Inherent powers of the state

INHERENT POWERS OF THE STATE

POLICE POWER
Requisites
1- LAWFUL SUBJECT: The interests of the public generally, as distinguished from those of a
particular class, require the exercise of the police power
2- LAWFUL MEANS: The means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals
MMDA v. Bel-Air Village Association, Inc., 328 SCRA 836, March 27, 2000, 1st Div. [Puno]
Police power is an inherent attribute of sovereignty. It has been defined as the power vested
by the Constitution in the legislature to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes and ordinances, either with penalties or without, not repugnant to the
Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for
the subjects of the same.
It bears stressing that police power is lodged primarily in the National Legislature. It cannot
be exercised by any group or body of individuals not possessing legislative power. The National
Legislature, however, may delegate this power to the President and administrative boards as well
as the lawmaking bodies of municipal corporations or local government units. Once delegated,
the agents can exercise only such legislative powers as are conferred on them by the national
lawmaking body.
Acebedo Optical Company, Inc. v. CA, 329 SCRA 314, March 31, 2000, En Banc [Purisima]
The scope of police power has been held to be so comprehensive as to encompass almost all
matters affecting the health, safety, peace, order, morals, comfort and convenience of the
community. Police power is essentially regulatory in nature and the power to issue licenses or
grant business permits, if exercised for a regulatory and not revenue-raising purpose, is within
the ambit of this power.
Philtread Workers Union [PTWU] v. Confesor, 269 SCRA 393, March 12, 1997
Article 263(g) of the Labor Code (vesting upon the Secretary of Labor the discretion to
determine what industries are indispensable to the national interest and thereafter, assume
jurisdiction over disputes in said industries) does not interfere with the workers right to strike
but merely regulates it, when in the exercise of such right, national interests will be affected.
The rights granted by the Constitution are not absolute. They are still subject to control and
limitation to ensure that they are not exercised arbitrarily. The interests of both the employers
and the employees are intended to be protected and not one of them is given undue preference.
The Labor Code vests upon the Secretary of Labor the discretion to determine what industries
are indispensable to national interest. Thus, upon the determination of the Secretary of Labor
that such industry is indispensable to the national interest, it will assume jurisdiction over the
labor dispute of said industry. The assumption of jurisdiction is in the nature of police power
measure. This is done for the promotion of the common good considering that a prolonged strike
or lockout can be inimical to the national economy.

POWER OF EMINENT DOMAIN

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Who May Exercise?

Heirs of Alberto Suguitan v. City of Mandaluyong, 328 SCRA 137, March 14, 2000, 3rd Div.
[Gonzaga-Reyes]
The exercise of the right of eminent domain, whether directly by the State, or by its
authorized agents, is necessarily in derogation of private rights, and the rule in that case is that
the authority must be strictly construed. No species of property is held by individuals with
greater tenacity, and none is guarded by the Constitution and the laws more sedulously, than the
right to the freehold of inhabitants. When the legislature interferes with that right, and, for

greater public purposes, appropriates the land of ah individual without his consent, the plain
meaning of the law should not be enlarged by doubt[ful] interpretation.
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Exercise of Eminent Domain by LGUs

Municipality of Paranaque v. V.M. Realty Corp., 292 SCRA 678, July 20, 1998 [Panganiban]
The power of eminent domain is lodged in the legislative branch of government, which may
delegate the exercise thereof to LGUs, other public entities and public utilities. An LGU may
therefore exercise the power to expropriate private property only when authorized by Congress
and subject to the latter's control and restraints imposed "through the law conferring the power
or in other legislations." In this case, Section 19 of RA 7160, which delegates to LGUs the power
of eminent domain, also lays down the parameters for its exercise.
Thus, the following essential requisites must concur before an LGU can exercise the power of
eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive,
in behalf of the LGU, to exercise the power of eminent domain or pursue expropriation
proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the
benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of eminent domain
pursuant to a resolution of the municipal council. Thus, there was no compliance with the first
requisite that the mayor be authorized through an ordinance.
A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is
merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An
ordinance possesses a general and permanent character, but a resolution is temporary in nature.
Additionally, the two are enacted differently a third reading is necessary for an ordinance, but
not for a resolution, unless decided otherwise by a majority of all the Sanggunian members.
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Requisites for Proper Exercise

Taking of private property
Public use/purpose
Payment of just compensation
Valid offer to buy and refusal of offer
Requisites for valid exercise by LGU
An ordinance must be enacted by the Sanggunian authorizing the local chief executive to
expropriate on behalf of the LGU.
The taking of the private property must be for a public use/purpose, welfare or for the benefit of
the poor and landless
Payment of just compensation
There must first be a valid and definite offer to the owner of the property and said offer was
refused.
TAKING in the Constitutional Sense
May include trespass without actual eviction of the owner, material impairment of the value of
the property or prevention of the ordinary uses fro which the property was intended. [notes]
Requisites for a valid taking:
Exproprietor must enter a private property
Entry must be for more than a momentary period
Entry must be under warrant or color of authority
Property must be devoted to public use or otherwise informally appropriated or injuriously
affected
Utilization of the property must be in such a way as to oust the owner and deprive him of
beneficial enjoyment

