ALBINO S. CO, PETITIONER, VS. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, RESPONDENTS.

In connection with an agreement to salvage and refloat a sunken vessel
— and in payment of his share of the expenses of the salvage operations
therein stipulated — petitioner Albino Co delivered to the salvaging firm on
September 1, 1983 a check drawn against the Associated Citizens’ Bank,
postdated November 30, 1983, in the sum of P361,528.00.^[1] The
check was deposited on January 3, 1984. It was dishonored two days later, the tersely-stated reason given by the
bank being: “CLOSED ACCOUNT.”

A criminal complaint for violation of Batas Pambansa Bilang 22^[2] was
filed by the salvage company against Albino Co with the Regional Trial Court of
Pasay City. The case eventuated in Co’s
conviction of the crime charged, and his being sentenced to suffer a term of
imprisonment of sixty (60) days and to indemnify the salvage company in the sum
of P361,528.00.

Co appealed to the Court of Appeals. There he sought exoneration upon the theory that it was
reversible error for the Regional Trial Court to have relied, as basis for its
verdict of conviction, on the ruling rendered on September 21, 1987 by this
Court in Que v. People, 154 SCRA 160 (1987)^[3] —
i.e., that a check issued merely to guarantee the performance of an obligation
is nevertheless covered by B.P. Blg. 22. This was because at the time of the issuance of the check on September
1, 1983, some four (4) years prior to the promulgation of the judgment
in Que v. People on September 21, 1987, the delivery of a
“rubber” or “bouncing” check as guarantee for an obligation
was not considered a punishable offense, an official pronouncement made in a
Circular of the Ministry of Justice. That Circular (No. 4), dated December 15, 1981, pertinently
provided as follows:

“2.3.4. Where issuance of bouncing check is
neither estafa nor violation of B.P. Blg. 22.

Where the check is issued as part of an arrangement to guarantee or
secure the payment of an obligation, whether pre-existing or not, the drawer is
not criminally liable for either estafa or violation of B.P. Blg. 22 (Res. No.
438, s. 1981, Virginia Montano vs. Josefino Galvez, June 19, 1981; Res. No.
707, s. 1989; Alice Quizon vs. Lydia Calingo, October 23, 1981, Res. No. 769,
s. 1981, Alfredo Guido vs. Miguel A. Mateo, et al., November 17, 1981; Res. No.
589, s. 1981, Zenaida Lazaro vs. Maria Aquino, August 7, 1981).”

This administrative circular was subsequently reversed by another
issued on August 8, 1984 (Ministry Circular No. 12) — almost one (1) year
after Albino Co had delivered the “bouncing” check to the complainant
on September 1, 1983. Said Circular No.
12, after observing inter alia that Circular No. 4 of December 15, 1981
appeared to have been based on “a misapplication of the deliberation in
the Batasang Pambansa, ** ** (or) the explanatory note on the original bill,
i.e., that the intention was not to penalize the issuance of a check to secure
or guarantee the payment of an obligation,” decreed as follows:^[4]

“Henceforth, conforming with the rule that an administrative
agency having interpreting authority may reverse its administration
interpretation of a statute, but that its new interpretation applies only
prospectively (Waterbury Savings Bank vs. Danaher, 128 Conn., 476; 20 a2d 455
(1941), in all cases involving violation of Batas Pambansa Blg. 22 where the
check in question is issued after this date, the claim that the check is issued
as a guarantee or part of an arrangement to secure an obligation or to
facilitate collection will no longer be considered as a valid defense.”

Co’s theory was rejected by the Court of Appeals which affirmed
his conviction. Citing Senarillos v.
Hermosisima, 101 Phil. 561, the Appellate Court opined that the Que doctrine
did not amount to the passage of new law but was merely a construction or
interpretation of a pre-existing one, i.e., BP 22, enacted on April 3, 1979.

From this adverse judgment of the Court of Appeals, Albino Co
appealed to this Court on certiorari under Rule 45 of the Rules of Court. By Resolution dated September 9, 1991, the Court dismissed
his appeal. Co moved for
reconsideration under date of October 2, 1991. The Court required comment thereon by the Office of the Solicitor
General. The latter complied and, in
its comment dated December 13, 1991, extensively argued against the merits of
Albino Co’s theory on appeal, which was substantially that proffered by him in
the Court of Appeals. To this comment,
Albino Co filed a reply dated February 14, 1992. After deliberating on the parties’ arguments and contentions, the
Court resolved, in the interests of justice, to reinstate Albino Co’s appeal
and adjudicate the same on its merits.

“Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the Philippines,”
according to Article 8 of the Civil Code. “Laws shall have no retroactive effect, unless the contrary is
provided,” declares Article 4 of the same Code, a declaration that is
echoed by Article 22 of the Revised Penal Code: “Penal laws shall have a
retroactive effect insofar as they favor the person guilty of a felony, who is
not a habitual criminal **.”^[5]

The principle of prospectivity of statutes, original or
amendatory, has been applied in many cases These include: Buyco v. PNB, 961)
2 SCRA 682 (June 30, 1961), holding that Republic Act No. 1576 which divested
the Philippine National Bank of authority to accept back pay certificates in
payment of loans, does not apply to an offer of payment made before effectivity
of the act; Largado v. Masaganda, at al., 5 SCRA 522 (June 30, 1962),
ruling that RA 2613, as amended by RA 3090 on June, 1961, granting to inferior
courts jurisdiction over guardianship cases, could not be given retroactive
effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64 SCRA
18, to the effect that Sections. 9 and 10 of Executive Order No. 90, amending
Section 4 of PD 1752, could have no retroactive application; Peo. v. Que Po
Lay, 94 Phil. 640, holding that a person cannot be convicted of violating
Circular No. 20 of the Central, when the alleged violation occurred before
publication of the Circular in the Official Gazette; Baltazar v. C.A., 104
SCRA 619, denying retroactive application to P.D. No. 27 decreeing the
emancipation of tenants from the bondage of the soil, and P.D. No. 316
prohibiting ejectment of tenants from rice and corn farmholdings, pending the
promulgation of rules and regulations implementing P.D. No. 27; Nilo v.
Court of Appeals, 128 SCRA 519, adjudging that RA 6389 which removed
“personal cultivation” as a ground for the ejectment of a tenant
cannot be given retroactive effect in the absence of a statutory statement for
retroactivity; Tac-An v. CA, 129 SCRA 319, ruling that the repeal of the
old Administrative Code by RA 4252 could not be accorded retroactive effect; Ballardo
v. Borromeo, 161 SCRA 500, holding that RA 6389 should have only
prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat
v. CA, 205 SCRA 419).

The prospectivity principle has also been made to apply to
administrative rulings and circulars, to wit: ABS-CBN Broadcasting
Corporation v. CTA, Oct. 12, 1981, 108 SCRA 142, holding that a circular or
ruling of the Commissioner of Internal Revenue may not be given retroactive
effect adversely to a taxpayer; Sanchez v. COMELEC, 193 SCRA 317, ruling
that Resolution No. 90-0590 of the Commission on Elections, which directed the
holding of recall proceedings, had no retroactive application; Romualdez v.
CSC, 197 SCRA 168, where it was ruled that CSC Memorandum Circular No. 29,
s. 1989 cannot be given retrospective effect so as to entitle to permanent
appointment an employee whose temporary appointment had expired before the
Circular was issued.

The principle of prospectivity has also been applied to judicial
decisions which, “although in themselves not laws, are nevertheless
evidence of what the laws mean, ** (this being) the reason why under Article 8
of the New Civil Code, ‘Judicial decisions applying or interpreting the laws or
the Constitution shall form a part of the legal system * *.’”

So did this Court hold, for example, in Peo. v. Jabinal, 55
SCRA 607, 611:

“It will be noted that when appellant was appointed Secret
Agent by the Provincial Government in 1962, and Confidential Agent by the
Provincial commander in 1964, the prevailing doctrine on the matter was that
laid down by Us in People v. Macarandang (1959) and People v. Lucero (1958).^[6]
Our decision in People v. Mapa,^[7]
reversing the aforesaid doctrine, came only in 1967. The sole question in this appeal is: should appellant be
acquitted on the basis of Our rulings in Macarandang and Lucero, or
should his conviction stand in view of the complete reversal of the Macarandang
and Lucero doctrine in Mapa?***

Decisions of this Court, although in themselves not laws, are
nevertheless evidence of what the laws mean, and this is the reason why under
Article 8 of the New Civil Code, ‘Judicial decisions applying or interpreting
the laws or the Constitution shall form a part of the legal system * *.’ The
interpretation upon a law by this Court constitutes, in a way, a part of the
law as of the date that law was originally passed, since this Court’s
construction merely establishes the contemporaneous legislative intent that the
law thus construed intends to effectuate. The settled rule supported by numerous authorities is a restatement of
the legal maxim ‘legis interpretatio legis vim obtinet’ — the
interpretation placed upon the written law by a competent court has the force
of law. The doctrine laid down in Lucero
and Macarandang was part of the jurisprudence, hence, of the law, of
the land, at the time appellant was found in possession of the firearm in
question and when he was arraigned by the trial court. It is true that the doctrine was overruled
in the Mapa case in 1967, but when a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should be applied prospectively,
and should not apply to parties who had relied on the old doctrine and acted on
the faith thereof. This is especially
true in the construction and application of criminal laws, where it is
necessary that the punishability of an act be reasonably foreseen for the
guidance of society.”

