People vs. Pastor

Where a repealing statute wholly fails to penalize the acts that constituted the offense under the repealed law, the repeal carries with it the deprivation of the courts' jurisdiction to try, convict, and sentence persons charged with violations of the old law, and the continuity of the obligation — and therefore of the penal sanction — is broken.

The accused, Geronima Sindiong de Pastor and Santos T. Pastor, were owners, managers, or administrators of the "Magazine Center," an establishment in Dumaguete devoted to selling newspapers, magazines, and stationery. Under the Revised Administrative Code (sections 1458 and 1459) and Act No. 3243, merchants were required to make returns of their sales and pay a percentage tax thereon; failure to do so was penalized under section 2723 of the same Code. These provisions were expressly repealed by section 369 of Commonwealth Act No. 466, the National Internal Revenue Code, which restructured the privilege tax system by shifting its incidence to manufacturers, producers, or importers on original sales. Commonwealth Act No. 503, approved October 16, 1939, later amended certain sections of the NIRC to extend the concept of "original sale" to cover articles in a merchant's possession on which tax had not been collected.

The accused, Geronima Sindiong de Pastor and Santos T. Pastor, were the owners, managers, or administrators of the "Magazine Center," an establishment in Dumaguete, Oriental Negros, engaged in the sale of newspapers, magazines, and stationery. On June 4, 1941, the Provincial Fiscal of Oriental Negros filed an information charging them with violation of sections 1458 and 1459 of the Revised Administrative Code, in relation with Act No. 3243 and section 2723 of the same Code. The information alleged that during the period from January 1936 to March 31, 1938, the accused, with deliberate purpose to evade the payment of the percentage tax upon their receipts, voluntarily, illegally, and criminally neglected to make a return of their sales within the time prescribed by law.

The accused waived their right to a preliminary investigation, and the information was lodged with the Court of First Instance of Oriental Negros on July 11, 1941. Likely as a consequence of the Pacific war, no further proceedings were taken until January 27, 1946, when the accused filed a motion to quash. The trial court upheld the motion in its order dated February 12, 1946, reasoning that the kind of business conducted by the accused was no longer subject to the percentage tax and no longer required to file quarterly returns under the present law, placing it outside the penal provisions of the Internal Revenue Code.

The Government appealed. It was an admitted fact that the provisions under which the accused were prosecuted had been expressly repealed by section 369 of Commonwealth Act No. 466 (the National Internal Revenue Code) and were no longer in force when the action was instituted. The Government conceded that without the enactment of Commonwealth Act No. 503, the accused would not have been liable to prosecution, since the NIRC imposed the percentage tax only on manufacturers, producers, or importers. The Government contended, however, that section 5 of Commonwealth Act No. 503 manifested legislative intent to subject all merchants to the privilege tax in the same manner as under the Revised Administrative Code.

• Effect of Commonwealth Act No. 503: The Government argued that while the NIRC alone would have exempted the accused because only manufacturers, producers, or importers were liable for the percentage tax, the enactment of Commonwealth Act No. 503 demonstrated legislative intent to subject all merchants to the privilege tax in the same way they were subject under the Revised Administrative Code.
• Continuity of Penal Sanction: The Government maintained that the repeal and re-enactment doctrine applied, citing authorities predicated upon the re-enactment, literal or substantial, of repealed penal provisions by the repealing act, which would preserve the courts' jurisdiction to prosecute violations committed while the old law was in force.

• Effect of Repeal on Pending Prosecution: Whether the express repeal of sections 1458 and 1459 of the Revised Administrative Code and Act No. 3243 by the National Internal Revenue Code extinguished the penal action for violations committed while those provisions were in force.
• Sufficiency of Commonwealth Act No. 503 to Revive Liability: Whether section 5 of Commonwealth Act No. 503 revived or sustained the obligation of the accused to file returns and pay the percentage tax for sales made between January 1936 and March 31, 1938.

• Effect of Repeal on Pending Prosecution: Yes. The repeal extinguished the penal action because the National Internal Revenue Code wholly failed to penalize the acts imputed to the accused, the continuity of the obligation and its penal sanction having been broken.
• Sufficiency of Commonwealth Act No. 503 to Revive Liability: No. Section 5 of Commonwealth Act No. 503 applied only to first sales occurring on or after its approval on October 16, 1939, and the accused's sales took place well before that date.

• Effect of Repeal on Pending Prosecution: Under the doctrine articulated in United States vs. Cuna, the enactment of new penal laws with general repealing clauses does not deprive courts of jurisdiction to try violations of the old law unless the new law wholly fails to penalize the acts that constituted the offense under the repealed law. Here, the NIRC radically changed the incidence of the percentage tax: instead of imposing it on every person making any sale, barter, or exchange (as under sections 1458 and 1459 of the Revised Administrative Code), section 186 of the NIRC imposed it only on the manufacturer, producer, or importer on the original sale. The accused, as merchants who were not printers or publishers, could not have made the "original sale" within the meaning of section 186. Section 191, which imposed a tax on publishers, did not apply to merchants who acquired publications for resale. The provisions of the old law were not re-enacted, even substantially, in the NIRC. Accordingly, the NIRC wholly failed to penalize the acts imputed to the accused, and the repeal carried with it the deprivation of the courts' jurisdiction to try them.

