The non-impairment clause and government contracts

Section 10, Article III of the Constitution provides:

"SECTION 10. NO LAW IMPAIRING THE OBLIGATION OF CONTRACTS SHALL BE PASSED."

According to a ruling of the Supreme Court, the purpose of the non-impairment clause is to safeguard the integrity of contracts against unwarranted interference by the State. As a rule, contracts should not be tampered with by subsequent laws that would change or modify the rights and obligations of the parties. 

It includes statutes enacted by the national legislature, executive orders and administrative regulations promulgated under a valid delegation of power, and municipal ordinances passed by the local legislative bodies.

There is impairment if a subsequent law changes the terms of a contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the parties. It is anything that diminishes the efficacy of the contract.

However, it applies only to previously perfected contracts and is limited in application to laws that derogate from prior acts or contracts by enlarging, abridging or in any manner changing the intention of the parties.

Interestingly, Republic Act No. 3019 considers as a corrupt practice and unlawful the act by any public officer, “Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.”


It behooves all concerned officers of government agencies and instrumentalities then, especially those bestowed with rule-making powers, to observe and be mindful of this section of the Bill of Rights when entering into contracts and subsequently crafting rules and regulations affecting the former, to avert and avoid any legal bind.  

Is mandamus an appropriate remedy to enforce government contracts?

Will a petition for mandamus be the appropriate remedy to enforce contractual obligations?

Mandamus is a command issuing from a court of law of competent jurisdiction, in the name of the state or the sovereign, directed to some inferior court, tribunal, or board, or to some corporation or person requiring the performance of a particular duty therein specified, which duty results from the official station of the party to whom the writ is directed or from operation of law. This definition recognizes the public character of the remedy, and clearly excludes the idea that it may be resorted to for the purpose of enforcing the performance of duties in which the public has no interest. The writ is a proper recourse for citizens who seek to enforce a public right and to compel the performance of a public duty, most especially when the public right involved is mandated by the Constitution. As the quoted provision instructs, mandamus will lie if the tribunal, corporation, board, officer, or person unlawfully neglects the performance of an act which the law enjoins as a duty resulting from an office, trust or station. (Uy Kiao Eng vs. Nixon Lee, G.R. No. 176831, January 15, 2010)

As a universally accepted rule, mandamus never lies to enforce the performance of contractual obligations. But it has also been held that such rule was not really absolute. So long as there is a showing of a complete, well-defined and clear legal right on the part of the petitioner to the performance of ministerial acts, the same may be enforced by mandamus. (Vda. de Serra vs. Salas, 30 SCRA 541)

Thus, where government contracts are completely performed on the part of the private party, an officer of a corporation may be compelled to perform a duty imposed upon him by law, particularly when the act of said officer has the effect of setting aside contracts already in the process of consummation. In other words, mandamus will lie only to compel the performance of a ministerial duty. (Isada vs. Bocar, G.R. No. L-33535 January 17, 1975)