VICTORIA DESBARATS MIAILHE, PETITIONER, VS. JOSE VIVENCIO RAMIREZ, ET AL., RESPONDENTS.

Miailhe versus Ramirez

The Case

This is the case of Miailhe versus Ramirez, a suit for the foreclosure of a mortgage. Victoria Desbarats Miailhe sued Jose Vivencio Ramirez and the other members of the Ramirez family to collect a debt of two hundred thousand pesos, with interest, and to foreclose the mortgage securing it. The defendants moved to dismiss, invoking the wartime and postwar moratorium on debts. The plaintiff answered that the moratorium laws were unconstitutional. The case matters because it shows the Supreme Court applying its ruling in the Rutter versus Esteban case, striking down the moratorium, and it teaches the doctrine that a statute declared unconstitutional is void from the start and confers no rights.

Procedural History

Victoria Desbarats Miailhe filed her complaint for foreclosure of mortgage in the Court of First Instance of Manila. The defendants filed a motion to dismiss on the ground that the complaint did not state a cause of action, because the debt was not yet due and payable by reason of the moratorium. The Court of First Instance of Manila granted the motion to dismiss in an order dated May 13, 1950. The plaintiff appealed to the Supreme Court. While the appeal was pending, the Supreme Court decided the Rutter versus Esteban case on May 18, 1953, declaring the moratorium laws unconstitutional. The Supreme Court then decided this appeal.

Facts

Victoria Desbarats Miailhe filed a complaint for foreclosure of mortgage against Jose Vivencio Ramirez, Rita Esperanza Ramirez, Jorge Pedro Ramirez, Jose Eugenio Ramirez, Belen Tomasa Ramirez, Ramos Anastacio Ramirez, and Angela M. Butte. She sought the sum of two hundred thousand pesos, with interest at six percent per annum from March 10, 1945, until payment, plus interest upon accrued interests and attorney's fees of two percent on the total amount due.

In her complaint, she alleged that Executive Order Number 25, dated November 18, 1944, as amended by Executive Order Number 32, dated March 10, 1945, and Republic Act Number 342, approved July 26, 1948, which provided for a moratorium on all debts and other monetary obligations, were null and void for being unconstitutional. She prayed that these laws be declared unconstitutional and null and void, and that judgment be rendered for the sums stated against the defendants.

The defendants filed a motion to dismiss, arguing that the complaint did not state a cause of action because the debt was not due and payable by reason of the moratorium. The Court of First Instance of Manila granted the motion in an order dated May 13, 1950. The plaintiff appealed.

Issues

• Whether or not the moratorium established by Republic Act Number 342 and the executive orders is valid and enforceable, so as to bar the foreclosure suit.
• Whether or not the trial court erred in dismissing the complaint on the ground that the debt was not yet due and payable by reason of the moratorium.

Applicable Provisions

Republic Act Number 342, approved July 26, 1948, provided for a moratorium on all debts and other monetary obligations. The decision does not quote its text, but it is the law the defendants invoked to defeat the complaint. Executive Order Number 25, dated November 18, 1944, as amended by Executive Order Number 32, dated March 10, 1945, likewise established the moratorium. The decision does not quote their text either, but they are the earlier measures the plaintiff challenged as unconstitutional.

Ruling

On the first issue, the Supreme Court held that it was no longer necessary to consider the questions raised with regard to the moratorium. In the case of Royal L. Rutter versus Placido J. Esteban, promulgated on May 18, 1953, and in several other cases, the Court had already declared that Republic Act Number 342 and the executive orders establishing the moratorium are unconstitutional and, therefore, null and void. Because the moratorium is void, it cannot be set up as a defense to delay the payment of a debt.

On the second issue, the Court held that the trial court erred in dismissing the complaint. Since the moratorium is void, the ground for dismissal, that the debt was not due and payable, does not hold. The order of dismissal was therefore reversed and set aside, and the case was ordered returned to the trial court for further proceedings.

Doctrine

A statute declared unconstitutional is void from the start and confers no rights. It cannot be used as a defense to defeat a valid claim. The moratorium laws, Republic Act Number 342 and the executive orders, having been declared unconstitutional in Rutter versus Esteban, are null and void and cannot bar a suit for foreclosure of mortgage. A motion to dismiss for failure to state a cause of action cannot succeed when it rests on a void law.

Disposition

The Supreme Court reversed and set aside the order of dismissal and ordered the case returned to the trial court for further proceedings, without pronouncement as to costs. The plaintiff won the appeal.

Remember This

The single line worth memorizing is that a law declared unconstitutional is void and confers no rights, so the moratorium could not bar the foreclosure suit. Examiners like to use this case to test the effect of an unconstitutional statute and the rule that a void law cannot be invoked as a defense.