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CASE 35

EO 32 and RA 342 were in force, prescription


didnt run.

Title: De Agbayani v. Philippine National Bank (PNB)


Nature: Appeal from a decision of the Court of First
Instance of Pangasinan.
Facts: Plaintiff de Agbayani obtained the loan from
defendant Bank in 1939, maturing on 1944, secured by
real estate mortgage duly registered covering property.
Defendant then instituted extra-judicial foreclosure
proceedings in the office of defendant Provincial Sheriff of
Pangasinan for the recovery of the balance of the load
remaining unpaid. Plaintiff countered with a suit against
both defendants, her main allegation being that the
mortgage sought to be foreclosed had long prescribed 15
years having elapsed from the date of maturity. She was
able to obtain a writ of preliminary injunction against
defendant Provincial Sheriff, which was made permanent
in the decision now on appeal. Defendant Bank in its
answer prated for the dismissal of the plaintiffs suit. The
court favoured the plaintiff.
Issue/s:
WON the lower court erred in favouring de Agbayani.
Held: Wherefore, the decision is reversed and the suit of
plaintiff DISMISSED.
Ratio:
1.

2.

3.

4.

Orthodox view on an unconstitutional act. An


unconstitutional act, for that matter an EO or a
municipal ordinance suffering from an infirmity,
cant 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.
The actual existence of a statute, prior to such a
determination of unconstitutionality, is an
operative fat and may have consequences
which cant justly be ignored. The past cant
always be erased by a new judicial declaration.
At the time of the issuance of EO 32 in 1945 and
the passage of RA 342 in 1948, there was a
factual justification for the moratorium. The
Philippines was confronted with an emergency
of impressive magnitude at the time of her
liberation from the Japanese in 1946. The Sc was
right in rejecting the contention that on its face,
the Moratorium Law was unconstitutional. Time
passed however and conditions changed.
Precisely because of the judicial recognition that
moratorium was a valid governmental response
to the plight of the debtors who were war
sufferers, this Court has made it clear in
jurisprudence that during the 8-year period that