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Fundamental Powers of the State - MAD

Fundamental Powers of the State 1. May not be exercised arbitrarily to the prejudice of the bill of rights.
2. Subject at all times to the limitations and requirements of the
 What are the Fundamental Powers the State? Constitution and may in proper cases be annulled by the courts when
1. Police Power there is grave abuse of discretion.
2. Power of Eminent Domain
3. Power of Taxation
 What are the Similarities of these powers?
1. They are all inherent in the State, exercised without need of express  What is Police Power?
constitutional grant. It is the power of promoting public welfare by restraining and regulating
2. They are not only necessary but also Indispensable; State cannot be the use of liberty and property.
effective without them.
3. Methods by which the state interferes with private property.  What are the characteristics of police power as compared to the powers
4. Presuppose Equivalent Compensation for the private rights interfered of taxation and eminent domain?
with. A: Police power easily outpaces the other powers. (Why? It is because it
5. They are all exercised by the legislature. regulates not only property, but also the liberty of person.)

 What are the distinctions of these powers? Police power is considered the most pervasive, the least limitable, and
Police Power Power of Power of the most demanding of the three powers. It may be exercised as long as the
Eminent Domain Taxation activity or property sought to be regulated has some relevance to the public
What does it Both LIBERTY Only PROPERTY Only PROPERTY welfare. The justification is found in the Latin Maxims: Salus Populi Est
regulate? and PROPERTY RIGHTS RIGHTS Suprema Lex
Who exercise Only by the May be exercised Only by the
it? Government by Private Government  What are the aspects of police power?
A: : Generally, police power extends to all the great public needs. However,
What is the The property Property taken is Property taken is
purpose? taken is for PUBLIC USE. for PUBLIC USE. its particular aspects are the following:
DESTROYED 1. Public health
because it is 2. Public morals
usually noxious. 3. Public safety
Compensation Intangible; Full and fair Protection given 4. Public welfare
altruistic feeling equivalent of the and/or public
that the property taken improvements
 Scope/ Characteristics of Police Power
individual has instituted by
contributed to government for  Can Police power be bargained by a treaty or a contract?
the public good the taxes paid. In Ichong vs. Hernandez, the court ruled that police power cannot be
bargained away through the medium of a treaty or a contract.

 What are the limitations of these powers?

Fundamental Powers of the State - MAD

 Can Police power be implemented through other inherent powers? 1. Lawful Subject – The interests of the public generally, as distinguished
In Lutz v. Araneta, taxing power may be used as an implement of police from those of particular class, require the exercise of the police power.
power. 2. Lawful Means – The means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppressive upon
In Association of Small Landowners v. Sec. of Agrarian Reform, individuals.
Eminent domain may be used as an implement to attain the police


 Can Laws enacted in the exercise of police power be given
retroactive effect?  What is eminent domain?
In Ortigas & Co v. CA, a law enacted in the exercise of police power to  It is the right, authority or power of the State as sovereign, or of those to
regulate or govern certain activities or transactions could be given whom the power has been lawfully delegated to take private property
retroactive effect and may reasonably impair vested rights or contracts. for public use upon observance of due process of law and paying for
Police power legislation is applicable not only to future contracts, the owner a just compensation to be ascertained according to law.
but equally to those already in existence.  The conditions for the exercise of eminent domain ( T P J D )
a. Taking of private property
Non-impairment of contracts or vested rights clauses will have to b. For public use
yield to the superior and legitimate exercise by the State of the c. Just compensation
police power. d. Observance of due process

 Who may exercise police power?  Who exercises the power?

