RUTTER VS ESTEBAN G.R. NO. L-3708.

MAY 18, 1953)

the protective power of the State, the police power, may only be invoked and justified by an emergency, temporary in nature, and can only be exercised upon reasonable conditions in order that it may not infringe the constitutional provision against impairment of contracts The purpose of the law is to afford to prewar debtors an opportunity to rehabilitate themselves by giving them a reasonabled time within which to pay their prewar debts so as to prevent them from being victimized buy their creditors. While it is admitted in said law that since liberation conditions have gradually returned to normal, this is not so with regard to those who have suffered the ravages of war and so it was therein declared as a policy that as to them the debt moratorium should be continued in force This period seems to us unreasonable, if not oppressive. while the purpose of Congress is plausible, and should be commended, the relief accorded works injustice to creditors who are practically left at the mercy of the debtors. Their hope to effect collection becomes extremely remote, more so if the credits are unsecured. And the injustice is more patent when, under the law, the debtor is not even required to pay interest during the operation of the relief

FACTS: Rutter sold to Placido a parcel of land through full payment of the half and two installments of the other half of the agreed amount. The first half was paid then war came through Japanese occupation. Rutter filed an action to claim to recover the balance due to the CFI. Esteban set up the defense of moratorium clause embodied in Republic Act No. 342. The CFI dismissed the case upholding the moratorium of 8 years had not yet lapsed. In Rutters motion, he raised the constitutionality issue for the first time, but said motion was denied. ISSUE: Whether or not Republic Act No. 342 is unconstitutional being violative of the constitutional provision forbidding the impairment of the obligation of contracts (Article III, Section 1, 1935 Constitution). HELD: Yes. R.A. No. 342 was declared unconstitutional. Consistent with what the Supreme Court believe to be as the only course dictated by justice, fairness and righteousness,the Supreme Court feel that the only way open to us under the present circumstances is to declare that the continued operation and enforcement of Republic Act No. 342 x x x is unreasonable and oppressive, and should not be prolonged a minute longer, and, therefore, the same should be declared null and void and without effect. The impairment should only refer to the remedy and not to a substantive right. The State may postpone the enforcement of the obligation but cannot destroy it by making the remedy futile The rule requires that the alteration or change that the new legislation desires to write into an existing contract must not be burdened with restrictions and conditions that would make the remedy hardly pursuing

ORTIGAS V. FEATI GR L-24670, 14 DECEMBER 1979 Facts: Ortigas, Madrigal & Sia is a limited partnership and Feati Bank and Trust Co., is a corporation duly organized and existing in accordance with the laws of the Philippines. Ortigas is engaged in real estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision along EDSA, Mandaluyong. On 4 March 1952, Ortigas, as vendor, and Augusto Padilla and Natividad Angeles, as vendees, entered in separate agreements of sale on installments over two parcels of land. On 19 July 1962, the vendees transferred their rights and interests over the lots in favor of Emma Chavez. Both agreements contained stipulations or restrictions as to the removal of soil, the materials of the buildings, and sanitary installations, which were annotated in the TCTs with the Rizal Registry of Deeds. Feati Bank eventually acquired said lots on 23 July 1962, one bought directly from Chavez, and the other from Republic Flour Mills (to whom Chavez sold it previously). On 5 May 1963, Feati Bank began laying the foundation and commenced the construction of a building to be devoted to banking purposes, but which could also be devoted to, and used exclusively for, residential purposes. The following day, Ortigas demanded that Feati Bank stop the construction of the commercial building on the lots, claiming that the restrictions annotated were imposed as part of its general building scheme designated for the beautification and development of Highway Hills Subdivision. Feati Bank refused to comply with the demand, contending that the building was being constructed in accordance with the zoning regulation, that it has filed building and planning permit applications with the municipality of Mandaluyong, and that it had accordingly obtained building and planning permits to proceed with the construction. Ortigas filed the complaint with the lower court (Civil Case 7706), seeking the issuance of "a writ of preliminary injunction to prevent the construction of a commercial bank building in the premises in view of the building restrictions annotated in the Feati Bank's TCTs. The trial court dismissed the complaint holding that the restrictions were subordinate to Municipal Resolution 27, rendering the restrictions ineffective and unenforceable. On 2 March 1965, Ortigas filed a motion for reconsideration. The trial court denied the motion for reconsideration in its order of 26 March 1965. On 2 April 1965 Ortigas filed its notice of appeal, its record on appeal, and a cash appeal bond. On 14 April 1965, the appeal was given due course by the appellate court and the records of the case were elevated directly to the Supreme Court, since only questions of law were raised.

