GR L 6003; (April, 1954) (Digest)
G.R. No. L-6003; April 26, 1954
RAMON R. DIZON, ET AL., plaintiffs-appellants, vs. SIMEON OCAMPO, ET AL., defendants-appellees.
FACTS
The plaintiffs-appellants filed an action for foreclosure of a mortgage. The original complaint alleged that on or about or previous to November 22, 1948, the defendants-appellees borrowed P20,000 from the plaintiffs, secured by a mortgage on real property, and had failed to pay the debt. Upon the defendants’ motion, the plaintiffs amended the complaint to specify that the loan was contracted on November 22, 1948. The defendants then moved to dismiss, stating they borrowed no money on that date but had instead borrowed P35,000 in Japanese war notes from the plaintiffs on August 15, 1944. They argued the action was barred by the debt moratorium law, as the debt was contracted during the Japanese occupation. At the hearing on the motion, both parties admitted that on August 15, 1944, the defendants obtained a loan of P35,000 in Japanese military notes secured by a chattel mortgage. On November 22, 1948, the parties substituted the chattel mortgage with a real estate mortgage, reducing the loan to P20,000 in Philippine currency and making it payable two years from that date. The lower court held that the 1948 agreement, which made a debt from the Japanese occupation payable before the lifting of the moratorium, was null and void for violating the moratorium law. It ruled the debt was not demandable until Congress lifted the moratorium and dismissed the complaint. The plaintiffs appealed.
ISSUE
Whether the lower court erred in dismissing the complaint based on the debt moratorium law, specifically in holding that the 1948 agreement modifying the debt was violative of the moratorium and that the debt was not demandable until the moratorium was lifted.
RULING
The Supreme Court reversed the order of dismissal. It found no reversible error in the lower court’s order for the plaintiffs to specify the date of the obligation. However, regarding the dismissal based on the moratorium law, the Court ruled that all laws and executive orders on the debt moratorium had been declared void in the case of Rutter vs. Esteban (90 Phil., 415). Consequently, the lower court’s ruling grounded on those voided moratorium laws could no longer stand. The order of dismissal was revoked, and the case was remanded to the lower court for further proceedings. Costs were imposed on the appellees.