3. PNB v.

Remigio

FACTS: Five parcels of land of Remigio in Isabela were mortgaged to PNB as a security for a loan
and was subsequently foreclosed due to the default of Remigio in the payment of the loan.
Pursuant to PD No. 47 which mandates an agrarian reform, an "Operation Land Transfer
Program" was launched covering certain parcels of land in the mortgage contract between PNB
and Remigio, thus, transferring the rights to the tenants-beneficiaries in favor of the Land Bank of
the Philippines. PNB insisted that the foreclosure is valid and with effect.

ISSUE:
WON the application of PD 27 would be a violation of the non-impairment clause of the
Constitution.

HELD:
No, PD 27 does not violate the non-impairment clause of the Constitution. One limitation on the
contract clause arises from the police power, the reason being that public welfare is superior to
private rights. Technically, the condemnation proceedings do not impair the contract to destroy its
obligations, but merely appropriate or take for public use. As the Land Bank is obliged to settle the
obligations secured by the mortgage, the mortgagee is not left without any compensation.

AQUINO.BANGI.CAEG.DE
GUZMAN.EBORA.GAVINO.GOZOS.HERNANDEZ.HERRERA.HIZON.ISIDRO.LAGRAMADA.LASALA.MAGRATA.
MAGPANTAY.MALAMUG.MIOLE.PABLO.PACETE.POSTRADO.RAMOS.TOLENTINO.VILLANO.VILLANUEVA.YAP.YU
2010-2011