP 129),[15] as amended, Section 3 of Rule 41 of the 1997 Rules of Civil Procedure, and
Section 6 of Rule 122 of the Revised Rules of Criminal Procedure.

Section 39 of BP 129, as amended, provides:

SEC. 39. Appeals. The period for appeal from final orders, resolutions,
awards, judgments, or decisions of any court in all cases shall be fifteen (15)
days counted from the notice of the final order, resolution, award, judgment, or
decision appealed from: Provided, however, That in habeas corpus cases, the
period for appeal shall be forty-eight (48) hours from the notice of the judgment
appealed from.

Section 3, Rule 41 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. The appeal shall be taken within

fifteen (15) days from notice of the judgment or final order appealed from. Where
a record on appeal is required, the appellant shall file a notice of appeal and a
record on appeal within thirty (30) days from notice of the judgment or final
order.
The period of appeal shall be interrupted by a timely motion for new trial
or reconsideration. No motion for extension of time to file a motion for new trial
or reconsideration shall be allowed.
Section 6, Rule 122 of the Revised Rules of Criminal Procedure reads:

SEC. 6. When appeal to be taken. An appeal must be taken within fifteen

(15) days from promulgation of the judgment or from notice of the final order
appealed from. This period for perfecting an appeal shall be suspended from the
time a motion for new trial or reconsideration is filed until notice of the order
overruling the motion has been served upon the accused or his counsel at which
time the balance of the period begins to run.
In Neypes, the Court modified the rule in civil cases on the counting of the 15-day
period within which to appeal. The Court categorically set a fresh period of 15 days from a
denial of a motion for reconsideration within which to appeal, thus:

The Supreme Court may promulgate procedural rules in all courts. It has
the sole prerogative to amend, repeal or even establish new rules for a more
simplified and inexpensive process, and the speedy disposition of cases. In the
rules governing appeals to it and to the Court of Appeals, particularly Rules 42,
 43 and 45, the Court allows extensions of time, based on justifiable and
compelling reasons, for parties to file their appeals. These extensions may
consist of 15 days or more.

To standardize the appeal periods provided in the Rules and to afford

litigants fair opportunity to appeal their cases, the Court deems it practical to
allow a fresh period of 15 days within which to file the notice of appeal in the
Regional Trial Court, counted from receipt of the order dismissing a motion for a
new trial or motion for reconsideration.

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing
appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on
petitions for review from the Regional Trial Courts to the Court of Appeals; Rule
43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45
governing appeals by certiorari to the Supreme Court. The new rule aims to
regiment or make the appeal period uniform, to be counted from receipt of the
order denying the motion for new trial, motion for reconsideration (whether full
or partial) or any final order or resolution.[16]

The Court also reiterated its ruling that it is the denial of the motion for
reconsideration that constituted the final order which finally disposed of the issues involved
in the case.

The raison dtre for the fresh period rule is to standardize the appeal period provided in
the Rules and do away with the confusion as to when the 15-day appeal period should be
counted. Thus, the 15-day period to appeal is no longer interrupted by the filing of a motion
for new trial or motion for reconsideration; litigants today need not concern themselves with
counting the balance of the 15-day period to appeal since the 15-day period is now counted
from receipt of the order dismissing a motion for new trial or motion for reconsideration or
any final order or resolution.

While Neypes involved the period to appeal in civil cases, the Courts pronouncement of
a fresh period to appeal should equally apply to the period for appeal in criminal cases under
Section 6 of Rule 122 of the Revised Rules of Criminal Procedure, for the following reasons:

