THE FUNDAMENTAL POWERS OF THE STATE (Police Power, Eminent Domain, Taxation)

These powers are inherent and do not need to be expressly conferred by constitutional provision. They are supposed to co-exist with the state. Similarities i. ii. iii. iv. v. Distinctions i. ii. The police power regulates both liberty and property, while the power of eminent domain and the power of taxation affect only property rights. The police power and the power of taxation may be exercised only by the government, while the power of eminent domain may be exercised by some private entities. The property taken in the exercise of the police power is destroyed because it is noxious or intended for a noxious purpose, while the property taken under the power of eminent domain and the power of taxation is intended for a public use or purpose and is thus wholesome. The compensation of the person subjected to the police power is the intangible altruistic feeling that he has contributed to the general welfare, while the compensation involved in the other powers is more concrete. They are inherent in the state and may be exercised by it without need of express constitutional grant; They are not only necessary but indispensable; They are methods by which the state interferes with private rights; They all presuppose an equivalent compensation for the private rights interfered with; They are exercised primarily by the legislature.

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Limitations The exercise of these powers is subject at all times to the limitations and requirements of the Constitution and may in proper cases be annulled by the courts of justice. POLICE POWER It is the power of promoting the public welfare by restraining and regulating the use of liberty and property. Scope / Characteristics a.] b.] c.] It is the most pervasive, the least limitable, and the most demanding of the 3 powers. It cannot be bargained away through the medium of a treaty or a contract. The impairment clause must yield to the police power whenever the contract deals with a subject affecting the public welfare. It is dynamic, not static, and must move with the moving society it is supposed to regulate.

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It may sometimes use the taxing power as an implement for the attainment of a legitimate police objective. Eminent domain may be used as an implement to attain the police objective.

Exercise of the police power Power is inherently vested in Congress, but it may be delegated to the president, to administrative bodies and to lawmaking bodies of local government units under the general welfare clause [Section 16, R.A. 7160]. Exercise of the police power, as well as the choice of measures or remedies, lies in the discretion of Congress. The ascertainment of facts upon which the police power is to be based is likewise a legislative prerogative, which must be supported by semblance of proof. Limitations / Tests of the police power I. II. The Interest Of The Public Generally Requires The Exercise Of The Police Power [Lawful Subject] The Means Employed Are Reasonably Necessary For The Accomplishment Of The Purpose And Not Unduly Oppressive Upon Individuals [Lawful Means]

Additional limitations [When exercised by a delegate] a.] b.] c.] Express grant by law, e.g., Secs. 16, 391, 447, 458 and 468 of R.A. 7160, for local government units Within territorial limits [for local government units, except when exercised to protect water supply] Must not be contrary to law Activity prohibited by law cannot, in the guise of regulation, be allowed; an activity allowed by law may be regulated, but not prohibited. POWER OF EMINENT DOMAIN [Or Power of Expropriation] Scope i. Section 9, Art. III; Private property shall not be taken for public use without just compensation. ii. Section 18, Art. XII; The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and private enterprises to be operated by the government.

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Sections 4 and 9, Art. XIII 2

Agrarian reform program founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till, subject to the payment of just compensation. Urban land reform and housing in cooperation with the private sector to underprivileged and homeless citizens in urban centers and resettlement areas. Who may exercise Congress and, by delegation, the president, administrative bodies, local government units, and even private enterprises performing public services. But the grant of the power of eminent domain to local government units under RA 7160 cannot be understood as equal to the pervasive and all encompassing power vested in the legislative branch of government. The power of eminent domain must, by enabling law, be delegated to local governments by the national legislature, and thus, can only be as broad, or confined as the real authority would want it to be. Requisites for its exercise a.] Necessity i. When the power is exercised by the legislature, the question of necessity is generally a political question; but when exercised by a delegate, the determination of whether there is genuine necessity for the exercise is a justiciable question. The general power to exercise the right of eminent domain must not be confused with the right to exercise it in a particular case. The issue of the necessity of the expropriation is a matter properly addressed to the RTC in the course of the expropriation proceedings. If the property owner objects to the necessity of the takeover, he should say so in his Answer to the Complaint.

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Private property i. Private property already devoted to public use cannot be expropriated by a delegate of legislature acting under a general grant of authority. Courts will have the authority to inquire into the necessity of the expropriation and, finding none, refuse to allow it. All private property capable of ownership may be expropriated, except money and choses in action. Even services may be subject of eminent domain.

