The State’s police powers

"The President is not violating anything."



Those who are crying foul over President Rodrigo Duterte's orders to review and secure the revision of the MWSS water concessions and various other contracts entered into by government with the private sector by insisting that the same violates the non-impairment of contracts clause under the Constitution are being blind to the inherent powers of the State granted under the same Constitution.

Like the constitutions of other countries, including that of the United States from where we virtually copied our own, there are three such inherent powers which are deemed plenary and rarely questioned to ensure stability, discipline and order in society. These are: a) police power (for public welfare and good); b) power of eminent domain or power of expropriation (for public use) and power of taxation (for revenue generation).

In the case of the water concessions and the other contracts being sought for review by both the executive and the legislative branches, such acts are guaranteed and provided for under our constitution. The reviews sought by the President, in the case of the water concessions and, of late, the UP-AyalaTechno Hub deal and the NDC-Chevron land deal in Batangas, and by the legislature in the case of the LRT1 extension, FTI and Trinoma land deals, among others, are all being done within the state’s police powers. Basically, these initiatives are meant to ascertain whether the contracts entered into by government with the private proponents or users, as the case maybe, promote the public welfare and the public good.

As legally defined, police power is the power of the State to promote public welfare or the public good for the betterment of the health, safety and morals of the people. In so doing, it can compel compliance by restraining and regulating behavior and enforce order by whatever necessary measures provided the same do not infringe on any rights protected under the constitution and are not unreasonably arbitrary or oppressive.

So the question arises, is the President being unreasonably arbitrary or oppressive in ordering the review of what he or his cabinet consider the onerous provisions of the water concessions and the land deals?

Is he by any measure violating the non-impairment of contracts clause under the constitution? In the same manner is there any legislative overreach as committee hearings are being called to look into another basket of deals.

The answer is a flat NO.

The President as chief executive and the legislature are well within their rights in ordering such review and ultimately, the revision of the contracts if in their view the same are not promoting the people’s health, safety, morals and the general public welfare.

The case of the water concessions is instructive. About six years ago, I joined a group which filed a petition for the recission of such contracts based on at least two grounds: Constitutionality and the illegal and onerous provisions inimical to the public interest. We have emphasized then and we are reiterating now that the provision of water and sewerage services is considered a public utility—a fundamental public need—and should be governed by a legislative franchise.

In this instance, the franchise for such a service was granted to the MWSS not to the two water concessionaires. The agency cannot sub-grant it to its two contractors. The concessionaires themselves admit to that when they so please. If it suits them, they claim they are merely contractors of the MWSS and their acts and other undertakings are as permitted by the MWSS Board and therefore they are answerable only to that board.

However, if they are being asked to pay for their income taxes and are imposed additional fees as private contractors they say they are public utilities and therefore exempt from such impositions. Well, as the President said, they cannot have it both ways. It’s either they agree to revise and reform the contract to do away with its onerous provisions or say goodbye to all that. In which case, government will take over and start the process of determining the liabilities they may have incurred during the pendency of their grossly disadvantageous and highly deleterious contracts since 1997.

Or, reimburse them for any capital expenditures they may have incurred in improving and even expanding the water service facilities in the franchise areas so long as these were not included in the rate increases they were allowed to collect over time.

The land deals are similarly situated. In the case of the UP Techno Hub project, a number of onerous provisions have been exposed, starting with the valuation of the land to the sharing of revenues and profits. Additionally, there is the question of the “use of the land” as many observers now think that the original intent of providing a complex for the promotion of technology based enterprises and the enhancement of knowledge based learning has never been achieved.

Or will ever be, given the manner by which UP’s private partner, Ayala Land, appears to have structured its mandated operations.

The UP TechnoHub deal is just one of the many land deals government agencies have entered into not just with the Ayala group but with other big (and even smaller) developers with essentially the same questionable arrangements. Within the Diliman area alone we have the UP Town Center on what used to be the UP IS area, the Trinoma complex which was then hosting a colony of informal settlers and even the Manila Seedling Bank but was a huge “landbank” of the National Housing Administration just waiting to be developed into a vastly profitable mixed use complex.

We can go on and on identifying hundreds of such deals scattered all over the islands with public lands being “conjoined” with well connected and smart developers and transformed into what are now being touted as the priciest pieces of real estate this corner of the world. Is it any wonder most of the richest Filipinos and their partners are developers or at least have a considerable part of their wealth founded on real estate, a sizeable portion of which on public land?

Topics: Jonathan Dela Cruz , President Rodrigo Duterte , MWSS , water concessions , police power
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