FUNDAMENTAL POWERS OF THE STATE

General principles
The inherent powers of the state are
a. police power
b. power of eminent domain
c. power of taxation

Similarities
1. inherent in the state (exercised without need of express grant)
2. necessary and indispensable (state cannot be effective without them)
3. methods by which the state intereferes with private property
4. presupposes equivalent compensation
5. exercised by the legislature

Distinctions
police power: Power of the
state to promote public welfare
by restraining & regulating the
use of liberty and property
power of eminent domain: power of taxation
Inherent right of the state to
condemn private property to
public use upon the payment
of just compensation

What it regulates Liberty and property Property rights Property rights

Exercised by government May be exercised by private government

entitites
Nature of Noxious/noxious purposes- may be Wholesome used, devoted to Wholesome used, devoted to
property destroyed public use or purpose public use or purpose

Compensation Intangible, altruistic feeling that the Full & fair equivalent of the Protection given and/or
individual has contributed to the property taken public improvements
common good instituted by government for
the taxes paid

Limitations: ⇒ Taxing power may be used as an implement of police

G: Bill of rights power (Tiu v Videogram Regulatory Board)
E: Power may prevail over specific constitutional ⇒ Eminent domain may be used as an implement to
guarantees. Courts may annul improvident exercise of attain the police objective
police power
RETROACTIVE EFFECT/IMPAIR VESTED RIGHTS
POLICE POWER ⇒ A law enacted in the exercise of police power to
regulate or govern certain acts or transactions may be
Definition: the power of promoting public welfare by given retroactive effects & may reasonably impair
restraining and regulating the use of liberty and property vested rights.
⇒ Police power legislation is applicable to existing
Scope/Characteristics: contracts.
a. most pervasive ⇒ Non-impairment of contracts or vested rights clauses
b. least limitable will have to yield to the superior and legitimate
c. most demanding of all 3 powers exercise of police Power (Ortigas v CA)
⇒ Ex: Subdivision and Condominium Buyers protective
Justification: salus populi est suprema lex and sic utere tuo ut decree applies to all existing Ks
alienum non laedas
PRC v De Guzman: Exercise of the right to select a
⇒ Police power cannot be bargained away through the profession or course of study (like medicine) may be
medium of a treaty or a contract regulated pursuant to the police power of the state to
safeguard health, morals, peace, education, order, safety