Taking under Eminent Domain distinguished from Taking under the Police
Power
PPI v. COMELEC, [G.R. No. 119694. May 22, 1995.]
To compel print media companies to donate "Comelec space" of the dimensions specified in
Section 2 of Resolution No. 2722, amounts to "taking" of private personal property for public use
or purposesxxx
The extent of the taking or deprivation is not insubstantial; this is not a case of a de minimis
temporary limitation or restraint upon the use of private property. The monetary value of the
compulsory "donation," measured by the advertising rates ordinarily charged by newspaper
publishers whether in cities or in non-urban areas, may be very substantial indeed. The taking of
private property for public use is, of course, authorized by the Constitution, but not without
payment of "just compensation" (Article III, Section 9). And apparently the necessity of paying
compensation for "Comelec space" is precisely what is sought to be avoided by respondent
Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI reads it, as an
assertion of authority to require newspaper publishers to "donate" free print space for Comelec
purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free print space, as
Section 1 of Resolution No. 2772-A attempts to suggest. The threshold requisites for a lawful
taking of private property for public use need to be examined here: one is the necessity for the
taking; another is the legal authority to effect the taking. The element of necessity for the taking
has not been shown by respondent Comelecxxx
Similarly, it has not been suggested, let alone demonstrated, that Comelec has been granted
the power of eminent domain either by the Constitution or by the legislative authority. A
reasonable relationship between that power and the enforcement and administration of election
laws by Comelec must be shown; it is not casually to be assumed. . . . Section 2 does not
constitute a valid exercise of the power of eminent domain.
TELEBAP, Inc. v. COMELEC, 289 SCRA 337, April 21, 1998 [Mendoza]
In truth, radio and television broadcasting companies, which are given franchises, do not own
the airwaves and frequencies through which they transmit broadcast signals and images. They
are merely given the temporary privilege of using them. Since a franchise is a mere privilege,
the exercise of the privilege may reasonably be burdened with the performance by the grantee
of some form of public service.
Consequently, a license permits broadcasting, but the licensee has no constitutional right to
be the one who holds the license or to monopolize a radio frequency to the exclusion of his fellow
citizens. There is nothing in the First Amendment which prevents the government from requiring
a licensee to share his frequency with others and to conduct himself as a proxy or fiduciary with
obligations to present those views and voices which are representative of his community and
which would otherwise, by necessity, be barred from the airwaves. As radio and television
broadcast stations do not own the airwaves, no private property is taken by the requirement that
they provide airtime to the Comelec.
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Meaning of Public Use

Traditional Concept: The number of actual beneficiaries determines public purpose.
benefits redound in favor of individuals, then the purpose is not public.

If the

Concept of vicarious benefit: Abandons the traditional concept. The purpose is public as
long as the society in general is indirectly benefited, i.e. conversion of a slum area into a model
housing community. There is a vicarious advantage to the society.
Filstream International Incorporated v. CA, 284 SCRA 716, Jan. 23, 1998 [Francisco]
The City of Manila, acting through its legislative branch, has the express power to acquire
private lands in the city and subdivide these lands into home lots for sale to bona fide tenants or
occupants thereof, and to laborers and low-salaried employees of the city.
That only a few could actually benefit from the expropriation of the property does not
diminish its public character. It is simply not possible to provide all at once land and shelter for
all who need them.

Through the years, the public use requirement in eminent domain has evolved into a flexible
concept, influenced by changing conditions. Public use now includes the broader notion of
indirect public benefit or advantage, including in particular, urban land reform and housing.
Estate of Salud Jimenez v. PEZA, 349 SCRA 240, Jan. 16, 2001, 2nd Div. [De Leon] (Public Use
Requirement; Payment of Just Compensation)
In the exercise of eminent domain, only as much land can be taken as is necessary for the
legitimate purpose of the condemnation. The term "necessary", in this connection, does not
mean absolutely indispensable but requires only a reasonable necessity of the taking for the
stated purpose, growth and future needs of the enterprise. The respondent cannot attain a selfsustaining and viable ECOZONE if inevitable needs in the expansion in the surrounding areas are
hampered by the mere refusal of the private landowners to part with their properties. The
purpose of creating an ECOZONE and other facilities is better served if respondent directly owns
the areas subject of the expansion program.
The Legislature may directly determine the necessity for appropriating private property for a
particular improvement for public use, and it may select the exact location of the improvement.
In such a case, it is well-settled that the utility of the proposed improvement, the existence of the
public necessity for its construction, the expediency of constructing it, the suitableness of the
location selected, are all questions exclusively for the legislature to determine, and the courts
have no power to interfere or to substitute their own views for those of the representatives of the
people.
In the absence of some constitutional or statutory provision to the contrary, the necessity and
expediency of exercising the right of eminent domain are questions essentially political and not
judicial in their character.
The concept of just compensation embraces not only the correct determination of the amount
to be paid to the owners of the land, but also the payment of the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be considered "just" inasmuch as
the property owner is made to suffer the consequences of being immediately deprived of his land
while being made to wait for a decade or more before actually receiving the amount necessary to
cope with his loss. 46 Payment of just compensation should follow as a matter of right
immediately after the order of expropriation is issued. Any delay in payment must be counted
from said order. However, the delay to constitute a violation of due process must be
unreasonable and inexcusable; it must be deliberately done by a party in order to defeat the
ends of justice.
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Payment of Just Compensation

