The Court has upheld in several cases the superiority of police power over the non-impairment clause. The constitutional guaranty 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
In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., the Court held that contractual restrictions on the use of property could not prevail over the reasonable exercise of police power through zoning regulations. The Court held:
With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee–referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee–it should be stressed, that 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. As this Court held through Justice Jose P. Bengzon in Philippine Long Distance Company v. City of Davao, et al., 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.” We were even more emphatic in Vda. De Genuino v. The Court of Agrarian Relations, et al., when We declared: “We do not see why the 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.”
x x x."
G.R. No. 141010, February 7, 2007, UNITED BF HOMEOWNERS’ ASSOCIATIONS, INC., ROMEO T. VILLAMEJOR, RAUL S. LANUEVO, ROBERTO ARNALDO, FLORENTINO CONCEPCION, BF NORTHWEST HOMEOWNERS’ ASSOCIATION, INC., KK HOMEOWNERS’ ASSOCIATION, INC., and BF (CRAB) HOMEOWNERS’ ASSOCIATION, INC., Petitioners, vs. THE (MUNICIPAL) CITY MAYOR, THE (MUNICIPAL) CITY PLANNING AND DEVELOPMENT COORDINATING OFFICER OR ZONING ADMINISTRATOR, THE (MUNICIPAL) CITY ENGINEER AND/OR BUILDING OFFICIAL, THE CHIEF OF THE PERMITS AND LICENSES DIVISION, THE SANGGUNIANG (BAYAN) PANGLUNGSOD, and BARANGAY BF HOMES, ALL OF PARAÑAQUE CITY, METRO MANILA, Respondents, EL GRANDE AGUIRRE COMMERCE AND TRADE ASSOCIATION (EL ACTO), Respondent-Intervenor.