#20

FRANCISCO SERRANO DE AGBAYANI, plaintiff-appellee, vs. PHILIPPINE NATIONAL

BANK and THE PROVINCIAL SHERIFF OF PANGASINAN, defendants, PHILIPPINE
NATIONAL BANK, defendant-appellant.
G.R. No. L-23127 April 29, 1971
Facts: Agbayani obtained a loan P450 from PNB secured by a REM, which was to
mature 5 years later. 15 years later, PNB sought to foreclose the REM.
Agbayani filed a complaint claiming that it was barred by prescription. She also
claims that she obtained an injunction against the sheriff. PNB argued that the claim
has not yet prescribed if the period from the time of issuance of EO32 to the time
when RA 342 was issued should be deducted.
o E0 32 was issued in 1945 providing for debt moratorium
o RA 342 was issued in 1948 - extension of the debt moratorium
The RA 342 was declared void and since it was an extension of EO 32, EO 32 was
likewise nullified.
Here, RA 342 (the debt moratorium law) continued EO 32, suspending the payment
of debts by war sufferers. However RA 342 could not pass the test of validity. (I think
what Justice Fernando was saying is that the law was later declared unconstitutional
because it violates the non-impairment of contractual obligations clause in the
constitution).
PNB claims that this period should be deducted from the prescriptive period since
during this time the bank took no legal steps for the recovery of the loan. As such,
the action has not yet prescribed.
ISSUE: Has the action prescribed?
Ruling: NO.
The general rule is that an unconstitutional act because it suffers from infirmity,
cannot be a source of legal rights or duties. When the courts declare a law to be
inconsistent with the Constitution, the former shall be void and the latter shall
govern.
However, prior to the declaration of nullity of such challenged legislative act must
have been in force and had to be complied with. This is so as until after the judiciary,
in an appropriate case declares its invalidity, it is entitled to obedience and respect.
Such legislative act was in operation and presumed to be valid in all respects. It is
now accepted that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect the awareness that precisely because the
judiciary is the governmental organ which has the final say on whether a legislative
act is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would e to deprive the law
of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
The past cannot always be erased by judicial declaration. (OPERATIVE FACT
DOCTRINE). The existence of a statute prior to its being adjudged void is an
operative fact to which legal consequences are attached.
During the 8 year period that EO 32 and RA 342 were in force, prescription did not
run. Thus, the prescriptive period was tolled in the meantime prior to such
adjudication of invalidity.