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TITLE: PHILIPPINE NATION BANK VS FILEMON REMIGIO 2. No, although P.D. No. 27 had the effect of impairing the
GR NO.78508 obligation of the duly executed mortgage contracts affecting
VITUG,J.: said lands. There is no question, however, that the land
reform program of the government under P.D. No. 27), was
FACTS: On 25 August 1967, Remigio obtained from PNB a undertaken in the exercise of the police power of the state.
P65,000 loan secured by a real estate mortgage covering 5 It is settled that the one limitation on the contract clause
parcels of land in Isabela. On November 17, 1970 Remigio arises from the police power; the reason being that public
defaulted hence PNB extrajudicially foreclosed on the welfare is superior to private rights. The situation here, is
mortgage and acquired the encumbered assets for P87,082. like that in eminent domain proceedings, where the state
However the sheriff’s sale was only registered with the expropriates private property for public use, and the only
register of deeds on October 11, 1972, two years after the condition to be complied with is the payment of just
said sale. compensation. Technically, the condemnation proceedings
On Oct 21, 1972, P.D. No. 27 was enacted into law do not impair the contract to destroy its obligations, but
which mandated an agrarian reform. Pursuant thereto, an merely appropriate or take for public use. As the Land Bank
"Operation Land Transfer Program" was launched and is obliged to settle the obligations secured by the mortgage,
among the areas it covered were the parcels of land in the the mortgagee is not left without any compensation.
mortgage contract between Remigio and PNB. This in effect
transferred the rights of the plaintiff to the tenants- This Court, likewise, in a number of cases has expressed the
beneficiaries in favor of the Land Bank of the Philippines. dictum that police power subordinates the non-impairment
clause of the Constitution.
1. WON the said mortgaged lands were still under Remigio’s
right of redemption when PD 27 was enacted.

2. WON application of PD 27 in the case at bar would be a

violation of the non-impairment clause of the Constitution

1. Yes, when P.D. No. 27, was enacted on 21 October 1972,
the parcels of land in dispute were clearly still subject to
Remigio’s right of redemption. In the foreclosure of real
property by banking institutions, as well as in the
extrajudicial foreclosure by any other mortgagee, the
mortgagor could redeem the property within one year from
date of registration of the deed of sale in the appropriate
Registry of Deeds and not on date of foreclosure.