G.R. No.

L-23587-88 June 10, 1976

LUCAS RAMIREZ and ENCARNACION FAJARDO RAMIREZ, petitioners,

Norberto J. Quisumbing, Sedfrey A. Ordonez and Gatchalian & Sison for petitioners.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Octavio R.
Ramirez for respondent.

ESGUERRA, J.:

Before Us is a joint petition for certiorari to review the decision dated May 22, 1964 of the Court of
Appeals, affirming the judgment of the Court of First Instance, Manila Branch XVI, in its Criminal Cases
Nos. 33438, 33439 and 33440 convicting the spouses Lucas Ramirez and Encarnacion Fajardo Ramirez of
the crime of falsification of public, official and/or commercial documents punishable under Section 172,
paragraph 1, of the Revised Penal Code, and sentencing each of them in each case to not less than six (6)
months of arresto mayor and not more than three (3) years, six (6) months and twenty- one (21) days of
prision correccional to pay a fine of P1,000.00 and one-half of the costs in each case.

The record discloses the following facts:

On December 9, 1949, the Central Bank of the Philippines, beset by an exchange crisis and pursuant to
Section 14 (Exercise of Authority) and 74 (Emergency Restrictions on Exchange Operation) of Republic
Act 265, otherwise known as the Central Bank Act, issued Circular No. 20 designed to protect the
international reserve during the said crisis. It subjected all transactions in gold and foreign exchange to a
previous licensing by the Central Bank. To implement the said circular, guiding principles governing the
licensing of foreign exchange for the payment of imports were promulgated and embodied in Circular
No. 44 issued on June 12, 1953, and made effective July 1, 1953. It created the Bankers Committee to
process applications of new importers who were made to accomplish and submit, among others,
through local authorized banks, documents such as Balance Sheets, Profit and Loss Statements,
Schedule of Monthly Sales and Merchandise Inventory to show that they met the criteria set by the
Central Bank for new importers. These documents were further required to be certified to by an
independent Certified Public Accountant. Further restrictions were imposed by subsequent circulars, all
of which were devised to combat the then prevailing exchange crisis.

Against this backdrop, Criminal Cases Nos. 33438, 33439 and 33440, each entitled People vs. Lucas
Ramirez, Encarnacion Ramirez and Ligaya Bernardino, People vs. Lucas Ramirez, Encarnacion Ramirez
and Salustia Lasin and People vs. Lucas Ramirez, Encarnacion Ramirez and Natalia Caparaz, respectively,
were filed, all for falsification of public, official and or commercial documents, spawned by a raid of
Room 308 of the Quisumbing bldg. at Dasmarinas Street, Manila, which room was then leased by Mrs.
Encarnacion Fajardo Ramirez. The search which was conducted by the NBI agents and Jose Aquino, a
Central Bank confidential agent, yielded voluminous documents among which were duplicates of the
papers submitted by applicant-importers Bernardino, Lasin and Caparaz duly certified by Segundo
Esguerra, A CPA but which were allegedly falsified.
Criminal Case No. 33438 was eventually dismissed for failure of the prosecution to establish falsification
and also because one of the accused, Bernardino, remained at large.

In Criminal Case No. 33439 the information reads as follows:

That on or about the period comprised between December 28, 1953 and May 12, 1954, inclusive, in the
City of Manila, Philippines, the said accused, conspiring and confederating together with others whose
true names and Identities are still unknown, and helping one another, did then and there willfully,
unlawfully and feloniously commit acts of falsification in the following manner, to wit: the said
accused for the purpose of securing and obtaining dollar allocations or foreign exchange license for
import payments, from the Central Bank of the Philippines, an agencies of instrumentality of the
Government of the Republic of the Philippines, thru its lawfully authorized agent, the Philippine Bank
of Communications, did then and there willfully, unlawfully and feloniously prepare, concoct, execute
and accomplish or cause to be prepared, concocted and executed and accomplished the following
public, official and commercial documents:

1. Application of Salustia Lasin to qualify as new importer, together with:

a. Balance Sheet as of December 31, 1953;

b. Profit and Loss Statement for the year ending December 31, 1953;

c. Schedule of Monthly Sales as of December 31, 1953;

d. Merchandise Inventory as of December 31, 1953. Income Tax Return for 1953.

