FUNDAMENTAL POWERS OF THE STATE

Inherent powers of the State

1. Police Power
2. Power of eminent domain
3. Power of Taxation

Similarities:

a. Inherent in the State, exercised even without the need of express constitutional grant
b. Necessary and indispensable; State cannot be effective without them
c. Methods by which State interferes with private property.
d. Presuppose equivalent compensation
e. Exercised primarily by the Legislature

Distinctions:

a. Police power regulates both liberty and property, eminent domain and taxation affect only
property rights.
b. Police power and taxation are exercised only by government; eminent domain may be exercised
by private entities.
c. Property taken in police power is usually noxious or intended for noxious purpose and may thus
be destroyed; while in eminent domain and taxation, the property is wholesome and devoted to
public use or purpose.
d. Compensation in police power is the intangible, altruistic feeling that the individual has
contributed to the public good; in eminent domain, it is the full and fair equivalent of the
property taken; while in taxation, while in taxation, it is the protection given and/or public
improvements instituted by the government for the taxes paid

Limitations:

Generally, the Bill of Rights, although in some cases the exercise of the power prevails over specific
constitutional guarantees. The courts may annul the improvident exercise of police power.

POLICE POWER

- The power of promoting public welfare by restraining and regulating the use and enjoyment of
liberty and property.

Scope/Characteristics:

- Police power is the most pervasive, the least limitable, and the most demanding of the 3
powers. The justification is found in the Latin maxims: salus populi est suprema lex and sic utere
tuo ut alienum non laedas.
a. Police cannot be bargained away through the medium of a treaty or a contract.
 b. The taxing power may be used as an implement of police power
c. Eminent domain may be used as an emplement to attain the police objective
d. A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future contracts, but equally to
those already in existence.
e. While the right of workers to security of tenure is guaranteed by the Constitution, its
exercise may be reasonably regulated pursuant to the police power of the State to
safeguard health, morals, peace, education, order, safety and the general welfare of the
people.
f. This regulation assumes particular pertinence in the field of medicine, to protect the public
from the potentially deadly effects of incompetence and ignorance
g. The right to bear arms is merely a statutory privilege. The license to carry a firearm is
neither a property nor a property right. It does not create vested right.
h. The State under its all-encompassing police power, may alter, modify or amend the same in
accordance with the demands of the general welfare.
i. A license to operate a motor vehicle is not a property right, but a privilege granted by the
state, which may be suspended or revoked in the exercise of its police power.
j. R.A. 9257 “Expanded Senior Citizens Act” is a legitimate exercise of the police power. When
conditions so demand as determined by the legislature, property rights must bow to the
primacy of police power because property rights though sheltered by the due process
clause, must yield to the general welfare.
k. In exercise of police power, the state can regulate the rates imposed by a public utility, such
as an electric cooperative.

Who may exercise the power;

- The power is inherently vested in the legislature . However Congress may validly delegate this
power to the President, to administrative bodies and to lawmaking bodies of local government
units. Local government units exercise the power under the general welfare clause.
a. While police power may be validly delegated to the President, P.D. 260 as amended, do not
authorize the president or any other administrative body, to take over the internal
management of a cooperative.
b. The power to establish zones for industrial, commercial and residential uses is derived from
the police power itself and is exercised for the protection and benefit of the residents of a
locality.
c. Unlike the legislative bodies of local government units, there is no provision in R.A. 7924
that empowers the MMDA or its council to enact ordinances, approve resolutions and
appropriate funds for the general welfare of the inhabitants of Metro Manila. Thus, MMDA
may not order the opening of Neptune St, in the Bel-Air Subdivision to public traffic, as it
does not possess delegated police power.
 d. The MMDA is an administrative agency tasked with the implementation of rules and
regulations enacted by proper authorities. By designating the MMDA as the implementing
agency, the President overstepped the limits of the authority conferred by law.