First, BP 129, as amended, the substantive law on which the Rules of Court is based,
makes no distinction between the periods to appeal in a civil case and in a criminal case.
Section 39 of BP 129 categorically states that [t]he period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in all cases shall be fifteen (15)
days counted from the notice of the final order, resolution, award, judgment, or decision
appealed from. Ubi lex non distinguit nec nos distinguere debemos. When the law makes no
distinction, we (this Court) also ought not to recognize any distinction.[17]
 Second, the provisions of Section 3 of Rule 41 of the 1997 Rules of Civil Procedure and
Section 6 of Rule 122 of the Revised Rules of Criminal Procedure, though differently worded,
mean exactly the same. There is no substantial difference between the two provisions insofar
as legal results are concerned the appeal period stops running upon the filing of a motion for
new trial or reconsideration and starts to run again upon receipt of the order denying said
motion for new trial or reconsideration. It was this situation that Neypes addressed in civil
cases. No reason exists why this situation in criminal cases cannot be similarly addressed.
Third, while the Court did not consider in Neypes the ordinary appeal period in criminal
cases under Section 6, Rule 122 of the Revised Rules of Criminal Procedure since it involved
a purely civil case, it did include Rule 42 of the 1997 Rules of Civil Procedure on petitions for
review from the RTCs to the Court of Appeals (CA), and Rule 45 of the 1997 Rules of Civil
Procedure governing appeals by certiorari to this Court, both of which also apply to appeals
in criminal cases, as provided by Section 3 of Rule 122 of the Revised Rules of Criminal
Procedure, thus:

SEC. 3. How appeal taken. x x x x

(b) The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review under Rule 42.

xxxx

Except as provided in the last paragraph of section 13, Rule 124, all other
appeals to the Supreme Court shall be by petition for review on certiorari under
Rule 45.

Clearly, if the modes of appeal to the CA (in cases where the RTC exercised its
appellate jurisdiction) and to this Court in civil and criminal cases are the same, no cogent
reason exists why the periods to appeal from the RTC (in the exercise of its original
jurisdiction) to the CA in civil and criminal cases under Section 3 of Rule 41 of the 1997 Rules
of Civil Procedure and Section 6 of Rule 122 of the Revised Rules of Criminal Procedure
should be treated differently.
Were we to strictly interpret the fresh period rule in Neypes and make it applicable only
to the period to appeal in civil cases, we shall effectively foster and encourage an absurd
situation where a litigant in a civil case will have a better right to appeal than an accused in
a criminal case a situation that gives undue favor to civil litigants and unjustly discriminates
against the accused-appellants. It suggests a double standard of treatment when we favor a
situation where property interests are at stake, as against a situation where liberty stands to
be prejudiced. We must emphatically reject this double and unequal standard for being
contrary to reason. Over time, courts have recognized with almost pedantic adherence that
what is contrary to reason is not allowed in law Quod est inconveniens, aut contra rationem
non permissum est in lege.[18]
Thus, we agree with the OSGs view that if a delay in the filing of an appeal may be
excused on grounds of substantial justice in civil actions, with more reason should the same
treatment be accorded to the accused in seeking the review on appeal of a criminal case
where no less than the liberty of the accused is at stake. The concern and the protection we
must extend to matters of liberty cannot be overstated.
In light of these legal realities, we hold that the petitioner seasonably filed her notice
of appeal on November 16, 2005, within the fresh period of 15 days, counted from November
3, 2005, the date of receipt of notice denying her motion for new trial.

WHEREFORE, the petition for prohibition is hereby GRANTED. Respondent Judge Rosa
Samson-Tatad is DIRECTED to CEASE and DESIST from further exercising jurisdiction over
the prosecutions motions to dismiss appeal and for execution of the decision. The respondent
Judge is also DIRECTED to give due course to the petitioners appeal in Criminal Case No. Q-
01-105698, and to elevate the records of the case to the Court of Appeals for review of the
appealed decision on the merits.

JUDITH YU, G.R. No. 170979

Facts:
An information for estafa against the petitioner (Judith Yu) was filed with the RTC which
convicted the petitioner as charged. Fourteen days later, the petitioner filed a motion for new
trial with the RTC, alleging that she discovered new and material evidence that would
exculpate her of the crime for which she was convicted. The respondent judge denied the
petitioner's motion for new trial for lack of merit.

The petitioner filed a notice of appeal with the RTC, alleging she had a fresh period of 15 days
from the receipt of the denial of her motion for new trial, within which to file a notice of
appeal. The prosecution filed a motion to dismiss the appeal fore being belatedly filed and a
Motion for execution of the decision.

Issue:
Does the fresh period rule apply to appeals in criminal cases?

