Police Power, Government, and Business Regulation

Introduction

The beginning and fast spread of the coronavirus pandemics led to a variety of negative consequences, including economic, political, and public health issues. In response to the economic decrease because of COVID-19, the government of the Philippines introduced a Bayanihan to Heal as One Act that is supposed to support citizens, provide health care services, and regulate enterprises. Most importantly, it granted emergency authorities to the state’s police power, giving it the right to overtake non-impairment (King, 2020). However, the provision of such benefits as lower lending rates can be useful for citizens, but they can be detrimental to businesses.

Police Power and Businesses During COVID-19

According to Section 10, Article III of the Constitution, the application of the Bayanihan Act violates the right to non-impairment, which claims that a law disrupting the obligation of contracts should not be passed. It is considered that the right to non-impairment is not absolute, and the courts are to support the new act. Accordingly, Pamaos (2020) states that the police are expected to exercise their power to promote public health and the overall welfare of the nation. Under the mentioned activities, the police are eligible to order private hospitals, lease properties for medical goals, require enterprises to accept contracts with various parties, and so on. While following the act’s goals, the police should ensure that lawful subjects and lawful methods concur as the public interests are involved and necessary to pay attention to. The case of the National Development Company versus Philippine Veterans Bank shows that the interference of the police in business affairs is justified if private agreements are directly related to the public interest (King, 2020). As a result, the government can, for example, deprive property rights or take over the operations of companies.

In the conditions of COVID-19, it became especially important for the police to adopt measures to contribute to improving the health of society and reducing the economic burden of citizens (Pamaos, 2020). The regulation of the observance of labor legislation, employment services, and control over the hiring of workers by private individuals compose another area of regulation. However, King (2020) notes that the methods applied by the police should be reasonably necessary. For example, the strategy of decreasing lending rates seems to be useful for debtors; it would negatively impact lenders whose charges have already increased. In this case, the businesses that can no longer operate themselves can be factually taken over by the police.

Most importantly, police power is separated from the eminent domain power, but there is a trend toward mixing them, which creates additional difficulties in understanding whether the police should compensate for taking over or not (Pamaos, 2020). In addition to taking over privately-owned businesses, the government has the authority to retain its management system, adjust its operations, and make other changes. Such authority is used mainly in relation to hospitals to encourage them to cooperate in combat against the coronavirus.

Power to Tax and Power to Destroy

The phrase “the power to tax includes the power to destroy” can be referred to as the right of the court to interpret the Constitution. It was the first time in the history of the US when Justice John Marshall pronounced these words, and the debate about the power of taxation began. In McCulloch v. Maryland (1819), the state of Maryland targeted banks to charge taxes in the period of the Great Depression, which was especially damaging to them. On the one hand, the government needs taxes to be paid to have resources and support different systems. On the other hand, such an approach is negative for banks and other businesses as it can destroy them.

In McCulloch v. Maryland (1819), the issue of constitutional authority was raised. It was stated that the Constitution gives the federal government not only those rights that are written in its text, but also those that are “implied.” By his decrees, John Marshall, the Chief Justice, helped to transform the US government into an effective instrument of power. Namely, while the Constitution does not give Congress a specific right to establish banks, the fourth paragraph of Section of the Constitution is to be read in such a way that the federal government has the ability to establish such a subsidiary body of national importance (McCulloch v. Maryland, 17 U.S. 316., 1819). The rationale is that it turns out to be necessary for the implementation of a national task, and the state authorities cannot interfere with the work of this body.

The letter to lawmakers by Mon Abrea, a member of the Ease of Doing Business Task Force on Paying Taxes, is an example of the impact of the taxation system on small businesses. It is declared that a tax relief system should be implemented to manage the negative consequences of COVID-19 to improve both the economy and public health. Without the adjustment of taxes, many small businesses would be destroyed, having no support from the government. Abrea (2020) suggests that large multinational companies that compose only 0.43% of the enterprises in the Asian-Pacific region are supported by authorities. However, little attention is given to small businesses and especially micro-enterprises. Among the offered tax breaks, there are tax holidays and a general tax amnesty, which would allow suspension audits and broaden a tax base. According to Abrea (2020), wage subsidies and tax rebates should be given to help them provide for their families. When considering the potential damage to companies in terms of taxation, employees should also be taken into account.

Eminent Domain and Private Property

A property right is one of the fundamental rights protected by a modern democratic rule of law. Guarantees for the implementation of this right are provided not only in the national legislation of individual states but also at the international level. The concept of the eminent domain refers to the government’s power to convert private property into public use property. The foundation for the eminent domain against private property is the seizure of the land on which it is located for state needs. The ruling of the court in the Republic v. Borbon G.R. No. 165354. (2015) stated that “the fundamental basis then of all actions brought for the expropriation of lands, under the power of an eminent domain, is public use”. In other words, this procedure is carried out according to the rules that regulate the seizure of land plots for state needs.

In the Republic v. Heirs of Saturnino Q. Borbon case, the National Power Corporation (NAPOCOR) intended to take the property that belonged to the representatives of Borbon. The purpose of this was the building of power plants on the mentioned territory. The agreement provided to the owner of the property should include the evaluation of the real estate located on it in addition to the monetary valuation of the land plot. The owners, whose rights to the land plot are subject to termination, should be notified in advance by the authorized body about the aims, circumstances, and terms of withdrawal (Republic v. Borbon G.R. No. 165354, 2015). In this case, the heirs of Borbon were not notified of expropriation, and the conditions were not properly negotiated.

Accordingly, in discussing remedies, the main guarantee of the owner’s rights is an opportunity not to sign the provided agreement and express personal demands in court proceedings. The request for fair compensation is another possible remedy that can be required by those against whom an eminent domain was applied. Since the required compensation was too high for the NAPOCOR, and it was decided to change the plans, the expropriation request was canceled.

Conclusion

To conclude, this paper discussed the power of the government and police to impact businesses in terms of economic and public health challenges. The government of the Philippines introduced the Bayanihan to Heal as One Act to meet the need to support public health in the period of COVID-19. The increased power of the police can violate the operations in enterprises and lead to significant changes. The paper also focused on the role of taxation in terms of crisis, when support to citizens can make a negative impact on those who provide loans. Ultimately, the practice of eminent domain was also considered in terms of private property, and it was found that negotiations and compensation are the main remedies.

References

Abrea, M. (2020). [Opinion] Taxes and the coronavirus pandemic: An open letter to lawmakers. Rappler. Web.

King, S. B. (2020). Philippines: Pandemics, police power and private contracts. In-House Community. Web.

McCulloch v. Maryland, 17 U.S. 316. (1819). Justia. Web.

Pamaos, F. B. (2020). Government take-over of private businesses: The COVID-19 Crisis. Philippine e-Legal Forum. Web.

Republic v. Borbon G.R. No. 165354. (2015). The LawPhil Project. Web.

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BusinessEssay. (2023) 'Police Power, Government, and Business Regulation'. 9 January.

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BusinessEssay. 2023. "Police Power, Government, and Business Regulation." January 9, 2023. https://business-essay.com/police-power-government-and-business-regulation/.

1. BusinessEssay. "Police Power, Government, and Business Regulation." January 9, 2023. https://business-essay.com/police-power-government-and-business-regulation/.


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BusinessEssay. "Police Power, Government, and Business Regulation." January 9, 2023. https://business-essay.com/police-power-government-and-business-regulation/.