G.R. No. L-9396 - Manila Motor Co., Inc. vs. Flores

Case Summary (G.R. No. L-9396)

Claim, Amount, and Dates of Obligation

Manila Motor Company sued to recover P1,047.98, representing chattel mortgage installments that fell due in September 1941. The complaint for collection was filed in May 1954.

Defense of Prescription and Disposition Below

The defendant pleaded prescription, arguing that the ten-year prescriptive period had run between 1941 and 1954. The Municipal Court of Manila dismissed the complaint on that ground. On appeal, the Court of First Instance disagreed, holding that moratorium laws had interrupted the running of prescription; deducting the period during which the moratorium laws were in force (three years and eight months), the court concluded the ten-year term had not yet expired when the action was filed, and therefore ordered the case returned to the municipal judge for trial on the merits.

Appellant’s Principal Argument on Appeal

On appeal from the Court of First Instance’s ruling, the defendant principally argued that the moratorium laws could not suspend the prescriptive period because those laws had been declared unconstitutional in Rutter v. Esteban. The appellant relied on the general principle that, when a statute is adjudged unconstitutional, it is deemed inoperative as if never passed, and no rights or suspensions of rights can be founded upon it.

Procedural Question Raised and Court’s Approach

Some members of the Supreme Court expressed doubt whether the Court of First Instance’s order was appealable. The Court, however, declined to decide that procedural question because the substantive issue raised by the appellant could be disposed of promptly and decisively.

Controlling Precedent and the Court’s Analysis

The Supreme Court relied on its prior holding in Montilla v. Pacific Commercial, which had held that the moratorium laws suspended the running of prescription. The Court noted that Montilla had been decided after Rutter v. Esteban but before the present disposition; Montilla supported the conclusion that moratorium laws interrupted prescription. The Court additionally cited a resolution in Araneta v. Hill to explain that although the general rule is that an unconstitutional statute confers no rights and is as if never enacted, courts have, in certain instances and on equitable grounds, relaxed or qualified the consequences of a later-declared-unconstitutional statute. The Court quoted authorities recognizing that the actual prior existence of a statute is an operative fact with consequences that sometimes cannot justly be ignored.

Authorities and Illustrative Citations

The decision references prior authorities and notes: Alcantara v. Chico (regarding the period of three years and eight months), Norton v. Shelby and Exposition of American Jurisprudence on

Case Syllabus (G.R. No. L-9396)

Title, Citation, and Authorship

Reported at 99 Phil. 738; G.R. No. L-9396; decided August 16, 1956.
Case styled: MANILA MOTOR COMPANY, INC., PLAINTIFF AND APPELLEE, VS. MANUEL T. FLORES, DEFENDANT AND APPELLANT.
Opinion authored by Justice Bengzon (D E C I S I O N BENGZON, J.).

Factual Background

In May 1954, Manila Motor Company filed a complaint in the Municipal Court of Manila.
The complaint sought recovery from Manuel T. Flores of the amount of P1,047.98.
The amount claimed represented chattel mortgage installments which fell due in September 1941.
Defendant (Flores) pleaded prescription, asserting the period 1941 to 1954 as constituting prescription.

Procedural History

The Municipal Court of Manila dismissed the complaint.
On appeal, the Court of First Instance reversed the municipal court, sustaining the plaintiff’s contention regarding the effect of the moratorium laws on prescription.
The Court of First Instance ordered the case returned to the municipal judge for trial on the merits.
Defendant appealed to this Court (Supreme Court of the Philippines).

Core Legal Issue Presented on Appeal

Whether the moratorium laws had the effect of interrupting or suspending the running of the prescriptive period for the recovery of the chattel mortgage installments due in September 1941, thereby preventing prescription from accruing between 1941 and May 1954.
Whether the moratorium laws could be so applied, given the contention that those laws were unconstitutional as declared in Rutter vs. Esteban.

Arguments of the Parties (as presented in the source)

Plaintiff/Appellee (Manila Motor Company): Contended that the moratorium laws interrupted the running of the prescriptive period, and that after deducting the time during which said laws were in operation—three years and eight months—the ten-year prescriptive term had not elapsed when complainant sued in May 1954.
Defendant/Appellant (Manuel T. Flores): Pleaded prescription (1941–1954) and principally argued that the moratorium laws did not have the effect of suspending the period of limitations because those laws were unconstitutional, as declared by this Court in Rutter vs. Esteban (cited in the source as 49 Off. Gaz. (5) 1807). He cited jurisprudence holding that when a statute is adjudged unconstitutional it is as inoperative as if it had never been passed and that no rights can be built upon it (citation in source: Norton vs. Shelby, 118 U.S., 425-454; Am. Jur. Vol. 11, p. 827).

Lower Court Reasoning (Court of First Instance)

The Court of First Instance sustained the plaintiff’s contention that moratorium laws had interrupted the running of the prescriptive period.
The court calculated that the moratorium laws were in operation for three years and eight months (see footnote reference in source [1]).
After deducting that period, the Court of First Instance concluded the ten-year prescriptive period had not yet elapsed by May 1954, when the plaintiff filed suit.
Consequently, the Court of First Instance ordered the return of the case to the municipal judge f