Ruling:
Yes, to standardize the appeal period provided in the Rules and do away with the confusion as
to when the 15-day appeal period should be counted. Thus, the 15-day period to appeal is no
longer interrupted by the filing of a motion for new trial or motion for reconsideration,
litigants today need not concern themselves with counting the balance of the 15-day period
to appeal since the 15-day period is now counted from the receipt of the order dismissing a
motion for new trial or motion for reconsideration or any final order or resolution.
G.R. No. 188550 August 19, 2013

DEUTSCHE BANK AG MANILA BRANCH, PETITIONER,

vs.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

DECISION

SERENO, CJ.:

This is a Petition for Review1 filed by Deutsche Bank AG Manila Branch (petitioner) under Rule
45 of the 1997 Rules of Civil Procedure assailing the Court of Tax Appeals En Banc (CTA En
Banc) Decision2 dated 29 May 2009 and Resolution3 dated 1 July 2009 in C.T.A. EB No. 456.

THE FACTS

In accordance with Section 28(A)(5)4 of the National Internal Revenue Code (NIRC) of 1997,
petitioner withheld and remitted to respondent on 21 October 2003 the amount of PHP
67,688,553.51, which represented the fifteen percent (15%) branch profit remittance tax
(BPRT) on its regular banking unit (RBU) net income remitted to Deutsche Bank Germany (DB
Germany) for 2002 and prior taxable years.5

Believing that it made an overpayment of the BPRT, petitioner filed with the BIR Large
Taxpayers Assessment and Investigation Division on 4 October 2005 an administrative claim
for refund or issuance of its tax credit certificate in the total amount of PHP 22,562,851.17.
On the same date, petitioner requested from the International Tax Affairs Division (ITAD) a
confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax
Treaty.6

Alleging the inaction of the BIR on its administrative claim, petitioner filed a Petition for
Review7 with the CTA on 18 October 2005. Petitioner reiterated its claim for the refund or
issuance of its tax credit certificate for the amount of PHP 22,562,851.17 representing the
alleged excess BPRT paid on branch profits remittance to DB Germany.

THE CTA SECOND DIVISION RULING8

After trial on the merits, the CTA Second Division found that petitioner indeed paid the total
amount of PHP 67,688,553.51 representing the 15% BPRT on its RBU profits amounting to PHP
451,257,023.29 for 2002 and prior taxable years. Records also disclose that for the year 2003,
petitioner remitted to DB Germany the amount of EURO 5,174,847.38 (or PHP 330,175,961.88
at the exchange rate of PHP 63.804:1 EURO), which is net of the 15% BPRT.

However, the claim of petitioner for a refund was denied on the ground that the application for
a tax treaty relief was not filed with ITAD prior to the payment by the former of its BPRT and
actual remittance of its branch profits to DB Germany, or prior to its availment of the
preferential rate of ten percent (10%) under the RP-Germany Tax Treaty provision. The court a
quo held that petitioner violated the fifteen (15) day period mandated under Section III
paragraph (2) of Revenue Memorandum Order (RMO) No. 1-2000.

Further, the CTA Second Division relied on Mirant (Philippines) Operations Corporation
(formerly Southern Energy Asia-Pacific Operations [Phils.], Inc.) v. Commissioner of Internal
Revenue9 (Mirant) where the CTA En Banc ruled that before the benefits of the tax treaty may
be extended to a foreign corporation wishing to avail itself thereof, the latter should first
invoke the provisions of the tax treaty and prove that they indeed apply to the corporation.

THE CTA EN BANC RULING10

The CTA En Banc affirmed the CTA Second Divisions Decision dated 29 August 2008 and
Resolution dated 14 January 2009. Citing Mirant, the CTA En Banc held that a ruling from the
ITAD of the BIR must be secured prior to the availment of a preferential tax rate under a tax
treaty. Applying the principle of stare decisis et non quieta movere, the CTA En Banc took into
consideration that this Court had denied the Petition in G.R. No. 168531 filed by Mirant for
failure to sufficiently show any reversible error in the assailed judgment.11 The CTA En Banc
ruled that once a case has been decided in one way, any other case involving exactly the
same point at issue should be decided in the same manner.

The court likewise ruled that the 15-day rule for tax treaty relief application under RMO No. 1-
2000 cannot be relaxed for petitioner, unlike in CBK Power Company Limited v. Commissioner
of Internal Revenue.12 In that case, the rule was relaxed and the claim for refund of excess
final withholding taxes was partially granted. While it issued a ruling to CBK Power Company
Limited after the payment of withholding taxes, the ITAD did not issue any ruling to petitioner
even if it filed a request for confirmation on 4 October 2005 that the remittance of branch
profits to DB Germany is subject to a preferential tax rate of 10% pursuant to Article 10 of the
RP-Germany Tax Treaty.

