THE THREE INHERENT POWERS OF THE STATE

POLICE POWER
It is the sovereign power to promote and protect the general welfare. It is the most pervasive and the
least limitable of the three powers of the state, the most essential, consistent and illimitable which enables
the State to prohibit all hurtful things to the comfort, safety and welfare of the society.
It also refers to the power vested in the legislature by the Constitution to make, ordain, establish all
manner of wholesome and reasonable laws, statutes, or ordinances, either with penalties, or without, nor
repugnant to the constitution, as they shall be judge to be for the good and welfare of the state and the
subjects.
Police power is an inherent attribute of sovereignty. It can exist even without reservation in the
constitution. It is based on necessity as without it, there can be no effective government. It is also referred to
as the law of overwhelming necessity.
What is the basis of the exercise of the police power of the state?

The exercise of police power is founded on the basic principles of salus populi est suprema lex (the
welfare of the people is the supreme law) and sic utere tu et alienum non laedas (so use your property so as
not to impair another)
Who has the ultimate power to determine the necessity and the means of exercising the police power of the
state?

Congress has the ultimate power, because it is the judge of necessity, adequacy, reasonableness and
wisdom of any law. The congress is the constitutional repository of police power and exercise the prerogative
of determining the policy of the state.
Limitations in the exercise of Police power
1. Due process clause
2. Equal protection clause
The basic purposes of Police Power are:
1.
2.
3.
4.
5.
6.

To serve the general welfare, comfort and convenience of the people;

To promote and preserve public health;
To promote and protect public safety;
To maintain and safeguard public order;
To protect public morals; and
To promote the economic security of the people.

MMDA v. Bel-Air Village Association, Inc., 328 SCRA 836, March 27, 2000, 1st Div. [Puno]
Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the
Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes and ordinances, either with penalties or without, not repugnant to the Constitution, as they shall
judge to be for the good and welfare of the commonwealth, and for the subjects of the same.
It bears stressing that police power is lodged primarily in the National Legislature. It cannot be exercised by
any group or body of individuals not possessing legislative power. The National Legislature, however, may
delegate this power to the President and administrative boards as well as the lawmaking bodies of municipal
corporations or local government units. Once delegated, the agents can exercise only such legislative powers
as are conferred on them by the national lawmaking body.

 Acebedo Optical Company, Inc. v. CA, 329 SCRA 314, March 31, 2000, En Banc [Purisima]
The scope of police power has been held to be so comprehensive as to encompass almost all matters affecting
the health, safety, peace, order, morals, comfort and convenience of the community. Police power is
essentially regulatory in nature and the power to issue licenses or grant business permits, if exercised for a
regulatory and not revenue-raising purpose, is within the ambit of this power.
Philtread Workers Union [PTWU] v. Confesor, 269 SCRA 393, March 12, 1997
Article 263(g) of the Labor Code (vesting upon the Secretary of Labor the discretion to determine what
industries are indispensable to the national interest and thereafter, assume jurisdiction over disputes in said
industries) does not interfere with the workers right to strike but merely regulates it, when in the exercise of
such right, national interests will be affected. The rights granted by the Constitution are not absolute. They
are still subject to control and limitation to ensure that they are not exercised arbitrarily. The interests of both
the employers and the employees are intended to be protected and not one of them is given undue
preference.
The Labor Code vests upon the Secretary of Labor the discretion to determine what industries are
indispensable to national interest. Thus, upon the determination of the Secretary of Labor that such industry
is indispensable to the national interest, it will assume jurisdiction over the labor dispute of said industry. The
assumption of jurisdiction is in the nature of police power measure. This is done for the promotion of the
common good considering that a prolonged strike or lockout can be inimical to the national economy.
POWER OF EMINENT DOMAIN
It is an inherent power of the state that enables it to forcibly acquire private property, which is
intended for public use, upon the payment of just compensation. It is based on political necessity; it is
inseparable from the state unless it is denied to it by its fundamental law.
Condemnation of private property is justified only if it is for the public good character. It is the courts
of law that have the power to determine whether there is necessity therefore. Also called the power of
expropriation, eminent domain is described as the highest and most exact idea of property remaining in the
government that may be acquired for some public purpose through a method in the nature of a compulsory
sale to the state.
Who may exercise the Power of Eminent domain?
1. The Congress
2. The President
3. The local legislative bodies
4. Certain public corporations (e.g. Land Authority and the MWSS)
5. Quasi-public corporations (e.g. PLDT and Meralco)
What are the requisites in exercising the power of eminent domain?
1. The property taken must be private property;
2. The taking must be within constitutional sense;
3. The taking must be for public use
4. Just compensation must be paid;
5. There must be due process of law.
The following essential requisites must concur before an LGU can exercise the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive to exercise
the power of eminent domain;
2. It is exercised for the public use, purpose and welfare;
3. There must be payment of just compensation; and
4. A valid and definite offer has been previously made to the owner of the property south to be
expropriated.