2. Information Sheet of Salustia Lasin as a new importer which documents have been executed under
oath before a notary public and or officer authorized to administer oaths, as required by law and the
regulations duly promulgated by the Monetary Board, Central Bank of the Philippines, pursuant to
Republic Act No. 265, and other records or documents connected therewith and required by to law to
kept by merchants, by stating, narrating, making it appear and representing in the said documents
that the accused Salustia Lasin was qualified, under the law and regulations of the Central Bank, as a
new importer, being actively engaged in the general merchandise (textile) business, with an
establishment at Nos. 1514-1515, Divisoria Market, in said city, continuously since July 1, 1953
operating on a paid-up capital of P23,500.00 with adequate distribution facilities, and that her
purchases and gross sales of merchandise during the period from January 1, 1953 to December 31,
1953 amounted to P147,062.35 and P149,246.30, respectively and such other information or narration
of facts pertinent thereto and in connection therewith, the said information, data and narration of
facts being material for the purpose of said application, the said accused knowing fully well that their
manifestations were all false and untrue and were made solely for the purpose of obtaining the said
dollar allocations and foreign exchange license for import Payments from the Central Bank of the
Philippines; and the said accused, in furtherance of their conspiracy, submitted and filed the aforesaid
documents with the said Central Bank of the Philippines thru its aforesaid duly authorized agent bank,
vested by law with authority to determine and authorize the issuance of such dollar payments,
securing and obtaining as a result thereof the approval of the application of said accused as a new
importer and the issuance to her of a dollar allocation or foreign exchange license for import
payments in the amount of $8,975.00, every semester, to the damage and prejudice of the Republic of
the Philippines and or the Central Bank of the Philippines.
Criminal Case No. 33440 likewise charged the spouses Lucas and Encarnacion Ramirez with the same
offense, with Natalia Caparaz as co-accused. In the Information it was alleged that the foreign exchange
allocation in the amount of $8,177.75 every semester was obtained by Caparaz through the submission
of falsified documents.

Record likewise showed that Salustia Lasin and Natalia Caparaz who were indicted in the information
were discharged and made state witnesses. After trial the lower court convicted petitioners herein of
the charges concerning the dollar application of Caparaz and Lasin. Both spouses appealed to the Court
of Appeals which affirmed the judgment of the Court of First Instance and also denied their motion for
reconsideration. Hence this petition.

Before We take up the assigned errors, We note, as was brought up by defense counsels Quisumbing,
Ordonez and Gatchalian in their well-written brief, the fact that-on January 21, 1962, while this case was
pending in the Court of Appeals, the Central Bank issued Circular No. 133 which lifted and abolished the
foreign exchange controls instituted by earlier circulars. This particular circular dispensed with the need
for prior specific licensing from the Central Bank for the sale of foreign exchange for imports. Before Us
now therefore are posed these questions:

1. Did the Honorable Court of Appeals err in not acquitting the petitioners herein?

2. Did the Honorable Court of Appeals err in not ruling that prosecution against petitioner spouses may
no longer be had for falsification of documents required by the Central Bank Circular No. 20 as a
consequence of the repeal of said Circular by Circular No. 133?

A review of the proceedings and exhibits presented in the lower court reveals that there is truth in the
findings of the trial court, affirmed by the Court of Appeals, that the spouses Lucas and Encarnacion
Ramirez were guilty of the crime charged. Although their names never appeared in the allegedly falsified
documents, this was so because they concocted, schemed and executed the plot to falsify the said
documents submitted to the Central Bank very carefully and meticulously without involving their names,
but this plot was betrayed by their active participation (other than signing their names) in the
commission of the offense at bar which was positively proved.

