Philippine 1987

Constitution
Article III: Bill of Rights
 Section X
“No law impairing
the obligation of
contracts shall be
passed”
Contracts Affected
1. Only valid contracts, either executed or
executory, are covered by the guarantee.
2. The agreement of the parties, as long as
it is valid, is the law between them. Their
will should prevail, and this must be
respected by the legislature and not
tampered with by subsequent laws. Well-
established is the policy that the subject of
contractual agreements is “imbued with
paramount public interest.”
Flores, Angelica A.
CON 1A
Limitations
1. As between freedom of contract and police
power, police power prevails. Thus, laws enacted
in exercise of police power will prevail over
contracts. After all, private rights and interest in
contracts must yield to the common good. Every
contract affecting public welfare is presumed to
include the provisions of existing laws and a
reservation of police power.
2. The power of taxation and power of eminent
domain, inasmuch as they are also sovereign
powers of the state, can validly impair
obligations of contracts.
3. Licenses are different from contracts. Licenses
are franchises or privileges given by the State to
qualified entities that may be withdrawn or
relinquished when national interests so require.
However, like contracts, they yield to police
power.