Limitations (Test for Valid exercise)

a. Lawful Subject: The interests of the public in general, as distinguished from those of a particular
class, require the exercise of the power. This means that the activity or property sought to be
regulated affects the general welfare; if it does, then the enjoyment of the rights flowing
therefrom may have to yield to the interest of the greater number.
b. Lawful means : The means employed are reasonably necessary for the accomplishment of the
purpose, and not unduly oppressive on individuals
Requisites:
a. The interest of the public generally, as distinguished from those of a particular class, require
the interference by the state
b. The means employed are reasonably necessary for the attainment of the object sought and
not unduly oppressive upon individuals.

Additional limitations (When exercised by delegate)

a. Express grant by law – for local government units

b. Within territorial limits – for local government units, except when exercised to protect water
supply
c. Must not be contrary to law – An activity prohibited by law cannot in the guise of regulation, be
allowed, an activity allowed by law may be regulated, but not prohibited.

For municipal ordinances to be valid

a. Must not contravene the Constitution or any statute

b. Must not unfair or oppressive
c. Must not be partial or discriminatory
d. Must not prohibit but may regulate trade
e. Must not be unreasonable
f. Must be general in application and consistent with public policy

Zoning ordinance – is defined as a local city or municipal legislation which logically arranges, prescribes,
defines and apportions a given political subdivision into specific land uses as present and future
projection of needs.

 Based on the hierarchy of constitutionally protected rights, the right to life enjoys precedence to
the right to property. The reason is obvious, life is irreplaceable, property is not. So, when the
exercise of police power clashes without a few individuals right to property, the former should
prevail.
POWER OF EMINENT DOMAIN

a. Also known as the power of expropriation

b. Distinguished from police power. Police power is the power of the State to promote public
welfare by restraining and regulating the use of liberty and property. The power of eminent
domain is the inherent right of the State to condemn private property to public use upon
payment of just compensation.
-Property condemned under police power is usually noxious or intended for a noxious
purpose, hence no compensation is paid. Likewise, property rights of individuals are subject
to restraints and burdens in order to secure the general comfort, health and prosperity of
the State. However, when a property interest is appropriated and applied to some public
purpose, there is a need to pay just compensation.

c. In Section 9 Article III of the Constitution, in mandating that “private property shall not be taken for
public use without just compensation” merely imposes a limit on the on the government’s exercise of
this power and provides measure of protection to the individuals right to property. An ejectment suit
should not ordinarily prevail over the power of eminent domain.

d. Easement of right of way falls within the purview of the power of eminent domain

e. Court that has jurisdiction. Jurisdiction over the complaint for eminent domain is with the RTC. While
the value of the property to be appropriated is estimated in monetary terms – for the court is duty
bound to determine the amount of just compensation to be paid for the property – it is merely
incidental to the expropriation suit.

f. The plaintiff’s right to expropriation cases to dismiss the complaint has always been subject to court
approval and certain conditions.

Who may exercise the Power

- Congress and by delegation, the President, administrative bodies, local government units and
even private enterprises performing public services.
a. Local government units have no inherent power of eminent domain, they can exercise the
power only when expressly authorized by the Legislature, but the power is not absolute, it is
subject to statutory requirements
b. Respondent should prove that before it filed its complaint, it made a written, definite and
valid offer to acquire the property as required .
c. The exercise of the power is clearly superior to the final and executor judgment rendered by
the court in an ejectment case
d. Eminent domain cases are to strictly construed against the expropriator. If the republic had
actually made full payment of just compensation, it would have led in the cancellation of the
title or at least, the annotation of the lien in favor of the government on the certificate of
title.
Requisites for Exercise:

A.Necessity

1. When the power is exercised by the Legislature, the question of necessity is generally a
political question, but when exercise d by a delegate, the determination of whether there is
genuine necessity for the exercise is a justiciable question.
2. The RTC has the power to inquire into the legality of the exercise of the right of eminent
domain and to determine whether there is a genuine necessity for it.
3. The foundation of the right to exercise eminent domain is genuine necessity and that
necessity must be of public character.

B.Private Property

1. Private property already devoted to public use cannot be expropriated by a delegate of

legislature acting under a general grant of authority.
2. All private property capable of ownership may be expropriated, except money and choses in
action. Even services may be subject to eminent domain.