During the trial the fact of illiteracy of the applicant-importers Salustia Lasin and Natalia Caparaz was
elicited and established. Capitalizing on the illiteracy of Lasin and Caparaz who neither could read nor
write except to sign their names but who were eager beavers to be among the importers, spouses Lucas
and Encarnacion Ramirez had ready- made applications with manufactured figures and data signed by
them (applicant importers). These applications had every appearance of genuineness and since the
same appear to be duly certified to by Segundo Esguerra, an independent Certified Public Accountant, in
compliance with a CB regulation, the applicant importers qualified as new importers and in fact
obtained dollar allocations.

Petitioners herein would pass the buck to Segundo Esguerra the CPA whose signature appeared in all
the statements filed in the CB. Thus petitioner Ramirez declared during the trial that Segundo Esguerra
with another lawyer, Osmundo Miranda, now deceased, sub-leased a portion of the room at 308
Quisumbing Bldg. leased by her which Esguerra used as his office after the regular office hours (Esguerra
was said to be working for H. R. Lopez, Inc. as Accountant) and that he used to stay there from 11:30
A.M. to 2:00 P.M., then from 5:00 P.M. to 7:00 P.M. daily (t.s.n. November 4,1960 pp. 37-41). She would
also have us believe that the alleged falsified papers were found at the outer room which was then
occupied by Esguerra and the late Atty. Miranda—a fact which she failed to prove. When the raid
occurred it was Lucas Ramirez who came to the scene, opened the main door and unlocked all the
cabinets and drawers in Room 308. As found out by the Court of Appeals:

... Los agentes de la ley antes de verificar el registro del cuarto Num. 308 del edificio Quisumbing
estuvieron en la residencia de los esposos aqui acusados y Lucas Ramirez fue quien les acompano al
referido cuarto, y segun las pruebas de la accusacion, Ramirez tenia las llavez de los armarios y mesas
que estaban dentro del cuarto y fue quien abrio los cajones de dichas mesas donde se encontraron los
duplicados y los documentos falsos. (Emphasis supplied) (Criminal Record, Decision of the court of
Appeals, Third Div.)

The testimony of Jose Aquino, CB agent (t.s.n, March 10, 1958 pp. 3-5) that he remembered that there
were divisions in Room 308 with several tables but without Identifying who the occupants of the tables
were did not in any way lend support to the contention of accused Encarnacion Ramirez that she
subleased a portion of her room to Esguerra and deceased Miranda. No contract of sub-lease was
presented, and even assuming arguendo that the same was sub-leased, no reason was offered why
Lucas Ramirez had the keys not only to the main door but all the cabinets and drawers as well. What is
apparent is that Esguerra held office at Room 308 Quisumbing Bldg. not as sublessee but on agreement
with Lucas Ramirez who was himself a CPA and an Auditor of H.R. Lopez Inc., a firm where Esguerra was
also employed as an Accountant. In fact Esguerra admitted that he went to 308 Quisumbing Bldg. after
office hours (t.s.n. March 20, 1959 pp. 12-13.) on instructions of Lucas Ramirez and signed statements
for a fee of P100.00 per certification (t.s.n. October 5, 1956, Criminal Record p. 352, 357). It surprises Us
why Esguerra was not subjected to further investigations if he were equally guilty of the crime charged.
Accused Encarnacion Ramirez too tried to wash her hands by testifying that she did not know Natalia
Caparaz nor did she meet her before the hearing (t.s.n. p. 21 Nov. 4, 1960). On further examination,
however, she admitted having known her as she (Caparas) was introduced to her (Ramirez) by a mutual
friend, Apolonia Alcantara (t.s.n. p. 31 Nov. 4, 1960). Also during the raid, the NBI and CB agents found
among the papers powers of attorney executed by Lasin and Caparaz in favor of Encarnacion Fajardo
Ramirez, authorizing the latter to manage the disposal of the dollar allocations. Likewise it was shown
during the trial that the spouses petitioners herein benefited from the dollar allocations obtained by
Caparaz and Lasin and in fact retained the lion's share therefrom. Thus from the allocation obtained by
Caparaz in the amount of $8,177.75, she (Caparas) was only given the amount of P400.00 as
reimbursement of her expenses and P65.00 as her share of the dollar allocation (t.s.n. pp. 10-11 March
20, 1959). Similarly when Lasin's application was approved for $8,975.00 she was only given a share of
P500.00 (t.s.n. May 15, 1959 pp. 33, 34). All the above facts positively affirm the guilt of spouses-
petitioners herein.