 General rule: Police power is inherently vested in the legislature.  Congress. However, the following may exercise this power by virtue of
 Exception: By virtue of valid delegation of legislative power, it may be valid delegation:
exercised by the: a. The president
1. President b. Various local legislative bodies
2. Administrative Bodies c. Certain public corporations like Land authority
3. Lawmaking bodies on all municipal levels including the barangar. d. Quasi-public corporations like Philippine National Railways
Municipal Governments exercise this power under the general welfare
clause.  In City of Manila v. Chinese Community of Manila, the right of
 Requisites for Valid Delegation of Police Power expropriation is not an inherent power in a municipal corporation, and
1. Express grant by law before it can exercise the right some law must exist conferring the
2. Must not contrary to law power upon it. When the courts come to determine the question they
3. GR: Within territorial limits of LGUs must only find.
Except: when exercised to protect water supply. a. That a law or authority exists for the exercise of the right of eminent
domain but
 What are the tests to determine the validity of police power? b. Also that the right or authority is being exercised in accordance with
the law.
Fundamental Powers of the State - MAD

 Does the requisite of “must be of public use” must be used by public at

 Distinguish Power of expropriation as exercised by Congress and the large?
power of expropriation as exercised by delegates.  In MANOSCA v. CA, it is not required that the requisite of public use
 When exercised by Congress, the power is pervasive and all- must be used by the public at large. Whatever may be beneficially
encompassing but when exercised by delegates, it can only be broad as employed for the general welfare satisfies the requirement.
the enabling law and the conferring authorities want it to be.
 As to the question of necessity, the same is a POLITICAL QUESTION Moreover, that only few people benefits from the expropriation does
when the power is exercised by the Congress. On the other hand, it is not diminish its public-use character because the notion of public use
judicial when the exercised by delegates. The courts can determine now includes the broader notion of indirect public benefit or
whether there is genuine necessity for its exercise, as well as the value of advantage.
the property.
 In Lagcao v. Judge Labra, the Supreme Court said that condemnation
of private lands in an irrational or piecemeal fashion, or the random
 What are the requisites of valid TAKING? ( P M A P O )
expropriation of small lots to accommodate no more than a few
 In REPUBLIC v. CASTELVI, tenants or squatters, is certainly not the condemnation for public use
1. That the expropriator must enter a private property. contemplated by the Constitution. This deprives a citizen of his
2. Entry must be for more than a momentary period. property for the convenience of a few without perceptible benefit to
3. Entry must be under warrant or color of legal authority. the public. Moreover, prior to the passage of Ordinance No. 1843, there
4. Property must be devoted to Public use or otherwise informally was no evidence of a valid and definite offer to buy petitioners’
appropriated or injuriously affected. property, as required by Sec. 19, R.A. 7160.
5. Utilization of property must be in such a way as to oust the owner and
 What is Just Compensation?
deprive him of beneficial enjoyment of the property.  It is the full and fair equivalent of the property taken from the
private owner (owner’s loss) by the expropriator. It is usually the FAIR
 Taking MARKET VALUE of the property and MUST INCLUDE consequential
 Actual physical seizure not essential damages (damage to other interest of the owner attributed to the
 taking must be direct expropriation) MINUS consequential benefits (increase in the value of
other interests attributed to new use of the former property).
 mere notice or intention to expropriate not sufficient
 The aforementioned rule, however, is modified where only a part of a
certain property is expropriated. In such a case, the owner is not
 What properties may be taken? restricted to payment of the market value of the portion actually taken. In
 All private property capable of ownership including services addition to the market value of the portion taken, he is also entitled to
 In City of Manila v. Chinese Community, Private property already payment of consequential damages, if any, to the remaining part of the
devoted to public use cannot be expropriated by a delegate of property. At the same time, from the total compensation must be
legislature acting under general grant of authority. deducted the value of consequential benefits, if any, provided
consequential benefits shall not exceed consequential damages ( NPC v.
Sps. Chiong)
 Must be of PUBLIC USE
 Public use is synonymous with public interest, public benefit, public FMV – the price fixed by the parties will but not compelled to enter into a
welfare, and public convenience. contract of sale.
Fundamental Powers of the State - MAD