So, too, did the Court rule in Spouses Gauvain and Bernardita
Benzonan v. Court of Appeals, et al. (G.R. No. 97973) and Development
Bank of the Philippines v. Court of Appeals, et al. (G.R. No 97998), Jan.
27, 1992, 205 SCRA 515, 527-528:^[8]

“We sustain the petitioners’ position. It is undisputed that the subject lot was mortgaged to DBP on
February 24, 1970. It was acquired by
DBP as the highest bidder at a foreclosure sale on June 18, 1977, and then sold
to the petitioners on September 29, 1979.

At that time, the prevailing jurisprudence interepreting section
119 of R.A. 141 as amended was that enunciated in Monge and Tupas cited
above. The petitioners Benzonan and
respondent Pe and the DBP are bound by these decisions for pursuant to Article
8 of the Civil Code ‘judicial decisions applying or interpreting the laws or
the Constitution shall form a part of the legal system of the
Philippines.’ But while our decisions
form part of the law of the land, they are also subject to Article 4 of the
Civil Code which provides that ‘laws shall have no retroactive effect unless
the contrary is provided.’ This is expressed in the familiar legal maxim lex
prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is easy
to perceive. The retroactive
application of a law usually divests rights that have already become vested or
impairs the obligations of contract and hence, is unconstitutional (Francisco
v. Certeza, 3 SCRA 565 [1061]).

The same consideration underlies our rulings giving only
prospective effect to decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal. 55
SCRA 607 [1974] ’ ** when a doctrine of this Court is overruled and a different
view is adopted, the new doctrine should be applied prospectively and should
not apply to parties who had relied on the old doctrine and acted on the faith
thereof.”

A compelling rationalization of the prospectivity principle of
judicial decisions is well set forth in the oft-cited case of Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]. The Chicot doctrine advocates the
imperative necessity to take account of the actual existence of a statute prior
to its nullification, as an operative fact negating acceptance of “a
principle of absolute retroactive invalidity.”

Thus, in this Court’s decision in Tañada v Tuvera,^[9]
promulgated on April 24, 1985 — which declared “that presidential
issuances of general application, which have not been published, shall have no
force and effect,” and as regards which declaration some members of the
Court appeared “quite apprehensive about the possible unsettling effect **
(the) decision might have on acts done in reliance on the validity of those
presidential decrees ** ” — the Court said:

” * *. The answer is
all too familiar. In similar situations
in the past this Court had taken the pragmatic and realistic course set forth
in Chicot County Drainage District vs Baxter Bank (308 U.S. 371, 374) to wit:

‘The courts below have proceeded on the theory that the Act of
Congress, having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. Norton v. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v. Hackett, 228 U.S. 559,
566. It is quite clear, however, that
such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to
such a determination, is an operative fact and may have consequences which
cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects—with respect to
particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon accordingly, of public
policy in the light of the nature both of the statute and of its previous
application, demand examination. These
questions are among the most difficult of those which have engaged the
attention of courts, state and federal, and it is manifest from numerous
decisions that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.”

Much earlier, in De Agbayani v. PNB, 38 SCRA 429 —
concerning the effects of the invalidation of “Republic Act No. 342, the moratorium
legislation, which continued Executive Order No. 32, issued by the then
President Osmeña, suspending the enforcement of payment of all debts and other
monetary obligations payable by war sufferers,” and which had been
“explicitly held in Rutter v. Esteban (93 Phil. 68 [1953]^[10]
** (to be) in 1953 ‘unreasonable, and oppressive, and should not be prolonged a
minute longer ** ” — the Court made substantially the same observations,
to wit:^[11]

” **. The decision now
on appeal reflects the orthodox view that an unconstitutional act, for that
matter an executive order or a municipal ordinance likewise suffering from that
infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken
under it. Its repugnancy to the
fundamental law once judicially declared results in its being to all intents
and purposes a mere scrap of paper. * *
*. It is understandable why it should
be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot
survive.

