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National Development Company and New Agrix vs.

Philippine Veterans Bank (192 SCRA 257) Facts: Agrix Marketing executed in favor of respondent a real estate mortgage over three parcels of land. Agrix later on went bankrupt. In order to rehabilitate the company, then President Marcos issued Presidential Decree 1717 which mandated, among others, the extinguishing of all the mortgages and liens attaching to the property of Agrix, and creating a Claims Committee to process claims against the company to be administered mainly by NDC. Respondent thereon filed a claim against the company before the Committee. Petitioners however filed a petition with the RTC of Calamba, Laguna invoking the provision of the law which cancels all mortgage liens against it. Respondent took measures to extrajudicially foreclose which the petitioners opposed by filing another case in the same court. These cases were consolidated. The RTC held in favor of the respondent on the ground of unconstitutionality of the decree; mainly violation of the separation of powers, impairment of obligation of contracts, and violation of the equal protection clause. Hence this petition. Issue: Is the respondent estopped from questioning the constitutionality of the law since they first abided by it by filing a claim with the Committee? Is PD 1717 unconstitutional? Ruling: On the issue of estoppel, the Court held that it could not apply in the present case since when the respondent filed his claim, President Marcos was the supreme ruler of the country and they could not question his acts even before the courts because of his absolute power over all government institutions when he was the President. The creation of New Agrix as mandated by the decree was also ruled as unconstitutional since it violated the prohibition that the Batasang Pambansa (Congress) shall not provide for the formation, organization, or regulation of private corporations unless such corporations are owned or controlled by the government. PD 1717 was held as unconstitutional on the other grounds that it was an invalid exercise of police power, It had no lawful subject and no lawful method. It violated due process by extinguishing all mortgages and liens and interests which are property rights unjustly taken. It also violated the equal protection clause by lumping together all secured and unsecured creditors. It also impaired the obligation of contracts, even though it only involved purely private interests.

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