I.  THE INHERENT POWERS OF THE STATE

 

1.     Police Power

2.     Power of Eminent Domain

3.     Power of Taxation

 

·         They are inherent powers because they belong to the very essence of government and without them no government can exist.

 

Similarities, Distinctions, and Limitation

 

Similarities:

 

·         they are inherent in the State

·         they are necessary and indispensable

·         they are methods by which the State interferes with private rights

·         they presuppose an equivalent compensation

·         they are exercised primarily by the legislature

 

Differences:

 

	Police Power	Eminent Domain	Taxation
As to regulation	regulates both liberty and property	regulates property rights only	regulates property rights only
As to who may exercise	only the government	government and some private entities	only the government
As to the property taken	destroyed because it is noxious or intended for noxious purpose	-wholesome -taken for a public use or purpose	-wholesome -taken for a public use or purpose
As to Compensation	intangible altruistic feeling that the person has contributed to the general welfare	full and fair equivalent of the property expropriated	protection and public improvements for the taxes paid

 

Limitations:

 

(a)   Bill of Rights

 

A.  POLICE POWER

 

Police Power – is an inherent power of the State to promote the welfare of society by restraining and regulating the use of liberty and property.

 

Justification of existence:

 

·         Salus populi est suprema lex – the welfare of the people is the supreme law;

·         Sic utere tuo ut alienum non laedas – a person must use his own property so as not to injure another

 

Scope:

 

(a)   cannot be bargained away through the medium of a treaty or contract (Stone v Mississippi)

(b)   may use taxing power as its implement (Tio vs Videogram Regulatory Board)

(c)    may use eminent domain as its implement (Assoc. of Small Landowners vs Sec. of Agrarian Reform)

(d)   could be given retroactive effect and may reasonably impair vested rights or contracts (police power prevails over contract)

(e)   dynamic, not static, and must move with the moving society it is supposed to regulate

 

Who may exercise Police Power?

 

(a)   the Legislature (inherent)

(b)   President (by delegation)

(c)    administrative boards (by delegation)

(d)   lawmaking bodies on all municipal levels, including barangay (by delegation)

(e)   Municipal governments / LGU's (conferred by statute – general welfare clause of RA 7160)

 

·         Not being a political subdivision but merely an executive authority it has no police power.  (MMDA v. Bel-Air Village Assoc.)

 

Tests (Limitations): 

 

(a)   Lawful subject – interests of the public generally, as distinguished from those of a particular class, require the exercise of police power

(b)   Lawful means – the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals

 

Additional limitations (when exercised by delegate) [Nachura Reviewer]:

 

·         express grant by law (e.g. RA 7160)

·         within territorial limits (for LGU's)

·         must not be contrary to law (City Government of Quezon City vs Ericta)

·         for municipal ordinances -

 

1.     must not contravene the Constitution or any statute

2.     must not be unfair and oppressive

3.     must not be partial and discriminatory

4.     must not prohibit, but may regulate, trade

5.     must not be unreasonable

6.     must be general in application and consistent with public policy

 

 

·         In Ermita-Malate Hotel and Motel Operators Association, Inc. v. Mayor of Manila, police power has been characterized as the most essential, insistent and least limitable of powers extending as it does “to all great public needs.”

 

“[T}he mere fact that some individuals  in the community may be deprived of their business or a particular mode of earning  a living cannot prevent the exercise of police power. .. [P]ersons licensed to pursue occupations which may in the public need and interest be affected by the exercise of the police power embark in these occupations subject to the disadvantages which may result from the exercise of that power. ”

 

Government can take away a license and increase the cost of license fees even to prohibitive levels, if public interest dictates so, without any constitutional violations.

 

Licenses for regulating non-useful occupation are incidental to the exercise of police power and the right to exact fees is may be implied from that power to regulate. In setting the fees, municipal corporations are given wider discretion in this class of licenses (than for licenses issued to regular business). Courts have generally upheld these because of the desirability of imposing restraints on individuals who engage in these unuseful enterprises.

 

·         In Ynot v. IAC, the Court here ruled that the ban on transportation of carabao under the assailed ordinance and their outright confiscation and disposal without court hearing is a violation of due process hence it is an invalid exercise of police power.

The court adopted the measures laid down in the Toribio case

Protection general welfare is a function of police power which both restrains and is restrained by due process, which requires notice and hearing

Case emphasized the need to have a lawful method to follow due process requirement

Reasons why ordinance is invalid are:

◦      No reasonable connection between means employed (absolute ban on movement of carabeef) and purpose sought to be achieved (conservation of carabao for general welfare)

◦      Unduly oppressive since petition not given due process or opportunity to be heard in proper court

 

B.   EMINENT DOMAIN

 

Eminent Domain – is the use of the government of its coercive authority, upon just compensation, to forcibly acquire the needed property in order to devote the same to public use.

