Section 10. No Law Impairing The Obligation of Contracts Shall Be Passed

CONSTITUTIONAL LAW 2
NON-IMPAIRMENT OF CONTRACT
Section 10. No law impairing the obligation of contracts shall be passed.
 See Article 1305, Civil Code on the definition of a “contract”; includes

franchises but not licenses or marriage contracts; a public office is not a
property right and cannot be the subject of a contract; not limited to private
contracts (see Fletcher v. Peck, 6 Cranch 87); “Contract” refers to any lawful
agreement on property or property rights, whether real or personal, tangible
of intangible, executed or executory; the parties may be private persons only,
natural or artificial, or private persons on the one hand and the government
or its agencies on the other hand
 Safeguards the integrity of valid contractual agreements against unwarranted
interference by the State; a law may not change the intention of the parties or
modify their rights and obligations; to impair (diminishes the efficacy of a
contract), the law must retroact as to affect existing contract concluded
before its enactment (see Co v. Philippine National Bank, 114 SCRA 842,
where new loan regulations making redemption of property sold on
foreclosure more strict was not allowed to apply retroactively); impairment
must be substantial (see Clemons vs. Nolting, 42 Phil. 702 and Manila
Trading Co. v. Reyes, 62 Phil. 461) and effect a change on the rights of the
parties with reference to each other and not with reference to non-parties;
limits the exercise of legislative power and not of judicial or quasi-judicial
power
 As used in the impairment clause, “law” includes statutes enacted by the
national legislature, executive orders and administrative regulations
promulgated under a valid delegation of power, and municipal ordinances
passed by the local legislative bodies; it does not include judicial decisions
or adjudications made by administrative bodies in the exercise of their quasi-
judicial powers
 To impair, the law must retroact so as to affect existing contracts concluded
before its enactment and there is no impairment if the law is made to operate
prospectively; impairment is anything that diminishes the efficacy of the
contract, and there is substantial impairment when (1) the law changes the
terms of legal contract between parties, either in the time or mode of
performance, or (2) impose new conditions, or dispenses with those
expressed, or (3) authorizes for its satisfaction something different from that
provided in its terms (Clements v. Nolting)
 A license or a permit is not a contract between the sovereignty and the
licensee of permitee, and is not a property in the constitutional sense
(Gonzalo Sy v. Central Bank); timber licenses, permits and license
agreements are not contracts within the purview of the due process clause
and may be amended, modified, replaced or rescinded by the Chief
Executive when national interest so requires (TBAP v. COMELEC);
Franchise partakes the nature of a grant which is beyond the purview of the
non-impairment clause; Tax exemptions contained in franchises are far from
being strictly contractual in nature (Meralco v. Laguna)
 But a contract may become invalid, or certain provisions may be rendered
inoperative or illegal by virtue of a subsequent legislation being a proper
exercise of police power and prevails over a contract; public welfare is
superior to private rights (see PNB v. Remigio, G.R. No. 78508, March 21,
1994; Ortigas v. Feati Bank, 94 SCRA 553 upholding the zoning resolution
which modified the contractual provision on the use of the lots sold; Lozano
v. Martinez, 146 SCRA 323 on the challenge to B.P. No. 22; Ilusorio v.
CAR, 17 SCRA 25 on the conversion of the existing share tenancy contract
into leasehold tenancy; Tiro v. Hontanosas, 125 SCRA 697 on discontinuing
the assignment of the salaries of public school teachers to their creditors;
Conference of Maritime Manning Agencies v. POEA, G.R. No. 114714,
April 21, 1995); but see Ganzon v. Inserto, 123 SCRA 713 which disallowed
the substitution of a mortgage with the surety bond as the security for the
payment of a loan; while police power is superior to the non-impairment
clause, the principle will apply only where the contract is so related to the
public welfare that it will be considered congenitally susceptible to change
by the legislature in the interest of the greater number (see NDC v. PVB,
also Ilusorio v. CAR, where pre-existing share tenancy contracts could be
validly converted into leasehold tenancy through the valid exercise of police
power); the test of validity in the case of legislation interfering with existing
contracts is reasonableness (AATI v. TMCI); a municipal zoning ordinance
is a police measure and prevails over a restriction contained in the title to
property (Ortigas v. Feati Bank)
 Also limited by eminent domain (see Kabiling v. NHA, 156 SCRA 623) and
taxation (see La Insular v. Manchuca, 39 Phil. 567, and Tolentino vs.
Secretary of Finance); where a law grants a tax exemption in exchange for
valuable consideration, such exemption is considered a contract and cannot
be repealed because of the impairment clause (Casanova v. Hord); all other
tax exemptions are not contractual and so may be revoked at will by the
legislature; contractual tax exemptions are those agreed to by the taxing
authority in contracts (like those in government bonds and debentures)
lawfully entered into by them under enabling laws which the government
acting in its private capacity, sheds its cloak of authority and waives
governmental immunity (Meralco v. Laguna)
 Franchises, privileges, licenses, etc. do not come with the context of the
provision, as held in C & M Timber Corporation v. Alcala, G.R. No.
111088. June 13, 1997; see Sec. 11, Art. XII, decreeing that a franchise or
right is subject to amendment, alteration or repeal by the Congress when
required by common good; however, in cases not covered by a reservation
clause, licenses and privileges can evolve into property covered by the due
process clause (see American Inter-Fashion Corp. vs. Office of the
President, 197 SCRA 409); a reservation of the right to alter the charter may
be in the legislative grant itself or in a general law which then becomes a
part of every charter (see Philippine Railway Co. v. Collector of Internal
Revenue, 91 Phil. 35)
 The legislature cannot bargain away the police power through the medium of
a contract, neither may private parties fetter the legislative authority by
contracting on matters that are essentially within the legislative body to
regulate; see Stone v. Mississippi, 101 US 814, when a franchise granted by
the government in exchange for valuable consideration, for the operation of
a lottery by a private corporation, was revoked when the legislature
subsequently imposed a prohibition on all kinds of gambling within the
State; in Rutter v. Esteban. 93 Phil 68, a moratorium on the payment of pre-
war debts was annulled
 CASES:
Stone v. Mississippi, 101 US 814
Rutter v. Esteban. 93 Phil 68
PNB v. Remigio, G.R. No. 78508, March 21, 1994
Ortigas v. Feati Bank, 94 SCRA 553
Lozano v. Martinez, 146 SCRA 323
Conference of Maritime Manning Agencies v. POEA, G.R. No. 114714,
April 21, 1995
Ganzon v. Inserto, 123 SCRA 713
Kabiling v. NHA, 156 SCRA 623
La Insular v. Manchuca, 39 Phil. 567)
C & M Timber Corporation v. Alcala, G.R. No. 111088. June 13, 1997
Clements vs. Nolting, 42 Phil 702
FREE ACCESS TO THE COURTS
Section 11. Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty.
 This is a social justice provision, implemented by the Rules of Court

