ISSUE: WON the action prescribed?
FACTS: In 1939, Agbayani borrowed P450 from PNB secured by a realty mortgage. In1944, the loan matured but PNB could not collect because it was at thistime of the war. In 1945, Pres.Osmena issued the Debt Moratorium Law (EO #32), suspending the payment of loans for four years due to the ravagesof war. In 1948, RA 342 extended the Debt Moratorium Law for another eight years (up to 1956). In 1953, however, the SC declared RA 342 as unconstitutional in the case of Rutter v Esteban. In 1959, PNB filed a suit for payment of the loan.
DECISION: No. The action could still prosper.
RATIO DECIDENDI: The period from 1945 when the law was promulgated, to 1953 when itwas declared unconstitutional should not be counted for the purpose ofprescription since the Debt Moratorium Law was operative during this time. Ineffect, only 7 years had elapsed (1944-45, 1953-59). Indeed, it would be unjust topunish the creditor who could not collect prior to 1953 because the DebtMoratorium Law was effective, only to be told later that his respect foranapparently valid law made him lose his right to collect. Art. 7 of the Civil Code which provides that, "When the courtsdeclare a law to be inconsistent with the Constitution, the former shall be voidand the latter shall govern."