  Page 1 of 7
 
and the general welfare of the people. Necessary to protect
the public from the potentially deadly effects of
incompetence and ignorance.
Chavez v Romulo: Right to bear arms is a statutory
privilege. A PTCFC is not a property, property right, not a
vested right and may be revoked at any time.
Mining exploration permits, timber permits do not vest
the grantee any permanent or irrevocable rights
MMDA v Garin: Right to operate a motor vehicle is not a
property right, but a privilege granted by the state
Carlos Superdrug v DSWD: When conditions so demand,
property rights must bow down to police power; ex:
Expanded Senior Citizens act of 2003- 20% discount for
prescription/non-prescription/branded and not.
Who may exercise the power
G: Congress
E: delegated to the President, administrative bodies, and
lawmaking bodies of LGUs (general welfare clause, Sec. 16
of RA 7160)
Does not authorize the President to take over internal
management of a cooperative (Cam Norte Electric
Cooperative)
MMDA not empowered to enact ordinances, approve
resolutions or appropriate funds for the general welfare of
inhabitants.
Mandate: transport and traffic management, admin and
implementation of all traffic enforcement operations,
traffic engineering services and traffic educ programs
⇒ MMDA v Bel-Air: not empowered to order opening of
Neptune St.
⇒ MMDA v Garin: Not empowered to suspend or
revoke licenses without any other legislative
enactment; only power to enforce existing traffic rules
and regulations
⇒ Francisco v Fernando: “Wet-flag” scheme along EDSA
is valid. All cities have enacted anti-jaywalking
ordinances or traffic management codes for
pedestrian regulation.
⇒ MMDA v Viron: DOTC not the MMDA which is
authorized to implement project (designation of bus
terminals)
Limitations (Tests for valid exercise)
a. lawful subject
b. lawful means
lawful subject: The interests of the public in general as
distinguished from those of a particular class require the
exercise of the power. The activity sought to be regulated
affects the general welfare, if it does then the enjoyment of
rights therefrom may have to yield to the greater interest.
  Page 2 of 7
⇒ Ex: gambling is a vice and social ill; PD that revoked
all existing franchises and permits to operate all forms
of gambling facilities is valid (jai-alai)
⇒ Ex2: AO of DENR to convert all existing mining leases
and or mining agreements into production sharing
agreements are valid
⇒ Ex3: Pollution Adjudication Board v CA: ex parte
cases to cease and desist issued by PAB are valid! Ex:
prevent continuous discharge of pollutive &
untreated effluents to rivers
Lawful means: The means employed are reasonably
necessary for the accomplishment of the purpose, and is
not unduly approve on individuals
⇒ JMM Promotion and Mgmt v CA: DOLE Order 3
establishing procedures & requirements for screening
of performance artists by POEA is a valid exercise
⇒ Phil Press Inst. V COMELEC: Reso 2772 of COMELEC
which mandates newspapers of general circulation to
provide free print space of not less than ½ page is
invalid. No national emergency or existence of
imperious public necessity
⇒ City Govt of QC V Ericta: Requiring cemetery owners
to reserve 6% of burial lots to paupers is an invalid
exercise of police power; exercise of power of eminent
domain
Requisites for proper exercise of police power [Lucena
Grand Terminal v JAC Liner]
1. interest of public generally as distinguished from
those of a particular class require the interference
from the State
2. means employed are reasonably necessary for the
attainment of the object sought and not unduly
oppressive upon individuals
Additional limitations (when exercised by delegate)
1. must be an express grant by law (sec. 16,39, of the LG
code)
2. within territorial limits (G: local govt units E: protect
water supply)
3. must not be contrary to law – an activity prohibited
by law cannot be allowed under the guise of
regulation; an activity allowed by law may not be
prohibited but regulated
For municipal ordinances to be valid:
1. must not contravene the Constitution or any statute
2. must not be unfair or oppressive
3. must not be partial or discriminatory
4. must not prohibit, but may regulate trade
5. must not be unreasonable
6. must be general in application & consistent with
public police
City of Manila v Laguio: Ordinance 7783 which prohibited
the established of business providing certain forms of
entertainment in Ermita-Malate area is invalid. Local leg
bodies cannot prohibit the operation of sauna and
massage parlors, karaoke bars, beerhouses, night clubs, etc. To this end, the State shall encourage and undertake the
without violating due process and equal protection (not just distribution of all agricultural
even under the guise of police power) lands, subject to such priorities and reasonable retention
limits as the Congress may
Authority of a municipality to issue zoning classification prescribe, taking into account ecological, developmental,
is an exercise of police power. Zoning ordinance – or equity considerations, and
local/mun legislation which arranges, prescribes, defines subject to the payment of just compensation. In
and apportions a given poli subdivisions into specific land determining retention limits, the State shall
uses as present and future projection of needs respect the right of small landowners. The State shall
further provide incentives for voluntary
POWER OF EMINENT DOMAIN/AKA land-sharing.
POWER OF EXPROPRIATION ⇒ Section 9. The State shall, by law, and for the common
good, undertake, in cooperation with
See: the private sector, a continuing program of urban land
reform and housing which will make
⇒ Art. 3(9) Private property shall not be taken for public
available at affordable cost, decent housing and basic
use without just compensation.
services to under-privileged and
⇒ Art. 12(18) The State may, in the interest of national
homeless citizens in urban centers and resettlement areas.
welfare or defense, establish and
It shall also promote adequate
operate vital industries and, upon payment of just
employment opportunities to such citizens. In the
compensation, transfer to public ownership
implementation of such program the State
utilities and other private enterprises to be operated by the
shall respect the rights of small property owners.
Government.
⇒ Art. 13(4 and 9)
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the
right of farmers and regular farmworkers who are
landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof.

police power: power of eminent domain:

