PNB V.

REMIGIO
FACTS:
On 25 August 1967, Remigio obtained from PNB aP65,000 loan secured by a real
estate mortgage covering 5parcels of land in Isabela. On November 17, 1970
Remigiodefaulted hence PNB extrajudicially foreclosed on themortgage and acquired the
encumbered assets for P87,082.However the sheriffs sale was only registered with
theregister of deeds on October 11, 1972, two years after thesaid sale.On Oct 21, 1972, P.D.
No. 27 was enacted into lawwhich mandated an agrarian reform. Pursuant thereto,
an"Operation Land Transfer Program" was launched andamong the areas it covered were the
parcels of land in themortgage contract between Remigio and PNB. This in effecttransferred
the rights of the plaintiff to the tenants-beneficiaries in favor of the Land Bank of the
Philippines.
HELD:
Although P.D. No. 27 had the effect of impairing theobligation of the duly executed
mortgage contracts affectingsaid lands. There is no question, however, that the landreform
program of the government under P.D. No. 27), wasundertaken in the exercise of the police
power of the state.It is settled that the one limitation on the contract clausearises from the
police power; the reason being that publicwelfare is superior to private rights. The situation
here, islike that in eminent domain proceedings, where the stateexpropriates private
property for public use, and the onlycondition to be complied with is the payment of
justcompensation. Technically, the condemnation proceedingsdo not impair the contract to
destroy its obligations, butmerely appropriate or take for public use.