Issue: Whether the constitutional guarantee of non-impairment of contracts is absolute. Held: While non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people." Invariably described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of government," the exercise of the power may be judicially inquired into and corrected only if it is capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. Police power "is elastic and must be responsive to various social conditions; it is not confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life. Public welfare when clashing with the individual right to property should prevail through the state's exercise of its police power. Herein, the municipality of Mandaluyong exercised police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Decision dismissing the complaint of Ortigas is AFFIRMED.

TIRO V. HONTANOSAS GR L-32312, 25 NOVEMBER 1983 Facts: Zafra Financing Enterprise extended loans to public school teachers in Cebu City and the teachers concerned executed promissory notes and special powers of attorney in favor of Zafra to take and collect their salary checks from the Division Office in Cebu City of the Bureau of Public Schools. Aurelio Tiro, Superintendent of Schools in Cebu City, forbade the collection of checks by persons other than the employees concerned with Circular 21 (series of 1969, Memorandum Order 93 of the Executive Office dated 5 February 1968 was quoted) dated 5 December 1969. Zafra sued Tiro with the now defunct Court of First Instance (CFI) Cebu (Civil Case 11616). Zafra sought to compel Tiro to honor the special powers of attorney, to declare Circular 21 to be illegal, and to make Tiro pay attorneys fees and damages. The trial court granted the prayer but the claim for money was disallowed on the ground that he acted in good faith in implementing Circular 21. Tiro seeks in the petition for review before the Supreme Court a reversal of the trial courts decision. Issue: Whether or not Circular 21 impairs the obligations of contracts between Zafra Financing Enterprise and the teachers. Held: The salary check of a government officer or employee such as a teacher does not belong to him beforeit is physically delivered to him. Until that time the check belongs to the Government. Accordingly, before there is actual delivery of the check, the payee has no power over it; he cannot assign it without the consent of the Government. The Circular, further, is authorized by relevant statutes such as the Revised Administrative Code (Section 79b, Power to regulate) and the Magna Carta for Teachers (RA 4670, Section 21, Deductive prohibited). The Circular does not impair the obligation of contracts with the teachers as the Circular does not prevent Zafra from collecting the loans but merely makes the Government a non-participant in their collection.
Zafras claim that the Circular impairs the obligation of contracts with the teachers is baseless. For the Circular does not prevent Zafra from collecting the loans. The Circular merely makes the Government a non-participant in their collection which is within its competence to do.

GANZON VS INSERTO FACTS : Petitioner Rodolfo Ganzon initiated proceedings to extra-judicially foreclose a real estate mortgage executed by the private respondents in his favor. The Deed of Real Estate Mortgage executed on March 19, 1979 (Annex "A", Petition) between Randolph Tajanlangit and Esteban Tajanlangit as mortgagors on one hand and Rodolfo Ganzon as mortgagee on the other hand was to secure the payment by the Tajanlangits of a promissory note amounting to P40,000.00 in favor of Ganzon. Thereafter, petitioner Gregorio Lira, in his capacity as ex-oficio provincial sheriff of Iloilo served personal notice of the foreclosure proceedings on the private respondents. Lira also caused the publication in a newspaper of general circulation in the City and Province of Iloilo of a Notice of Extra Judicial Sale of Mortgaged Property On September 27, 1979, a day before the scheduled public auction, the private respondents filed a civil action for specific performance, damages, and prohibition with preliminary injunction against the petitioners with the respondent court. After the issues had been joined but before actual trial, the private respondents filed a "Motion For Release Of Real Estate And For The Clerk Of Court To Accept Bond Or Cash In Lieu Thereof," to which the petitioners interposed an Opposition. ISSUE : WON the assailed order is constitutional HELD : The questioned orders violate the non-impairment of contracts clause guaranteed under the Constitution. Substitution of the mortgage with a surety bond to secure the payment of the P40,000.00 note would in effect change the terms and conditions of the mortgage contract. Even before trial on the very issues affecting the contract, the respondent court has directed a deviation from its terms, diminished its efficiency, and dispensed with a primary condition.