II

Anent the second error, it is the contention of petitioners herein that with the advent of full decontrol
envisaged in Circular No. 133 issued on January 21, 1962, the crime for which petitioners were indicted
has already been extinguished. Pertinent provisions of Circular 133 are hereunder quoted for easy
reference, viz:

xxx xxx xxx

a. All imports must be covered by letter of credit except small transactions involving not more than
$100.00;

b. x x x

xxx xxx xxx

4. The free market rate shall not be administratively fixed but shall be determined through transactions
in the free market,

xxx xxx xxx

8. All existing circulars, rules and regulations and conditions governing transactions in foreign exchange
not inconsistent with the provisions on this Circular are deemed incorporated hereto and made integral
parts hereof by reference.

It is very clear that Circular 133 lifted the restrictions imposed by Circular 20 and subsequent circulars
thereto. In short Circular 133 repealed Circular 20. This is so because Circular 20 and Circular 133 are
diametrically opposed to each other. While Circular 20 restricted the sale of foreign exchange and
subjected all transactions therein to specific licensing by the Central Bank, Circular 133 practically did
away with prior licensing. As aptly elucidated in the case of People vs. Sandico 1, Jr. et al.

... The Solicitor General's opposition to the motion for dismissal is predicated primarily upon his
contention that Circular 20 has not been repealed by Circular 133, and that far from being incompatible,
the two actually complement each other. This contention is without merit. In the first place, while
Circular 20 restricts sales of foreign exchange and subjects all transactions therein to specific licensing by
the Central Bank, Circular 133 neither restricts sales of foreign exchange nor subjects transactions
therein to licensing. As a matter of fact, Circular 133 provides that foreign exchange shall be sold at a
free market rate to any applicant without requiring prior specific licensing from the Central Bank, and
that the free market rate shall not be administratively fixed but shall be determined in the transactions
in the free market. From the contradictory concepts of the two systems may be seen the incompatibility
between the two circulars. Circular 133 was promulgated precisely to remedy the evils brought about by
the control system; it is therefore not ancillary to Circular 20. If life is to be given to the remedy of
decontrol as a policy for economic survival, Circular 20 must give away to the supervening Circular 133.
The purpose of Circular 133 cannot be achieved by applying the provisions of Circular 20; the two
circulars cannot operate hand in hand. It may be true that Circular 133 contains no specific provision
which is in direct conflict with Secs. 4-a and b of Circular 20, the particular sections under which the
appellants were charged and convicted. But it is obvious nonetheless that the respective purposes of
these two circulars are diametrically opposed to each other, because while Circular 20 restricts the sale
of foreign exchange and subjects all transactions therein to specific licensing by the Central Bank, the
purpose of Circular 133 is clearly to abolish such restrictions and do away with licensing. It is beyond
doubt, therefore, that the purpose of Circular 20 was abandoned by the promulgation of Circular 133,
and Secs. 4-a and b thereof have lost all meaning and function.
Also under paragraph 8 of Circular 133 (supra) it is so provided that circulars consistent with the
provisions of Circular 133 are deemed incorporated thereto. However since Circular 20 is inconsistent
and runs counter to it then by necessary implication the same is abrogated and repealed. And as
Sutherland 2 an eminent authority on Statutory Construction says-"When a subsequent enactment
covering a field of operation coterminous with a prior statute cannot by any reasonable construction be
given effect while the prior law remains in operative existence because of irreconcilable conflict
between the two acts, the latest legislative expression prevails and the prior law yields to the extent of
the conflict."