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Taking in the constitutional sense i. Taking, as commonly understood, imports a physical dispossession of the owner; in law, however, the term has a broader connotation, which 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 was intended.

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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 was intended. 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 of title or possession.

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Requisites for valid taking a.] b.] c.] d.] e.] The expropriator must enter a private property; The entry must be more than a momentary period; The entry must be under warrant or color of authority; The property must be devoted to public use or otherwise informally appropriated or injuriously affected; The utilization of the property must be in such a way as to oust the owner and deprive him of beneficial enjoyment of the property.

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Public Use a] Public use is the general concept of meeting public need or public exigency. It is not confined to actual use by the public in its traditional sense. The public use requirement for the valid exercise of the power of eminent domain is a flexible and evolving concept influence by changing conditions. It is accurate to state then that at present, whatever may be beneficially employed for the general welfare satisfies the requirement of public use. Public use has also been broadened to cover uses which, while not directly available to the public, redound to their indirect advantage or benefit. The fact that the property is less than hectare and that only a few could actually benefit from the expropriation does not diminish its public use. The practical reality that greater benefit may be derived by INC than most others could well be true, but such peculiar advantage still remains to be merely incidental and secondary in nature. That only few would actually benefit from the expropriation of the property does not necessarily diminish the essence and character of public use.

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Just Compensation It is the full and fair equivalent of the property taken; it is the fair market value of the property, which is that sum of money which a person, desirous but not compelled to buy, and an owner, willing but not compelled to sell, would agree on as a price to be given and received therefore. Basis / Factors of just compensation 4

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Actual or basic value of the property [Cost of acquisition] Current value of like properties Actual or potential uses In case of particular land, its size, shape or location and tax declaration thereon.

Writ of Possession i. The issuance of the writ of possession becomes ministerial upon [1] [2] Filing of a complaint for expropriation sufficient in form and substance; and Upon deposit made by the government of the amount equivalent to 15% of the fair market value of the property sought to be expropriated per current tax declaration.

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Hearing is required to determine whether the expropriator complied with the requirements of RA 7229. POWER OF TAXATION

Taxes are the enforced proportional contributions from persons and property, levied by the State by virtue of its sovereign, for the support of government and for all public needs. Scope a.] b.] c.] It reaches even the citizens abroad and his income earned from sources outside the state. The power to tax includes the power to destroy [Chief justice John Marshall]. The power to tax does not include the power to destroy as long as this court sits [Justice Holmes].

Who may exercise a.] b.] c.] Limitations a.] Due process of law i. ii. Tax should not be confiscatory, except where it is intended precisely for destruction as an instrument of police power. From the procedural viewpoint, due process does not require previous notice and hearing before a law prescribing fixed or specific taxes on certain articles may be affected. Where the tax to be collected is to be based on the value of the taxable property, the taxpayer is entitled to e notified of the 5 Primarily, by the legislature. Local legislative bodies [Section 5, Article X, Constitution] Limited extent to the President when granted delegated tariff powers [Section 28(2), Article VI]

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assessment proceedings and to be heard therein on the correct valuation to be given the property. b.] Equal protection clause i. ii. iii. iv. c.] Taxes should be uniform and equitable [Section 28 (1), Article VI] Uniformity means that persons or things belonging to the same class shall be taxed at the same rate. Equality means that the tax shall be strictly proportional to the relative value of the property. Equitable means that taxes should be apportioned among the people according to their capacity to pay.

Public purpose i. ii. Pascual v. Secretary of Public Works and Communications. Tax for special purpose [Section 29 (3), Article VI] 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. [Osmena v. Orbos, 220 SCRA 703]

Double taxation Despite lack of specific constitutional prohibition, double taxation will not be allowed if the same will result in a violation of the equal protection clause. Tax exemptions a.] Classification i. Constitutional or Statutory ii. Express or Implied iii. Total or Partial b.] c.] No law granting tax exemption shall be passed without the concurrence of a majority of all the members of Congress. [Section 28(4), Article VI] Charitable institutions, churches and parsonages or convents appurtenant thereto, mosque, 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. [Section 28(3), Article VI] 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 xxx [Section 4(3), Article XIV] 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. [Section 4(4), Article XIV] Where tax exemption is granted gratuitously, it may be revoked at will; but not if granted for a valuable consideration.

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