Buyco vs. Philippine National Bank

A statutory amendment operates prospectively only and cannot impair rights that vested under the original statute prior to the amendment's enactment, absent an express legislative provision or necessary implication of retroactivity. Where the law in force at the time a backpay certificate was offered as payment authorized—indeed compelled—the bank to accept it, a subsequent amendatory prohibition does not apply to that already-accrued right.

Marcelino Buyco was a borrower from the Philippine National Bank (PNB), Iloilo Branch, having obtained a crop loan for the 1952-53 agricultural year secured by a mortgage of real property. Buyco was likewise a holder of a Backpay Acknowledgment Certificate issued under Republic Act No. 897, a law providing for backpay to certain government employees and others affected by the war, payable in long-term installments. The statutory framework governing whether PNB could accept such certificates as payment of obligations owed to it was the subject of litigation in Marcelino B. Florentino vs. Philippine National Bank (L-8782), which construed Republic Act No. 897 as authorizing PNB to accept backpay certificates. While that case was under reconsideration, Congress enacted Republic Act No. 1576 on June 16, 1956, amending PNB's charter to prohibit the acceptance of backpay certificates.

Marcelino Buyco was indebted to the Philippine National Bank (PNB), Iloilo Branch, in the amount of ₱5,102.90 plus interest, representing his deficit on a 1952-53 crop loan secured by a mortgage of real property. Buyco was also a holder of Backpay Acknowledgment Certificate No. 4801, dated July 9, 1955, issued under Republic Act No. 897 in the amount of ₱22,227.69, payable in thirty years.

On April 24, 1956, Buyco offered to pay his crop-loan deficit with his backpay acknowledgment certificate. PNB, by letter dated July 18, 1956, declined the offer, stating that its motion for reconsideration in Florentino vs. Philippine National Bank (L-8782) was still pending before the Supreme Court and that it "cannot yet grant" the request. The Florentino decision, promulgated on April 28, 1956—four days after Buyco's offer—had declared PNB authorized to accept backpay acknowledgment certificates as payment of obligations owed to it. On February 15, 1957, the Supreme Court denied PNB's motion for reconsideration in that case, maintaining its ruling.

Thereafter, on February 15, 1957, Buyco wrote PNB reiterating his request to pay with the certificate. PNB replied on February 19, 1957, stating that in view of the amendment of its charter on June 16, 1956 by Republic Act No. 1576, it could no longer accept the certificate. Buyco requested reconsideration by letter dated March 26, 1957, which was referred to PNB's Legal Department. On April 23, 1957, that department opined that notwithstanding the Florentino decision, PNB could not accept the certificate because of the charter amendment. Buyco then filed a petition for mandamus in the Court of First Instance of Iloilo, which was submitted on an agreed stipulation of facts.

The trial court, on July 24, 1958, granted the petition and ordered PNB to accept Buyco's backpay certificate as payment, finding that PNB had impliedly admitted Buyco's right in its July 18, 1956 letter, that the pendency of the motion for reconsideration in the Florentino case did not affect Buyco's vested right already acquired on April 24, 1956, that Republic Act No. 1576 did not nullify that right, and that mandamus lay. PNB appealed.

• Vested Right: Petitioner maintained that his right to apply his backpay certificate as payment of his obligation had already vested on April 24, 1956, when he made the offer, and that the subsequent enactment of Republic Act No. 1576 on June 16, 1956 could not impair or nullify that right.
• Implied Admission: Petitioner argued that PNB, by its letter of July 18, 1956, had impliedly admitted his right to pay with the certificate, since it refused only "in the meantime" that its motion for reconsideration was pending.
• Prospective Operation of Law: Petitioner contended that Republic Act No. 1576, containing no provision for retroactivity, should operate prospectively only and could not apply to rights that had accrued before its enactment.

• Charter Amendment: Respondent argued that Republic Act No. 1576, which amended its charter effective June 16, 1956, expressly prohibited the acceptance of backpay certificates, and that this prohibition governed its ability to accept petitioner's certificate.
• Pending Reconsideration: Respondent initially maintained that while its motion for reconsideration in the Florentino case was pending, it could not yet grant petitioner's request, implying that no enforceable right existed until the Supreme Court resolved the motion.
• Legal Department Opinion: Respondent's Legal Department opined that notwithstanding the Florentino decision, the charter amendment precluded acceptance of the certificate.

• Retroactivity of Statutory Amendment: Whether Republic Act No. 1576, amending PNB's charter to prohibit acceptance of backpay certificates, applies retroactively to defeat the petitioner's right to pay his obligation with his backpay certificate, which right had accrued before the amendatory law's enactment.
• Availability of Mandamus: Whether mandamus is the proper remedy to compel PNB to accept the petitioner's backpay certificate as payment.

• Retroactivity of Statutory Amendment: No. Republic Act No. 1576 has no retroactive effect, as it contains no express provision or necessary implication of retroactivity; the case is governed by the law in force at the time the offer was made on April 24, 1956.
• Availability of Mandamus: Yes. Mandamus is the proper remedy to compel PNB to accept the certificate, pursuant to the ruling in the Florentino case construing Republic Act No. 897.