BANAT vs COMELEC FACTS : On 23 January 2007, less than four months before the 14 May 2007 local elections, the President signed RA 9369. Two newspapers of general circulation, Malaya and Business Mirror, published RA 9369 on 26 January 2007. RA 9369 thus took effect on 10 February 2007. On 7 May 2007, petitioner, a duly accredited multi-sectoral organization, filed this petition for prohibition alleging that RA 9369 violated Section 26(1), Article VI of the Constitution.4 Petitioner also assails the constitutionality of Sections 34, 37, 38, and 43 of RA 9369. According to petitioner, these provisions are of questionable application and doubtful validity for failing to comply with the provisions of the Constitution. "The dominant majority party and dominant minority party, which the Commission shall determine in accordance with law, shall each be entitled to one official watcher who shall be paid a fixed per diem of four hundred pesos. ISSUE : WON Section 34 violate Section 10, Article III of the Constitution HELD : The Supreme Court assails the constitutionality of the provision which fixes the per diem of poll watchers of the dominant majority and dominant minority parties at Pon election day. Petitioner argues that this violates the freedom of the parties to contract and their right to fix the terms and conditions of the contract they see as fair, equitable and just. Petitioner adds that this is a purely private contract using private funds which cannot be regulated by law. The OSG argues that petitioner erroneously invoked the non-impairment clause because this only applies to previously perfected contracts.In this case, there is no perfected contact and, therefore, no obligation will be impaired. Both the COMELEC and the OSG argue that the law is a proper exercise of police power and it will prevail over a contract.According to the COMELEC, poll watching is not just an ordinary contract but is an agreement with the solemn duty to ensure the sanctity of votes.The role of poll watchers is vested with public interest which can be regulated by Congress in the exercise of its police power.The OSG further argues that the assurance that the poll watchers will receive fair and equitable

compensation promotes the general welfare.The OSG also states that this was a reasonable regulation considering that the dominant majority and minority parties will secure a copy of the election returns and are given the right to assign poll watchers inside the polling precincts.

CHAVEZ vs COMELEC FACTS : Petition for prohibition with prayer for the issuance of a writ of preliminary injunction, Francisco I. Chavez stands as a taxpayer and a citizen asking this Court to enjoin the Commission on Elections (COMELEC) from enforcing Section 32 of its Resolution No. 6520, dated January 6, 2004. Petitioner Chavez, on various dates, entered into formal agreements with certain establishments to endorse their products. On August 18, 2003, he authorized a certain Andrew So to use his name and image for 96 North, a clothing company. Petitioner also signed Endorsement Agreements with Konka International Plastics Manufacturing Corporation and another corporation involved in the amusement and video games business, G-Box On December 30, 2003, however, petitioner filed his certificate of candidacy for the position of Senator under Alyansa ng Pag-asa, a tripartite alliance of three political parties: PROMDI, REPORMA, and Aksyon Demokratiko. On January 6, 2004, respondent COMELEC issued Resolution No. 6520, which contained Section 32, the provision assailed herein. On January 21, 2004, petitioner was directed to comply with the said provision by the COMELEC's Law Department ISSUE : WON sec 32 of Resolution No 6520 is constitutional

HELD : The Court held a close examination of the assailed provision reveals that its primary objectives are to prohibit premature campaigning and to level the playing field for candidates of public office, to equalize the situation between popular or rich candidates, on one hand, and lesser-known or poorer candidates, on the other, by preventing the former from enjoying undue advantage in exposure and publicity on account of their resources and popularity The non-impairment clause of the Constitution must yield to the loftier purposes targeted by the Government. Equal opportunity to proffer oneself for public office, without regard to the level of financial resources one may have at his disposal, is indeed of vital interest to the public. The State has the duty to enact and implement rules to safeguard this interest. Time and again, this Court has said that contracts affecting public interest contain an implied reservation of the police power as a postulate of the existing legal order. This power can be activated at anytime to change the provisions of the contract, or even abrogate it entirely, for the promotion or protection of the general welfare. Such an act will not militate against the impairment clause, which is subject to and limited by the paramount police power.