Taking may not only include the import of a physical possession of the owner, as when he is ousted
from his land or relieved of his watch or car but also covers trespass without actual eviction of the owner,
material impairment of the value of the property or prevention of the ordinary uses for which the property
was intended.
The following cases constitute taking:

Where a farmland is inundated because of the construction of a damn nearby, the owner who is
prevented from planting on the land.

Where government planes fly over private property at such a low altitude as to practically touch the
tops of the trees.

A municipal ordinance prohibiting construction of any building that would destroy the view of the plaza
from the highway.
Query: A building which is on the verge of collapse was ordered to be demolished. The owner objected
thereto since the demolition constitutes taking without payment of just compensation. Is the contention of
the owner correct?
Answer: No, the demolition of the building is done in the exercise of police power. It is intended to further the
interest of the public as the structure is susceptible to harm the public, in case it collapses. Hence, the owner
is not entitled to compensation.
Query: An ordinance was passed requiring private cemeteries to reserve 6% of their total areas for the burial
paupers. The owners of the private cemeteries demand payment of just compensation because the ordinance
sought to deprive them of their property. However, the city invoked that such ordinance was done in the
exercise of their police power under the general welfare clause. Is the argument of the city tenable?
Answer: No, although there was taking of private property for public use, nevertheless, it was done without
payment of just compensation. Hence, it violates the principles governing eminent domain. The taking of
property under the police power is sought to be destroyed.
Just compensation is the full and fair equivalent of the property taken from the private owner by the
expropriator. The measure of this compensation is not the takers gain but the owners loss.
Who May Exercise?
Heirs of Alberto Suguitan v. City of Mandaluyong, 328 SCRA 137, March 14, 2000, 3rd Div. [GonzagaReyes]
The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is
necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly
construed. No species of property is held by individuals with greater tenacity, and none is guarded by the
Constitution and the laws more sedulously, than the right to the freehold of inhabitants. When the legislature
interferes with that right, and, for greater public purposes, appropriates the land of ah individual without his
consent, the plain meaning of the law should not be enlarged by doubt[ful] interpretation.
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Exercise of Eminent Domain by LGUs

Municipality of Paranaque v. V.M. Realty Corp., 292 SCRA 678, July 20, 1998 [Panganiban]
The power of eminent domain is lodged in the legislative branch of government, which may delegate the
exercise thereof to LGUs, other public entities and public utilities. An LGU may therefore exercise the power to
expropriate private property only when authorized by Congress and subject to the latter's control and
restraints imposed "through the law conferring the power or in other legislations." In this case, Section 19 of
RA 7160, which delegates to LGUs the power of eminent domain, also lays down the parameters for its
exercise.

