University of the Philippines College of Law

Block F2021

Topic Non Impairment of Contract Clause (Art. 3, Sec.10)

Case No. G.R. No. 177508 / August 7, 2009
Case Name BANAT v. COMELEC
Ponente J. Carpio
Case assigned to Cole and Juno

RELEVANT FACTS

 A petition for prohibition was filed by Barangay Association for National Advancement and Transparency
(BANAT) Party List assailing the constitutionality of RA 9369, enjoining the respondent COMELEC from
implementing statute;

 RA 9369 is an amendatory act entitled “An Act Amending RA 8436 1”, with effectivity date of February 10,
2007, more than three months ahead of May 14, 2007 elections;

 Among others, petitioner BANAT contends that Sec. 34 of RA 9369 is violative of Art. III, Sec. 10 of the
Constitution by fixing the per diem of poll watchers of both the dominant majority and minority parties
at P400.00, encroaching upon their (the parties) freedom to contract and their right to fix the terms and
conditions of the contract they see fair, equitable and just;

 Contested portion of Sec. 34 reads as follow:

“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 (400.00).”

ISSUE

 W/N Sec. 34 of RA 9369 is violative of non-impairment clause (Art. III, Sec. 10) for fixing the per diem
rate of poll watchers

RATIO DECIDENDI

Issue Ratio
W/N Sec. 34 of RA 9369 is No.
violative of non-
impairment clause (1) The Court ruled that there is no existing contract yet and, therefore, no
enforceable right or demandable obligation will be impaired. RA 9369 was
enacted more than three months prior to the May 14, 2007 elections. Hence,
when the dominant majority and minority parties hired their respective poll
watchers for the May 14, 2007 elections, they were deemed to have
incorporated in their contracts the provisions of RA 9369.
1
RA 8436 “An Act Authorizing the Commission on Elections To Use an Automated Election System in the May 11, 1998
National or Local Elections and in Subsequent National and Local Electoral Exercises, to Encourage Transparency, Credibility,
Fairness and Accuracy of Elections, Amending for the Purpose BP 881, as Amended, RA No. 7166 and Other Related Election
Laws, Providing Funds Therefor and For Other Purposes
 University of the Philippines College of Law
Block F2021

The Court explained that non-impairment clause is limited in application to

laws that derogate from prior acts or contracts by enlarging, abridging or in
any manner changing the intentions of the parties. 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.

(2) Even if there is an existing contract, Sec. 34 would still be constitutional

since it is a valid exercise of police power, and police power is superior than
non-impairment clause.

The Court argued that the regulation of the per diem of the poll watchers of
the dominant majority and minority parties is a valid exercise of police power
since it promotes the general welfare of the people. They couched the
argument on the role of the poll watchers (reiterated, in three different
phrasings but essentially the same meaning): (1) the poll watching is an
agreement with solemn duty to ensure the sanctity of votes. (2) that such role
is invested with public interest, being essential not only in guarding the votes
of their respective candidates or political parties but also ensure that all votes
are properly counted; (3) that they help ensure that the elections are
transparent, credible, fair, and accurate.

RULING

WHEREFORE, we DISMISS the petition for lack of merit.

SO ORDERED.

NO SEPARATE OPINION