ISSUE

This Court is now confronted with the issue of whether the failure to strictly comply with
RMO No. 1-2000 will deprive persons or corporations of the benefit of a tax treaty.

THE COURTS RULING

The Petition is meritorious.

Under Section 28(A)(5) of the NIRC, any profit remitted to its head office shall be subject to a
tax of 15% based on the total profits applied for or earmarked for remittance without any
deduction of the tax component. However, petitioner invokes paragraph 6, Article 10 of the
RP-Germany Tax Treaty, which provides that where a resident of the Federal Republic of
Germany has a branch in the Republic of the Philippines, this branch may be subjected to the
branch profits remittance tax withheld at source in accordance with Philippine law but shall
not exceed 10% of the gross amount of the profits remitted by that branch to the head office.

By virtue of the RP-Germany Tax Treaty, we are bound to extend to a branch in the
Philippines, remitting to its head office in Germany, the benefit of a preferential rate
equivalent to 10% BPRT.

On the other hand, the BIR issued RMO No. 1-2000, which requires that any availment of the
tax treaty relief must be preceded by an application with ITAD at least 15 days before the
transaction. The Order was issued to streamline the processing of the application of tax
treaty relief in order to improve efficiency and service to the taxpayers. Further, it also aims
to prevent the consequences of an erroneous interpretation and/or application of the treaty
provisions (i.e., filing a claim for a tax refund/credit for the overpayment of taxes or for
deficiency tax liabilities for underpayment).13

The crux of the controversy lies in the implementation of RMO No. 1-2000.

Petitioner argues that, considering that it has met all the conditions under Article 10 of the
RP-Germany Tax Treaty, the CTA erred in denying its claim solely on the basis of RMO No. 1-
2000. The filing of a tax treaty relief application is not a condition precedent to the availment
of a preferential tax rate. Further, petitioner posits that, contrary to the ruling of the CTA,
Mirant is not a binding judicial precedent to deny a claim for refund solely on the basis of
noncompliance with RMO No. 1-2000.

Respondent counters that the requirement of prior application under RMO No. 1-2000 is
mandatory in character. RMO No. 1-2000 was issued pursuant to the unquestioned authority
of the Secretary of Finance to promulgate rules and regulations for the effective
implementation of the NIRC. Thus, courts cannot ignore administrative issuances which
partakes the nature of a statute and have in their favor a presumption of legality.

The CTA ruled that prior application for a tax treaty relief is mandatory, and noncompliance
with this prerequisite is fatal to the taxpayers availment of the preferential tax rate.
We disagree.

A minute resolution is not a binding precedent

At the outset, this Courts minute resolution on Mirant is not a binding precedent. The Court
has clarified this matter in Philippine Health Care Providers, Inc. v. Commissioner of Internal
Revenue14 as follows:

It is true that, although contained in a minute resolution, our dismissal of the petition was a
disposition of the merits of the case. When we dismissed the petition, we effectively affirmed
the CA ruling being questioned. As a result, our ruling in that case has already become final.
When a minute resolution denies or dismisses a petition for failure to comply with formal and
substantive requirements, the challenged decision, together with its findings of fact and legal
conclusions, are deemed sustained. But what is its effect on other cases?

With respect to the same subject matter and the same issues concerning the same parties, it
constitutes res judicata. However, if other parties or another subject matter (even with the
same parties and issues) is involved, the minute resolution is not binding precedent. Thus, in
CIR v. Baier-Nickel, the Court noted that a previous case, CIR v. Baier-Nickel involving the
same parties and the same issues, was previously disposed of by the Court thru a minute
resolution dated February 17, 2003 sustaining the ruling of the CA. Nonetheless, the Court
ruled that the previous case "ha(d) no bearing" on the latter case because the two cases
involved different subject matters as they were concerned with the taxable income of
different taxable years.

