de Agbayani vs. Court of Appeals Facts: Plaintiff De Agbayani obtained the loan in the amount of P450.

00 from def endant Bank in 1939. The said loan was secured by real estate mortgage duly regi stered covering property described in T.C.T. No. 11275 of the province of Pangas inan. Five years later, the loan matured but the bank PNB could not collect beca use of the war. A year later, President Osmena issued EO no. 32 (Debt Moratorium Law), which suspended the payment of loans for 4 years due to the ravages of th e war. In 1948, RA No. 342 extended the debt moratorium for another 8 years. How ever in 1953, the Supreme Court declared RA 342 as unconstitutional in the case of Rutter vs. Esteban. Fifteen years after the date of maturity of the loan, PNB instituted an extrajud icial foreclosure proceedings for the recovery of the balance. De Agbayani countered that the mortgage sought to be foreclosed had long been pr escribed since 15 years had already elapsed. He also sought and obtain a writ of Preliminary injunction. Meanwhile, PNB in its answer prayed for the dismissal o f the suit and alleged that if the period of debt moratorium were to be deducted from the computation then the right to foreclose the mortgage was still subsist ing. Issues: WON a statute subsequently declared unconstitutional shall have legal effects. Held: Yes. A statute though subsequently declared unconstitutional shall have legal ef fects. The orthodox view on an unconstitutional act is that it cannot be the source of any legal rights or duties nor can it justify any official act taken under it. However, the orthodox view may not be sufficiently realistic. It is an accepted doctrine that prior to the declaration of unconstitutionality the act is an oper ative fact to which legal consequences are attached. Prior to the declaration of unconstitutionality, the act must have been in force and complied with. It is entitled to obedience and respect until after the judi ciary, in an appropriate case, declares its unconstitutionality. It would be to deprive the law of fairness and justice if there be no recognition of what had t ranspired prior to the declaration of unconstitutionality.