- Office of Minority Leader Edcel C. Lagman
- 0916-6406737 / 0918-9120137
- Official Website: http://www.edcellagman.com.ph
- 19 November 2010
While it is salutary to protect investors from “regulatory risks”, government contracts are not inordinately sacrosanct so as to be immune from judicial review by the Supreme Court and police power legislation by the Congress.
It is beyond presidential prerogatives to shield contracts from final court judgments and valid legislative enactments.
President Benigno Aquino III gave investors an errant assurance when he declared:
· “If private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature –
then our government will use its own resources to ensure that they are kept whole.”
· “If, for some reason, a court decision threatens the adjustment, the government will compensate the private concessionaire for the difference between what the tariff should have been under the formula, and the tariff which it is actually able to collect.”
It is a heretic for the President to assert that he will defy the Supreme Court by not following its decisions annulling or modifying contractual stipulations, and instead he will pay investors the difference between what they are supposed to earn under the original contract and what they can only collect under the Supreme Court verdict.
It is also axiomatic that the legislature does not pass laws that cannot be repealed or modified, and consequently, the President cannot prevent the Congress from legislating a new law as warranted by changing circumstances.
The constitutional injunction that “no law impairing the obligation of contracts shall be passed” and the Civil Code provision that “contracts have the force of law between the contracting parties” are not absolute because contracts must bow to the police power of the State on prescription of “regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people.”
Moreover, contracts are only valid if they are “not contrary to law, morals, good customs, public order or public policy” as provided for in Article 1306 of the Civil Code.
Considering the propensity of the Aquino administration to resort to legal shortcuts and constitutional infractions as many of the President’s Executive Orders have been challenged before the Supreme Court, it would be foolhardy to propagandize that all its contracts should be “kept whole” despite adverse judicial and legislative scrutiny.