G.R. No. L-3601 July 31, 1951
UY HOO AND COMPANY, plaintiff and appellant, vs. JOAQUIN C. YUSECO, defendant and appellee.

FACTS

On December 23, 1943, Joaquin Yuseco executed a mortgage deed in favor of Uy Hoo and Company to secure a debt of P70,000. A clause in the mortgage stipulated that the loan could not be repaid, in whole or in part, within two years from the date of the deed, but must be paid after that two-year period but not later than December 24, 1946, and this condition was agreed to be non-waivable by either party. On October 7, 1944, Yuseco filed a complaint (Civil Case No. 2904) in the Court of First Instance of Manila, alleging that on September 25, 1944, he offered to pay the creditor the debt with interest up to December 24, 1946, but the creditor refused to receive payment; consequently, he was compelled to file the suit, consign the payment, and ask that the debt be declared paid and the mortgage cancelled. The creditor filed its answer. The records of this case were destroyed during the war. On January 2, 1946, Uy Hoo and Company demanded payment from Yuseco of the debt with interest and attorney’s fees. As the debtor did not satisfy the debt, the creditor filed a complaint (Civil Case No. 71980) on January 18, 1946, seeking payment of its mortgage credit. On January 30, 1946, Yuseco filed a motion to dismiss the complaint on the ground of litis pendentia, referring to Civil Case No. 2904 filed during the Japanese occupation. This motion was denied. On February 19, 1946, Yuseco filed his answer, alleging as a defense that the creditor, despite several offers of payment, refused to receive it, forcing him to consign the amount by instituting Civil Case No. 2904. On June 23, 1949, both cases (the present case and Case No. 2904, with reconstituted records) were called for hearing. Yuseco made an oral motion to amend his answer to add the defense of moratorium. The creditor’s counsel objected. The court noted that the motion was not in accordance with the rules. The plaintiff-creditor presented its evidence, and before closing it, the debtor asked for postponement of the hearing. Over the creditor’s opposition, the court granted Yuseco’s request and continued the hearing to July 1, 1949. On June 24, 1949, Yuseco filed an amended answer, adding the moratorium as an additional defense. Over the creditor’s opposition, the court admitted the amended answer. After the plaintiff-creditor presented all its evidence, the defendant filed a motion to dismiss based on the moratorium. The court reserved its resolution. On November 18, 1949, the court issued an order dismissing the complaint. Uy Hoo and Company appealed this order.

ISSUE

Whether the defendant-appellee Joaquin C. Yuseco, by not raising the defense of moratorium in his initial motion to dismiss (January 30, 1946) or in his original answer (February 19, 1946), is deemed to have waived such defense under the Rules of Court.

RULING

The Supreme Court affirmed the appealed order of dismissal. The Court held that the defense of lack of cause of action, which includes the bar of the moratorium laws, is an exception to the rule on waiver of defenses under Section 10, Rule 9 of the Rules of Court. It may be raised in a subsequent pleading if permission is granted, in a motion for judgment on the pleadings, or at the trial on the merits. Since Republic Act No. 342 (the Moratorium Law) was still in force with respect to debts incurred during the Japanese occupation, the creditor could not demand payment and therefore had no cause of action. The Court cited precedents (Uy vs. Kalaw Katigbak; Cruz y Gumatay vs. Avila; General vs. De Venecia; Ma-ao Sugar Central Co., Inc. vs. Barrios) establishing that the moratorium is a valid defense that negates a cause of action. Consequently, the trial court did not err in admitting the amended answer raising the moratorium defense and in subsequently dismissing the complaint based on that defense.