Thus, the following essential requisites must concur before an LGU can exercise the power of eminent
domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of
the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular
private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the
poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and
other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be
authorized through an ordinance.
A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a
declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a
general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted
differently a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise
by a majority of all the Sanggunian members.
1234-

Requisites for Proper Exercise

Taking of private property
Public use/purpose
Payment of just compensation
Valid offer to buy and refusal of offer

Requisites for valid exercise by LGU

1- An ordinance must be enacted by the Sanggunian authorizing the local chief executive to expropriate
on behalf of the LGU.
2- The taking of the private property must be for a public use/purpose, welfare or for the benefit of the
poor and landless
3- Payment of just compensation
4- There must first be a valid and definite offer to the owner of the property and said offer was refused.
TAKING in the Constitutional Sense
May include trespass without actual eviction of the owner, material impairment of the value of the
property or prevention of the ordinary uses fro which the property was intended. [notes]
Requisites for a valid taking:
1. Exproprietor must enter a private property
2. Entry must be for more than a momentary period
3. Entry must be under warrant or color of authority
4. Property must be devoted to public use or otherwise informally appropriated or injuriously affected
5. Utilization of the property must be in such a way as to oust the owner and deprive him of beneficial
enjoyment
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Taking under Eminent Domain distinguished from Taking under the Police Power

 PPI v. COMELEC, [G.R. No. 119694. May 22, 1995.]

To compel print media companies to donate "Comelec space" of the dimensions specified in Section 2 of
Resolution No. 2722, amounts to "taking" of private personal property for public use or purposesxxx
The extent of the taking or deprivation is not insubstantial; this is not a case of a de minimis temporary
limitation or restraint upon the use of private property. The monetary value of the compulsory "donation,"
measured by the advertising rates ordinarily charged by newspaper publishers whether in cities or in nonurban areas, may be very substantial indeed. The taking of private property for public use is, of course,
authorized by the Constitution, but not without payment of "just compensation" (Article III, Section 9). And
apparently the necessity of paying compensation for "Comelec space" is precisely what is sought to be
avoided by respondent Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI reads
it, as an assertion of authority to require newspaper publishers to "donate" free print space for Comelec
purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free print space, as Section 1 of
Resolution No. 2772-A attempts to suggest. The threshold requisites for a lawful taking of private property for
public use need to be examined here: one is the necessity for the taking; another is the legal authority to
effect the taking. The element of necessity for the taking has not been shown by respondent Comelecxxx
Similarly, it has not been suggested, let alone demonstrated, that Comelec has been granted the power of
eminent domain either by the Constitution or by the legislative authority. A reasonable relationship between
that power and the enforcement and administration of election laws by Comelec must be shown; it is not
casually to be assumed. . . . Section 2 does not constitute a valid exercise of the power of eminent domain.
TELEBAP, Inc. v. COMELEC, 289 SCRA 337, April 21, 1998 [Mendoza]
In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves
and frequencies through which they transmit broadcast signals and images. They are merely given the
temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may
reasonably be burdened with the performance by the grantee of some form of public service.
Consequently, a license permits broadcasting, but the licensee has no constitutional right to be the one
who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens. There is
nothing in the First Amendment which prevents the government from requiring a licensee to share his
frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views
and voices which are representative of his community and which would otherwise, by necessity, be barred
from the airwaves. As radio and television broadcast stations do not own the airwaves, no private property is
taken by the requirement that they provide airtime to the Comelec.
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Meaning of Public Use

Traditional Concept: The number of actual beneficiaries determines public purpose. If the benefits
redound in favor of individuals, then the purpose is not public.
Concept of vicarious benefit: Abandons the traditional concept. The purpose is public as long as the
society in general is indirectly benefited, i.e. conversion of a slum area into a model housing community.
There is a vicarious advantage to the society.
Filstream International Incorporated v. CA, 284 SCRA 716, Jan. 23, 1998 [Francisco]
The City of Manila, acting through its legislative branch, has the express power to acquire private lands in
the city and subdivide these lands into home lots for sale to bona fide tenants or occupants thereof, and to
laborers and low-salaried employees of the city.
That only a few could actually benefit from the expropriation of the property does not diminish its public
character. It is simply not possible to provide all at once land and shelter for all who need them.