Besides, there are substantial, not simply formal, distinctions between a minute resolution
and a decision. The constitutional requirement under the first paragraph of Section 14, Article
VIII of the Constitution that the facts and the law on which the judgment is based must be
expressed clearly and distinctly applies only to decisions, not to minute resolutions. A minute
resolution is signed only by the clerk of court by authority of the justices, unlike a decision. It
does not require the certification of the Chief Justice. Moreover, unlike decisions, minute
resolutions are not published in the Philippine Reports. Finally, the proviso of Section 4(3) of
Article VIII speaks of a decision. Indeed, as a rule, this Court lays down doctrines or
principles of law which constitute binding precedent in a decision duly signed by the
members of the Court and certified by the Chief Justice. (Emphasis supplied)

Even if we had affirmed the CTA in Mirant, the doctrine laid down in that Decision cannot bind
this Court in cases of a similar nature. There are differences in parties, taxes, taxable
periods, and treaties involved; more importantly, the disposition of that case was made only
through a minute resolution.

Tax Treaty vs. RMO No. 1-2000

Our Constitution provides for adherence to the general principles of international law as part
of the law of the land.15The time-honored international principle of pacta sunt servanda
demands the performance in good faith of treaty obligations on the part of the states that
enter into the agreement. Every treaty in force is binding upon the parties, and obligations
under the treaty must be performed by them in good faith.16 More importantly, treaties have
the force and effect of law in this jurisdiction.17
Tax treaties are entered into "to reconcile the national fiscal legislations of the contracting
parties and, in turn, help the taxpayer avoid simultaneous taxations in two different
jurisdictions."18 CIR v. S.C. Johnson and Son, Inc. further clarifies that "tax conventions are
drafted with a view towards the elimination of international juridical double taxation, which is
defined as the imposition of comparable taxes in two or more states on the same taxpayer in
respect of the same subject matter and for identical periods. The apparent rationale for doing
away with double taxation is to encourage the free flow of goods and services and the
movement of capital, technology and persons between countries, conditions deemed vital in
creating robust and dynamic economies. Foreign investments will only thrive in a fairly
predictable and reasonable international investment climate and the protection against
double taxation is crucial in creating such a climate."19

Simply put, tax treaties are entered into to minimize, if not eliminate the harshness of
international juridical double taxation, which is why they are also known as double tax treaty
or double tax agreements.

"A state that has contracted valid international obligations is bound to make in its
legislations those modifications that may be necessary to ensure the fulfillment of the
obligations undertaken."20 Thus, laws and issuances must ensure that the reliefs granted
under tax treaties are accorded to the parties entitled thereto. The BIR must not impose
additional requirements that would negate the availment of the reliefs provided for under
international agreements. More so, when the RP-Germany Tax Treaty does not provide for any
pre-requisite for the availment of the benefits under said agreement.

Likewise, it must be stressed that there is nothing in RMO No. 1-2000 which would indicate a
deprivation of entitlement to a tax treaty relief for failure to comply with the 15-day period.
We recognize the clear intention of the BIR in implementing RMO No. 1-2000, but the CTAs
outright denial of a tax treaty relief for failure to strictly comply with the prescribed period is
not in harmony with the objectives of the contracting state to ensure that the benefits
granted under tax treaties are enjoyed by duly entitled persons or corporations.

Bearing in mind the rationale of tax treaties, the period of application for the availment of tax
treaty relief as required by RMO No. 1-2000 should not operate to divest entitlement to the
relief as it would constitute a violation of the duty required by good faith in complying with a
tax treaty. The denial of the availment of tax relief for the failure of a taxpayer to apply within
the prescribed period under the administrative issuance would impair the value of the tax
treaty. At most, the application for a tax treaty relief from the BIR should merely operate to
confirm the entitlement of the taxpayer to the relief.

The obligation to comply with a tax treaty must take precedence over the objective of RMO
No. 1-2000.1wphi1 Logically, noncompliance with tax treaties has negative implications on
international relations, and unduly discourages foreign investors. While the consequences
sought to be prevented by RMO No. 1-2000 involve an administrative procedure, these may be
remedied through other system management processes, e.g., the imposition of a fine or
penalty. But we cannot totally deprive those who are entitled to the benefit of a treaty for
failure to strictly comply with an administrative issuance requiring prior application for tax
treaty relief.