C. Taking in the constitutional sense

1. May include 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 is intended.

2. 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 a condemned
property, without loss of title or possession

3. The owner should be compensated for the monetary equivalent of the land if the easement is
intended to perpetually or indefinitely deprive the owner of his proprietary rights through the
imposition of conditions that affect the ordinary use, free enjoyment and disposal of the property

Elements of Taking

a. The government must enter private property

b. The entry must be indefinite or permanent
c. There is color of legal authority in the entry
d. The property is devoted to public use or purpose
e. The use of the property for public use removed from the owner all beneficial enjoyment of the
property.
- Taking also occurs when agricultural lands are voluntarily offered by a landowner and approved
by the PARC for CARP coverage through the stock distribution scheme
- Where there is taking in the constitutional sense, the property owner need not file a claim for
just compensation with the Commission on Audit, he may go directly to court to demand
payment.
D.PUBLIC USE – the term has now been held synonymous to public interest, public benefit, public
welfare and public convenience.

- the meaning of public use has also been broadened to cover uses which, while not directly
available to the public, redound to their indirect advantage or benefit.

E. JUST COMPENSATION

Concept: The full and fair equivalent of the property taken; it is the fair market value of the
property. The measure is not taker’s gain, but the owner’s loss.

- Consequential damages are awarded if, as a result of the expropriation, the remaining property
of the owner suffers from impairment or decrease in value. No consequential damages should
be awarded if the entire property, and not merely a portion, is being expropriated.
- Just compensation means not only the correct amount to be paid to the owner of the land but
also payment within a reasonable time from its taking. Compensation must be just not only to
the property owner but also to the public which ultimately bears the cost of expropriation.
- In agrarian reform cases, just compensation should be the full and fair equivalent of the
property taken from the owner, the equivalent being real, substantial, full and ample.
- For purposes of just compensation, the fair market value of the expropriated property is
determined by its character and its price at the time of actual taking.
- Factors to be considered:
a. Acquisition cost
b. Current market value of like properties
c. Tax value of the condemned property
d. Size, shape and location
- These factors must be supported by documentary evidence.
- Land Bank possesses the legal personality to institute a petition for determination of just
compensation
- Judicial prerogative. PD 76, which fixes payment on the basis of the assessment by the assessor
or the declared valuation by the owner, is unconstitutional.
- The RTC , as special agrarian court, is given original and exclusive jurisdiction over 2 categories
1. All petitions for the determination of just compensation to land owners
2. The prosecution of all criminal offenses under RA 6657
- Commisioners are to be appointed by the court for the determination of just compensation.
However, the court may substitute its own estimate of the value of the property only for valid
reasons, to wit:
a. The commissioners have appled illegal principles to the evidence submitted to them
b. They have disregarded a clear preponderance of evidence
c. Where the amount allowed is either grossly inadequate or excessive.
- Form of compensation. Compensation is to be paid in money and no other. However, in
agrarian reform, payment is allowed to be made partly in bonds, because under CARP, we do
 not deal with the traditional exercise of the power of eminent domain, we deal with the
revolutionary kind of expropriation.
- The value of the property must be determined either as of the date of the taking or the filing of
complaint, whichever comes first.
- It should be noted that the principal criterion in determining just compensation is the character
of the land at the time of the taking.
- When eminent domain is exercised by the local government unit, the amount to be paid for the
expropriated property shall be determined by the proper court, based on the fair market value
at the time of the taking of the property.
- To be just, the compensation must not only be the correct amount to be paid; it must also be
paid within a reasonable time from the time the land is taken from the owner. If not, the State
must pay the landowner interest, by way of damages, from the time the land is taken from the
owner. The interest, deemed a part of just compensation due, has been established by
prevailing jurisprudence to be 12% per annum.
- If property taken for public use before compensation is deposited with the court having
jurisdiction over the case, the final compensation must include interest on its value to be
computed from the time the property is taken o the time when the compensation is actually
paid or deposited with the court.
- Who else may be entitled to just compensation. Entitlement is not however, limited to the
owner but includes all those who have lawful interest in the property to be condemned,
including a mortgagee, a lessee and a vendee in possession under an executor contract.
- Title to the property. Title does not pass until after payment. Thus, the owner of the land subject
to expropriation may still dispose of the same before payment of just compensation.
- Taxes paid by the owner after taking by the expropriator are reimbursable. Capital gains tax is to
be paid by the seller.
- Non-payment of just compensation in an expropriation proceeding does not entitle the private
landowners to recover possession, but only to demand payment of the fair market value of the
property.
- Due process of law. The defendant must be given an opportunity to be heard.
- Writ of possession. It becomes ministerial
a. Upon filing of a complaint for expropriation sufficient in form and substance and
b. Upon deposit made by the government of the amount equivalent to the assessed value of
the property sought to be expropriated per current tax declaration.
- There is no such thing as the plaintiff’s “matter of right to dismiss the complaint”, precisely
because the landowner may have already suffered damages at the start of the taking.
- Right to repurchase or re-acquire the property. The property owner’s right to repurchase the
property depends upon the character of the title acquired by the expropriator.
- The constitutional provision envisions a situation wherein the exigencies of the times
necessitate the government to “ temporarily take over or direct the operation of any privately
owned public utility or business affected with public interest”. It is the welfare and interest of
the public which is the paramount consideration in determining whether or not temporarily take
over a particular business.
 - The temporary take over by the government extends only to the operation of the business and
not to the ownership thereof. As such, the government is not required to compensate the
private entity-owner of the said business as there is no transfer of ownership, whether
permanent or necessary.

