Article II, Sec. 4 (e) of the Republic Act No.

7925, “Public telecommunications

services shall be provided by private enterprises. The private sector shall be the engine
of rapid and efficient growth in the telecommunications industry;”

In view of Article III, Section 10 of the 1987 Constitution, which provides that “No law
impairing the obligation of contracts shall be passed.” There is impairment when there is a
change in 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. (Clemons vs Nolting)

A law impairs a contract when it enlarges, abridges, or in any manner change the intentions of
the parties. (US vs Diaz Conde), and this is true even if the change is done indirectly.

A franchise partakes of the nature of a grant which is beyond the purview of the non-impairment
clause of the Constitution. Hence, the provision in Section 1 of RA 9337, aending Sec. 27 (c) of
RA No. 8424 by withdrawing the exemption of PAGCOR from corporate income tax, which
may affect any benefits to PAGCOR’s transactions with private parties, is non violative of the
non-impairment clause of the Constitution. (PAGCOR vs BIR, March 15, 2011)