NON-IMPAIRMENT CLAUSE

PWRDC vs Puerto Azul

THERE HAS TO BE A LAW OR EXECUTVIE ISSUANCE MODIFYING THE CONTRACT.
REHABILITATION NOT COVERED BY NON-IMPAIRMENT CLAUSE

We also find no merit in PWRDC's contention that there is a violation of the

impairment clause. Section 10, Article III of the Constitution mandates that no law
impairing the obligations of contract shall be passed. This case (rehabilitation)
does not involve a law or an executive issuance declaring the modification of the
contract among debtor PALI, its creditors and its accommodation mortgagors. Thus,
the non-impairment clause may not be invoked. Furthermore, as held in Oposa v.
Factoran, Jr.[39] even assuming that the same may be invoked, the non-impairment
clause must yield to the police power of the State. Property rights and contractual
rights are not absolute. The constitutional guaranty of non-impairment of
obligations is limited by the exercise of the police power of the State for the
common good of the general public.

Successful rehabilitation of a distressed corporation will benefit its debtors,

creditors, employees, and the economy in general. The court may approve a
rehabilitation plan even over the opposition of creditors holding a majority of the
total liabilities of the debtor if, in its judgment, the rehabilitation of the
debtor is feasible and the opposition of the creditors is manifestly unreasonable.

LICENSES ARE NOT CONTRACTS

Since timber licenses are not contracts, the non-impairment clause, which reads:

"SEC. 10. No law impairing the obligation of contracts shall be passed." cannot be
invoked.

Needless to say, all licenses may thus be revoked or rescinded by executive action.
It is not a contract, property or a property right protected by the due process
clause of the Constitution.

`A license is merely a permit or privilege to do what otherwise would be unlawful,

and is not a contract between the authority, federal, state, or municipal, granting
it and the person to whom it is granted; neither is it a property or a property
right, nor does it create a vested right; nor is it taxation' (C.J. 168). Thus,
this Court held that the granting of license does not create irrevocable rights,
neither is it property or property rights

MARRIAGE CONTRACTS AND PUBLIC OFFICES ALSO NOT COVERED

But it does not cover licenses,3 say for operation of a

liquor store or a cockpit, as these involve grants of privi
leges only that are essentially revocable. Neither does it
include the marriage contract, which, more than a mere
agreement between the spouses, is regarded as a social
institution subject at all times to regulation by the legisla
ture and to change ofthe original conditions.4 Thus, a sub
sequent law allowing divorce would be applicable to mar
riages previously solemnized under a law prohibiting their
dissolution.
Also, as earlier observed, a public office is not a prop
erty right and therefore cannot be the subject of a contract
between the incumbent and the government. The office
itself, if created by statute, may be modified or even abol
ished or any of its incidents may be changed, as by reduc
tion of the term or the salary.

PERSONALITY TO INVOKE NON-IMPAIRMENT CLAUSE

The government also argues that petitioners have no right to invoke the non-
impairment of contracts clause since they clearly have no personal interest in
existing toll operating agreements (TOAs) between the government and tollway
operators

Petitioner Timbol has no personality to invoke the non-impairment of contract

clause on behalf of private investors in the tollway projects. She will neither be
prejudiced by nor be affected by the alleged diminution in return of investments
that may result from the VAT imposition. She has no interest at all in the profits
to be earned under the TOAs. The interest in and right to recover investments
solely belongs to the private tollway investors.

POLICE POWER, TAXATION, AND EMINENT DOMAIN PREVAILS OVER NON-IMPAIRMENT CLAUSE
The reason for this is that public welfare is superior to private rights

On the other hand, where a law grants a tax exemp

tion in exchange for valuable consideration, such exemp
tion is considered a contract and cannot be repealed be-
cause ofthe impairment clause. All other tax exemptions
are not contractual and so may be revoked at will by the
legislature.

FREE ACCESS TO COURTS!

“Free access to the courts and quasi-
judicial bodies and adequate legal assistance shall not be denied to any person by
reason of poverty. ’]
RE: REQUEST OF NATIONAL COMMITTEE ON LEGAL AID TO EXEMPT LEGAL AID CLIENTS FROM
PAYING FILING, DOCKET AND OTHER FEES.

Equity will not suffer a wrong to be without a remedy. Ubi jus ibi remedium. Where
there is a right, there must be a remedy. The remedy must not only be effective and
efficient, but also readily accessible. For a remedy that is inaccessible is no
remedy at all.

The Constitution guarantees the rights of the poor to free access to the courts and
to adequate legal assistance. The legal aid service rendered by the NCLA and legal
aid offices of IBP chapters nationwide addresses only the right to adequate legal
assistance. Recipients of the service of the NCLA and legal aid offices of IBP
chapters may enjoy free access to courts by exempting them from the payment of fees
assessed in connection with the filing of a complaint or action in court. With
these twin initiatives, the guarantee of Section 11, Article III of Constitution is
advanced and access to justice is increased by bridging a significant gap and
removing a major roadblock.

WHEREFORE, the Misamis Oriental Chapter of the Integrated Bar of the Philippines is
hereby COMMENDED for helping increase the access to justice by the poor. The
request of the Misamis Oriental Chapter for the exemption from the payment of
filing, docket and other fees of the clients of the legal aid offices of the
various IBP chapters is GRANTED. The Rule on the Exemption From the Payment of
Legal Fees of the Clients of the National Committee on Legal Aid (NCLA) and of the
Legal Aid Offices in the Local Chapters of the Integrated Bar of the Philippines
(IBP) (which shall be assigned the docket number A.M. No. 08-11-7-SC [IRR] provided
in this resolution is hereby APPROVED.
MERIT AND MEANS TEST:
ARTICLE VIII
TESTS

SEC. 19. Combined tests. - The Chapter Legal Aid Committee or the [NCLA], as the
case may be, shall pass upon the request for legal aid by the combined application
of the means test and merit test, and the consideration of other factors adverted
to in the following sections.

SEC. 20. Means test. - The means test aims at determining whether the applicant has
no visible means of support or his income is otherwise insufficient to provide the
financial resources necessary to engage competent private counsel owing to the
demands for subsistence of his family, considering the number of his dependents and
the conditions prevailing in the locality.

The means test shall not be applicable to applicants who fall under the
Developmental Legal Aid Program such as Overseas Filipino Workers, fishermen,
farmers, women and children and other disadvantaged groups.

SEC. 21. Merit test. - The merit test seeks to ascertain whether or not the
applicant's cause of action or his defense is valid and chances of establishing the
same appear reasonable.

TRIVIA:
WHEREAS, IBP Legal Aid clients are qualified under the same indigency and merit
tests used by the Public Attorney's Office (PAO), and would have qualified for PAO
assistance, but for reasons other than indigency, are disqualified from availing of
the services of the PAO, like the existence of a conflict of interests or
conflicting defenses, and other similar causes;

WHEREAS, PAO clients are automatically exempt from the payment of docket and other
fees for cases, be they original proceedings or on appeal, by virtue of the
provisions of Section 16-D of R.A. 9406 (PAO Law), without the need for the filing
of any petition or motion to declare them as pauper litigants;