Rutter vs. Esteban [G.R. No.

L-3708, May 18, 1953] Facts: On August 20,1941 Rutter sold to Esteban two parcels of land situated in the Manila for P9,600 of which P4,800 were paid outright, and the balance was made payable as follows: P2,400 on or before August 7, 1942, and P2,400 on or before August 27, 1943, with interest at the rate of 7percent per annum. To secure the payment of said balance of P4,800, a first mortgage has been constituted in favor of the plaintiff. Esteban failed to pay the two installments as agreed upon, as well as the interest that had accrued and so Rutter instituted an action to recover the balance due, the interest due and the attorney's fees. The complaint also contains a prayer for sale of the properties mortgaged in accordance with law. Esteban claims that this is a prewar obligation contracted and that he is a war sufferer, having filed his claim with the Philippine War Damage Commission for the losses he had suffered as a consequence of the last war; and that under section 2 of RA 342(moratorium law), payment of his obligation cannot be enforced until after the lapse of eight years. The complaint was dismissed. A motion for recon was made which assails the constitutionality of RA 342. Issue: Whether or Not RA 342 unconstitutional on non-impairment clause grounds. Held: Yes. The moratorium is postponement of fulfillment of obligations decreed by the state through the medium of the courts or the legislature. Its essence is the application of police power. The economic interests of the State may justify the exercise of its continuing and dominant protective power notwithstanding interference with contracts. The question is not whether the legislative action affects contracts incidentally, or directly or indirectly, but whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end. However based on the Presidents general SONA and consistent with what the Court believes to be as the only course dictated by justice, fairness and righteousness, declared that the continued operation and enforcement of RA 342 at the present time is unreasonable and oppressive, and should not be prolonged should be declared null and void and without effect. This holds true as regards Executive Orders Nos. 25 and 32, with greater force and reason

considering that said Orders contain no limitation whatsoever in point of time as regards the suspension of the enforcement and effectivity of monetary obligations

Ortigas & Co. Ltd. Partnership vs. Feati Bank & Trust Co. [G.R. No. L24670, December 14, 1979] Facts: Plaintiff is engaged in real estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision along EDSA. On March 4, 1952, plaintiff, as vendor, and Augusto Padilla and Natividad Angeles, as vendees, entered into separate agreements of sale on installments over two parcels of land of the Subdivision. On July 19, 1962, the said vendees transferred their rights and interests over the aforesaid lots in favor of one Emma Chavez. Upon completion of payment of the purchase price, the plaintiff executed the corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on installment) and the deeds of sale contained the stipulations or restrictions that: 1. The parcel of land shall be used exclusively for residential purposes, and she shall not be entitled to take or remove soil, stones or gravel from it or any other lots belonging to the Seller. 2. All buildings and other improvements (except the fence) which may be constructed at anytime in said lot must be, (a) of strong materials and properly painted, (b) provided with modern sanitary installations connected either to the public sewer or to an approved septic tank, and (c) shall not be at a distance of less than two (2) meters from its boundary lines. Eventually said lots were bought by defendant. Lot 5 directly from Chavez and Lot 6 from Republic Flour Mills by deed of exchange, with same restrictions. Plaintiff claims that restriction is for the beautification of the subdivision. Defendant claimed of the commercialization of western part of EDSA. Defendant began constructing a commercial bank building. Plaintiff demand to stop it, which forced him to file a case, which was later dismissed, upholding police power. Motion for recon was denied, hence the appeal. Issue: Whether or Not non-impairment clause violated.

Held: No. Resolution is a valid exercise of police power. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Health, safety, peace, good order and general welfare of the people in the locality are justifications for this. It should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power

Lozano vs. Martinez [G.R. No. L-63419, December 18, 1986] Facts: A motion to quash the charge against the petitioners for violation of the BP 22 was made, contending that no offense was committed, as the statute is unconstitutional. Such motion was denied by the RTC. The petitioners thus elevate the case to the Supreme Court for relief. The Solicitor General, commented that it was premature for the accused to elevate to the Supreme Court the orders denying their motions to quash. However, the Supreme Court finds it justifiable to intervene for the review of lower court's denial of a motion to quash. Issue: Whether or Not BP 22 impairs freedom of contract. Whether or not BP 22 transgresses the constitutional inhibition against imprisonment for debt. Held: The freedom of contract which is constitutionally protected is freedom to enter into "lawful" contracts. Contracts which contravene public policy are not lawful. Checks can not be categorized as mere contracts. It is a commercial instrument which, in this modem day and age, has become a convenient substitute for money; it forms part of the banking system and therefore not entirely free from the regulatory power of the state. The offense punished by BP 22 is the act of making and issuing a worthless check or a check that is dishonored upon its presentation for payment. It is not the non-payment of an obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit, under pain of penal sanctions, the making of worthless checks and putting them in circulation.