Through the years, the public use requirement in eminent domain has evolved into a flexible concept,
influenced by changing conditions. Public use now includes the broader notion of indirect public benefit or
advantage, including in particular, urban land reform and housing.
Estate of Salud Jimenez v. PEZA, 349 SCRA 240, Jan. 16, 2001, 2nd Div. [De Leon] (Public Use
Requirement; Payment of Just Compensation)
In the exercise of eminent domain, only as much land can be taken as is necessary for the legitimate
purpose of the condemnation. The term "necessary", in this connection, does not mean absolutely
indispensable but requires only a reasonable necessity of the taking for the stated purpose, growth and future
needs of the enterprise. The respondent cannot attain a self-sustaining and viable ECOZONE if inevitable
needs in the expansion in the surrounding areas are hampered by the mere refusal of the private landowners
to part with their properties. The purpose of creating an ECOZONE and other facilities is better served if
respondent directly owns the areas subject of the expansion program.
The Legislature may directly determine the necessity for appropriating private property for a particular
improvement for public use, and it may select the exact location of the improvement. In such a case, it is wellsettled that the utility of the proposed improvement, the existence of the public necessity for its construction,
the expediency of constructing it, the suitableness of the location selected, are all questions exclusively for the
legislature to determine, and the courts have no power to interfere or to substitute their own views for those
of the representatives of the people.
In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency
of exercising the right of eminent domain are questions essentially political and not judicial in their character.
The concept of just compensation embraces not only the correct determination of the amount to be paid
to the owners of the land, but also the payment of the land within a reasonable time from its taking. Without
prompt payment, compensation cannot be considered "just" inasmuch as the property owner is made to
suffer the consequences of being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss. 46 Payment of just compensation
should follow as a matter of right immediately after the order of expropriation is issued. Any delay in payment
must be counted from said order. However, the delay to constitute a violation of due process must be
unreasonable and inexcusable; it must be deliberately done by a party in order to defeat the ends of justice.
-

Payment of Just Compensation

Just compensation is described as a full and fair equivalent of the property taken from the private owner
by the exproprietor. This is intended to indemnify the owner fully for the losss he has sustained as a result of
the expropriation.
Just compensation
=
actual or basic value of the property
+ consequential damages
- consequential benefits (which should not exceed the
consequential damages)
The basic or market value of the property is the price that may be agreed upon by parties willing but
not compelled to enter into a contract of sale.
Acquisition of Easement of Right-of-Way
The exercise of the power of eminent domain does not always result in the taking or appropriation of title
to the expropriated property; it may only result in the imposition of a burden upon the owner of the
condemned property, without loss or title or possession. In this case, while it is true that the plaintiff is only
after a right-of-way easement, it nevertheless perpetually deprives defendants of their proprietary rights as
manifested y the imposition by the plaintiff upon the defendants that below said transmission lines, no plant
higher than 3 meters is allowed. (NPC v. Gutierrez, 193 SCRA 1)

How expropriation may be initiated? Two Stages in Expropriation of Land

Republic v. Salem Investment Corporation, G.R. No. 137569, June 23, 2000, 2nd Div. [Mendoza]
The first is concerned with the determination of the authority of the plaintiff to exercise the power of
eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with
an order, if not dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose declared in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the complaint"xxx.
The second phase of the eminent domain action is concerned with the determination by the court of "the
just compensation for the property sought to be taken." This is done by the court with the assistance of not
more than three (3) commissionersxxx
It is only upon the completion of these two stages that expropriation is said to have been completed.
Moreover, it is only upon payment of just compensation that title over the property passes to the
government. Therefore, until the action for expropriation has been completed and terminated, ownership
over the property being expropriated remains with the registered owner. Consequently, the latter can
exercise all rights pertaining to an owner, including the right to dispose of his property, subject to the power
of the State ultimately to acquire it through expropriation.
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Is prior unsuccessful negotiation a condition precedent for the exercise of eminent domain?