 

Eminent domain is also known as expropriation, or condemnation.

 

Who may Exercise?

 

1.     The Congress (inherent)

2.     President

3.     various local legislative bodies

4.     certain public corporations (e.g. National Housing Authority)

5.     Quasi-public corporations (e.g. PLDT)

 

Eminent Domain Distinguished from  Destruction from Necessity

 

Eminent Domain	Destruction from Necessity
·         public right ·         arises from the laws of society and is vested in the state or grantee, acting under the right and power of the state or benefit of the state	·         private right vested in every individual with which the right of state or state necessity has nothing to do ·         comes under the right of necessity, of self-preservation ·         arises under the laws of society or society itself ·         cannot require the conversion of the property taken to public use, nor is there any need for the payment of just compensation

 

·         The Regional Trial Court (RTC) has the jurisdiction over a complaint for eminent domain.

 

Requisites of Eminent Domain:

1.     Necessity of exercise

2.     Private property

3.     Taking

4.     Public use

5.     Just compensation

 

1.  Necessity of Exercise

 

·         genuine necessity, and

·         must be of public character

◦      When exercised by legislature – political question

◦      When exercised by a delegate – justiciable question

▪      determine the: (a) adequacy of compensation; (b) necessity of taking; and (c) public use character

 

2.  Private Property

 

·         General Rule: anything that can come under the dominion of man is subject to expropriation

·         Exceptions: money and chose in action (personal right not reduced into possession, i.e. the right to bring an action to recover debt, money or thing)

·         Private property already devoted to public use cannot be expropriated by a delegate acting under a general grant of authority (City of Manila vs Chinese Community)

 

3.  Taking

 

Requisites (Republic vs Castellvi):

 

(a)   expropriator must enter a private property

(b)   entry must be for more than a momentary period

(c)    entry must be under the warrant of legal authority

(d)   entry is for public use

(e)   the owner is deprived of enjoying his property

 

·         if taking is under police power, it is not compensable

 

Taking Under Eminent Domain vs Taking in Police Power :

 

Police Power	Eminent Domain
·         the prejudice suffered by the individual property owner is shared in common with the rest of the community	·         the individual suffers more than his aliquot part of the damages, i.e. a special injury above that sustained by the rest of the community

 

·         In Amigable v. Cuenca, where there is taking in the constitutional sense, the property owner need not file a claim for just compensation with the Commission of Audit; he may go directly to the court to demand payment. Arbitrary action of the government shall be deemed a waiver of its immunity from suit.

 

 

·         In City Government v. Ericta, an ordinance of Quezon City, under the guise of exercising police power, prescribed that at least 6% of the total area of memorial parks must be developed and set aside for the burial of paupers.  The Court held that such ordinance is not an exercise of police power but the taking of private property for public use.  Hence, to satisfy the Constitution, there must be compensation.

 

4.  Public Use

 

Public use – is whatever may be beneficially employed for the general welfare, including both direct or indirect benefit or advantage to the public

 

·         In Heirs of Ardona v. Reyes, the Court held that the Constitution understand public use in a broad sense as meaning public welfare.  That includes development of tourism.

 

5.  Just Compensation

 

Just compensation – is fair and full equivalent payment for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating agency. It is not market value per se. (Epza v. Dulay)

 

·         Where only part of the property is expropriated:  entitlement to consequential damages, if any + consequential benefits must be deducted from the total compensation provided consequential benefits does not exceed consequential damages

 

◦      Payment of the correct amount + Payment within a reasonable time

 

·         Form of Compensation: Money (However, in Assoc. of Small Landowners vs Sec. of Agrarian Reform, payment is allowed to be made partly in bonds because it deals with a revolutionary kind of expropriation).

 

·         Transfer of Title:  payment of just compensation before title is transferred.

 

·         Reckoning point of market value of property: either as of the date of taking or filing of the complaint, whichever comes first 

 

·         Entitlement of interest:

◦       General Rule: when there is delay, there must be interest by way of damages (Art. 2209, CC)

◦      Exception: when waived by not claiming the interest

 

·         Payment of Taxes :  taxes paid from the time of the taking until the transfer of the title, during which the owner did not enjoy any beneficial use of the property, are reimbursable by the expropriator.

 

 

·         Right of the landowner in case of non-payment: 

◦      General Rule: landowner is not entitled to recover possession of the property, but only to demand payment

◦      Exception: when the government failed to pay just compensation within 5 years from the finality of judgment in expropriation proceedings, there is a right to recover property 

 

·         In De Knecht v. Bautista, the court ruled that the expropriation proceeding against the property of petitioner was arbitrary and cannot receive judicial approval. There was another area where the expansion of EDSA can be undertaken, which will cost government less, affect lesser homeowners, etc.