• Retroactivity of Statutory Amendment: The right to have a backpay certificate applied as payment of an obligation to PNB existed by virtue of Republic Act No. 897, which was merely construed and clarified by the Supreme Court in the Florentino case promulgated on April 28, 1956. Although that decision came four days after Buyco's offer on April 24, 1956, the right already existed under the statute itself. PNB's letter of July 18, 1956, refusing only "in the meantime" that its motion for reconsideration was pending, demonstrated that PNB knew or should have known a right had vested, with enforcement awaiting the Court's resolution. A vested right is some right or interest in property that has become fixed or established and is no longer open to doubt or controversy. Republic Act No. 1576, enacted June 16, 1956, amended PNB's charter to provide that the authority to accept government certificates of indebtedness "shall not be used as regards backpay certificates." However, Article 4 of the Civil Code provides that laws shall have no retroactive effect unless the contrary is provided, and Republic Act No. 1576 contains no retroactivity provision, nor can one be implied from its language. The amendment therefore operates prospectively only, and the case is governed by the law in force when the offer was made. The rule is that after an act is amended, the original act continues in force with regard to all rights that accrued prior to the amendment.

• Availability of Mandamus: Since the law in force at the time of the offer authorized and in fact compelled PNB to accept the backpay certificate, and the subsequent prohibitory amendment cannot be given retroactive effect, mandamus lies to enforce the duty that existed under the original statute. The Florentino case established that PNB was authorized—and indeed compelled—to accept backpay certificates as payment, and that ruling, as affirmed on reconsideration, governs the present case.

• Prospective Operation of Laws — Under Article 4 of the Civil Code, laws shall have no retroactive effect unless the contrary is provided. Statutes are construed as having only prospective operation unless the legislature expressly declares or necessarily implies retroactivity, and every doubt is resolved against retrospective effect. This principle applies equally to amendments of statutes. In this case, Republic Act No. 1576 contained no retroactivity provision, so it could not impair the vested right Buyco acquired under Republic Act No. 897 before the amendment's enactment.

• Vested Rights — A vested right or vested interest is some right or interest in property that has become fixed or established and is no longer open to doubt or controversy. Once a right has vested under existing law, a subsequent statutory amendment cannot impair or nullify that right. The Court held that Buyco's right to apply his backpay certificate as payment had vested when he made the offer on April 24, 1956, under Republic Act No. 897 as construed in the Florentino case.

• Continuing Force of Original Act After Amendment — After an act is amended, the original act continues to be in force with regard to all rights that accrued prior to such amendment. The Court applied this rule to hold that PNB's charter as it stood before Republic Act No. 1576 governed Buyco's offer, since his right had accrued before the amendment.

• "Laws shall have no retroactive effect, unless the contrary is provided" — The Court quoted Article 4 of the Civil Code as the controlling principle, establishing that Republic Act No. 1576 could not operate retroactively to defeat Buyco's vested right absent an express legislative provision for retroactivity.

• "After an act is amended, the original act continues to be in force with regard to all rights that had accrued prior to such amendment" — This formulation, drawn from American jurisprudence cited by the Court, articulates the doctrine that amendments are prospective only as to rights already vested, which was decisive in resolving the case.

• "A vested right or a vested interest may be held to mean some right or interest in property that has become fixed or established, and is no longer open to doubt or controversy" — The Court adopted this definition to characterize Buyco's right to pay with his backpay certificate, which had become fixed under Republic Act No. 897 before the amendatory law was enacted.

• Marcelino B. Florentino vs. Philippine National Bank, L-8782 (52 O.G. 2522) — Controlling precedent. The Supreme Court construed Republic Act No. 897 as authorizing PNB to accept backpay acknowledgment certificates as payment of obligations. The Court's denial of PNB's motion for reconsideration on February 15, 1957, confirmed this ruling, which governed the present case.
• Lopez vs. Crow, 40 Phil. 997 — Cited for the principle that laws look to the future only and have no retroactive effect unless the legislature expressly provides otherwise.
• Montilla vs. Agustinian Corp., 24 Phil. 220 — Cited for the rule that statutes are construed prospectively unless retroactivity is expressly declared or necessarily implied, and that doubts are resolved against retrospective effect.
• Graham vs. Great Falls Water Power & Town Site Co., 76 Pac. 808 — Cited for the definition of a vested right as a right or interest in property that has become fixed or established and is no longer open to doubt or controversy.

• Article 4, Civil Code of the Philippines — Provides that "laws shall have no retroactive effect, unless the contrary is provided." The Court applied this provision to hold that Republic Act No. 1576, which amended PNB's charter to prohibit acceptance of backpay certificates, could not operate retroactively to impair Buyco's vested right.
• Article 5, Civil Code of the Philippines — Provides that "acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity." The Court noted this provision finds no application because the prohibitory amendment should not be given retroactive effect, and the law in force at the time of the offer allowed and compelled PNB to accept the certificate.
• Section 9-A(d), Republic Act No. 1576 — Amended PNB's charter to grant the Board of Directors discretion to accept government certificates of indebtedness, "Provided, however, that the authority herein granted shall not be used as regards backpay certificates." The Court held this provision prospective only and inapplicable to Buyco's already-vested right.
• Republic Act No. 897 — The original statute under which Buyco's backpay acknowledgment certificate was issued. The Florentino case construed this law as authorizing PNB to accept backpay certificates as payment, establishing the right that vested in Buyco before the charter amendment.

Bengzon, C.J., Labrador, Reyes, J.B.L., Dizon, De Leon, and Natividad, JJ., concurred. Padilla, Bautista Angelo, Concepcion, and Barrera, JJ., took no part.