 Who determines just compensation?  Entitlement to the payment of just compensation is not, however,
 In EPZA v. Dulay, The determination of just compensation is a judicial limited to the “owner”, but includes all those who have lawful
function. The executive department or the legislature may make the interest in the property to be condemned.
initial determination but when a party claims a violation of the
guarantee in the Bill of Rights that the private party may not be taken for  When does title to the property passes?
public use without just compensation, no statute, decree, or executive  After payment. Therefore, the owner may still dispose of the same
order can mandate that its own determination shall prevail over the before payment.
court’s findings.  Does non‐payment of just compensation entitle the private owner to
recover possession of the expropriated property?
 When should assessment of the value of the property be determined?  GR: Non‐payment by the government does not entitle private
 In EPZA v. Dulay, The value of the property must be determined either owners to recover possession of the property because
at the time of taking or filing of the complaint, whichever comes first. expropriation is an in rem proceeding, not an ordinary sale,
but only entitle them to demand payment of the fair market
 The Court is not bound by the Commissioners to be appointed by the value of the property.
court for the determination of just compensation. The court may
substitute its own estimate of the value of the property only for valid XPNS: ( R F )
reasons. 1. When there is deliberate refusal to pay just compensation
a. The commissioners applied illegal principles to the evidence 2. Government’s failure to pay compensation within 5 years
submitted to them. from the finality of the judgment in the expropriation
b. They have disregarded a clear preponderance of evidence proceedings. This is in connection with the principle that the
c. Where the amount allowed is either grossly inadequate or excessive. government cannot keep the property and dishonor the judgment.
(Republic v. Lim, G.R. No. 161656, June 29, 2005)
However, trial by commissioners is not mdatory in agrarian reform cases.
 Is the owner entitled to the payment of interest? How about
 Does the compensation to be paid in money? reimbursement of taxes paid on the property?
 General Rule: Yes.  Yes, the owner is entitled to the payment of interest from the time
 Exception: In Association of Small Landowners v. Secretary of of taking until just compensation is actually paid to him. Taxes paid
Agrarian Reform, supra., 175 SCRA 343, it was held that in agrarian by him from the time of the taking until the transfer of title (which
reform, payment is allowed to be made partly in bonds. It is not an can only be done after actual payment of just compensation),
ordinary expropriation where only a specific property of relatively during which he did not enjoy any beneficial use of the property,
limited area is sought to be taken by the State from its owner for a are reimbursable by the expropriator.
specific and perhaps local purpose. It is rather a revolutionary kind of

 When does just compensation be determined? POWER OF TAXATION

 In Nepomuceno v. City of Surigao, G.R. No. 146091, July 28, 2008, it
was held that the value of the property shall be ascertained as of the  What are taxes and what is taxation?
date it was actually taken, because it is as of that time that the real  Taxes are: ( P L S P )
measure of the owner’s loss may be fairly adjudged 1. Enforced proportional contributions from persons and property
2. Levied by the State by virtue of its sovereignty
 Who else may be entitled to just compensation? 3. For the support of the government
4. For public needs
Fundamental Powers of the State - MAD

o UNIFORMITY OF TAXATION – refers to geographical

 Taxation is the method by which these contributions are exacted. uniformity, meaning it operates with the same force and effect in
(Gorospe, Constitutional Law: Notes and Readings on the Bill of Rights, every place where the subject of it is found.
Citizenship and Suffrage, Vol. 2)
3. Uniformity, equitability and progressive system of taxation (Art. VI, Sec
 Who may exercise power of taxation?
 Primarily, the legislature; also: local legislative bodies[Sec. 5, Art. X,
Constitution]; and to a limited extent, the President when granted o PROGRESSIVE SYSTEM OF TAXATION – means that the tax rate
delegated tariff powers [Sec. 28 (2), Art. VI] increases as the tax base increases.
 Local Government Units (LGU) shall have the power to create its own 4. Non‐impairment of contracts (Art. III, Sec. 10)
sources of revenues and to levy taxes, fees and charges subject to such 5. Non‐imprisonment for non‐payment of poll tax (Art. III, Sec. 20)
guidelines and limitations as the Congress may provide, consistent with 6. Revenue and tariff bills must originate in the House of Representatives
the basic policy of local autonomy. Such taxes, fees, and charges shall
(Art I, Sec. 7)
accrue exclusively to the loca governments. ( Sec. 5, Art X)
7. Non‐infringement of religious freedom (Art. III, Sec.4)
 Limitations in General of Power of Taxation 8. Delegation of legislative authority to the President to fix tariff rates,
1. Inherent import and export quotas, tonnage and wharfage dues
2. Constitutional 9. Tax exemption of properties actually, directly and exclusively used for
religious, charitable and educational purposes (NIRC, Sec 30)
 Inherent Limitations 10. Majority vote of all the members of Congress required in case of
1. Public Purpose legislative grant of tax exemptions
o In Pascual vs. Sec. of Works and Communications, the
11. Non‐impairment of SC’s jurisdiction in tax cases
taxing power must be exercised for public purposes only;
money raised by taxation can be expanded only for public 12. Tax exemption of revenues and assets of, including grants,
purposes and not for the advantage of private individuals. endowments, donations or contributions to educational institutions.