 

·         But in Republic vs. Knecht, the same property was ordered expropriated. Apparently, BP 340, which called for the taking of the property, was enacted after the 1^st De Knecht case. De Knecht argued that there was already a law of the case, which should not be disturbed.

 

Court responded that while it is true that there was a law of the case, it is equally true that there is constitutional grant given to the State to take private property upon payment of just compensation. 

“Such expropriation proceedings may be undertaken by the [State] not only by voluntary negotiation with landowners but also by taking appropriate court action or by legislation.”

 

The prior court decision is no obstacle for the legislature to make its own assessment of the circumstances that prevailed after the decision as well as supervening events and reaching a conclusion as to the propriety of undertaking the appropriation of the De Knecht property.

 

·         In the  case Republic v. PLDT, the Court ordered the PLDT to allow the reconnection of telephone lines of the Republic.

◦      No cogent reason appears why Eminent Domain may be availed of to impose only a burden upon the owner of condemned property without loss of title or possession for public use subject to just compensation

◦      Case highlights that even services may be subjected to eminent domain

 

·          In City of Manila v. Chinese Community of Manila, the Court said that “[T]he very foundation of the right to exercise eminent domain is a genuine necessity and that necessity must be of public character.”

 

·         In Epza v. Dulay, P.D. Nos. 76, 464, 794, and 1533 prescribed a formula for arriving at just compensation in expropriation proceedings ,  dispense with the need to appoint commissioners to determine just compensation. The Court held that those decrees are unconstitutional and void for they constitute “impermissible encroachment on judicial prerogatives.”

 

·         In Republic v. CA, the government argued that the nullification should only have prospective effect.  The Court agreed.  Thus under the “operative fact” doctrine, the effect of the invalidated law was allowed to affect transactions completed before the declaration of nullity.

 

 

C.  POWER OF TAXATION

 

Power of Taxation – is a method by which contributions are exacted from persons and property for the support of government and for all public needs.

 

·         Obligation to pay taxes is a duty

 

Taxes vs Licenses

 

Tax	License
·         to raise revenues	·         for regulatory purpose only ·         justified under police power ·         amount of fees required is usually limited to the cost of regulation

 

Scope

 

·         all income earned in the taxing state, whether by citizens or aliens, and all immovable and tangible personal properties found in its territory, as well as tangible personal property owned by persons domiciled therein

 

Power to Tax Includes Power to Destroy

 

(1)   when used validly as an implement of the police power in discouraging and in effect ultimately prohibiting certain things or enterprises inimical to public welfare

 

Power to Tax Does Not Include Power to Destroy

 

·         where the tax is used solely for the purpose of raising revenues

 

Who May Exercise

 

1.     Legislature / Congress (inherent)

2.     President (by delegation / tariff powers [Sec. 28 (2), Art. VI, Consti])

3.     local legislative bodies (conferred by direct authority [Sec. 5, Art. X, Consti])

 

Limitations of Taxation:

 

1.     Due Process of Law

2.     Equal Protection

3.     Public Purpose

 

1.  Due Process

 

·         Substantive : tax should not be confiscatory except when used as an implement of police power

 

·         Procedural : due process does not require previous notice and hearing before a law prescribing specific taxes on specific articles may be enacted. However, where the tax to be collected is to be based on the value of the taxable property, the taxpayer is entitled to be notified of the assessment proceedings and to be heard therein on the correct valuation of the property.

 

2.  Equal Protection

 

·         embodied in Sec. 28 (1), Art. VI, 1987 Constitution (The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.)

 

·         Uniformity – persons or things belonging to the same class shall be taxed at the same rate

 

◦      Requisites (Tan vs Del Rosario):

 

(a)   standards that are used are substantial and not arbitrary

(b)   categorization is germane to achieve the legislative purpose

(c)    the law applies, all things being equal, to both present and future conditions

(d)   classification applies equally well to all those belonging to the same class

 

·         Equitable taxation – based on the capacity to pay

 

·         Equality in taxation – tax shall be strictly proportional to the relative value of the property

 

      ·         Progressive system of taxation – the rate increases as the tax base increases

 

3.  Public Purpose

 

·         whatever may be beneficially employed for the general welfare

 

·         Double Taxation / Direct Duplicate Taxation

 

◦      when additional taxes are laid on the same subject by the same taxing jurisdiction during the same taxing period and for the same purpose.

 

◦      despite the lack of specific prohibition, double taxation will not be allowed if it results in a violation of the equal protection clause.

 

·         Tax Exemptions may either be:

 

◦      constitutional

▪      Art. Vi, Sec. 28 (3) : when lands, buildings and improvements are actually, directly and exclusively for religious, charitable or educational purposes – entitled to exemption

 

◦      statutory- discretion of legislature