Clemons Vs.

Nolting
Facts:
Clemons a citizen of the United States, temporarily residing in the city
of Manila, Philippine Islands. He entered into a contract with the Government
of the Philippine Islands employing him to the position of electrical and
mechanical engineer in the Philippine Bureau of Public Works, under special
contract to expire December 31, 1921, at a straight salary of $4,000 per
annum, that is, $333.33 a month. The rate of exchange prevailing at that
time, as fixed by the Insular Government of the Philippine Islands, the
equivalent of $333.33 is P739.33.
Meanwhile, the Legislature of the Philippine Islands has enacted a law,
Act No. 2711 as amended by Act No. 2776, making the rate of exchange of 1
dollar for 2 pesos. Pursuant to this law, on February, 1921, the chief
accountant of the Bureau of Public Works of the Government of the Philippine
Islands tendered Clemons a warrant on the Treasurer of the Philippine Islands
in the sum of P666.66, Philippine currency, in full payment of his salary for
the month of January, 1921. As a result, Clemons demanded that he be paid
an additional sum of P73.33 in addition to P666.66 to satisfy the prevailing
official rates when the contract was signed. His protest was favored by the
chief accountant of the Bureau of Public Works who issued a warrant to be
paid to Clemons. When the warrant was presented by Clemons to Nolting,
Auditor of the Philippine Government, it was rejected grounded on the
provision of Act. No. 2711 as amended by Act No. 2776.
Issue:
Whether or not, Act No. 2711 as amended by Act No. 2776 violates the
impairment clause.
Rulings:
The passage of the said law impaired Clemons vested rights as it
reduced Clemons salary from P739.33 to P666.66 a month. Clearly, it
changed the condition and terms of the subject contract. A law which
changes the terms of a legal contract between parties, either in the time or
mode of performance, or imposes new conditions, or dispenses with those
expressed, or authorizes for its satisfaction something different from that
provided in its terms, is law which impairs the obligation of a contract and is
therefore null and void.
Therefore, Act No. 2711 as amended by Act No. 2776 violates the
impairment clause.