UBFHAI, et al. v. City Mayor of Parañaque, et al.,

G.R. No. 141010, February 7, 2007

An ordinance of the SB of Parañaque City reclassified two major thoroughfares at BF Homes from residential to commercial. It was questioned by the homeowners as unconstitutional because it amounted to impairment of contracts between the developer and the lot buyers. They contended that when they bought their lots, the owner/developer promised that the lot shall be for residential purposes. The CA dismissed the petition holding that the ordinance is an exercise of police power. According to the CA, the needs of the homeowners in the subdivision grew because of the rapid and tremendous increase in population thereby necessitating the opening of more commercial districts. The local government was therefore just responding to these changes in the community by enacting the ordinance in question. Was the CA correct?

Yes. The constitutional guarantee of non-impairment of contracts is limited by the exercise of the police power of the State, in the interest of public health, safety, morals and general welfare. The contractual restrictions on the use of property could not prevail over the reasonable exercise of police power through zoning regulations. While the 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 police 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 the narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life.

Our jurisdiction guarantees sanctity of contract and is said to be the law between the contracting parties, but while it is so, it cannot be raised as a deterrent to police power, designed precisely to promote health, safety, peace, and enhance the common good. In this case, the enactment of the ordinance is not arbitrary or unreasonable. Before it was passed, it has been the subject of barangay consultations and committee hearings. The increasing number of homeowners in the area necessitated the addition of commercial areas in the subdivision. Even UBFHAI acknowledged the need for additional commercial area although it proposed another commercial zone. Clearly, the reclassification of the two main thoroughfares in the subdivision as commercial areas was reasonable and justified under the circumstances (UBFHAI, et al. v. City Mayor of Parañaque, et al., G.R. No. 141010, February 7, 2007).