G.R. No. 115813 - Ferdez vs. Court of Appeals

In May 1954, Manila Motor Company, Inc. filed a complaint in the Municipal Court of Manila against Manuel T. Flores to recover the amount of P1,047.98, representing chattel mortgage installments due in September 1941.
The defendant, Manuel T. Flores, filed a plea of prescription, arguing that the claim was barred by the ten-year prescriptive period running from 1941 to 1954.
The Municipal Court dismissed the complaint based on prescription.

The case was elevated to the Court of First Instance, which reversed the dismissal.
The Court of First Instance held that the moratorium laws had interrupted the running of the prescriptive period.
Considering the suspension period of three years and eight months imposed by the moratorium laws, the court ruled that the ten-year prescriptive period had not yet elapsed as of May 1954 when the complaint was filed.
Consequently, the case was remanded to the Municipal Court for trial on the merits.

The defendant appealed to the Supreme Court.
His principal argument was that the moratorium laws did not suspend prescription because these laws had been declared unconstitutional by the Supreme Court in *Rutter vs. Esteban*, 49 Off. Gaz. (5) 1807.
He cited jurisprudence affirming that a statute declared unconstitutional is as if it never existed and confers no rights or protections.

Although some members questioned whether the lower court's order was appealable, the Court proceeded to address the substantive issue raised by appellant.
The Supreme Court referred to *Montilla vs. Pacific Commercial*, 98 Phil., 133, a subsequent ruling holding that moratorium laws do suspend the running of the prescriptive period, which came after the *Rutter* decision but before this case’s final resolution.
The Court also cited from *Araneta vs. Hill*, 93 Phil., 1002, clarifying that even if a statute is later declared unconstitutional, its actual existence prior to such declaration remains an operative fact that can have consequences which courts may justly consider.

Whether the moratorium laws, which were declared unconstitutional, could validly suspend the running of the prescriptive period under which the plaintiff claimed payment.
Whether the Court of First Instance correctly applied the moratorium laws to interrupt the prescriptive period on the chattel mortgage installments due in September 1941.
Whether the appellant’s contention that the moratorium laws are inoperative due to their unconstitutionality should prevail.