Prior Application vs. Claim for Refund

Again, RMO No. 1-2000 was implemented to obviate any erroneous interpretation and/or
application of the treaty provisions. The objective of the BIR is to forestall assessments
against corporations who erroneously availed themselves of the benefits of the tax treaty but
are not legally entitled thereto, as well as to save such investors from the tedious process of
claims for a refund due to an inaccurate application of the tax treaty provisions. However, as
earlier discussed, noncompliance with the 15-day period for prior application should not
operate to automatically divest entitlement to the tax treaty relief especially in claims for
refund.

The underlying principle of prior application with the BIR becomes moot in refund cases,
such as the present case, where the very basis of the claim is erroneous or there is excessive
payment arising from non-availment of a tax treaty relief at the first instance. In this case,
petitioner should not be faulted for not complying with RMO No. 1-2000 prior to the
transaction. It could not have applied for a tax treaty relief within the period prescribed, or 15
days prior to the payment of its BPRT, precisely because it erroneously paid the BPRT not on
the basis of the preferential tax rate under

the RP-Germany Tax Treaty, but on the regular rate as prescribed by the NIRC. Hence, the
prior application requirement becomes illogical. Therefore, the fact that petitioner invoked
the provisions of the RP-Germany Tax Treaty when it requested for a confirmation from the
ITAD before filing an administrative claim for a refund should be deemed substantial
compliance with RMO No. 1-2000.

Corollary thereto, Section 22921 of the NIRC provides the taxpayer a remedy for tax recovery
when there has been an erroneous payment of tax.1wphi1 The outright denial of petitioners
claim for a refund, on the sole ground of failure to apply for a tax treaty relief prior to the
payment of the BPRT, would defeat the purpose of Section 229.

Petitioner is entitled to a refund

It is significant to emphasize that petitioner applied though belatedly for a tax treaty
relief, in substantial compliance with RMO No. 1-2000. A ruling by the BIR would have
confirmed whether petitioner was entitled to the lower rate of 10% BPRT pursuant to the RP-
Germany Tax Treaty.

Nevertheless, even without the BIR ruling, the CTA Second Division found as follows:

Based on the evidence presented, both documentary and testimonial, petitioner was able to
establish the following facts:

a. That petitioner is a branch office in the Philippines of Deutsche Bank AG, a

corporation organized and existing under the laws of the Federal Republic of Germany;

b. That on October 21, 2003, it filed its Monthly Remittance Return of Final Income
Taxes Withheld under BIR Form No. 1601-F and remitted the amount of 67,688,553.51
as branch profits remittance tax with the BIR; and

c. That on October 29, 2003, the Bangko Sentral ng Pilipinas having issued a clearance,
petitioner remitted to Frankfurt Head Office the amount of EUR5,174,847.38 (or
330,175,961.88 at 63.804 Peso/Euro) representing its 2002 profits remittance.22
The amount of PHP 67,688,553.51 paid by petitioner represented the 15% BPRT on its RBU net
income, due for remittance to DB Germany amounting to PHP 451,257,023.29 for 2002 and
prior taxable years.23

Likewise, both the administrative and the judicial actions were filed within the two-year
prescriptive period pursuant to Section 229 of the NIRC.24

Clearly, there is no reason to deprive petitioner of the benefit of a preferential tax rate of 10%
BPRT in accordance with the RP-Germany Tax Treaty.

Petitioner is liable to pay only the amount of PHP 45,125,702.34 on its RBU net income
amounting to PHP 451,257,023.29 for 2002 and prior taxable years, applying the 10% BPRT.
Thus, it is proper to grant petitioner a refund ofthe difference between the PHP 67,688,553.51
(15% BPRT) and PHP 45,125,702.34 (10% BPRT) or a total of PHP 22,562,851.17.

WHEREFORE, premises considered, the instant Petition is GRANTED. Accordingly, the Court
of Tax Appeals En Banc Decision dated 29 May 2009 and Resolution dated 1 July 2009 are
REVERSED and SET ASIDE. A new one is hereby entered ordering respondent Commissioner
of Internal Revenue to refund or issue a tax credit certificate in favor of petitioner Deutsche
Bank AG Manila Branch the amount of TWENTY TWO MILLION FIVE HUNDRED SIXTY TWO
THOUSAND EIGHT HUNDRED FIFTY ONE PESOS AND SEVENTEEN CENTAVOS (PHP
22,562,851.17), Philippine currency, representing the erroneously paid BPRT for 2002 and
prior taxable years.