provision allowing “pauper suits”; See Rule 141, Section 19 exempting
indigent litigants from payment of legal fees
 The Constitution has expanded the right so that in addition to giving free
access to courts it now guarantees free access also to “quasi-judicial bodies”
and to “adequate legal assistance”
 The Supreme Court has the power to promulgate rules concerning legal
assistance to the underprivileged and such rules shall provide a simplified
and inexpensive procedure for the speedy disposition of cases [Article VIII,
Section 5(5)]
 CASE:
Abadia v. CA, 236 SCRA 676
THE PRIVILEGE OF THE WRIT OF HABEAS CORPUS
Section 15. The privilege of the writ of habeas corpus shall not be suspended
except in cases of invasion or rebellion when the public safety requires it.
 The writ of habeas corpus is one directed to the person detaining another,
commanding him to produce the body of the prisoner at a designated time
and place, with the day and cause of his caption and detention; to do, submit
to, and receive whatever the court or judge awarding the writ shall consider
in that behalf; an essential requisite for the availability of the writ is actual
deprivation of personal liberty
 Habeas corpus restores the liberty of an individual subjected to physical
restraint; The high prerogative of the writ was devised and exists as a speedy
and effectual remedy to relieve persons from unlawful restraint and is the
best and only sufficient defense of personal freedom; it secures to the
prisoner the right to have the cause of his detention examined and determined
by a court of justice, and to have the issue ascertained as to whether he is
held under lawful authority
 Other instances where the writ is applicable:
(1) Where as a consequence of judicial proceeding, there has been
deprivation of a constitutional right resulting in the restraint of the
person;
(2) Where the court has no jurisdiction to impose the sentence;
(3) Where an excessive penalty has been imposed, since such sentence is
void as to the excess. (Feria v. CA, 2000)
(4) It may also extend to cases by which rightful custody of any person is
withheld from the person entitled thereto. (Tijing v. CA, 2001)
(5) The writ may issue on the ground that moral restraint was being exerted
by the employer to prevent the housemaid from leaving. (Caunca v.
Salazar)
(6) A person detained during the Japanese occupation for an offense of
political complexion could demand his release after the legitimate
government was restored. (Alcantara v. Director of Prisons)
 The privilege is the right to have an immediate determination of the legality
of the deprivation of physical liberty
 Even if the detention is, at its inception, illegal, supervening events, such as
the issuance of a judicial process, may prevent the discharge of the detained
person [Jackson v. Macalino, G.R. No. 139255, November 24, 2003]
 The writ is NEVER suspended and always issues as a matter of course; what
is suspended is the privilege of the writ, that once the officer making the
return shows the court that the person detained is being detained for an
offense covered by the suspension, the court may not inquire any further
 It is the President who may suspend the privilege but its suspension does not
suspend the right to bail
 The requisites for the suspension: (1) existence of actual invasion or
rebellion; and (2) public safety requires the suspension; see the limitations to
the exercise of the power to suspend the privilege in Article VII, Section 18
 Non-compliance with the writ constitutes contempt of court
 CASES:
Caunca v. Salazar, 82 Phil. 851
Alcantara v. Director of Prisons, 75 Phil. 749
Gumabon v. Director of Prisons, 37 SCRA 420
Feria v. CA, G.R. No. 122954, February 15, 2000
Tijing v. CA, G.R. No. 125901, March 8, 2001
Jackson v. Macalino, G.R. No. 139255, November 24, 2003

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CONSTITUTIONAL LAW 2

Section 10. No law impairing the obligation of contracts shall be passed.

 See Article 1305, Civil Code on the definition of a “contract”; includes

 This is a social justice provision, implemented by the Rules of Court

THE PRIVILEGE OF THE WRIT OF HABEAS CORPUS

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