*Note: both have general welfare as
their object, recent trends show a
mingling of the 2 with eminent domain
used an an implement of police power
Nature of property
Power of the state to promote
public welfare by restraining &
regulating the use of liberty and
property
Noxious/noxious purpose
Inherent right of the state to
condemn private property to public
use upon the payment of just
compensation

compensation None If appropriated and applied to

If property right restricted bec public purpose; pay just
continued use would be injurious to compensation
public interest = no compensable
taking
Property rights of individuals are
subjected to the restraints and
burdens to secure the general
comfort, health and prosperity of
the state
End use State restricts use of property; but
none of the property interests or
bundle of rights is used by/for
benefit of public
Can be total deprivation; but if
nobody else acquires it not
compensable taking

  Page 3 of 7
 
INHERENT POWER
It is an inherent power of the state and need not be
granted
Art. 3(9) imposes a limit on the govt’s exercise of the
power, provides protection to the individual
[NPC v mabuhay]: acquisition of a right of way
[Republic v PLDT]: If a burden is imposed on the owner of
the condemned property through expropriation, even
without loss of title or possession is still subject to
expropriation]
JURISDICTION: complaint filed in RTC, court is duty
bound to determine the amount of just compensation to be
paid for property.
Plaintiff does not have a right to dismiss the complaint,
landowner would have already suffered injuries. But if the
plaintiff decides to dismiss it, it will be subject to court
approval and to certain condition
Who may exercise the power
G: Congress
E: delegated to President, Admin, Local Govt Units and
Private Enterprises performing public services (peculiar to
eminent domain!)
Lagcao v Judge Labra: loc gov units have no inherent power
of eminent domain; must be expressly delegated and the
delegated power is not equal to the pervasive and all-
encompassing power vested in the legislative
Jesus is Lor v Pasig: Strict construction against the agency
exercising the power. Govt failed to prove that before it
filed its complaint it made a written, definite, and valid
offer to acquire property under Sec. 19
Filstream v CA: Exercise of eminent domain is superior to
the final and executory judgment in an ejectment case
IronSteal v CA: non-incorporated entity of the government-
in absence of any special provisions its powers, duties,
assets, liabilities will revert to and be assumed by the
government
San Roque v IAC: strict construction
G: govt not estopped by acts of agents
E: strict application will defeat effectiveness of the Torrens
Title
Requisites for exercise
1. Necessity: genuine necessity of public character
2. Private property
3. Taking in the constitutional sense
4. Public use: synonymous with public interest, public
benefit, public welfare and public convenience
5. Just compensation
6. Due process
Requirement 1: Necessity
  Page 4 of 7
⇒ When exercised by legislature- political question;
Exercised by delegate- justiciable question
⇒ RTC has the power to inquire into the legality of the
exercise of the right of eminent domain and
determine whether there is genuine necessity
⇒ Foundation of right: genuine necessity of public
character, govt must not capriciously or arbitrarily
choose which private property will be expropriatred
[Lagcao v Judge Labra]
Requirement 2: Private property
⇒ Private property already devoted to public use cannot
be expropriated by a delegate under a general grant
of authority [City of Manila v Chinese Community]
⇒ G: All private property capable of ownership, (even
services) may be expropriated
E: Money and choses in action
Requirement 3: Taking in the constitutional sense
⇒ May include trespass w/o actual eviction, material
impairment of the value of the property or the
prevention of the ordinary uses for which the
property was intended ex: 3 meter easement, prohibit
a building which would impair the view
⇒ May only result in the imposition of a burden upon
the owner without loss of title or possession
⇒ Property owner need not file a claim for just
compensation with COA, may go directly to court to
demand payment
⇒ Owner can recover possession of the property from
squatters until the transfer is consummated or
expropriation case filed- even if he agreed to transfer
to the property,
Requisites of valid taking [Republic v Castelvi]
1. Expropriator must enter a private property
2. Entry must not be for more than a momentary period
3. Entry must be under warrant of color or authority
4. Property must be devoted to public use or otherwise
informally appropriated or injuriously affected
5. Utilization of property must be in such a way as to
