POINTERS ON FUNDAMENTAL POWERS OF THE STATE
(Atty. Mary Ellen S. Cabuhat)
CONCEPT, APPLICATION AND LIMITATIONS
➢ Art. II (Declaration of Principles and State Policies), Sec 1 - The Philippines is a democratic and
republican State. Sovereignty resides in the people and all government authority emanates from
them.
➢ State power is so vast that the protection of individual freedoms must be guaranteed. Police Power,
Eminent Domain and Taxation interfere with individual freedoms.
➢ The Constitution serves to balance governmental powers with individual freedoms. Specifically, the Bill
of Rights is a guarantee that there are certain areas of a person’s life, liberty and property which
governmental power may not interfere with or encroach upon.
Applicable to All the Powers
✓ Art. III (Bill of Rights), Sec. 1 - No person shall be deprived of life, liberty, or property without
due process of law, nor shall any person be denied the equal protection of the laws.
Police Power
✓ Art. III, Sec. 10 - No law impairing the obligation of contracts shall be passed.
Eminent Domain
✓ Art. III, Sec. 9 - Private property shall not be taken for public use without just compensation.
Taxation
✓ Art. VI (Legislative Department), Sec. 28
1. The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive
system of taxation.
2. The Congress may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the Government.
3. Charitable institutions, churches and personages 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.
4. No law granting any tax exemption shall be passed without the concurrence of a majority
of all the Members of the Congress.
✓ Art. XIV (Education, Science and Technology, Arts, Culture and Sports), Sec. 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.
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✓ Art. X (Local Government), Sec. 5
Each local government unit shall have the power to create its own sources of revenues and to
levy taxes, fees and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.
SIMILARITIES AND DIFFERENCES
Similarities:
✓ Inherent in the State (Exercised even without need of express Constitutional grant.)
✓ Necessary and indispensable (State cannot be effective without them.)
✓ Method by which the state interferes with private property
✓ Presuppose equivalent compensation
✓ Exercised primarily by the legislature
Differences:
POLICE POWER (PP) EMINENT DOMAIN (ED) TAXATION (T)
WHAT PRIMARY To regulate To take To raise revenue
(Definition) PURPOSE
COVERAGE Property and liberty Property only Property only
OBJECTIVE Public (General) Public Use Public Welfare/Public
welfare (genuine necessity) Use
(health, safety, morals, (to defray necessary
etc.) government
expenses)
COMPENSATION The altruistic feeling Just Compensation The protection given
that one has and public
contributed to the improvements
public good. instituted by the
State
because of these
taxes.
HOW EXERCISE Government Government or private Government
(primarily by the Legislature entities (primarily by the
but can be delegated to the (primarily by the Legislature Legislature but can be
President, admin agencies but can be delegated to the delegated to the
and LGUs) admin agencies and LGUs) President, admin
agencies and LGUs)
As exercised by Congress As exercised by Delegate
EXTENT Pervasive and all encompassing Can only be as broad as the enabling law and
(for PP, ED & T) the conferring authorities want it to be
QUESTION OF Political question Justiciable question. RTC has to determine
NECESSITY whether there is a genuine necessity for its
(for ED) exercise, as well as what the property’s value is.
If not justiciable, there is grant of special
authority for special purpose.
PRIVATE Property already devoted to public use can Delegate cannot expropriate private property
PROPERTY still be expropriated. (Genuine Necessity) already devoted to public use.
(for ED)
WHY BASIS Self-preservation and Improve public service Life-blood
self-protection Doctrine/Theory
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POLICE POWER
(The power of the state restrain or regulate liberty and property to promote public welfare (e.g. health, morals,
safety).
➢ It is the most pervasive, the least limitable, and the most demanding of the three (3) fundamental powers of the
State.
➢ The justification is found in the Latin maxim salus populi est suprema (the welfare of the people is the supreme
law) and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others).
➢ It is an inherent attribute of sovereignty which virtually extends to all public needs through which the State, as
Parens Patriae, gives effect to a host of its regulatory powers. [Gerochi vs. DOE, G.R. No. 159796 July 17, 2007]
➢ It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensive embrace. "Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the
future where it could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits."
➢ It is a fundamental attribute of government that has enabled it to perform the most vital functions of governance.