POWER OF TAXATION

Who may exercise:

- Primarily, the legislature; also local legislative bodies, and to a limited extent , the President
when granted delegated tariff powers.

Limitations on the exercise:

a. Due Process of law ; tax should not be confiscatory.

- With the Legislature primarily lies the discretion to determine the nature, object, extent,
coverage and situs of taxation. But where a tax measure becomes so unconscionable and unjust
as to amount to confiscation of property, courts will not hesitate to strike it down, for despite all
its plenitude, the power to tax cannot override constitutional prescriptions.
b. Equal protection clause: Taxes should be uniform and equitable
c. Public purpose
- Tax for special purpose. Treated as a special fund and paid out for such purpose only; when
purpose is fulfilled, the balance if any, shall be transferred to the general funds of the
government.

Double taxation. Additional taxes are laid on the same subject by the same taxing jurisdiction during the
same taxing period and for the same purpose.

- Despite lack of specific constitutional prohibition, double taxation will not be allowed if the
same will result in a volation of the equal protection clause.

Tax Exemptions Requisite. No law granting any tax exemption shall be passed without the concurrence
of a majority of all the members of Congress.

a. Charitableinstitutions, churches and parsonages or convents appurtenant thereto, mosques,

non-profit cemeteries and all lands and buildings, actually, directly and exclusively used for
religious, charitable or educational purpose shall be exempt from taxation
b. 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.
c. Subject to conditions prescribed by law, all grants, endowments, donations or contributions
used actually, directly and exclusively for educational purposes shall be exempt from tax.
d. Where tax exemption is granted gratuitous, it may be revoked at will, but not if granted for a
valuable consideration.
Police power vs. Taxation

-If generation of revenue is the primary purpose and regulation is merely incidental , the imposition is a
tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make
the imposition a tax.

a. License Fee vs. Tax

1. License fee is a police measure ; tax is a revenue measure

2. Amount collected for a license fee is limited to the cost of permit and reasonable police regulation ;
amount of tax may be unlimited provided it is not confiscatory.

3. License fee is paid for the privilege of doing something, and may be revoked when public interest so
requires. Tax is imposed on persons or property for revenue.

b. Kinds of License fee

1. For useful occupations or enterprises

2. For non-useful occupations or enterprises. The amount imposed may be a bit exorbitant.

Supremacy of the national government over local governments in matters of taxation

MIAA is exempt from real estate tax for the ffg. Reasons:

a. MIAA is not a government-owned or controlled corporation but an instrumentality of the

National government
b. The real properties of MIAA are owned by the Republic of the Philippines, and thus exempt from
local taxation.