deprive him of beneficial enjoyment
Requirement 4: Public Use
General concept: meeting public need or public exigency
New: synonymous with public interest, public benefit,
public welfare and public convenience, flexible and
evolving concept; broadened to cover uses which redound
to indirect advantage or benefit of the public
⇒ Filstream v CA: the fact that property is less than ½
hectare and only a few could actually benefit from
expropriation does not diminish its public character
⇒ When practiced by LGU: Sec. 19, permits it for public
use, or purpose, or welfare, or benefit of the poor and
the landless.
⇒ Must be passed through an ordinance! Not a
resolution
⇒ Lagcao v Labra: condemnation in an irrational or
piecemeal fashion not contemplated by the court
Requirement 5: Just Compensation
Full and fair equivalent:
⇒ G: Market value- sum of money which a person,
desirous but not compelled to buy, and an owner,
willing but not compelled to sell would agree on a
price to be given & received therefor
⇒ E: only a portion, owner not restricted to actual
market value Total = (Market value + consequential
damages) – consequential benefits
⇒ Must be paid within a reasonable time from taking
Judicial prerogative: PD which sanctions the assessment
to be determined by the assessor/executive/city assessor
is unconstitutional
RTC as special agrarian court: original and exclusive
jurisdiction over
1. petitions for determination of just compensation
2. prosecution of criminal offenses under RA 6657
(Republic v DAR)
Commissioners
G: Expropriation where principal issue is determination of
payment of just compensation- Trial before commissioners
is indispensable
E: agrarian reform cases – discretionary
But RTC not bound by their findings; may substitute its
own estimate of the value for the property
1. commissioners applied illegal principles on evidence
2. disregarded clear preponderance of evidence
3. amount is either grossly inadequate or excessive
Form of compensation: NOT in a trust account
1. money/cash
2. in agrarian reform, payment partly in bonds (Assoc of
Agrarian Reform)
3. Land Bank bonds
When?
⇒ There must be payment before the title to the
expropriated property is transferred!
⇒ The rejecting landowner may withdraw the deposit in
the trust pending determination of valuation of the
property- because owner is merely exercising right to
seek just compensation (otherwise penalizing him)
⇒ Without prompt payment; cannot be considered just
⇒ Would be depriving him of land while govt decides
WON to expropriate or return to landowner when
rendered useless by force majeur
  Page 5 of 7
Reckoning point of valuation of property
G: date of filing of the complaint for eminent domain
E: actual taking w/ increase in value of the land then
filing? Date of actual taking
⇒ But! [Esteban v De Onorio- declared value of prop
determined either as of the date of the taking or filing-
whichever comes first]
⇒ Local govt unit: market value at time of taking of the
property; thats when the real measure of loss may be
fairly adjudged
Principle criterion: Character of land at the time of taking
Entitlement of owner to interest:
G: once value of property is fixed by court, amt shall earn
interest at the legal rate until full payment is effect (6%)
E: if there is delay = forbearance of money/goods (12%)
Who is entitled? Present lawful interest in the property to
be condemned
Ex:owner, mortgagee, lessee, vendee in possession under
an executory contract
When does title pass?
G: expropriation- after payment; landowner may still
dispose of the same before payment of just compensation
E: agrarian reform – even before payment
Right of owner in case of non-payment
G: does not entitle owner to recover possession of the
expropriated lots, only payment
E: where the govt fails to pay within 5 years from finality
of judgment, the owners shall have the right to recover
possession of their property
Due process of law: defendants must have the
opportunity to be heard where they can question the
propriety of the expropriation or reasonableness of
compensation (Filstream v CA)
Writ of possession:
Ministerial
1. filing of a complaint sufficient in form & substance
2. deposit made by the government of the amt
equivalent to 15% of the FMV
Determination of whether its for a public purpose is not a
condition precedent
Hearing to determine compliance with requirements for
socialized housing (RA 7279 done even after writ of
possession)
No plaintiff’s matter of right to dismiss the complaint!
Right to dismiss is subject to court approval and to certain
conditions
Right to re-purchase or re-acquire
G: fee simple; no right! In rem proceeding, the paramount
title is in the public under a new and independent title
(diff from an unpaid seller)
E: if done for a particular purpose with a condition that