Just compensation is described as a full and fair equivalent of the property taken from the
private owner by the exproprietor. This is intended to indemnify the owner fully for the losss he
has sustained as a result of the expropriation.
Just compensation
=
actual or basic value of the property
+ consequential damages
- consequential benefits (which should not exceed the
consequential damages)
The basic or market value of the property is the price that may be agreed upon by parties
willing but not compelled to enter into a contract of sale.

Acquisition of Easement of Right-of-Way

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 or title or possession. In this
case, while it is true that the plaintiff is only after a right-of-way easement, it nevertheless
perpetually deprives defendants of their proprietary rights as manifested y the imposition by the
plaintiff upon the defendants that below said transmission lines, no plant higher than 3 meters is
allowed.(NPC v. Gutierrez, 193 SCRA 1)

How expropriation may be initiated? Two Stages in Expropriation of Land

Republic v. Salem Investment Corporation, G.R. No. 137569, June 23, 2000, 2nd Div.
[Mendoza]
The first is concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the facts involved in
the suit. It ends with an order, if not dismissal of the action, "of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose declared in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint"xxx.
The second phase of the eminent domain action is concerned with the determination by the
court of "the just compensation for the property sought to be taken." This is done by the court
with the assistance of not more than three (3) commissionersxxx
It is only upon the completion of these two stages that expropriation is said to have been
completed. Moreover, it is only upon payment of just compensation that title over the property
passes to the government. Therefore, until the action for expropriation has been completed and
terminated, ownership over the property being expropriated remains with the registered owner.
Consequently, the latter can exercise all rights pertaining to an owner, including the right to
dispose of his property, subject to the power of the State ultimately to acquire it through
expropriation.
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Is prior unsuccessful negotiation a condition precedent for the exercise of eminent

domain?

SMI Development
[Panganiban]

Corporation

v.

Republic, 323

SCRA

862, Jan.

28,

2000,

3rd Div.

Current effective law on delegated authority to exercise the power of eminent domain is
found in Section 12, Book III of the Revised Administrative Code, which provides:
SEC. 12. Power of Eminent Domain The President shall determine when it is necessary or
advantageous to exercise the power of eminent domain in behalf of the National Government,
and direct the Solicitor General, whenever he deems the action advisable, to institute
expropriation proceedings in the proper court.
The foregoing provision does not require prior unsuccessful negotiation as a condition
precedent for the exercise of eminent domain. In Iron and Steel Authority v. Court of Appeals,the
President chose to prescribe this condition as an additional requirement instead. In the instant
case, however, no such voluntary restriction was imposed.
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When Ownership transferred to Expropriator

Republic v. Salem Investment Corporation, G.R. No. 137569, June 23, 2000, 2nd Div.
[Mendoza]
The recognized rule, indeed, is that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just compensation. Jurisprudence on this
settled principle is consistent both here and in other democratic jurisdictions.
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When may the Expropriator enter the Property?

Upon receipt of the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by DAR of
the compensation in cash or in Land Bank Bonds in accordance with this Act, the DAR shall take
immediate possession of the land xxx (Land Bank v. CA & DAR v. CA)
When used as Implement of Police Power
Power of Eminent Domain is utilized as an implement of Police Power to promote the
welfare of the people.

It is the Constitution itself which mandated the pursuit of Agrarian Reform Program to
address once and for all the plight of the landless and the poor which for centuries has been the
source of discontent and unrest. (ASLP v. Sec. DAR)
POWER OF TAXATION
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Does the power to tax include the power to destroy?