The decisive question to determine now is whether or not repeal of Circular 20 obliterated petitioners'
crime.

Petitioners heavily relied on the case of People vs. Quasha 3 where this Court opined:

... The majority of the court however, are also of the opinion that, even supposing that the act imputed
to the dependant constituted falsification at the time it was perpetrated, still with the approval of the
Parity Amendment to the Constitution in March, 1947, which placed Americans on the same footing as
Filipino citizens with respect to the right to operate public utilities in the Philippines, thus doing away
with the prohibition in Section 8, Article XIV, of the Constitution in so far as American citizens are
concerned, the said act has ceased to be an offense within the meaning of the law, so that defendant
can no longer be held criminally liable therefor. ...

On the other hand, the Court of Appeals in its decision said:

Finalmente, los apelantes contienden que con la abolicion de la adjudicacion de dolares, los actos
cometidos por los esposos en el supuesto de que fuesen estos culpables ya han dejado de ser punibles,
citando para este efecto la causa de Pueblo vs. Quasha, 49 O.G., 2826. Entendemos que la contencion
carece de merito porque en la presente causa los esposos estan acusados de falsification de
documentos official y commercial y no de una infraction de los reglamentos del Banco Central sobre la
adjudicacion de dolares y la causa de Quasha, supra, no es aplicable al caso de autos donde en parte se
sostuvo que debido a la enmienda de la Constitution concediendo a los americanos iguales privilegios
que los filipinos en la Llamadad clausula de paridad, no era necesario expresar en la escritura de
incorporacion la nacionalidad de los incorporadores americanos en una corporacion de utilidad publica
puesto que tenian los mismos derechos y privilegios que los filipinos en una corporacion de tal indole.

We believe that the ratiocination of the Court of Appeals is altogether hair-splitting. If We will recall, the
crime of falsification stemmed from the violation of the legal requirements of the Central Bank,
specifically Circulars 20 and 44, where applicant- importers were obliged to disclose the truth on the
figures and data appearing in the documents submitted but which they allegedly falsified to qualify
them as new importers. These requirements incorporated in Circular 20 and subsequent circulars were
issued during an emergency in an effort to curb the outward flow of foreign exhange. Eventually, a free
market ensued and the emergency measures were lifted. Consequently, there is no more obligation now
to submit to the Central Bank such documents in support of an application for foreign exchange.

Although the acts imputed to the accused constituted, at the time they were committed, falsification of
commercial documents penalized under Sec. 172, paragraph 1, of the Revised Penal Code, the
promulgation of Central Bank Circular 133 abolishing the requirement of specific licensing under Central
Bank Circular No. 20 wiped away the legal obligation of the applicants for foreign exchange to disclose
the truth of the facts narrated in the documents supporting their application. As there is no more legal
obligation of the applicant to disclose such truth, an untruthful statement therein no longer constitutes
the crime of falsification perpetrated by making false statements in a narration of facts (Francisco,
Revised Penal Code, p. 194, 1963 ed.; U.S. vs. Lopez, 15 Phil. 515 and People vs. Quasha, 93 Phil. 333).

It may be argued that the repeal of Central Bank Circular No. 20 by Central Bank Circular No. 133 did
not extinguish the criminal liability for falsification of commercial documents because the Revised Penal
Code where such offense is punishable was unaffected thereby and remains valid and subsisting. True
that the pertinent provision of the Revised Penal Code on falsification was not repealed by Circular No.
133, but the stubborn fact remains that the repeal of Circular No. 20 which imposed the obligation to
state the truth in the papers supporting the application for foreign exchange extinguished that
obligation, leaving no more foundation on which the falsification of such papers would rest. The root
cause of the falsification, which was Central Bank Circular No. 20, having been totally removed , the
offense arising out of a disregard or violation of said circular has no more leg to stand on.

