Page 1 of 4

UNIVERSITY OF SAN JOSE – RECOLETOS

Accountancy and Finance Department

I. Inherent Powers of the State

Tax 1 – Income Taxation
2nd Semester, AY 2021 - 2022

WARNING!!

This material is INTENDED SOLELY for the TAX 1 students (Second Semester, AY 2021 –
2022) of the University of San Jose-Recoletos. This should NOT be distributed to
unauthorized users or published in any internet websites. Any students who initiated
unauthorized distribution is considered theft or stealing and is punishable by Suspension
(minimum) or Expulsion (maximum). Please use this learning material accordingly. Thank
you and Enjoy!

---------------------------------------------------------------------------------------------------------

THREE INHERENT POWERS OF THE STATE:

1. POLICE POWER – The power of the State to enact such laws in relation to persons and
property to promote public health, public morals, public safety and general welfare of the
people.
2. POWER OF EMINENT DOMAIN – Power of the state to acquire private property for public
purpose upon payment of just compensation.
3. POWER OF TAXATION – Power to raise revenue, through the enactment of laws that impose
charges upon persons, property and activity under its jurisdiction, to defray expenses of
government.

ACTIVITY I.1:

1. Discuss briefly how the following powers complement each other (maximum of 3 sentences
each):
a. Police Power Power of Eminent Domain
b. Police Power Power of Taxation
c. Power of Taxation Police Power

2. It is said that Police Power and Power of Eminent Domain cannot be fully implemented or
exercised by the Government without the Power of Taxation. Do you agree? Provide reason
in not more than 5 sentences.
 Page 2 of 4

SIMILARITIES AMONG THE THREE INHERENT POWERS OF THE STATE

1. They are inherent in the State. These powers were granted to the State upon its existence.
The State cannot exist without any of these powers.
2. Underlie and exist independently of the constitution although the conditions for their exercise
may be prescribed by the constitution. In other words, the Constitution does not grant the
power, but it limits its exercise.
3. Ways by which the State interfere with private rights and property and it presuppose an
equivalent compensation received, directly or indirectly, by the persons affected.
4. Legislative in nature and character.

DISTINCTIONS AMONG THE THREE INHERENT POWER OF THE STATE:

TAXATION POLICE POWER EMINENT DOMAIN

A. Authority
Government Only. This power Government Only. May be granted to public service
cannot be delegated to private companies or public utilities.
entities. The public service company or
public utilities can only the
power if there is an authority
from the government through a
legislative act.
B. Purpose
For the support of the Promotion of general welfare. The property taken will be for
government. To defray the To protect the welfare of its public use.
legitimate expenses of the citizens.
government.
C. Persons affected
Community or a class of Community or a class of Only the owner of the property
individuals. Everyone is ought to individuals taken is affected and shall also
follow the law and everyone will enjoy the compensation given.
also enjoy its benefits.
D. Effect
Contributions becomes part of No transfer or title; there may There is a transfer of title to
public fund just be a restraint on the property
injurious use of property
E. Benefits Received
In form of protection and No direct and immediate benefit Just compensation
benefits received from but only such as may arise from
government the maintenance of a healthy
economic standard of society.
F. Amount of Imposition
No Limit, as long as there a law Sufficient to cover cost of the No imposition. The owner is
implementing such license and the necessary paid FMV of his property. The
expenses to police surveillance exercise of this power cannot
and regulation raise money for the government
G. Relationship to the constitution
Subject to constitutional Superior to impairment Superior to the impairment
prohibition against the provision. The exercise of the prohibition
impairment of the obligations of power can impair existing
contract. contracts/agreements.
 Page 3 of 4

ACTIVITY I.2

TRUE OR FALSE.

Identify if the statement is TRUE or FALSE. After, provide a 1-2 sentence explanation of
your answer. DO NOT just simple repeat/restate the original statement.

Example: The power of taxation is inherent to the existence of the government.

ANSWER: TRUE

UNACCEPTABLE EXPLANATION/S:
• It is true because indeed the power of taxation is inherent to the existence of the
government.
• It is inherent to the existence of the government that the power of taxation be
granted.

ACCEPTABLE EXPLANATION:
• Upon the existence of the government, there are some powers automatically
granted, these are (1) Power of Taxation; (2) Power of Eminent Domain; and (3)
Police Power. These powers are granted for the government to properly exercise its
mandate.

1. The Barangay Council is allowed to pass a law, in a form of an ordinance, imposing a tax on
certain item within its jurisdiction.

ANSWER:

EXPLANATION:

2. Installation by Metro Cebu Water District of water pumps under your lawn is an example of a
valid exercise of the power of eminent domain.

ANSWER:

EXPLANATION:

3. A State cannot exercise the power to tax even if it is not granted by the Constitution, the
Supreme Law of the Land.

ANSWER:

EXPLANATION:
 Page 4 of 4

4. Police power being the most superior power of the State is not subject to any limitation.

ANSWER:

EXPLANATION:

5. In Police Power of the State, the person who is parting with his money or property is presumed
to receive a benefit.

ANSWER:

EXPLANATION:

End of Topic I.