The power to tax includes the power to destroy if it is used as an implement of the police
power (regulatory) of the State. However, it does not include the power to destroy if it is used
solely for the purpose of raising revenue. (ROXAS vs. CTA)

NOTES:
> If the purpose of taxation is regulatory in character, taxation is used to implement the
police power of the state.
> If the power of taxation is used to destroy things, businesses, or enterprises and the
purpose is to raise revenue, the court will come in because there will be violation of the inherent
and constitutional limitations and it will be declared invalid.
Taxes distinguished from Licenses

Acebedo Optical Company, Inc. v. CA, 329 SCRA 314, March 31, 2000, En Banc [Purisima]
The scope of police power has been held to be so
matters affecting the health, safety, peace, order,
community. Police power is essentially regulatory in
grant business permits, if exercised for a regulatory
the ambit of this power.

comprehensive as to encompass almost all

morals, comfort and convenience of the
nature and the power to issue licenses or
and not revenue-raising purpose, is within

The power to grant or issue licenses or business permits must always be exercised in
accordance with law, with utmost observance of the rights of all concerned to due process and
equal protection of the law.
Distinction must be made between the grant of a license or permit to do business and the
issuance of a license to engage in the practice of a particular profession. The first is usually
granted by the local authorities and the second is issued by the Board or Commission tasked to
regulate the particular profession. A business permit authorizes the person, natural or otherwise,
to engage in business or some form of commercial activity. A professional license, on the other
hand, is the grant of authority to a natural person to engage in the practice or exercise of his or
her profession.
The Life-Blood Doctrine
Taxes are the life-blood of the Government and their prompt and certain availability are an
imperious need. (CIR v. Pineda, 21 SCRA 105)
The existence of the government is a necessity; the main source of the government is taxes.
These are the life-blood of the government. The government will not be able to survive and
continue to perform its functions without taxes. (CIR v. Algue, Inc., 158 SCRA 8)
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Can taxes be subject to off-setting or compensation?

Philex Mining Corporation v. CIR, 294 SCRA 687, Aug. 28, 1998 [Romero]
Taxes cannot be subject to compensation for the simple reason that the government and the
taxpayer are not creditors and debtors of each other. There is a material distinction between a
tax and debt. Debts are due to the Government in its corporate capacity, while taxes are due to
the Government in its sovereign capacity. It must be noted that a distinguishing feature of a tax
is that it is compulsory rather than a matter of bargain. Hence, a tax does not depend upon the
consent of the taxpayer. If any taxpayer can defer the payment of taxes by raising the defense
that it still has a pending claim for refund or credit, this would adversely affect the government
revenue system. A taxpayer cannot refuse to pay his taxes when they fall due simply because

he has a claim against the government or that the collection of a tax is contingent on the result
of the lawsuit it filed against the government.
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Tax Exemptions

Sec. 28[3], Art. VI, 1987 Constitution

SECTION 28. (3)
Charitable institutions, churches and parsonages 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.
Sec. 4[3], Art. XIV, 1987 Constitution
SECTION 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.
Proprietary educational institutions, including those cooperatively owned, may likewise be
entitled to such exemptions subject to the limitations provided by law including restrictions on
dividends and provisions for reinvestment.
CIR v. CA, 298 SCRA 83, Oct. 14, 1998 [Panganiban]
Laws allowing tax exemption are construed strictissimi juris. Hence, for the YMCA to be
granted the exemption it claims under the abovecited provision, it must prove with substantial
evidence that (1) it falls under the classification non-stock, non-profit educational institution; and
(2) the income it seeks to be exempted from taxation is used actually, directly, and exclusively
for educational purposes. However, the Court notes that not a scintilla of evidence was
submitted by private respondent to prove that it met the said requisites.

Who may grant tax exemptions?

Chavez v. PCGG, 299 SCRA 744, Dec. 9, 1998 [Panganiban]

The power to tax and to grant exemptions is vested in the Congress and, to a certain extent,
in the local legislative bodies. Section 28(4), Article VI of the Constitution, specifically provides:
No law granting any tax exemption shall be passed without the concurrence of a majority of all
the members of the Congress. The PCGG has absolutely no power to grant tax exemptions,
even under the cover of its authority to compromise ill-gotten wealth cases.
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Tax Treaties; International Juridical Double Taxation

CIR v. S.C. Johnson and Son, Inc., 309 SCRA 87, June 25, 1999, 3rd Div. [Gonzaga-Reyes]
The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has
entered into for the avoidance of double taxation. The purpose of these international
agreements is to reconcile the national fiscal legislations of the contracting parties in order to
help the taxpayer avoid simultaneous taxation in two different jurisdictions. More precisely, the
tax conventions are drafted with a view towards the elimination of international juridical double
taxation.
International juridical double taxation is defined as the imposition of comparable taxes
in two or more states on the same taxpayer in respect of the same subject matter and for
identical periods.
The apparent rationale for doing away with double taxation is to encourage the free flow of
goods and services and the movement of capital, technology and persons between countries,
conditions deemed vital in creating robust and dynamic economies. Foreign investments will
only thrive in a fairly predictable and reasonable international investment climate and the
protection against double taxation is crucial in creating such a climate.