SMI Development Corporation v. Republic, 323 SCRA 862, Jan. 28, 2000, 3rd Div. [Panganiban]
Current effective law on delegated authority to exercise the power of eminent domain is found in Section
12, Book III of the Revised Administrative Code, which provides:
SEC. 12. Power of Eminent Domain The President shall determine when it is necessary or advantageous
to exercise the power of eminent domain in behalf of the National Government, and direct the Solicitor
General, whenever he deems the action advisable, to institute expropriation proceedings in the proper court.
The foregoing provision does not require prior unsuccessful negotiation as a condition precedent for the
exercise of eminent domain. In Iron and Steel Authority v. Court of Appeals, the President chose to prescribe
this condition as an additional requirement instead. In the instant case, however, no such voluntary
restriction was imposed.
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When Ownership transferred to Expropriator

Republic v. Salem Investment Corporation, G.R. No. 137569, June 23, 2000, 2nd Div. [Mendoza]
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions.
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When may the Expropriator enter the Property?

Upon receipt of the landowner of the corresponding payment or, in case of rejection or no response from
the landowner, upon the deposit with an accessible bank designated by DAR of the compensation in cash or in
Land Bank Bonds in accordance with this Act, the DAR shall take immediate possession of the land xxx (Land
Bank v. CA & DAR v. CA)
When used as Implement of Police Power

Power of Eminent Domain is utilized as an implement of Police Power to promote the welfare of the
people.
It is the Constitution itself which mandated the pursuit of Agrarian Reform Program to address once and
for all the plight of the landless and the poor which for centuries has been the source of discontent and
unrest. (ASLP v. Sec. DAR)

POWER OF TAXATION
It is the inherent power of the state to raise revenues to defray the expenses of the government or for any
public purpose. This can be done through the imposition of burdens or imposition on persons, properties,
services, occupations or transactions.
The importance of taxation derives from the unavoidable obligation of the government to protect the
people and extend them benefits in the form of public projects and services. Taxation is based on necessity
and the reciprocal duties of protection and support between the state and those that are subject to its
authority.
Who may exercise the power of taxation?

It is the Congress who exercises the plenary power to tax. However, it may be delegated by congress to
local government units under such terms and conditions as may prescribed by law.
The following are the requisites or limitations on the power to tax:
1. Public purpose;
2. Territoriality;
3. Uniformity;
4. Due process and equal protection clause;
5. Constitutionally exempt properties cannot be taxed;
6. In the assessment and collection of certain kinds of taxes, notice and opportunity for hearing must be
provided. Does the power to tax include the power to destroy?
The power to tax includes the power to destroy if it is used as an implement of the police power (regulatory)
of the State. However, it does not include the power to destroy if it is used solely for the purpose of raising
revenue. (ROXAS vs. CTA)
NOTES:
> If the purpose of taxation is regulatory in character, taxation is used to implement the police power of the
state.
> If the power of taxation is used to destroy things, businesses, or enterprises and the purpose is to raise
revenue, the court will come in because there will be violation of the inherent and constitutional limitations
and it will be declared invalid.
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Taxes distinguished from Licenses

Acebedo Optical Company, Inc. v. CA, 329 SCRA 314, March 31, 2000, En Banc [Purisima]
The scope of police power has been held to be so comprehensive as to encompass almost all matters affecting
the health, safety, peace, order, morals, comfort and convenience of the community. Police power is
essentially regulatory in nature and the power to issue licenses or grant business permits, if exercised for a
regulatory and not revenue-raising purpose, is within the ambit of this power.
The power to grant or issue licenses or business permits must always be exercised in accordance with law,
with utmost observance of the rights of all concerned to due process and equal protection of the law.

