Agus Development Corporation leased to Rita Caleon its lot for P180.00/month. Caleon built a 4-door apartment and sub-leased it at P350.00/door/month without Agus’ consent. Agus’ filed an ejectment suit under Batas Pambansa (B.P.) Blg. 25 after Caleon refused to vacate the lot. Caleon argued that B.P. Blg. 25 cannot be applied because there is a perfected contract of lease without any express prohibition on subleasing. The MTC ruled in favor of Agus. It was appealed to the RTC but was dismissed outright. Hence this petition for review.
Whether or not B.P. Blg. 25 is unconstitutional for being violative of “non-impairment clause” on the ground that it impaired the lease contract.
No. B.P. Blg. 25 is valid and constitutional. The lease contract is subordinate to the police power of the state. Petition is denied.
B.P. Blg. 25 is derived from P.D. No. 20 which has been declared by the Supreme Court as police power legislation so that the applicability thereof to existing contracts cannot be denied. The constitutional guaranty of non-impairment of obligations of contract is limited by and subject to the exercise of police power of the state in the interest of public health, safety, morals and general welfare. In spite of the constitutional prohibition, the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguarding said interest may modify or abrogate contracts already in effect.