Justice Marshall, to whom the expression has been credited, refers to it succinctly as the plenary power of the State
"to govern its citizens." "The police power of the State is a power coextensive with self- protection, and it is not
inaptly termed the "law of overwhelming necessity." It may be said to be that inherent and plenary power in the
State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society." [Philippine
Association of Service Exporters, Inc. (PASEI) vs. Drilon, G.R. No. 81958 June 30, 1988]
➢ For all its awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event,
it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used
to further private interests at the expense of the citizenry, there is a clear misuse of the power. [PASEI vs. Drilon,
G.R. No. 81958 June 30, 1988]
➢ In the context of municipal law, a law takes precedence as against a treaty obligation, for a treaty may never curtail
or restrict the scope of the Police Power. (Ichong vs. Hernandez, 101 Phil. 155)
TESTS FOR VALIDITY OF EXERCISE OF POLICE POWER
LAWFUL SUBJECT recognized by the Court:
(It must appear that the interests of the public generally, as distinguished from those of a particular class,
require an interference of private rights)
✓ Phasing out and replacement of 6-year-old cabs - “to insure that only safe and comfortable units are used as
public conveyances” (Taxicab Operators of Metro Manila vs. Board of Transportation, 119 SCRA 597)
✓ Barber shops cannot offer massages services in adjacent rooms or the same building - “to forestall possible
immorality” (Velasco vs. Villegas, 120 SCRA 568)
✓ Limitation on the use of public streets by heavy vehicles - “to insure the viability of the country's economy and
sustain its developmental growth; to cushion the effect of increasing oil prices and avoid fuel supply disruptions
xxx (Bautista vs. Juinio, 127 SCRA 329)
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✓ Creation of the Videogram Regulatory Board to regulate the videogram industry to attain the ff. objectives: “to
ensure national economic recovery by creating an environment conducive to growth and development of all
business industries including the movie industry; alleviate the dire financial condition of the movie industry
upon which more than 75,000 families and 500,000 workers depend for their livelihood, but also provide an
additional source of revenue for the Government, and at the same time rationalize the heretofore uncontrolled
distribution of videograms; and support the rearing of the youth for civic efficiency and the development of
moral character and promote their physical, intellectual, and social well-being xxx” (Tio vs. Videogram
Regulatory Board, 151 SCRA 208)
✓ Bouncing checks law – to deter the proliferation/circulation of worthless checks that has an adverse effect to
the economy. (Lozano vs. Martinez, 146 SCRA 323)
✓ Free air time for COMELEC - to give all candidates equal time and space for the purpose of ensuring "free,
orderly, honest, peaceful, and credible elections. (Telecommunications and Broadcast Attorneys of the
Philippines vs. COMELEC, 289 SCRA 337)
✓ Generics Act - to secure the health, safety, good order, comfort, or general welfare of the community. (Del
Rosario vs. Bengzon, 180 SCRA 521)
✓ Books of Account (Yu Cong Eng vs. Trinidad, 271 US 500)
LAWFUL MEANS recognized by the Court:
(The means must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive
of private rights. It must also be evident that no other alternative for the accomplishment of the purpose less
intrusive of private rights (Strict Scrutiny Test).
✓ Leprosariums for lepers (Lorenzo vs. Director of Health, 50 Phil. 595)
✓ Blood tests before issuance of a marriage license (Gould v. Gould, 61 Atl. 604)
✓ Sterilization of imbeciles (Buck vs. Bell, 274 US 195)
APPARENTLY LAWFUL MEANS but rejected by the Court for lack of reasonable connection to the Lawful Subject or
for being unreasonably necessary to the purpose of the law or being unduly oppressive.:
E.O. prohibiting the inter-provincial transport of carabaos to prevent their indiscriminate slaughter (Ynot vs.
IAC, 148 SCRA 659)
Prohibition against wash room rates and renting out rooms more than twice a day, to minimize if not eliminate
the use of the covered establishments for illicit sex, prostitution, drug use and alike. (White Light Corporation
vs. City of Manila - G.R. No. 122846, January 20, 2009)
Regulation of parking fees in malls – this is tantamount to taking of private property of mall owners and thus
it is Eminent Domain. (OSG vs. Ayala Land, Inc., G.R. No. 177056, September 18, 2009)
IMPORTANT TO NOTE:
✓ There must be a reasonable relation/connection between the Lawful Subject and the Lawful Means for
even under the guise of protecting the public interest, personal rights and those pertaining to private property
should not be arbitrarily invaded.
