Sangalang vs. IAC G.R. No. 71169, December 22, 1988 168 SCRA 634 (1988)

Facts:  August 12, 1977, the municipal officials of Makati, destroyed and removed the gates constructed/located at the corner of Reposo Street and Jupiter Street as well as the gates/fences located/constructed at Jupiter Street and Makati Avenue forcibly, and then opened the entire length of Jupiter Street to public traffic. Subsequently, Petitioners brought the present action for damages against the defendant-appellant Ayala Corporation predicated on both breach of contract and on tort or quasi-delict A supplemental complaint was later filed by said Petitioners seeking to augment the reliefs prayed for in the original complaint because of alleged supervening events which occurred during the trial of the case. That the exclusivity of the said village was adversely affected and diminished due to the opening of the said streets to the public. That the exclusivity of the said village was guaranteed in the restrictions of TCT.

Issue: Whether the Right to Non-Impairment of Contracts of the complainants was violated by the Respondents in an resolution promoting the welfare of the general public?

Held: No, while 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 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 narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life. The court do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state’s exercise of its police power.

Undoubtedly, the Metro Manila Commission (MMC) Ordinance represents a legitimate exercise of police power. The petitioners have not shown why we should hold otherwise other than for the supposed “non-impairment” guaranty of the Constitution, which, as we have declared, is secondary to the more compelling interests of general welfare. The Ordinance has not been shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so appealed. In that connection, we find no reversible error to have been committed by the Court of Appeals.