The greater weight of authority is inclined to the view that an appellate court, in reviewing a judgment
on appeal, will dispose of a question according to the law prevailing at the time of such disposition, and
not according to the law prevailing at the time of rendition of the appealed judgment. The court will,
therefore, reverse a judgment which was correct at the time it was originally rendered where, by
statute, there has been an intermediate change in the law which renders such judgment erroneous at
the time the case was finally disposed of on appeal (111 A.L.R. 1318; see cases cited therein). Thus, if
pending the appeal from a judgment of the lower court the law is changed, or the statute under which it
was decided has been repealed, the appellate court must dispose of the case under the law in force
when its decision is rendered. The court must conform its decision to the law then existing and may,
therefore, reverse a judgment which was correct when pronounced in the subordinate tribunal, if it
appears that pending the appeal a statute which was necessary to support the judgment of the lower
court has been withdrawn by an absolute repeal (Vance v. Rankin (1902) 194 I11. 625, 62 N.E. 807, 88
Am. St. Rep. 173; Wall v. Chesapeake & O.R. Co. (1919) 290 I11. 227, 125 N.E. 20).

Likewise it was held that while as a general rule it is the province of an appellate court to inquire only
into the question whether a judgment was erroneous when rendered, if subsequent to the judgment of
the lower court and before the decision of the appellate court is handed down a law intervenes
changing the applicable rule, the judgment of the lower court, although correct under the law
prevailing at the time it was rendered must be set aside by the appellate court and a judgment in
conformity with the new law must be entered (U.S. v. The Peggy (1801) 1 Cranch (U.S.) 103, 2L. Ed. 49).

It may be argued that the function of the appellate court is not to consider the merits of a cause on the
basis of supervening extraneous circumstances but merely to review the judgment of the lower court
with a view to determining whether it was erroneous or correct when it was rendered. But because
judgment is suspended by appeal, it is without finality; that to give it finality the appellate court must
itself pronounce its judgment, and that in so doing it must be governed by the existing law. When the
previous law under which alone validity could be given to the judgment has been repealed, the sole
prop and foundation for support of the judgment has been removed, and of necessity it must be
declared null and void (Yeaton v. United States (1809) 5 Cranch (U.S.) 281, 3 L. Ed. 101).
In view of the failure of the Court en banc after its first deliberation to reach a decision on this case due
to the absence of the required number of justices to promulgate a decision, and of the abstention of
two justices from participating therein, the case was set for rehearing en banc in accordance with Sec. 3,
Rule 125 of the Rules of Court. On September 4, 1975, the case was reheard en banc and subsequently
the justices present were requested to cast their respective votes on the final outcome of the case.

On April 8, 1976, the Court for the second time, formally voted on the case, and the result of the voting
among the eleven justices present was as follows:

1. For AQUITTAL of the accused appellants—

1) Esguerra

2) Muñoz Palma

3) Concepcion

4) Martin, JJ.

2. For CONVICTION of the accused appellants—

1) Castro, C.J.

2) Teehankee

3) Barredo

4) Makasiar

5) Aquino, JJ.

3. For ABSTENTION—

1) Fernando

2) Antonio, JJ.

It resulted that the majority of eight required by the constitution in ordinary cases heard en banc to
decide a case has not for the second time been obtained. Pursuant to the provisions of Sec. 3, Rule 125
of the Rules of Court, if after the case is reheard and in the rehearing no decision is again reached, the
judgment of conviction of the lower court shall be reversed and the defendant shall be acquitted.

WHEREFORE, the accused appellants, Lucas Ramirez and Encarnacion Fajardo Ramirez, are hereby
acquitted of the offense charge, with costs de oficio.

SO ORDERED.