✓ The power to regulate does not include the power to confiscate or prohibit.
✓ Police Power may use both the Power of Taxation and the Power of Eminent Domain as implements for the
attainment of a legitimate police objective.
EMINENT DOMAIN
(The power of take/expropriate private property for public use upon payment of just compensation.)
➢ This power may be validly delegated to local government units, administrative agencies, public utilities and
even private entities..
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➢ Expropriation suits are filed with the Regional Trial Court (RTC) since it is characterized as INCAPABLE OF
PECUNIARY ESTIMATION with the determination of just compensation as merely incidental since the
primary cause of action is the legality of the “taking”.
REQUISITES
1) Necessity (Genuine) - construed liberally in favor of the property owner; courts can look into whether the
expropriation by the delegate is necessary or wise, unless there is a specific grant of authority, as opposed
to a general grant of authority to expropriate.
2) Private Property - anything that can come under the dominion of man.
✓ Real and Personal
✓ Tangible and Intangible properties
✓ Franchises
✓ Services (e.g. PLDT lines)
X Money
X Choses in action
3) Public Use - any use directly available to the general public as a matter of right and not merely forbearance
or accommodation.
INSTANCES OF PUBLIC USE recognized by the Courts:
✓ Parks
✓ Agrarian reform [Association of Small Landowners v. Secretary of Agrarian Reform, 175 SCRA 343]
✓ Property devoted to public services administered by privately-owned public utilities
✓ Urban development, urban land reform and housing, or socialized housing program
✓ Property already devoted to public use can still be expropriated. [City of Manila v. Chinese
Community, 40 Phil. 349]
4) Taking
✓ Diminution in value
✓ Prevention of ordinary use
✓ Deprivation of beneficial use
✓ Regulatory takings
REQUISITES OF TAKING [Republic v. Castelvi, 58 SCRA 336]
1) expropriator must enter a private property
2) entry must be for more than a momentary period
3) entry must be under warrant or color of legal authority
4) property must be devoted to public use or otherwise informally appropriated or injuriously affected
5) utilization of the property for public use must be in such a way as to oust the owner and deprive the
owner of beneficial enjoyment of the property.
INSTANCES OF TAKING recognized by the Courts:
✓Government planes constantly flying over private property at very low altitudes (US vs. Causby, 328
US 256)
✓Ordinance prohibiting the construction of any building which would obstruct the view of a plaza from a
highway (People vs. Fajardo, 104 Phil. 443
✓Right-of-way easements, resulting in the restriction on property rights over land traversed by
transmission lines (National Power Corporation vs. Co, G.R. No. 166973, February 10, 2009)
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✓Agrarian reform (Association of Small Landowners vs. Secretary of Agrarian Reform, 175 SCRA 343)
✓Ordinance requiring private cemeteries to reserve 6% of their total areas to paupers is not a valid
exercise of the police power but an exercise of the power of eminent domain, which requires the
payment of just compensation. (City Government of Quezon City vs. Ericta, 122 SCRA 759)
✓COMELEC Resolution requiring newspapers to provide it with free space of not less than ½ page for
the common use of political parties and candidates constitutes taking of private property without
payment of just compensation. (Philippine Press Institute vs. COMELEC, 244 SCRA 272)
5) Just Compensation - full and fair equivalent of the property taken; must be fair to both parties.
✓ The determination of just compensation is a judicial function.
✓ The value of the land and its character at the time it was taken are the main criteria for determining just
compensation.
✓ Property taken should be assessed as of the time of the taking, which usually coincides with the
commencement of expropriation proceedings. (Republic vs. Castelvi, 58 SCRA 336)
✓ Payment in bonds is allowed. [Association of Small Landowners v. Secretary of Agrarian Reform, 175
SCRA 343]
6) Due Process
a) Substantive - requires the intrinsic validity of the law in interfering with the rights of the person with respect
to his life, liberty and property.
✓ Lawful Subject (general public not a particular class)
✓ Lawful Means (reasonably related to purpose and not unduly oppressive
✓ The trial with the aid of the commissioners is a substantial right that may not be done away with
capriciously or for no reason at all. This is a mandatory requirement in expropriation
cases.(NAPOCOR vs. Sps. De la Cruz (G.R. No. 156093, February 2, 2007)
b) Procedural - serves as a restriction on actions of judicial and quasi-judicial agencies of the government.
