A.M. No. 439-MJ - Amosco vs. Magro

Plaintiff: Apolinario Cruz, who instituted the action by asserting rights arising from an assignment by the original mortgagee, Jose C. Marcelo.
Original Mortgagee: Jose C. Marcelo, from whom the plaintiff acquired the rights to sue regarding the mortgage.
Defendant: Initially Fernando F. Yapcinco, later substituted by his administratrix, Patrocinio Kelly, following his death.
Third Party Defendant: Jose C. Marcelo, who also became implicated in the proceedings through the third party complaint.

Commencement of Action: On July 22, 1949, the plaintiff filed a complaint in the Court of First Instance of Tarlac seeking:

Basis of the Suit: The plaintiff’s right to sue was based on an assignment of mortgage rights from Jose C. Marcelo.

The defendant filed an answer that included a prayer for judgment, specifically requesting the release of the mortgage allegedly assigned to the plaintiff.
The prayer specified that such release should occur upon payment of an amount equivalent to the mortgage-contract’s consideration, determined in accordance with the Ballantyne scale of values.

On September 21, 1949, the defendant filed a third party complaint against Jose C. Marcelo.
The complaint prayed for:

Judgment in favor of the defendant and against both the plaintiff and the third party defendant.
Ordering the discharge of the defendant’s obligation and the delivery of transfer certificate of title No. 20458 to the defendant upon a payment of P200, Philippine currency.
Relieving the defendant of any further obligations or responsibilities with respect to any rights or claims the plaintiff might assert against the third party defendant.

Substitution of Defendant: Due to the death of Fernando F. Yapcinco, the administratrix of his estate, Patrocinio Kelly, was substituted as the defendant.
Court’s Action Motu Proprio: On January 9, 1951, the Court of First Instance of Tarlac dismissed the case on its own motion, holding that the obligation at issue fell within the purview of the debt moratorium (Executive Order No. 25, as amended by Executive Order No. 32).

The Supreme Court had previously ruled that while the debt moratorium is a legal right granted to debtors, it may be waived, provided that such waiver does not adversely affect public interest or third-party rights.
Evidence of Waiver:

The defendant’s failure to invoke the defense of the debt moratorium in his pleadings.
The defendant’s express prayer for a judgment that would release the mortgage contingent upon payment, thereby indicating a waiver of the statutory protection.

The defendant alleged that he had previously offered to pay the original mortgagee, who refused to accept payment.
Similar offers of payment were reportedly made in the third party complaint, further supporting the assertion that the defendant was prepared to satisfy his obligation and redeem the mortgaged property.

Whether the dismissal of the case by the Court of First Instance, based on the debt moratorium provided by the relevant Executive Orders, was proper.

Does the debt moratorium apply if the debtor’s actions imply a waiver of that right?
What are the implications of not expressly invoking the statutory defense in the pleadings?

Whether the defendant’s explicit prayer for a judgment releasing the mortgage upon specified conditions (i.e., payment based on the Ballantyne scale) constitutes a waiver of the protective right provided by the debt moratorium.

Is the waiver effective given that the defendant was willing and ready to pay as evidenced by his offers?

The extent to which the defendant’s willingness to pay and repeated offers, and the subsequent refusal by the mortgagee, affect the enforceability of the debt moratorium defense.