Such a view has support in logic and possesses the merit of
simplicity. It may not however be
sufficiently realistic. It does not
admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied
with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation
regard be had to what has been done while such legislative or executive act was
in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the governmental organ which has the final
say on whether or not a legislative or executive measure is valid, a period of
time may have elapsed before it can exercise the power of judicial review that
may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired prior to such
adjudcation.

In the language of an American Supreme Court decision: ‘The actual
existence of a statute, prior to such a determination [of unconstitutionality],
is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various
aspects, — with respect to particular relations, individual and corporate, and
particular conduct, private and official’ (Chicot County Drainage Dist. v.
Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta
v. Hill (93 Phil. 1002 [1953]) and the decision in Manila Motor Co., Inc. v.
Flores (99 Phil. 738 [1956]). An even
more recent instance is the opinion of Justice Zaldivar speaking for the Court
in Fernandez v. Cuerva and Co. (L-­21114, Nov. 28, 1967, 21 SCRA 1095).”

Again, treating of the
effect that should be given to its decision in Olaguer v Military Commission
No 34,^[12]
— declaring invalid criminal proceedings conducted during the martial
law regime against civilians, which had resulted in the conviction and
incarceration of numerous persons — this Court, in Tan vs. Barrios, 190
SCRA 686, at p. 700, ruled as follows:

“In the interest of justice and consistency, we hold that Olaguer should, in principle, be
applied prospectively only to future cases and cases still ongoing or not yet
final when that decision was promulgated. Hence, there should be no retroactive nullification of final judgments,
whether of conviction or acquittal, rendered by military courts against
civilians before the promulgation of the Olaguer decision. Such final sentences should not be disturbed
by the State. Only in particular cases
where the convicted person or the State shows that there was serious denial of
constitutional rights of the accused, should the nullity of the sentence be
declared and a retrial be ordered based on the violation of the constitutional
rights of the accused, and not on the Olaguer doctrine. If a retrial is no longer possible, the
accused should be released since the judgment against him is null on account of
the violation of his constitutional rights and denial of due process.

*****

The trial of thousands of civilians for common crimes before the
military tribunals and commissions during the ten-year period of martial rule
(1971-1981) which were created under general orders issued by President Marcos
in the exercise of his legislative powers is an operative fact that may not
just be ignored. The belated
declaration in 1987 of the unconstitutionality and invalidity of those
proceedings did not erase the reality of their consequences which occurred long
before our decision in Olaguer was promulgated and which now prevent us from
carrying Olaguer to the limit of its logic. Thus did this Court rule
in Municipality of Malabang v Benito, 27 SCRA 533, where the question arose as
to whether the nullity of creation of a municipality by executive order wiped
out all the acts of the local government abolished.”^[13]

It would seem, then, that the weight of authority is decidedly in
favor of the proposition that the Court’s decision of September 21, 1987 in Que
v. People, 154 SCRA 160 (1987)^[14] —
i.e., that a check issued merely to guarantee the performance of an obligation
is nevertheless covered by B.P. Blg. 22 — should not be given retrospective
effect to the prejudice of the petitioner and other persons similarly situated,
who relied on the official opinion of the Minister of Justice that such a check
did not fall within the scope of B.P. Blg. 22..

Inveighing against this proposition, the Solicitor General
invokes U.S. v. Go Chico, 14 Phil. 128, applying the familiar doctrine
that in crimes mala prohibita, the intent or motive of the offender is
inconsequential, the only relevant inquiry being, “has the law been
violated?” The facts in Go Chico are substantially different from
those in the case at bar. In the
former, there was no official issuance by the Secretary of Justice or other
Government officer construing the special law violated;^[15]
and it was there observed, among others, that “the defense ** (of) an
honest misconstruction of the law under legal advice” ^[16] could not be appreciated as a valid
defense. In the present case, on the
other hand, the defense is that reliance was placed, not on the opinion of a
private lawyer but upon an official pronouncement of no less than the attorney
of the Government, the Secretary of Justice, whose opinions, though not law,
are entitled to great weight and on which reliance may be placed by private
individuals as reflective of the correct interpretation of a constitutional or
statutory provision; this, particularly in the case of penal statutes, by the
very nature and scope of the authority that resides in his office as regards
prosecutions for their violation.^[17] Senarillos
vs. Hermosisima, supra, relied upon by the respondent Court of
Appeals is crucially different in that in said case, as in U.S. v. Go Chico,
supra, no administrative interpretation antedated the contrary construction
placed by the Court on the law invoked.