• Sufficiency of Commonwealth Act No. 503 to Revive Liability: The Government relied on section 5 of Commonwealth Act No. 503, which provided that where taxes had not been collected on articles in a merchant's possession, the first sale, barter, or exchange of said articles "on or after the approval of this Act" shall be considered an original sale subject to tax. The proviso was designed to cover articles whose original sale would have been taxable if effected on or after the NIRC's enactment but which were sold before it. The proviso's express temporal limitation — "on or after the approval of this Act" (October 16, 1939) — meant the accused's sales, made between January 1936 and March 31, 1938, fell outside its coverage. Even hypothetically assuming a revival of the obligation would have been valid, the accused's sales would not have been considered "the first sale, barter, or exchange" under the proviso. The continuity of the obligation, and therefore of the penal sanction, was broken upon enactment of the NIRC and was not restored by Commonwealth Act No. 503.

• Doctrine of Repeal and Re-enactment — Where a repealing law substantially re-enacts the former penal law, the right to punish violations committed before the repeal survives. Conversely, where the repealing law wholly fails to penalize the acts that constituted the offense under the repealed law, the repeal extinguishes the courts' jurisdiction to try, convict, and sentence persons charged with violations of the old law. In this case, the NIRC did not re-enact, even substantially, the provisions of sections 1458 and 1459 of the Revised Administrative Code or Act No. 3243, because it shifted the incidence of the percentage tax from every merchant to manufacturers, producers, or importers on original sales. The accused's acts — failure to file returns as merchants — were wholly unpenalized under the new Code, and the penal sanction was extinguished.

• "In accordance with this doctrine, where the repealing law wholly fails to penalize the acts which constituted the offense defined and penalized in the repealed law, the repeal carries with it the deprivation of the courts of jurisdiction to try, convict, and sentence persons charged with violations of the old law prior to the repeal." — This passage articulates the controlling rule: total failure to penalize the same acts under the new law extinguishes the penal action, distinguishing cases where the repealing statute substantially re-enacts the old provisions.

• "After the approval of the National Internal Revenue Code the continuity of the obligation, and therefore of the penal sanction for its violation, was broken." — This statement captures the ratio decidendi as applied to the facts: the NIRC's radical restructuring of the tax's incidence severed the continuity between the old obligation and its penal sanction, precluding prosecution even before considering Commonwealth Act No. 503.

• "The underscored portion of the proviso of the aforequoted section determines what sale, barter or exchange of articles subject to the taxes prescribed in sections 184, 185 and 186 of Commonwealth Act No. 466 shall be considered as an original sale, barter or exchange and shall be subject to the tax, and it determines the question by saying that it shall be the first sale, barter or exchange on or after the approval of said Act." — This passage explains why Commonwealth Act No. 503 could not rescue the prosecution: the proviso's express temporal limitation confined its application to sales on or after October 16, 1939.

• Ong Chang Wing and Kwong Fok vs. United States, 40 Phil. 1046 (1919); affirmed by 218 U.S. 272 — Cited by the Government for the proposition that substantial re-enactment of repealed penal provisions preserves the right to punish offenses committed before repeal. The Court distinguished this case on the ground that the NIRC did not substantially re-enact the old provisions.
• United States vs. Cuna, 12 Phil. 241 (1908) — The earliest Philippine case articulating the doctrine that new penal laws with general repealing clauses do not deprive courts of jurisdiction unless the new law wholly fails to penalize the acts constituting the offense under the repealed law. The Court applied this doctrine directly, finding that the NIRC wholly failed to penalize the accused's acts.

• Sections 1458 and 1459, Revised Administrative Code — Imposed the percentage tax on merchants for every sale, barter, or exchange and required them to file returns of their sales. These were the provisions the accused were charged with violating; they were expressly repealed by section 369 of the NIRC.
• Section 2723, Revised Administrative Code — Fixed the penalty for failure to make the required return at a fine not exceeding ₱2,000 or imprisonment not exceeding one year, or both. Also repealed by section 369 of the NIRC.
• Act No. 3243, section 1 — Required merchants to make returns of their sales and pay the percentage tax. Repealed by the NIRC.
• Section 369, Commonwealth Act No. 466 (National Internal Revenue Code) — Expressly repealed sections 1458, 1459, and 2723 of the Revised Administrative Code and Act No. 3243.
• Section 186, Commonwealth Act No. 466 (National Internal Revenue Code) — Imposed the percentage tax on the manufacturer, producer, or importer on every original sale, barter, exchange, or similar transaction, collectible only once. The Court held this did not apply to merchants like the accused.
• Section 191, Commonwealth Act No. 466 (National Internal Revenue Code) — Imposed a 1½ per cent tax on publishers not covered by the exception therein. The Court held this did not apply to merchants who acquired publications for resale.
• Section 5, Commonwealth Act No. 503 — Provided that where taxes had not been collected on articles in a merchant's possession, the first sale on or after the Act's approval (October 16, 1939) would be considered an original sale subject to tax. The Court held this did not cover the accused's sales, which occurred before that date.

Moran, Bengzon (C.J.), Paras, Pablo, Perfecto, Briones, Hontiveros, Padilla, and Tuason, JJ., concurred.