It refers to the method or manner by which a law is enforced.
✓ Twin requirements of notice and hearing constitute the essential elements of due process
✓ It must undergo Judicial due process.
TAXATION
(It is the power of the state to raise revenue to defray the necessary expenses of the Government for public
welfare.)
➢ It is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that
security against its abuse is to be found only in the responsibility of the legislature to promulgate tax laws
guided by the principles of due process and equal protection.
Guiding Principles:
✓ Equal Protection clause: Taxes should be (a) uniform (persons or things belonging to the same
class shall be taxed at the same rate) and (b) equitable (taxes should be apportioned among the
people according to their ability to pay)
✓ Progressive system of taxation: The rate increases as the tax base increases, with social justice
as basis. (Taxation as an instrument for a more equitable distribution of wealth.)
✓ Delegated tax legislation: Congress may delegate law-making authority when the Constitution
itself specifically authorizes it.
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Guiding Principles:
GENERAL SPECIFIC
(1) Power to tax exists for the general welfare; should be (1) Uniformity, Equitable and Progressive
exercised only for a public purpose. (Art. VI, Sec. 28 (1)
General Rule: Simple geographical uniformity, meaning it
operates with the same force and effect in every place where
the subject of taxation is found.
Exception: Rule does not prohibit classification for
purposes of taxation, provided the requisites for valid
classification are met. [Ormoc Sugar v. Treasurer of Ormoc
(1968)]
Requisites for Valid Classification:
a) It must rest on substantial distinctions which make real
differences;
b) It must be germane to the purpose of the law;
c) It must not be limited to existing conditions only.
d) Apply equally to all members of the same class. [People
v. Cayat (1939)
(2) Might be justified as for public purpose even if the immediate (2) Tax Exemptions
beneficiaries are private individuals.
No law granting any tax exemption shall be passed without
(3) Tax should not be confiscatory or unconscionable. the concurrence of a majority of all the Members of
(4) Taxes should be uniform and equitable. [Sec. 28(1), Art. VI] Congress [Sec. 28 (4), Art. VI]
There is no vested right in a tax exemption. Being a mere
statutory privilege, a tax exemption may be modified or
withdrawn at will by the granting authority. [Republic v.
Caguioa (2009)]
➢ It is based on the principle that taxes are the lifeblood of the government. Thus, the theory behind the exercise
of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting
the general welfare and well-being of the people.
➢ It must be distinguished from licenses which is for regulatory purposes and essentially an exercise of the
police power.
POLICE POWER (license) TAXATION (tax)
BASIS To regulate To raise revenue
OBJECT Paid for the privilege of doing something and Persons or property
may be revoked when public interest so
requires
LIMITATION Amount is limited to: (a) cost of permit; and, Rate or amount to be collected is unlimited,
(b) reasonable police regulation. provided that it is not confiscatory.
Exception: When the license fee is imposed
on a nonuseful/beneficial occupation, such as
the practice of hygienic and aesthetic massage,
the fee may be large without being a tax.
[Physical Therapy Organization v. Municipal
Board of Manila (1957)]
EFFECT OF Business becomes illegal Business or activity does not become illegal
NON-PAYMENT
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Illustration: The imposition of a vehicle registration fee is not an exercise by the State of its police
power, but of its taxation power - mainly to raise funds for the construction and maintenance of highways and
to a much lesser degree, pay for the operating expenses of the administering agency. x x x Fees may be
properly regarded as taxes even though they also serve as an instrument of regulation. [Philippine Airlines,
Inc. v. Edu, G.R. No. L-41383, August 15, 1988, 164 SCRA 320]
➢ There is Double taxation when additional taxes are laid on the SAME:
✓ Subject
✓ Jurisdiction
✓ Period
✓ Purpose
IMPORTANT TO NOTE: There is no specific prohibition in the Constitution against double taxation.
“Double taxation is no more prohibited than doubled taxation.”
➢ Tax Exemptions are either CONSTITUTIONAL based on (Article VI, Section 28[3] – religious,
educational, charitable institutions(Lladoc v. CIR, 14 SCRA 292) or STATUTORY based on (Article VI,
Section 28[4] - concurrence of a majority of all the members of congress required for laws granting tax
exemptions.
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