Distinction must be made between the grant of a license or permit to do business and the issuance of a license
to engage in the practice of a particular profession. The first is usually granted by the local authorities and the
second is issued by the Board or Commission tasked to regulate the particular profession. A business permit
authorizes the person, natural or otherwise, to engage in business or some form of commercial activity. A
professional license, on the other hand, is the grant of authority to a natural person to engage in the practice
or exercise of his or her profession.
The Life-Blood Doctrine
Taxes are the life-blood of the Government and their prompt and certain availability are an imperious need.
(CIR v. Pineda, 21 SCRA 105)
The existence of the government is a necessity; the main source of the government is taxes. These are the lifeblood of the government. The government will not be able to survive and continue to perform its functions
without taxes. (CIR v. Algue, Inc., 158 SCRA 8)
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Can taxes be subject to off-setting or compensation?

Philex Mining Corporation v. CIR, 294 SCRA 687, Aug. 28, 1998 [Romero]
Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not
creditors and debtors of each other. There is a material distinction between a tax and debt. Debts are due to
the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity. It
must be noted that a distinguishing feature of a tax is that it is compulsory rather than a matter of bargain.
Hence, a tax does not depend upon the consent of the taxpayer. If any taxpayer can defer the payment of
taxes by raising the defense that it still has a pending claim for refund or credit, this would adversely affect the
government revenue system. A taxpayer cannot refuse to pay his taxes when they fall due simply because he
has a claim against the government or that the collection of a tax is contingent on the result of the lawsuit it
filed against the government.
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Tax Exemptions

Sec. 28[3], Art. VI, 1987 Constitution

SECTION 28. (3)
Charitable institutions, churches and parsonages or convents appurtenant thereto,
mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively
used for religious, charitable, or educational purposes shall be exempt from taxation.
Sec. 4[3], Art. XIV, 1987 Constitution
SECTION 4. (3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly,
and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or
cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner
provided by law.
Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such
exemptions subject to the limitations provided by law including restrictions on dividends and provisions for
reinvestment.
CIR v. CA, 298 SCRA 83, Oct. 14, 1998 [Panganiban]
Laws allowing tax exemption are construed strictissimi juris. Hence, for the YMCA to be granted the
exemption it claims under the abovecited provision, it must prove with substantial evidence that (1) it falls
under the classification non-stock, non-profit educational institution; and (2) the income it seeks to be
exempted from taxation is used actually, directly, and exclusively for educational purposes. However, the
Court notes that not a scintilla of evidence was submitted by private respondent to prove that it met the said
requisites.

Who may grant tax exemptions?

Chavez v. PCGG, 299 SCRA 744, Dec. 9, 1998 [Panganiban]

The power to tax and to grant exemptions is vested in the Congress and, to a certain extent, in the local
legislative bodies. Section 28(4), Article VI of the Constitution, specifically provides: No law granting any tax
exemption shall be passed without the concurrence of a majority of all the members of the Congress. The
PCGG has absolutely no power to grant tax exemptions, even under the cover of its authority to compromise
ill-gotten wealth cases.
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Tax Treaties; International Juridical Double Taxation

CIR v. S.C. Johnson and Son, Inc., 309 SCRA 87, June 25, 1999, 3rd Div. [Gonzaga-Reyes]
The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has entered into for the
avoidance of double taxation. The purpose of these international agreements is to reconcile the national fiscal
legislations of the contracting parties in order to help the taxpayer avoid simultaneous taxation in two
different jurisdictions. More precisely, the tax conventions are drafted with a view towards the elimination of
international juridical double taxation.
International juridical double taxation is defined as the imposition of comparable taxes in two or more states
on the same taxpayer in respect of the same subject matter and for identical periods.
The apparent rationale for doing away with double taxation is to encourage the free flow of goods and
services and the movement of capital, technology and persons between countries, conditions deemed vital in
creating robust and dynamic economies. Foreign investments will only thrive in a fairly predictable and
reasonable international investment climate and the protection against double taxation is crucial in creating
such a climate.