This is after all a criminal action all doubts in which, pursuant
to familiar, fundamental doctrine, must be resolved in favor of the
accused. Everything considered, the
Court sees no compelling reason why the doctrine of mala prohibita should
override the principle of prospectivity, and its clear implications as
hereinabove set out and discussed, negativing criminal liability.

WHEREFORE, the assailed decisions of the Court of Appeals
and of the Regional Trial Court are reversed and set aside, and the criminal
prosecution against the accused-petitioner is DISMISSED, with costs de
officio.

SO ORDERED.

Padilla, Regalado, Nocon, and
Puno, JJ., concur.

^[1]
As found by the Court of Appeals, the agreement was between Co, representing
Mayflower Shipping Corporation, and Geronimo B. Bella, representing
Tans-Pacific Towage, Inc. The expenses for refloating were apportioned chiefly
between FGU Insurance and Development Bank of the Philippines, which
respectively contributed P2,329,022.00 and P1,579,000.00. SEE rollo, pp.
9, 20-21.

^[2]
Otherwise known as the “Bouncing Checks
Law”

^[3]
The ruling is contained in an extended resolution on a motion for
reconsideration, promulgated by the Special Former Second Division of the Court
on September 21, 1987, written for the division by Paras, J., with
whom concurred Fernan, Gutierrez, Jr., Padilla, Bidin and Cortes, JJ. In that resolution, the Court gave its
“stamp of approval” on the decision of the Court of Appeals holding inter
alia that
“It is now settled that Batas Pambansa Bilang 22 applies even in cases
where dishonored checks are issued merely in the form of a deposit or a guarantee.”

^[4]
Italics supplied

^[5]
Exceptions to the rule of prospectivity are collated, e.g., in the textbook of
retired Justice Edgardo A. Paras (Civil Code of the Philippines Annotated, 1984
ed.,Vol. 1, pp. 22-23) viz.: 1) laws remedial in nature; 2) penal law
favorable to accused, if latter not habitual delinquent; 3) laws of emergency
nature under police power : e.g., tenancy relations (Vda. de Ongsiako v.
Gamboa, 470.G. 4259,Valencia et al. v. Surtida et al., MAY 31, 1961); 4)
curative laws; 5) substantive right declared for first time unless vested rights
impaired (Unson v. del Rosario, Jan. 29,1953; Belen v. Belen, 49
O.G. 997; Peo. v. Alejaga, 49 OG 2833)

^[6]
106 Phil. 713 and 103 Phil. 500, respectively, both involving prosecutions for
illegal possession of firearms, and both holding that appointment by the
Provincial Governor or Provincial Commander of a person as a “secret
agent” or “confidential agent” “sufficiently placed him in
the category of a ‘peace officer’ ** who under section 879 of the Revised
Administrative Code is exempted from the requirements relating to the issuance
of license to possess firearm.”

^[7]
SEE Ilagan v. People, Jan. 29, 1974 55 SCRA 361

^[8]
The title of the cited Monge case is Monge, et al. v. Angeles, et al.,
and is reported in 101 Phil., 563 [1957], while that of the cited Tupas case
is Tupas v. Damasco, et al., reported in 132 SCRA 593 [1984]

^[9]
136 SCRA 27, 40-41

^[10]
And several other rulings set forth in a corresponding footnote in the text of
the decision

^[11]
SEE also Olaguer v. Military Commission No. 34, 150 SCRA 144 (1987) (citing
Municipality of Malabang v. Benito, 27 SCRA 533 where the question arose as to
whether the judicial nullification of an executive order creating a
municipality wiped out all the acts of the local government abolished); Tan
v. Barrios, 190 SCRA 686 (1990); Drilon v. Court of Appeals, 202
SCRA 378 (1991); Union of Filipro Employees v. Vivar, Jr., 205 SCRA 200
(1992); Peralta v. Civil Service Commission, 212 SCRA 425

^[12]
150 SCRA 144 (1987)

^[13]
SEE also Cruz v. Enrile, 160 SCRA 700 [1988] and Res. of February 26,
1991; and Drilon v Court
of Appeals, 202 SCRA 378 [1991])

^[14]
SEE footenote 3, supra

^[15]
Act No. 1696 of the Phiippine Commission punishing any person who shall expose,
or cause or permit to be exposed, to public view ** any flag, banner, emblem, or
device used during the late insurrection in the Philippine Islands to designate
or identify those in armed rebellion against the United States, * *

^[16]
14 Phil. 128, 133-134

^[17]
Estrella vs. Orendain, 37 SCRA 640; Noblejas vs. Salas, 67 SCRA
47