after the purpose is ended or abandoned, property will
Art. 12(18)
Section 18. 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 other private enterprises to be operated by the
Government.
Art. 13(4)
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the
right of farmers and regular farmworkers who are landless, to
own directly or collectively the
lands they till or, in the case of other farmworkers, to receive
a just share of the fruits thereof.
To this end, the State shall encourage and undertake the just
distribution of all agricultural
lands, subject to such priorities and reasonable retention
limits as the Congress may
prescribe, taking into account ecological, developmental, or
equity considerations, and
subject to the payment of just compensation. In determining
retention limits, the State shall
respect the right of small landowners. The State shall further
provide incentives for voluntary
land-sharing.
comprehensive agrarian reform law
exercise of the police power of the state
⇒ police power: eminent domain as an instrument to
accomplish police objective, prescribed retention
limits for landowners
⇒ eminent domain: where to carry out the regulation,
owners are deprived of lands they own in excess of
the amount allowed
RA 7279 (urban devt and housing act)
Filstream v CA: restrictions in Art 19, LGC-
MANDATORY
a. order in which lands are acquired (privately
owned is last,6th)
b. other modes of acquisition exhausted
c. parcels owned by small prop owners are exempt
i. not more than 300sqm in highly urbanized
cities, not more than 800 sqm in urban areas
ii. do not own other residential property
  Page 6 of 7
revert/can re-acquire
Art. 12(17)
Section 17. In times of national emergency, when the public
interest so requires, the State
may, during the emergency and under reasonable terms
prescribed by it, temporarily take
over or direct the operation of any privately-owned public
utility or business affected with
public interest.
⇒ Welfare of public is paramount consideration
⇒ Temporary takeover- exercising police power (not
eminent domain!)
⇒ Extends to operation of business, not the ownership
⇒ No need to compensate owner
⇒ Emergency powers of the government
⇒ Reposed in CONGRESS not the President (must be
delegated)
Art. 13(9)
Section 9. The State shall, by law, and for the common good,
undertake, in cooperation with
the private sector, a continuing program of urban land reform
and housing which will make
available at affordable cost, decent housing and basic services
to under-privileged and
homeless citizens in urban centers and resettlement areas. It
shall also promote adequate
employment opportunities to such citizens. In the
implementation of such program the State
shall respect the rights of small property owners.
POWER OF TAXATION
Power of taxation: purpose is generation of revenue and
regulation is incidental
If regulation is primary purpose (police power), fact that
revenue collected does not make it a tax
Who may exercise?
G: legislature
E: local legislative bodies (Art. 10(5)) and the President
when delegated tariff powers (Art. 6(28.2)
Limitations
1. Due process of law: should not be confiscatory
2. Legislature determines the nature, object, extent,
coverage and situs of tax (however courts can strike it
down)
3. Equal protection clause: Taxes should be uniform
and equitable (Art. 6.28)
4. Public purpose (if for a special purpose, treated as a
special fund and paid out for such purpose only,
when fulfilled balance goes to govt funds)
5. Double taxation: additional taxes on the same subject
by same taxing jurisdiction, same period. Same
purpose- no consti prohinition but cannot a violation
of equal protection clause
6. Tax exemptions: Art. 6(28) no law granting tax
exemption shall be passed without the concurrence of
a majority of ALL members of congress. If granted
gratuitously, may be revoked at will.
Art. 6(28)
(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.
License fee v Tax
License fee
police measure
Limited to cost of permit and reasonable regulation (except if
non-useful occupation)
Privilege of doing something, may be revoked when public
interest requires
Kinds of license fee
1. for useful occupations or enterprises
2. for non-useful occ: discourage non-useful enterprises, physical therapy, price may be exorbitant
Supremacy of NL govt over local govt:
When local govts: strictly construed against them, tax never presumed and must be clear language imposing the law
  Page 7 of 7
Art. 14(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.
Art 14(4)
(4) 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.
Tax
Revenue measure
Non-useful- amt of tax may be unlimited provided it is not
confiscatory- occupational therapy
Imposed on persons or property for revenue