2. Non-delegability of Power  What is double taxation? ( S A T P )

3. Territoriality or situs of taxation 1. Taxes are laid on the same subject
4. Exemption of government from taxation 2. By the same authority
5. International comity o In Punsalan v. Municipal board of manila, The argument
against double taxation may not be invoked where one tax is
 Constitutional Limitations imposed by the state and the other is imposed by the city
1. Due process of law (Art. III, Sec.1) 3. During the same taxing period
o Tax should not be confiscatory. 4. For the same purpose
o With legislature primarily lies the discretion to determine the
nature, subject, coverage and situs of taxation. But where a tax NOTE: There is no provision in the Constitution specifically prohibiting
measure becomes so unconscionable and unjust as to amount to double taxation, but it will no tbe allowed if it violates equal protection.
confiscation of property, courts will not hesitate to strike it  Tax Exemptions
down, for despite all its plenitude, the power to ax cannot
 Requisite: No law granting any tax exemption shall be passed without
override constitutional prescriptions.
concurrence of a majority of all the Members of the Congress (Sec. 28
(4), Art. VI, Consti)
2. Equal protection clause (Art. III, Sec.1)
o Taxes should be uniform and equitable.
Fundamental Powers of the State - MAD

a) Sec. 28 (31 Art. VI: Charitable institutions, churches and parsonages License Fee Tax
or convents appurtenant thereto, mosques, non-profit cemeteries, and Police measure Revenue measure
all lands, buildings and improvements, actually, directly and exclusively Amount collected is limited to the cost Amount of tax may be unlimited
used for religious, charitable or educational purposes shall be exempt of permit and reasonable police provided it is not confiscatory
from taxation. regulation except when the license
fee is imposed on a non-useful
b) Sec. 4 (3) Art. XIV: All revenues and assets of non-stock, non-profit occupation
educational institutions used actually, directly and exclusively for It is paid for the privilege of doing Imposed on persons or property for
educational purposes shall be exempt from taxes and duties, x x x something, and may be revoked when revenue.
Proprietary educational institutions, including those co-operatively public interest so requires
owned, may likewise be entitled to such exemptions subject to the
limitations provided by law including restrictions on dividends and
provisions for reinvestment.

c) Sec. 4 (41 Art. XIV: Subject to conditions prescribed by law, ail grants,
endowments, donations, or contributions used actually, directly and
exclusively for educational purposes shall be exempt from tax.

 In Lladoc v. CIR, as well observed by the learned respondent Court,

the phrase "exempt from taxation," as employed in the Constitution
(supra) should not be interpreted to mean exemption from all kinds of
 In Abra Valley College v. Aquino, reasonable emphasis has always
been made that the exemption extends to facilities which are
incidental to and reasonably necessary for the accomplishment of
the main purposes. The use of the school building or lot for
commercial purposes is neither contemplated by law, nor by
jurisprudence. In the case at bar, the lease of the first floor of the
building to the Northern Marketing Corporation cannot by any stretch
of the imagination be considered incidental to the purpose of
education. The test of exemption from taxation is the use of the
property for purposes mentioned in the Constitution.

 Once an exception is granted by the legislature, may such exemption

be revoked at will?
 If exemption is granted GRATUITOUSLY – revocable
 If exemption granted for VALUABLE CONSIDERATION – irrevocable
(non-impairment of contracts)