Professional Documents
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Truly, this Court cannot allow the injustice that will be wrought by a strictly prospective
application of the law. Little people who have toiled for years through blood and tears would be
deprived of their homes through no fault of their own. As the Solicitor General, in his comment,
argues:jgc
"Verily, if P.D. 957 were to exclude from its coverage the aforecited mortgage contract, the
vigorous regulation which P.D. 957 seeks to impose on unconscientious subdivision sellers will be
translated into a feeble exercise of police power just because the iron hand of the State cannot
particularly touch mortgage contracts badged with the fortunate accident of having been
constituted prior to the enactment of P.D. 957. Indeed, it would be illogical in the extreme if P.D.
957 is to be given full force and effect and yet, the fraudulent practices and manipulations it seeks
to curb in the first instance can nevertheless be liberally perpetrated precisely because P.D. 957
cannot be applied to existing antecedent mortgage contracts. The legislative intent could not have
conceivably permitted a loophole which all along works to the prejudice of subdivision lot buyers
(private respondents)." 4
Likewise noteworthy are certain provisions of P.D. 957, which themselves constitute strong
arguments in favor of the retroactivity of P.D. 957 as a whole. These are Sections 20, 21 and 23
thereof, which by their very terms have retroactive effect and will impact upon even those
contracts and transactions entered into prior to P.D. 957’s enactment:
As for objections about a possible violation of the impairment clause, we find the following
statements of Justice Isagani Cruz enlightening and pertinent to the case
"Despite the impairment clause, a contract valid at the time of its execution may be legally
modified or even completely invalidated by a subsequent law. If the law is a proper exercise of
the police power, it will prevail over the contract.
"Into each contract are read the provisions of existing law and, always, a reservation of the police
power as long as the agreement deals with a matter affecting the public welfare. Such a contract,
it has been held, suffers a congenital infirmity, and this is its susceptibility to change by the
legislature as a postulate of the legal order." 5
This Court ruled along similar lines in Juarez v. Court of Appeals 6:jgc:chanrobles.com.ph
"The petitioner complains that the retroactive application of the law would violate the
impairment clause. The argument does not impress. The impairment clause is now no longer
inviolate; in fact, there are many who now believe it is an anachronism in the present-day society.
It was quite useful before in protecting the integrity of private agreements from government
meddling, but that was when such agreements did not affect the community in general. They
were indeed purely private agreements then. Any interference with them at that time was really
an unwarranted intrusion that could properly struck down.
"But things are different now. More and more the interests of the public have become involved
in what are supposed to be still private agreements, which have as a result been removed from
the protection of the impairment clause. These agreements have come within the embrace of the
police power, that obtrusive protector of the public interest. It is a ubiquitous policeman indeed.
As long as the contract affects the public welfare one way or another so as to require the
interference of the State, then must the police power be asserted, and prevail, over the
impairment clause."
The decision of the Court of Appeals in Breta and Hamor v. Lao, Et. Al. 7, penned by then Court of
Appeals Associate Justice Jose A. R. Melo, now a respected member of this Court is persuasive,
the factual circumstances therein being of great similarity to the antecedent facts of the case at
bench:
"Protection must be afforded small homeowners who toil and save if only to purchase on
installment a tiny home lot they can call their own. The consuming dream of every Filipino is to
be able to buy a lot, no matter how small, so that he may somehow build a house. It has, however,
been seen of late that these honest, hard-living individuals are taken advantage of, with the
delivery of titles delayed, the subdivision facilities, including the most essential such as water
installations not completed, or worse yet, as in the instant case, after almost completing the
payments for the property and after constructing a house, the buyer is suddenly confronted by
the stark reality, contrived or otherwise, in which another person would now appear to be owner.
Finally, before closing this Resolution, we enjoin petitioner Bank to focus not only on the strictly
legal issues involved in this case but also to take another look at the larger issues including social
justice and the protection of human rights as enshrined in the Constitution, firstly, because legal
issues are raised and decided not in a vacuum but within the context of existing social, economic
and political conditions, law being merely a brick in the up-building of the social edifice; and
secondly, Petitioner, being THE state bank, is for all intents and purposes an instrument for the
implementation of state policies so cherished in our fundamental law. These consideration are
obviously far more weighty than the winning of any particular suit or the acquisition of any specific
property. Thus, as the country strives to move ahead towards economic self-sufficiency and to
achieve dreams of "NIC-blood" and social well-being for the majority of our countrymen, we hold
that petitioner Bank, the premier bank in the country, which has in recent years made record
earnings and acquired an enable international stature, with branches and subsidiaries in key
financial centers around the world, should be equally as happy with the disposition of this case as
the private respondents, who were almost deprived and dispossessed of their very homes
purchased through their hard work and with their meager savings.
WHEREFORE, in view of the foregoing considerations, the petition is hereby DENIED, petitioner
having failed to show any REVERSIBLE ERROR or GRAVE ABUSE OF DISCRETION in the assailed
decision. No costs.