Rutter sold to Placido a parcel of land through full payment of the half and two installments of the other half of the agreed amount. The first half was paid then war came through Japanese occupation. Rutter filed an action to claim to recover the balance due to the CFI. Esteban set up the defense of moratorium clause embodied in Republic Act No. 342. The CFI dismissed the case upholding the moratorium of 8 years had not yet lapsed. In Rutter’s motion, he raised the constitutionality issue for the first time, but said motion was denied.
Whether or not Republic Act No. 342 is unconstitutional being violative of the constitutional provision forbidding the impairment of the obligation of contracts (Article III, Section 1, 1935 Constitution).
Yes. R.A. No. 342 was declared unconstitutional.
Consistent with what [the Supreme Court] believe to be as the only course dictated by justice, fairness and righteousness, [the Supreme Court] feel that the only way open to us under the present circumstances is to declare that the continued operation and enforcement of Republic Act No. 342 x x x is unreasonable and oppressive, and should not be prolonged a minute longer, and, therefore, the same should be declared null and void and without effect.